Highland Investment Company v. Kansas City Computing Scales Company
| Decision Date | 17 March 1919 |
| Parties | HIGHLAND INVESTMENT COMPANY v. KANSAS CITY COMPUTING SCALES COMPANY, T. M. WALKER et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. Joseph A. Guthrie, Judge.
Reversed and remanded.
Gage Ladd & Small R. E. Ball for appellants.
(1) The petition alleged that the interest was paid in advance to March 29, 1913, and alleged and therefore admitted that a true copy of the note was attached to the petition. The attached copy had memoranda written on the face and also on the back of it, that on January 19th, the interest was paid in advance to March 29, 1913, and the note extended to that time. There being no allegation in the petition or reply that this was done by mistake or without authority -- and no denial in the reply of the allegations of the answer that such payment of interest and extension was written on the note by the bank -- it was error for the court to admit testimony tending to prove that it was so written there by mistake or want of authority. (2) The uncontradicted evidence of both parties was that the appellants never consented to any extension of the note. If, therefore, the interest was paid in advance and the bank and scales company agreed to extend the note for ninety days, as stated on the face and back of the note and on the books of the bank, the appellants were released. Nelson v. Brown, 140 Mo. 580; Stillwell v. Aaron, 69 Mo. 539; Insurance Co. v Hauck, 71 Mo. 465. (3) The uncontradicted evidence of plaintiff shows that if there was want of authority or mistake on the teller's part in extending the note in the first place, the bank with full knowledge of all the facts before the ninety days extension expired, kept the interest charged and made no change of any kind on the note or on its books. It therefore ratified the extension. It cannot blow hot and cold. Therefore, the appellants' demurrers should have been sustained. Smith v. Richardson, 77 Mo.App. 432; First Natl. Bank v. Fricke, 75 Mo. 178; Krause v. Uedelhofer, 193 Ill. 477; Donovan R. E. Co. v. Clark, 84 Mo.App. 163. (4) The note provided on its face that it should bear interest "from date" at the rate of six per cent per annum "until paid," and that the interest should be paid: 'annually." It therefore provided that if the note was allowed to run beyond maturity the interest should be paid annually and not in advance. If, therefore, there was an agreement between the bank and the Scales Company, as testified to by plaintiff's witness, Pollard, that after maturity the interest should be paid for ninety days in advance, and it was so paid, this was a change in the terms of the note, to which these appellants did not agree, and they are, therefore, released. Any change in the instrument without his consent, releases a surety or accommodation endorser. For this reason also the demurrers offered by appellants should have been given. Schuster v. Weiss, 114 Mo. 166; See also cases cited below. (5) There was an alteration of the instrument without the consent of any one, either the Scales Company or the endorsers. On January 19, 1913, without consent of the Scales Company, the bank took $ 120 out of its account to pay interest for ninety days in advance on this note, although the interest was not payable in advance, but was payable annually, and directed to be endorsed on the face and back of the note "Int. paid to March 29, 1913." This was a willfully false statement when it was made and put on the note. It tolled the Statute of Limitations in favor of the bank, if true, to that date. It changed the amount due and payable on the note according to its terms. It was a material alteration of the note. It changed its legal effect, and avoided the note as to all parties. In this State, any tampering with a note by the holder whether material or not, even though beneficial to the makers or the endorsers, avoids the note. Carson v. Woods, 177 S.W. 622; Evans v. Foreman, 60 Mo. 450; Kelley v. Thuey, 143 Mo. 434; Harvesting Co. v. Blair, 146 Mo.App. 382; Miller v. Gilleland, 19 Pa. 119, cited in Bank v. Fricke, 75 Mo. 183; Johnston v. May, 76 Ind. 293; Bobb v. Taylor, 184 S.W. 1028; McMurty v. Sparks, 71 Mo.App. 126; 2 Am. & Eng. Ency. Law (2 Ed.), 262-3; Gardner v. Gibbons, 91 Mo.App. 