Greenfield Savings Bank v. Stowell

• Decision Date: 05 September 1877
• Citation: 123 Mass. 196
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Greenfield Savings Bank v. Cyrus A. Stowell & others

123 Mass. 196

Greenfield Savings Bank v. Cyrus A. Stowell & others

Supreme Court of Massachusetts

September 5, 1877

Argued September 20, 1876

Franklin. Contract against Cyrus A. Stowell, Timothy D Richardson and Charles Stowell, upon the following promissory note, in which the words in Roman letters were printed, and those in italics written, and purporting to be signed by the defendants, and by George W. Bardwell, whose name appeared first among the signers:

"$ 467. Greenfield, Mass. Sept. 29th, 1874.

"For value received, I promise to pay the Greenfield Savings Bank or order, four hundred and sixty-seven dollars, on demand with interest at the rate of seven 3/10 per centum per annum, payable semiannually on the first days of June and December of each year."

Cyrus A. Stowell and Richardson alone appeared, and filed several answers, each containing a general denial. The case was submitted to the Superior Court, and, after judgment for the plaintiff, to this court on appeal, on agreed facts in substance as follows:

George W. Bardwell obtained from the plaintiff a printed blank form of a promissory note, such as the bank was accustomed to use. He then wrote in the figures "67" at the top of the note, leaving a space of three tenths of an inch between the mark "$" and these figures, and also wrote in the words "sixty-seven" before the word "dollars" in the body of the note, leaving three inches of the blank space before the words "sixty-seven" unfilled; signed the note thus filled out, and presented it to the defendants, who, at his request and for his accommodation, signed the note as a note for sixty-seven dollars, and with no knowledge or expectation that the note was to be altered, given or negotiated for any other or larger sum, and without any authority to him to alter or increase the amount of the note.

Bardwell then, without the knowledge of the defendants, fraudulently wrote the figure "4" before the figures "67" at the top of the note, and "the words "four hundred and" before the words "sixty-seven" in the body of the note; and on the note so altered, the plaintiff, without any notice of the alteration, lent to Bardwell the sum of $ 467. The note was then in the condition it now is, and there was no mark or indication of alteration.

If, as matter of law on the foregoing facts, the plaintiff was entitled to recover on the note, judgment was to be entered for the plaintiff; otherwise for the two defendants who appeared.

Judgment for the defendants.

D. Aiken & C. C. Conant, for the plaintiff.

C. Delano & G. M. Stearns, for the defendants.

Gray C. J. Colt, Morton & Soule, JJ., absent.

OPINION

Gray C. J.

This action is brought upon a promissory note, signed by George W. Bardwell, Cyrus A. Stowell, Timothy D. Richardson and Charles Stowell, and appearing in its present condition, and alleged in the declaration, to be a note for $ 467. Cyrus A. Stowell and Timothy D. Richardson only defend the action.

It is agreed that the note is upon a blank printed form; that, as originally prepared and signed by Bardwell, and signed by the defendants at his request, it was a note for $ 67; and that Bardwell afterwards, without the authority or knowledge or expectation of the defendants, fraudulently prefixed the figure "4" to the figures "67" and the words "four hundred and" to the words "sixty-seven," and in that form, and with no mark or indication of alteration, negotiated it to the plaintiff, who lent him $ 467 thereon.

The plaintiff contends that the defendants were negligent in signing the note with such blanks as enabled the fraudulent alterations to be made without danger of detection, and are therefore liable to an innocent holder for value upon the note as so altered. But after deliberate advisement, and careful examination of the authorities cited in the learned arguments at the bar, we are of opinion that this position cannot be maintained.

It is a general rule of our law, that a fraudulent and material alteration of a promissory note, without the consent of the party sought to be charged thereon, whether made before or after the delivery of the note, renders the contract wholly void as against him, even in the hands of one who takes it in good faith and without knowledge or reasonable notice of the alteration. Hall v. Fuller, 5 B. & C. 750; S. C. 8 D. & R. 464. Warrington v. Early, 2 El. & Bl. 763. Wood v. Steele, 6 Wall. 80. Angle v. North-Western Ins. Co. 92 U.S. 330. Fay v. Smith, 1 Allen 477. Draper v. Wood, 112 Mass. 315. Citizens' National Bank v. Richmond, 121 Mass. 110.

