Holyfield v. Perkins

• Decision Date: 06 May 1911
• Docket Number: 17,058
• Citation: 115 P. 546,84 Kan. 760
• Parties: NETTIE M. HOLYFIELD, Appellee, v. J. W. HARRINGTON et. al. (G. A. PERKINS et al., Appellants)
• Court: Kansas Supreme Court

115 P. 546

84 Kan. 760

NETTIE M. HOLYFIELD, Appellee, v. J. W. HARRINGTON et. al. (G. A. PERKINS et al., Appellants)

No. 17,058

Supreme Court of Kansas

May 6, 1911

Decided January, 1911.

Appeal from Wyandotte district court.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. NEGOTIABLE INSTRUMENTS--Material Alteration--Ratification. A material alteration in a promissory note may be ratified by any person affected by it so as to bind him as fully as though he had authorized it in the first instance.

2. NEGOTIABLE INSTRUMENTS--Material Alteration--Ratification--New Consideration Not Required--Statute Construed. A new consideration is not necessary to support the contract of ratification. Section 5377 of the General Statutes of 1909 which provides that "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" is construed to mean that any one of the parties to such an instrument may assent to a material alteration so as to make himself liable thereon without any new consideration, upon the principle that he who may authorize in the beginning may ratify in the end.

3. NEGOTIABLE INSTRUMENTS--Material Alteration--Ratification Renews Liability . At the request of the payee the maker of a promissory note after it had been executed and delivered altered the time of payment from three years to one year. Two of the sureties on the note afterward indorsed in writing upon the back of the instrument their agreement to the change of time. Held, that they ratified the change and made themselves liable upon the note without any new consideration.

James F. Getty, and David F. Carson, for the appellants.

Daniel J. Maher, and Jacob S. Detwiler, for the appellee.

OPINION

PORTER, J.:

Nettie M. Holyfield loaned to J. W. Harrington $ 1000 and took his note for that amount dated December 12, 1907, due three years after date, signed by J. W. Harrington, with Mattie Harrington, G. A. Perkins and John A. Stark as sureties. Two weeks afterward Nettie M. Holyfield went to the home of Harrington and informed him that the time of payment was longer than she desired and Harrington altered the note by scratching out the words "three years" and writing in the words "one year." The note as changed reads as follows:

"$ 1000. One year DECEMBER 12, 1907.

Three years after date we promise to pay to the order of Mrs. Nettie M. Holyfield, one thousand dollars, at . . . Value received, with 7 per cent from date until paid. Interest payable annually.

No.... Due Dec. 12, 1910.

J. W. HARRINGTON,

MATTIE HARRINGTON,

G. A. PERKINS,

JNO. A. STARK."

A day or two afterward Nettie M. Holyfield took the note in its changed condition to two of the sureties, Perkins and Stark, and asked them to consent to the note as altered. Thereupon they signed on the back of the note the following memorandum:

"We agree to and except change of time from three years to one year. G. A. PERKINS,

JNO. A. STARK."

In an action brought on the note as altered Nettie M. Holyfield recovered judgment, from which the sureties Perkins and Stark appeal.

The change in the time of payment was a material alteration. (Laws 1905, ch. 310, § 132, Gen. Stat. 1909, § 5378.) The contention of the appellants is that there was no consideration for their agreement to be further bound by the note, that the material alteration in the original note released them, and that a new consideration was necessary to support the new agreement. A material alteration in a negotiable instrument made without the consent of a party will discharge him. (Horn v. Newton City Bank, 32 Kan. 518, 4 P. 1022; Bank v. Wangerin, 65 Kan. 423, 70 P. 330.) But a party who consents to such alteration or authorizes it to be made will be bound by the instrument (Laws 1905, ch. 310, § 131, Gen. Stat. 1909, § 5377) and it can not be doubted that such alteration may be ratified by the person affected by it so as to bind him as fully as though he had authorized it in the first instance. (Stewart v. First Nat. Bank, 40 Mich. 348; Goodspeed v. Cutler, 75 Ill. 534; First National Bank of Trenton v. Gay, et als., 63 Mo. 33.)

"It is quite obvious that where all the parties to a bill or note expressly agree to a change in any of its terms that they can not complain of such change as an alteration. They have as much right to change as to make a contract. And where all do not consent, those consenting are bound, while the rest are discharged. Consent may be given before the change is made, or it may be given afterward by ratification. It may be express, or it may be implied from custom, or from the acts of the parties." (2 Daniel, Neg. Inst., 5th ed., § 1401.)

(See, also, 3 Randolph, Com. Paper, 2d. ed., § 1766. Tiedeman, Com. Paper, § 396.)

The ratification of such an alteration will be implied where the facts are such as to warrant the implication. (Weed v. Carpenter [N.Y. Supr. Ct.], 10 Wend. 403; Bell v. Mahin et al., 69 Iowa 408, 29 N.W. 331.)

It is not necessary in the present case to resort to implication because the appellants indorsed upon the instrument itself their written consent to the alteration. The real question here is whether a new consideration is necessary to support the contract of ratification. On this there is a slight conflict, but the great weight of authority is against the necessity for a new consideration. As a matter of fact, no independent consideration is required in the case of an ordinary surety or accommodation indorser, and there is no sound reason for requiring one in the case of ratification where by some act of the holder the surety has been released. The following cases are frequently cited as holding that a new consideration is necessary:

Warren, etc., v. Fant's Trustee, 79 Ky. 1; Mulkey v. Long, 5 Idaho 213, 47 P. 949; Wilson v. Hayes, 40 Minn. 531, 42 N.W. 467.

In the latter case the alteration was fraudulent and amounted to a forgery by the holder, and in the opinion it was said that no case has been found "where it has been held that a forged instrument can be ratified so as to give the forger himself a right of action upon it." (p. 540.) In the opinion it was further said:

"If the alteration was not fraudulent, so that it did not destroy the instrument, or at least did not extinguish the debt, we can see how a subsequent assent to it would create a liability on the instrument as altered. Parties can alter their contract by mutual consent, and this requires no new consideration, for it is merely the substitution of a new contract for the old one, and this is of itself a sufficient consideration for the new. And what a party may assent to when done he may assent to afterward, so as to bind himself, if there be a consideration to support it." (40 Minn. 531, 540.)

It is apparent therefore that the case is in accord with the weight of authority upon the precise question involved here.

Among numerous cases holding that no new consideration is necessary are the following:

Goodspeed v. Cutler, 75 Ill. 534; Pelton v. Prescott, 13 Iowa 567; Stewart v. First Nat. Bank, 40 Mich. 348; Wester v. Bailey, 118 N.C. 193, 24 S.E. 9; Montgomery v. Crossthwait, 90 Ala. 553, 8 So. 498; Payne, Ex'r, v. Long, 121 Ala. 385, 25 So. 780; Kilkelly v. Martin, impleaded, etc., 34 Wis. 525; National Bank v. Rising, [N.Y. Supr. Ct.] 4...