Clyde S.S. Co. v. Whaley

• Decision Date: 02 February 1916
• Docket Number: 1367.
• Citation: 231 F. 76
• Parties: CLYDE S.S. CO. v. WHALEY et al.
• Court: U.S. Court of Appeals — Fourth Circuit

231 F. 76

CLYDE S.S. CO. v. WHALEY et al.

No. 1367.

United States Court of Appeals, Fourth Circuit.

February 2, 1916

J. P K. Bryan, of Charleston, S.C., for plaintiff in error.

Huger Sinkler and Nathaniel B. Barnwell, both of Charleston, S.C. (Whaley, Barnwell & Grimball, Mitchell & Smith, and Nathans &amp Sinkler, all of Charleston, S.C., on the brief), for defendants in error.

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges.

WOODS Circuit Judge.

The Clyde Steamship Company brought this action to recover $3,592.52, the value of 38 bales of burlaps stored with W. B Whaley and A. Hasell Heyward, doing business as warehousemen under the name of Boyce's Wharf. By consent the cause was tried without a jury. The District Judge found that the plaintiff should recover nothing, and that the defendant should recover $391.50, its undenied counterclaim for storage. Judgment was entered accordingly, and the cause comes here on error assigned in the rejection of the plaintiff's claim.

The facts are not in dispute. In November, 1907, the Clyde Steamship Company held 251 bales of burlaps in Charleston under bill of lading calling for delivery to the order of the consignor. The shipment was intended for the Goldsmith Manufacturing Company, and was to be delivered to that company on presentation of the bills of lading duly endorsed. The Steamship Company, being pressed for room on its wharf asked the Goldsmith Company to arrange for it the storage of the burlaps at some other wharf pending the presentation of the bills of lading. with Whaley and Heyward on Boyce's Wharf; and the Steamship Company had the goods delivered there. The agency of the Goldsmith Company was not disclosed to Whaley and Heyward, and they issued warehouse receipts for 277 bales of burlaps in the name of the Goldsmith Company as if it were the owner of the entire lot. Afterwards the Goldsmith Company in accounting with the Steamship Company admitted that it had received and stored for the Steamship Company on Boyce's Wharf 251 bales of burlaps, and turned over the warehouse receipts for that number of bales, from which it had erased its own name and written in the place of it the Clyde Steamship Company. On the same day it gave a written order to Boyce's Wharf directing that 229 bales-- 22 bales short of the 251 bales-- be held for the order of the Steamship Company, and the remaining 48 bales of the 277 bales for its own order. Whaley and Heyward knew nothing of the alteration of the receipts or their delivery to the Steamship Company; but they delivered to the Steamship Company the 229 bales according to the written order of the Goldsmith Company. On the other hand, the Steamship Company took the receipts for the 251 bales from the Goldsmith Company, supposing that the alteration had been made before their delivery to the Goldsmith Company. At the trial the plaintiff relied on the receipts, and proof of the agency of the Goldsmith Company as evidence of its right to recover the value of 22 bales, the difference between 251 bales called for by the receipts turned over to it by the Goldsmith Company and 229 bales, the number received by it from Boyce's Wharf. The District Judge held that the erasure of one name and the substitution of the other was a material alteration, which annulled the receipts, and that therefore no recovery could be based on them.

The rule is too well settled for serious discussion that the erasure of the name of the payee or obligee in a written instrument and the insertion of the name of another person is a material alteration, and that such an alteration when made by a party in interest will render the instrument void. The rule is founded upon the public necessity that written instruments should be kept inviolate, and upon the principle that the writing as made by both parties binds and not that which one of the parties has attempted to substitute. Steele v. Spencer, 1 Pet. 552, 7 L.Ed. 259; Ann. Cas. 1913C, 180, note; 10 Am.Dec. 267, note; 86 Am.St.Rep. 80, note; 35 L.R.A. 464, note; 1 R.C.L. 973; 2 Corpus Juris, 1214; Sanders v. Bagwell, 32 S.C. 238, 10 S.E. 946, 7 L.R.A. 743; White v. Harris, 69 S.C. 65, 48 S.E. 41, 104 Am.St.Rep. 791. A limitation of the rule is that the substitution of one name for another is not a material alteration, where it amounts to nothing more than inserting the real name of the party intended. Such a change does not alter the instrument, for the person intended, though incorrectly named, could be shown by parol. Mouchet v. Cason & Hill, 1 Brev. (S.C.) 307; Hanrick v. Patrick, 119 U.S. 156, 7 Sup.Ct. 147, 30 L.Ed. 396; 22 Ann.Cas. 1045, note. Manifestly the erasure of the name 'Goldsmith Manufacturing Company' and the substitution of the name 'Clyde Steamship Company' was a material alteration; it was not the mere giving of the real name of the party intended, for Whaley and Heyward did not know the Steamship Company in the transaction.

There is, however, another rule as well established as that just stated. A material change in a written instrument avoids it against one party only when it is made by the other party or with his consent, and a change made by a stranger (that is, one who has no legal interest in the instrument) without authority from the party in interest is only a spoliation, not affecting its validity. An agent of a party to the instrument not authorized to change it is in this sense a stranger without legal interest, and a change made by such agent does not destroy the paper, but leaves it a valid contract binding according to its original form. Flinn & Hart v. Brown, 6 S.C. 229; Equitable Mfg. Co. v. Allen, 76 Vt. 22, 56 A. 87, 104 Am.St.Rep. 915; Langenberger v. Kroeger, 48 Cal. 147, 17 Am.Rep. 418; Burgess v. Blake (Ala.) 86 Am.St.Rep. 103, note; White Sewing Machine Co. v. Dakin, 86 Mich. 581, 49 N.W. 583, 13 L.R.A. 313; Gleason v. Hamilton, 138 N.Y. 353, 34 N.E. 203, 21 L.R.A. 210; Vanderford v. Farmers' & M. N. Bank, 105 Md. 164, 66 A. 47, 10 L.R.A. (N.S.) 129; 2 Corpus Juris, 1336; Kingan & Co. v. Silvers et al., 13 Ind.App. 80, 37 N.E. 413; Tulane University v. O'Connor et al., 192 Mass. 428, 78 N.E. 494. The alteration of the agent does not destroy the instrument, even when the other contracting party makes the obligation to the agent in his own name supposing him to be the principal. In that case, in the absence of fraudulent concealment on his part, the principal, being the real party in interest, has the right to enforce the contract in its original form upon proof that the nominal payee or obligee was his agent.

In Hunt v. Gray, 35 N.J.Law, 227, 10 Am.Rep. 232, John T. Hunt sold a horse for George Hunt and took the note of the purchaser to himself as payee without disclosing his agency. He altered the note without the consent of George Hunt. In holding that the alteration did not annul the paper, Chief Justice Beasley said:

'The alteration of this note was not the act of the plaintiff, because the person who made it was not his agent for that purpose. These were the facts: John T. Hunt was the agent who sold the plaintiff's horse for him; in that transaction he took * * * it to the bank and had it discounted, the proceeds going to the plaintiff. From these circumstances an authority to alter this note cannot be inferred. It was not an act that properly appertained to the transaction to which the agency related. It could not have been within the contemplation of either the principal or the agent, at the time of the creation of the agency. Consequently, the act must be regarded as though done by a stranger, without the concurrence, express or implied, of the plaintiff.'

The rule is thus well stated in Spreng v. Juni, 109 Minn. 85, 122 N.W. 1015, 18 Ann.Cas. 222:

'The owner of a promissory note, in which a third pa

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