If indeed a man indorses a blank form of note, and delivers it with the intention that the blank should be filled, he thereby makes the person to whom he delivers it his agent, and is responsible for whatever date, sum or time of payment he may insert, to a bona fide indorsee. Russel v. Langstaffe, 2 Doug. 514. Violett v. Patton, 5 Cranch 142. So, if he delivers the note with the date or sum in blank, he is held to authorize the blank to be filled up with any date or sum. Bank of Pittsburgh v. Neal, 22 How. 96. Androscoggin Bank v. Kimball, 10 Cush. 373. Abbott v. Rose, 62 Me. 194.

In an early case in this court, partners, one of whom had left their blank indorsements with their clerk for use in their business, were held liable to a bona fide holder upon one of such indorsements which had been obtained from the clerk by fraud and Chief Justice Parsons said, that the objection that the note ought to be considered as a forgery of the names of the indorsers "would have great weight, if, when the indorsers put the name of the firm on the paper, they had not intended that something should afterwards be written, to which the name should apply as an indorsement; for then the paper would have been delivered over unaccompanied by any trust or confidence;" but that the court "must consider a delivery by the clerk, who was entrusted with a power of using these indorsements, (although his discretion was confined,) as a delivery by one of the house; whether he was deceived, as in the present case, or had voluntarily exceeded his direction; for the limitation imposed on his discretion was not known to any but to himself and to his principals." Putnam v. Sullivan, 4 Mass. 45, 53, 54.

The principal authorities in support of the plaintiff's position are in those countries whose jurisprudence is immediately derived from the civil law. Pothier was of opinion that if the mistake of a banker, in paying a bill for too large a sum, was induced by the fault of the drawer, in not taking care to write the bill in such a manner as to prevent fraudulent alteration, as, for instance, if he wrote the sum in figures to which a cipher was afterwards added, the drawer should in such case be held to indemnify the banker for what he had lost by the fraudulent alteration which the drawer by his own fault had afforded opportunity to make. Pothier Contract de Change, pt. 1, c. 4, § 99. Similar views have been taken by courts in Scotland and in Louisiana in cases of promissory notes held by indorsees. Pagan v. Wylie and Grahame v. Gillespie, reported in Morison's Dict. Dec. 1660, 1453, and more briefly in Ross on Bills & Notes, 194, 195. Isnard v. Torres, 10 La.Ann. 103.

In Young v. Grote, 4 Bing. 253; S. C. 12 Moore 484; although Chief Justice Best quoted with approval the opinion of Pothier, the point adjudged was much narrower; for in that case the drawer had left with his wife checks signed by himself in blank, and the fraudulent alteration was made by his clerk, who was directed by the wife to fill out the check; and, it having been found by an arbitrator that the maker had been guilty of gross negligence by causing his check to be delivered to his clerk in such a state that the latter could and did by the mere insertion of additional words make it appear to be his check for a larger sum, it was held by the court that he could not recover that sum from his banker, who had paid it.

The subsequent comments of eminent English judges upon Young v. Grote have limited the doctrine there laid down to the peculiar circumstances of that case.

In Robarts v. Tucker, 16 Q. B. 560; S C. 15 Jur. 987; 20 L. J. (N. S.) Q. B. 270; bankers who had paid a bill upon a forged indorsement were held not to be entitled to recover the amount from their customer, the drawer. The judgment in the Exchequer Chamber was delivered orally by Baron Parke, and his comments upon Young v. Grote are variously stated in the different reports. In 16 Q. B. 580, he is reported to have said: "This was in truth considering that the customer had by signing a blank cheque given authority to any person in whose hands it was to fill up the cheque in whatever way the blank permitted." But no such general statement appears in either of the other reports. In 15 Jur. 988, the words attributed to him are: "But in that case there was negligence in the drawing of the cheque itself, which was the authority given by the drawers to the bank." The report in the Law Journal is fuller and apparently more exact: "There the court held, that the cheque was drawn in so negligent a way as to facilitate the forgery and to exonerate the banker from liability to his customer for paying the amount. They, in truth, consider that he, as it were, gave authority to the party to fill up the cheque in the way it was filled up." 20 L. J. (N. S.) Q. B. 273. This substantially accords with the later statements of the same eminent judge, and of Lord Cranworth and of Chief Justice Erle, in deliberately considered judgments, which put the decision in Young v. Grote upon the ground that the customer's negligence in the transaction had afforded opportunity for the fraud of his clerk, by which the bank was...