Gray v. Williams

Decision Date17 January 1917
Citation99 A. 735,91 Vt. 111
PartiesGRAY v. WILLIAMS et al.
CourtVermont Supreme Court

[Copyrighted material omitted.]

Exceptions from Caledonia County. Court; Frank L. Fish, Judge.

Action by George M. Gray against Gilbert H. Williams and another. Verdict directed for defendants, and plaintiff excepts. Reversed and remanded.

This was an action of special assumpsit on a promissory note. The defendant J. A. Williams pleaded the general issue with notice of the following special matter:

(1) That he signed the note as an indorser for the defendant Gilbert H. Williams, and that the defendant materially altered the note with out the authority or approval of the defendant J. A. Williams, by inserting therein the following words: "This note is given in payment for one pair of gray horses, Susie and Harry, which I have this day bought of said George M. Gray, and said horses are to remain the property of the said Gray until this note is fully paid."

(2) That the defendant J. A. Williams signed the note as an indorser, but was never notified that the note was presented for payment, and that payment had been refused, and that the plaintiff should look to the defendant J. A. Williams for payment of the same.

The defendant Gilbert H. Williams pleaded the general issue and gave notice of the following special matter:

That the said note had been materially altered by the plaintiff without his authority or approval in the same manner set up in the plea of the defendant J. A. Williams.

Argued before MUNSON, C. J., and WATSON, HASELTON, POWERS, and TAYLOR, JJ.

Dunnett & Shields, of St. Johnsbury, for plaintiff. Porter, Witters & Harvey, of St. Johnsbury, for defendants.

TAYLOR, J. The action is special assumpsit on a promissory note. The defendants severally pleaded the general issue, with notice by defendant J. A. Williams in substance that he signed the note as indorser and had not received notice of protest, and by both defendants of a material alteration of the note without their consent or approval after it was executed and delivered. There was trial by jury with verdict directed for the defendants, to which verdict and the judgment thereon the plaintiff excepted.

As the evidence stood when defendants' motion for a verdict was granted, there was no dispute as to when and by whom the claimed alteration of the note was made. In its original form the note on its face read as follows:

"$400.00. St. Johnsbury, Vt., Dee. 11, 1911.

Due ——. On demand after date we promise to pay to the order of Geo. M. Gray four hundred dollars at the Merchants' National Bank of St. Johnsbury, value received, with interest payable semiannually. Gilbert H. Williams. Post office address: Concord, Vt."

The name of the defendant J. A. Williams was written across one end of the back of the note. The note is an ordinary printed bank note with the blanks filled in writing. In its original form, it was discounted at the Merchants' National Bank on December 27, 1911. On or just before January 10, 1912, under circumstances which will later appear, the plaintiff procured the note from the bank and wrote on its face to the left of the signature of Gilbert H. Williams the following:

"This note is given in payment for one pair of horses, Susie and Harry, which I have this day bought of the said Geo. M. Gray, and said horses are to remain the property of said Gray until this note is fully paid."

Thereupon plaintiff sent the note to the town clerk of Concord, Vt., for record, and across the back of the note was written:

"Concord town clerk's office Jan. 10, 1912, at 4 o'clock p. m. received for record and recorded in book 7, page 166, Lien Records. Attest: F. A. Brown, Town Clerk. Fees Pd."

The note was returned to the bank, which held it until some time before this suit was brought. Gilbert H. paid the interest thereon to the bank to July 1, 1912. Before bringing suit plaintiff became the owner of the note, but how and when does not appear. In his opening case, plaintiff introduced the note and rested. In defense Gilbert H. testified that he gave the note in question as the purchase price of a pair of horses purchased of plaintiff for $400; that he procured his brother J. A. Williams to indorse the note; that the words now on the note reserving a lien on the horses were not there when the note was delivered to plaintiff; that he never gave his consent nor agreed that the words might be inserted; that he was notified by the Merchants' National Bank that it held the note and paid the interest to July 1, 1912, not knowing that the note had been altered; that he did not know of the notes being recorded in the town clerk's office of Concord until the time of the trial; and that he first learned of the alteration about December 1, 1912. Defendant J. A. Williams testified that the words giving a "claim" on the horses were not in the note when he wrote his name across the back of it; that he first learned of the alteration in December, 1912, when plaintiff told him that he "wrote a claim into the note"; that he did not consent to nor approve of the alteration; that he notified the bank that he should not pay the note; that the bank never demanded payment from him; and that he never received notice of the protest of the note.

