First Nat. Bank v. Liewer

• Citation: 187 F. 16
• Decision Date: 29 April 1911
• Docket Number: 3,430.
• Parties: FIRST NAT. BANK OF SHENANDOAH v. LIEWER.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

187 F. 16

FIRST NAT. BANK OF SHENANDOAH v. LIEWER.

No. 3,430.

United States Court of Appeals, Eighth Circuit.

April 29, 1911

Syllabus by the Court.

Where an innocent purchaser for value before maturity holds commercial paper that is fair on its face, and that fives no indication of any modification by interlineation or otherwise, the burden is on the maker to prove any alteration that he claims was made subsequent to the execution of the note.

It is the duty of the national courts to exercise their independent judgments in the determination of all questions of general commercial law, of general jurisprudence, and of right under the Constitution and laws of the United States, although the decisions of state courts may not accord with them.

On the issue of alteration of a promissory note after it was signed by the maker, proof had been made that the plaintiff was an innocent purchaser for value before maturity, the defendant had testified that the note was materially changed after he signed it, and the agent of the payee who took the note had testified that it was in the same condition when the defendant signed it that it was at the trial.

Held the testimony of the secretary of the payee that he received the note by mail from the agent a few days after it was dated, and that it was then in its condition at the trial was competent and material, and should have been admitted in evidence.

Emmet Tinley (Earl R. Ferguson and W. E. Mitchell, on the brief) for plaintiff in error.

Frederick S. Berry, for defendant in error.

Before SANBORN and HOOK, Circuit Judges, and WILLIAM H. MUNGER, District Judge.

SANBORN Circuit Judge.

The First National Bank of Shenandoah, Iowa, brought an action against Nicholas Liewer for $2,400.00 and alleged in its petition that on September 6, 1907, he made and delivered to the Wonder Stock Powder Company, a corporation, his promissory note, whereby he agreed to pay to the order of that company on January 1, 1908, $2,400.00 and interest, and that before the note matured the bank in good faith discounted it, and the powder company indorsed and transferred it for value to the bank. Liewer, the defendant below, answered (1) that he never signed the note; and (2) that, if he ever did, it was a note for $24.00, and that it had been subsequently changed to a note for $2,400.00. The issues thus made were tried by a jury, which returned a verdict for the defendant.

At the close of the trial the defendant had testified that his signature to the note was genuine, and that fact was conclusively established. The note was fair on its face. There were no interlineations, insertions, or indications of alterations upon it; but the defendant had testified that it was for only $24.00 when he signed it, and that it had been subsequently so changed as to make it a note for $2,400.00. The agent who took the note from the defendant for the powder company had testified that he wrote it, and that it was for $2,400.00 when the defendant signed and he received it. There was conclusive proof that the bank was a bona fide purchaser of the note for value before maturity without notice of any defense to it. The court charged the jury that the only issue for them to determine was whether or not the note was altered from one for $24.00 to one for $2,400.00 after the defendant signed it. The bank requested the court to charge the jury that upon this issue the burden of proof was upon the defendant. It declined to do so, and instructed them that this burden was upon the plaintiff, and this ruling is assigned as error. The assignment is well made.

Where an innocent purchaser for value before maturity holds commercial paper that is fair on its face, and that gives no indications of any modification by interlineation or otherwise, the burden is on the maker to prove any alteration which he claims was made subsequent to its execution by him. United States v. Linn, 1 How. 104, 111, 112, 11 L.Ed. 64; Smith v. United States, 69 U.S. 219, 231, 232, 17 L.Ed. 788; Sturm v. Boker, 150 U.S. 312, 340, 14 Sup.Ct. 99, 37 L.Ed. 1093; Murray v. Lardner, 2 Wall. 110, 121, 17 L.Ed. 857; Wilson v. Hayes, 40 Minn. 531, 536, 537, 42 N.W. 467, 4 L.R.A. 196, 12 Am.St.Rep. 754; Hagan v. Merchants', etc., Ins. Co., 81 Iowa, 321, 329, 330, 46 N.W. 1114, 25 Am.St.Rep. 493; Colby v. Foxworthy, 80 Neb. 239, 114 N.W. 174; McClintock v. State Bank of Table Rock, 52 Neb. 130, 132, 71 N.W. 978.

It is true that the Supreme Court of Nebraska, the state in which this note was made, has held that, when the issue of alteration or not after signing arises under a general denial of the making of the note and nothing more in the answer, the burden is upon the plaintiff (Ohio National Bank v. Gill Bros., 85 Neb. 718, 124 N.W. 152, 153; Bothell v. Miller, 87 Neb. 835, 128 N.W. 628, 629), and that when it arises under an allegation in the answer of alteration after the signing the burden is on the defendant (McClintock v. State Bank of Tawle Rock, 52 Neb. 130, 132, 71 N.W. 978). Even under this rule, the burden seems to have been on the defendant at the close of the trial in the case at bar, because by his answer he had made two issues: (1) Whether his purported signature upon the alleged promissory note, which was set out in full in the petition, was his genuine signature, or was a forgery, for to this issue his answer restricted his first defense, and that issue had been conclusively determined by his sworn admission and other evidence; and (2) whether or not the averments in his second defense that the note was altered after he signed it were true.

But the issue of law here presented is broader than a mere question of pleading or practice. It presents a question of general commercial law. Its decision...