First Nat. Bank of Commerce v. Merkel

• Citation: 97 Miss. 824,53 So. 350
• Decision Date: 17 October 1910
• Docket Number: 14,655
• Court: United States State Supreme Court of Mississippi
• Parties: FIRST NATIONAL BANK OF COMMERCE v. JOSEPH B. MERKEL ET AL

53 So. 350

97 Miss. 824

FIRST NATIONAL BANK OF COMMERCE v. JOSEPH B. MERKEL ET AL

No. 14,655

Supreme Court of Mississippi

October 17, 1910

FROM the circuit court of Forrest county, HON. WILLIAM H. COOK Judge.

The bank, appellant, was plaintiff in the court below; Merkel and another, appellees, were defendants there. From a judgment in defendant Merkel's favor, but against Holmes in plaintiff's favor, plaintiff appealed to the supreme court. The opinion of the court states the facts of the case

Reversed.

Stevens Stevens & Cook, for appellant.

There are three distinct defenses set up by the appellee, Merkel to appellant's cause of action. Merkel contends, first that because he did not receive the exact contract of insurance as applied for, there is a failure of consideration for the note sued on. He contends, secondly, that the insurance agent, Holmes, secured the note through fraud and as a result of such fraud appellant did not receive the contract of insurance applied for, and that he, appellant, delivered a note for which he received nothing in return, so far as value was concerned. He contends thirdly, that the note was materially altered after delivery. The last of these defenses can be dismissed from consideration upon the hearing of this appeal with the statement that a direct issue of fact was raised and presented to the jury as to whether the note had in fact been altered, and therefore, aside from the question as to whether Merkel is not estopped from pleading an alteration as discussed below, it is impossible to determine upon which defense the jury based their verdict. The point was raised in the lower court that inasmuch as Merkel, according to his own testimony, executed and delivered a note upon a blank form used by the bank, with a blank space left in the printed form for the insertion of the time from which the note was to draw interest, that is, whether from date or from maturity, and did not erase or mark out these blanks, he placed it within the power of any holder of the note or any one else simply to complete the filling in of these blanks and cause an innocent purchaser or endorsee of the note to buy the same with the understanding that the contract was not only an interest bearing one, but a binding legal obligation against the maker. It is the uncontradicted testimony that appellant purchased the note after the rate of interest had been inserted; that appellant had no notice whatever that there had been an alteration of the note. Holmes inserted the interest rate and the words "after date" with the same pen and ink he used in writing the other parts of the note, and there was nothing upon the face of the note to arouse suspicion. The contract as delivered and printed, according to Merkel's own testimony, would have drawn the legal rate of six per centum; and instead of blotting out all provisions for interest, appellant allowed the note to bear interest at the rate of six per centum. We respectfully contend that appellant, upon the issue of alteration was entitled to a peremptory instruction upon the equitable theory that Merkel was guilty of negligence in delivering the note as he says he did and by his own negligence entrapping an innocent purchaser into paying for a note which Merkel now contends can be defeated by a plea of material alteration.

Although the appellee, Merkel, attempted to raise an issue of fraud by his pleadings, yet no fraud whatever was properly pleaded or proved. The written plea setting up fraud was in fact subject to demurrer; it detailed no facts or circumstances showing any fraud in the procurement of the signature of Merkel to the application for insurance or the signing of the note, and upon trial the execution of these writings was admitted. The only shadow of any basis for fraud lies in the verbal statements or representations alleged by Merkel to have been made by Holmes at the very time and place the application for the insurance was signed and delivered. The parties elected to embody in two written applications the usual queries and answers for in applications for life insurance, and a full and detailed description of the kind of life insurance desired. These writings were made exhibits to appellant's replication and were introduced in evidence. Can they be contradicted, or their express terms varied by parol? In the absence of evidence showing that Merkel's signature was obtained to these documents by fraud, it is an elementary proposition that these applications can not be varied by parol and the action of the lower court in permitting Merkel to detail what Holmes said or represented, was palpable error. The plea of appellee, Merkel, alleged fraud only in general terms, and the court below conceived the idea that such a general plea licensed app...