In rebuttal the plaintiff admitted having written on the note the words relating to a lien, claiming that the act was authorized by Gilbert H., and later ratified by J. A. Williams. We shall later have occasion to examine the evidence bearing upon those issues. At the close of all the evidence plaintiff moved for a directed verdict. The court denied the motion, holding that the alteration was a material one, and intimating that there was no evidence to go to the jury on the questions of authorization and ratification. Thereupon defendants moved for a directed verdict on two grounds: (1) That on all the evidence J. A. Williams was an indorser and not a maker, and the note not duly presented for payment with notice of protest; and (2) that plaintiff had materially altered the note after execution and delivery. The court ruled against the defendants on the first ground of their motion, but sustained it on the second ground. No exception was saved to the court's ruling that there was no evidence to go to the jury on the questions whether the writing was authorized or ratified by either of the defendants, though the exceptions state that plaintiff was allowed an exception to the refusal of the court to comply with his motion for a directed verdict. The. record does not disclose what plaintiff's claim was as to the effect of the writing on the note, only that it was not such an alteration as vitiated it. The note was made and delivered before the Uniform Negotiable Instruments Act took effect, so its provisions do not apply. No. 99, Acts 1912, § 195.

Did the writing on the note amount to a material alteration of the instrument? There is practical harmony among the authorities as to the necessity that the alteration be material. The difficulty lies in determining what alterations are material and what are not. Theoretically the test is simple. A material alteration is one which makes the instrument speak a different language in legal effect from what it originally spoke; an alteration which produces some change in the rights, interests, and obligations of the parties to the instrument. Barton Sav. Bk. & Tr. Co. v. Stephenson, 87 Vt. 433, 438, 89 Atl. 639, 51 L. R. A. (N. S.) 346.

It is of no importance whether, as a matter of fact, the alteration has changed the situation of the parties. "That is material which might become material." It follows that any alteration which may in any event change the rights, interest, duties, or obligations of the parties sought to be charged is material in the legal sense. Soaps v. Eichberg, 42 Ill. App. 375; Booth v. Powers, 56 N. Y. 22; Townsend v. Star Wagon Co., 10 Neb. 615, 7 N. W. 274, 35 Am. Rep. 493.

It is equally unimportant whether the alteration was beneficial or injurious. The question is not whether the party has been or could be injuriously affected, but whether or not his rights have been materially affected. Note 86 Am. St. Rep. 87, and cases cited. It necessarily follows that any alteration of an instrument by which it is made to cover a subject-matter greater, or less, or different than that embraced in it before the alteration is material. Note 86 Am. St. Rep. 101, and cases cited.

It is urged that the plaintiff wrote the words on the note in good faith, honestly believing that he was authorized to do so by Gilbert H. Williams, and intending only to make the instrument conform to the original agreement; that, if defendant's claim be accepted as true, the added words did not make a lien, but were nothing more than a memorandum; but that, if considered an alteration, it did not invalidate the note, as the alteration was made without fraudulent intent.

The motive with which the words were written is entirely immaterial so far as their effect as an alteration is concerned. A material alteration by one not a stranger to it will avoid the instrument, though innocently made. Barton Sav. Bk. & Tr. Co. v. Stephenson, 87 Vt. 433, 444, 89 Atl. 639, 51 L. R. A. (N. S.) 346. This, not because the thing done is deemed fraudulent, but because a contrary rule would open the door for fraud, and for the further reason that the alteration changes the legal identity of the instrument and causes it to speak a language different in legal effect from that which it originally spoke. 1 R. C. L. 997. However, plaintiff's intention is important in determining whether in fact there was an alteration, for to affect the validity of the note there must have been present an intent to alter it. Barton Sav. Bk. & Tr. Co. v. Stephenson, 87 Vt. 433, 438, 89 Atl. 639, 51 L. R. A. (N. S.) 346. If his intention was not to change the effect of the note, but merely to make a memorandum upon it, there...

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