General Motors Acceptance Corporation v. Talbott

Decision Date17 October 1924
Citation230 P. 30,39 Idaho 707
PartiesGENERAL MOTORS ACCEPTANCE CORPORATION, a Corporation, Respondent, v. GEORGE W. TALBOTT, Appellant, and W. O. JOHNSON, Doing Business Under the Name of CHANGNON & CO., Defendant
CourtIdaho Supreme Court

PROMISSORY NOTE-MATERIAL ALTERATIONS-CHANGE IN DATE-AMOUNT AND TIME OF PAYMENT-HOLDER IN DUE COURSE-QUESTION FOR JURY.

1. Under the provisions of C. S., sec. 5992, an alteration which changes the date, the sum payable or the time of payment or any other change or addition which alters the effect of the instrument in any respect is a material alteration.

2. If in a promissory note providing for payment in instalments any instalment is overdue at the time it is transferred, the purchaser takes the whole note as overdue paper and is not a holder in due course.

3. Where, upon the face of a promissory note, it is apparent from an examination thereof that material alterations have been made in the date, the result of which was to change the time of payment and that an erasure and change has been made in the amount, and where testimony is introduced by the maker of the note to the effect that the date has been changed that he neither authorized the change nor had knowledge of the same, and such testimony is not contradicted, denied or explained by the holder of the note, the question as to whether the note was regular and complete upon its face when transferred, whether it was transferred before maturity and whether it was purchased in good faith so as to make the purchaser a holder in due course, were questions of fact properly determinable by the jury.

4. Held, under the facts of this case, that the court erred in directing the jury to return a verdict in favor of respondent.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. O. R. Baum, Judge.

Action upon promissory note. Judgment for plaintiff. Reversed and remanded for new trial.

Reversed and remanded. Costs awarded to appellant.

Arthur W. Holden and Solon Orr, for Appellant.

The note in suit showed an alteration on its face which changed the time of payment. It was improperly admitted in evidence, without any explanation of this alteration and without any showing that it was so altered before it came into respondent's hands. (C. S., sec. 7980; Mulkey v. Long, 5 Idaho 213, 47 P. 949.)

The alteration of the note, by changing its date, was a material alteration. (C. S., sec. 5992, subd. 1.)

A material alteration appearing upon the face of the note itself, the respondent is not a holder in due course. (C. S., sec. 5919, subd. 1; Elias v. Whitney, 50 Misc. 326, 98 N.Y.S. 667; Holbart v. Lauritson, 34 S.D. 267, 148 N.W. 19, L. R. A. 1915A, 166.)

Respondent being not a holder in due course, the alteration changing the date voided the note. (C. S., sec. 5991; Elias v. Whitney, supra.)

Undisputed evidence having been received that showed material alteration which avoided the note, besides other alterations, and the respondent being not a holder in due course, there were a number of questions to go to the jury, and the trial court ought not to have directed a verdict for respondent. (Palcher v. Oregon Short Line Ry. Co., 31 Idaho 93, 169 P. 298; McAlinden v. St. Maries Hospital Assn., 28 Idaho 657, Ann. Cas. 1918A, 380, 156 P. 115; Keane v. Pittsburg Lead Min. Co., 17 Idaho 179, 105 P. 60.)

H. J. Swanson, for Respondent.

The respondent is a holder in due course. (1 Daniel, Negotiable Instruments, sec. 812; G. S., secs. 5919, 5923, 5991; Winter v. Nobs, 19 Idaho 18, Ann. Cas. 1912C, 302, 112 P. 525; Park v. Johnson, 20 Idaho 548, 119 P. 52; Park v. Brandt, 20 Idaho 660, 119 P. 877; Vaughn v. Johnson, 20 Idaho 669, 119 P. 879, 37 L. R. A., N. S., 816; 2 Daniels Negotiable Instruments, 1419; Paramore v. Lindsey, 63 Mo. 63; Wilson v. Harris, 35 Iowa 507; Voris v. Anderson, 65 Okla. 270, 153 P. 291, 166 P. 213; National Bank of St. Joseph v. Dakin, 54 Kan. 656, 45 Am. St. 299, 39 P. 180; Bledsoe v. City National Bank of Selma, 7 Ala. App. 195, 60 So. 942; Tower v. Stanley, 220 Mass. 429, 107 N.E. 1010; Ensign v. Fogg, 177 Mich. 317, 143 N.W. 82; Public Bank of New York City v. Knox-Burchard Merc. Co., 135 Minn. 171, 160 N.W. 667; Redfield State Bank v. Myrick, 108 Kan. 191, 194 P. 648.)