412; Haskell v. Champion, 30 Mo. 136; Bank v. Fricke, 75 Mo. 178; Higgins v. Harvester Co., 181 Mo. 309; R. S. 1909, sec. 10095; Hardewick v. Barnes, 179 Mo. 387; Britton v. Dierkes, 46 Mo. 591. (6) There was abundant evidence to show that the mortgage was purposely withheld from record against the protests and consent of these defendants, and not recorded until May 21, 1913, nearly eight months after it was given. In the meantime, the property was depreciated and many intervening debts created, by reason of all of which the security of the mortgage for these defendants was lost or greatly damaged. They were thereby entirely released, or at least, released to the extent of their injury, and the court erred in refusing the instructions. 1 Brandt on Suretyship (3 Ed.), secs. 480-1-2-3; White v. Smith, 174 Mo. 208; Bank v. Woods, 56 Mo.App. 219; Sullivan v. State, 59 Ark. 47; Gotzian & Co. v. Heine, 87 Minn. 429; Monroe v. DeForest, 53 N.J.Eq. 264; Long v. Mason, 200 S.W. 1064; Bank v. Kilpatrick, 204 Mo. 119; Atlanta National Bank v. Douglas, 51 Ga. 209.
George L. Davis for respondents.
(1) There was no such an extension of time as to release the indorsers on the note. Welch v. Kerheck, 126 Wis. 419; Meradith v. Dibroel, 155 S.W. 163; Citizens Bank v. Mooran, 38 Mo.App. 484; Russell v. Brown, 21 Mo.App. 51; American National Bank of Springfield v. Love, 61 Mo.App. 378; First National Bank v. Wells, 98 Mo.App. 573; First National Bank v. Livermore, 90 Kan. 395. (2) Appellants failed to cite any agreement of any character with the maker that there was any extension of the note, but merely referred to the inadvertent inscription made on the note, which the teller himself testifies was made by mistake, and stand upon that, and assume to say that the jury should not determine what all other facts are with reference to the transaction. There was no alteration in the instrument by the notation made by the teller. It was merely a memoranda. With reference to such notation, the court without contradiction has stated the rule that such a notation is merely a memoranda. 2 Cyc. 241; Moore v. Macon Savings Bank, 22 Mo.App. 684. (3) The mortgage executed was void, and if recorded would not have been binding on any person whatsoever. The mortgage specifically provides "it is understood that the grantors may sell said scales as they are completed, the proceeds of said scales to the extent of $ 25 per scale to be applied to the payment of the debt executed." In other words, the mortgage authorized the mortgagors to sell the scales and the mortgage was void on account of said provision. Vermont Marble Company v. Ragsdale, 74 Mo.App. 42; Helm v. Helm, 52 Mo.App. 51; Sec. 2880, R. S. 1909. There is no evidence that the mortgage in this case was withheld from records purposely, save that the parties interested in the Scale Company, all of them being appellants, did not want it recorded. It would have been void and the recording of the mortgage would have availed the respondents nothing. There is not one word of evidence that interested parties wanted the bank to take possession of the scales, but if demand was made that they take possession, the bank was under no obligation to the indorsers to do so. There was no obligation on the bank of record the mortgage, even if demand was made by any or all of the appellants, as they were either directly or indirectly the owners of the property and could easily have sold the property and have applied the proceeds upon the mortgage.
OPINION
This suit is on a promissory note made payable to the order of the maker, the Kansas City Computing Scales Company, and negotiated to the Gates City National Bank, which transferred it to the plaintiff. The defendants, other than the maker, are accommodation indorsers, whose names appear on the back of the note. The note, with all indorsements, is as follows:
Cr. Hoffman 6.58
v
v Holly 5.00
27.09
The Scales Company filed no answer. The defendant Williams filed a separate answer, and defendants Walker, Browne and Watson filed their joint separate answer. Other defendants were not served. After a general denial these answers alleged that the defendants indorsed their names on the back of the note as accommodation indorsers and set forth three separate and distinct...
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