Defect of title of prior parties among themselves, or defenses available to prior parties among themselves, were not available against respondent. (C. S., sec. 5924.) Nor the fact of a material alteration to which respondent was not a party. (C. S., sec. 5991.)

BUDGE, J. McCarthy, C. J., and William A. Lee and Wm. E. Lee, JJ., concur.

OPINION

BUDGE, J.

This action was brought to recover upon a promissory note. The complaint alleges that the note in question, a purported copy of which appears in the complaint, was made and executed by appellant on February 14, 1921, and delivered to defendant, W. O. Johnson, doing business under the name Changnon & Company. The principal amount of the note was $ 1,080, which was payable in twelve equal monthly installments of $ 90 each, the first installment being due and payable "one month after date." It is next alleged that "before the due date of the first payment of said note" Changnon & Company indorsed said note to plaintiff, in due course of business and for value, and that no part of the note had been paid except the first two installments. To the complaint a demurrer was filed but was overruled by the court. Appellant thereupon answered, denying specifically each and every material allegation of respondent's complaint and alleging that on December 7, 1920, he executed a note similar to the one set forth in the complaint, and, as a part of the same transaction entered into a conditional sale contract with Changnon & Company for the purchase of a Viele automobile; that on December 7, 1920, Changnon & Company did not own said Viele automobile nor any interest therein; that the promissory note and conditional sale contract were both tentatively and conditionally signed in connection with a proposed transaction in which Changnon & Company were to deliver to appellant a new Oldsmobile sedan and upon its delivery the Viele automobile was to be transferred to Changnon & Company, at which time the note and contract were to be delivered to that company; that the Oldsmobile sedan was never delivered, the proposed transaction was never consummated and appellant received no consideration for the conditional sale contract and promissory note; that the promissory note and conditional sale contract were delivered to Changnon & Company for the sole purpose, and no other, of submitting the same to an agent of respondent for approval, but that the instruments were never returned, although numerous demands were made for them. Respondent further alleges that the note was materially altered by changing its date from December 7, 1920, to February 14, 1921, thereby changing the time of payment of the installments of the note. Defendant W. O. Johnson made no appearance. The cause was tried to the court and a jury. Both sides having introduced proof and rested, a motion for directed verdict was made by respondent, which was sustained. Verdict and judgment in accordance with the prayer of the complaint was thereupon entered, from which judgment this appeal is taken.

Numerous assignments of error are made in appellant's brief and relied upon for reversal of the judgment. We deem it unnecessary to discuss each one separately. It is contended that the court erred in admitting in evidence the note sued upon, Exhibit "A." This objection is based upon C. S., secs. 5991 and 7980, which read respectively as follows:

"Sec. 5991. Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration and subsequent endorsers. But when an instrument has been materially altered and is in the hands of a holder in due course, not a party to the alteration, he may enforce payment thereof according to its original tenor."

"Sec. 7980. The party producing a writing as genuine which has been altered, or appears to have been altered, after its execution, in a part material to the question in dispute, must account for the appearance or alteration. He may show that the alteration was made by another without his concurrence, or was made with the consent of the parties affected by it, or otherwise properly or innocently made, or that the alteration did not change the meaning or language of the instrument. If he do that he may give the writing in evidence but not otherwise."

The last quoted statute (C. S., sec. 7980) was construed by this court in the case of Mulkey v. Long, 5 Idaho 213, 216, 47 P. 949, where it was said:

"The conclusion, it seems to us, from all the decisions, is simply this: The party presenting an instrument which, upon its face, shows that it has been altered, is required to explain such alteration, or at least show that it has not been altered since it came to his hands. The parties who made or executed the instrument may have made or assented to the alteration before its execution, and yet the holder be entirely unable to prove that fact. We think, therefore, that the exigency of the statute is complied with when the party presenting the instrument in evidence has shown that there has been no alteration therein since it came into his hands. (Galland v. Jackman, 26 Cal. 79, 85, 85 Am. Dec. 172; Sedgwick v. Sedgwick, 56 Cal. 213.)"

Testimony was introduced by respondent in this case that when the note was forwarded to it, it was in exactly the same condition as when request was made that it be admitted in evidence, and in accordance with the rule...

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4 cases
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    • United States
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