Moore v. Macon Sav. Bank
| Decision Date | 28 June 1886 |
| Citation | 22 Mo.App. 684 |
| Parties | MARQUIS H. MOORE, Appellant, v. MACON SAVINGS BANK ET AL., Respondents. |
| Court | Kansas Court of Appeals |
APPEAL from Adair Circuit Court, HON. ANDREW ELLISON, Judge.
Reversed and remanded.
Statement of case by the court.
This action was begun in March, 1882, in the Macon circuit court and, on change of venue, was taken to the Adair circuit court.
This suit was brought upon the following written instrument:
" [No. 4285.] MACON, Mo., October 14, 1873.
The National Savings Bank of Macon, Mo.
Mr. H M. Moore has deposited in this bank one thousand dollars payable to himself, on the return of this certificate, sixty days after date, with interest at the rate of ten per cent. per annum for the time specified.
| J. B. MELONE, Cashier. |
| $1,000.00. | A. L. SHORTRIDGE." |
The whole evidence showed that Melone, for the Macon Savings Bank, borrowed the money for sixty days, and that Shortridge signed the instrument as surety.
As shown by the evidence, the following may be stated as facts: When the note became due, or shortly thereafter, Moore called at the bank for his money. The bank wished to hold the money for a longer time, and Melone and Moore then made a new contract and agreement, by which the bank was to keep the money for a longer time upon the payment, semi-annually, of ten per cent. interest per annum. The plaintiff Moore testified that he made the new agreement and contract upon the express understanding and condition, agreed to by Melone, that Shortridge should not thereby be released as surety. The new arrangement was then indorsed by Melone, in plaintiff's presence, upon the back of the note in this manner:
There was evidence tending to show that Shortridge knew nothing of the new arrangement, or of its indorsement upon the note, until after the failure of the bank in 1882.
The court, of its own motion, instructed the jury as follows:
" It is admitted by plaintiff that Shortridge signed the instrument sued on as security.
If, therefore, the jury believe, from the evidence, that some months after the instrument became due, towit: In September, 1874, following, the plaintiff Moore took this instrument to the bank for payment, and that then and there it was agreed by and between plaintiff Moore and Jas. B. Melone, cashier of the bank; that the plaintiff Moore would permit the bank to keep the money for a longer or indefinite time, by the payment of ten per cent. interest thereon, to be compounded every six months, and thereupon the cashier of sad bank indorsed upon said note the following language, or agreement, to-wit. " Compound interest to be allowed on the within every six months.
| (Signed) | J. B. MELONE, Cashier. |
And that plaintiff Moore then and there put the instrument in his pocket, and kept it, never presenting it for near seven years thereafter, and that the said Shortridge, the security, did not know of said extension of time and change in the instrument, as indorsed thereon and consent thereto, then the jury will find a verdict for the defendant Shortridge."
The jury found for defendant Shortridge. The bank defendant made no defence.
BERRY & THOMPSON and F. M. HARRINGTON, for the appellant.
I. The indorsement on the back of the note was a void collateral contract, forbidden by law; it did not bind the bank; the cashier had no authority to make it, and was an unauthorized, executory contract to pay usury. It did not bind the bank, nor bind it to any extension of time of payment, and was no alteration of the original instrument. Rev. Stat., sect. 2728; Morse on Banks (2 Ed.) 11, 151; Stilwell v. Aaron, 69 Mo. 539; Henry v. Marksberry, 57 Mo. 399; Daniel on Neg. Inst. (2 Ed.) sect. 1312; Hunt v. Postlewaite, 28 Ia. 427; Lawrence v. Johnson, 64 Ill. 351; Field on Corp. 266; Angell & Ames on Corp. (9 Ed.) sect. 297.
II. The contract to pay interest compounded twice a year was invalid. This cannot be done. If the time of payment was extended, there was no consideration for it. 2 Daniel on Neg. Inst., sects. 1318, 1322.
III. The time of extension must be definite and fixed. 2 Daniel on Neg. Inst., sect. 1319; Stilwell v. Aaron, 69 Mo. supra; Bucklen v. Huff, 53 Ind. 474; Hays v. Wells, 34 Md. 512.
IV. The court improperly submitted to the jury an issue on the plea of non est factum. The answer is not verified by affidavit.
JOHN F. WILLIAMS, with SEARS & GUTHRIE, for the respondent.
I. Any alteration of a written instrument, after delivery, however immaterial in its nature, and however innocently made, without the consent of all the parties, vitiates the instrument in this state. Bank v. Fricke, 75 Mo. 178; Morrison v. Garth, 78 Mo. 434; Hord v. Taubman, 79 Mo. 101; Moore v. Hutchinson, 69 Mo. 429; German Bank v. Dunn, 69 Mo. 429; Capital Bank v. Armstrong, 62 Mo. 59; Evans v. Foreman, 60 Mo. 449; Haskell v. Champion, 30 Mo. 136.
II. The surety is only bound by the terms of his contract, and if these are varied without his consent, it is no longer his contract, and he is not bound by it. Bank v. Leavitt, 65 Mo. 562; Stilwell v. Aaron, 69 Mo. 539; Wild v. Howe, 74 Mo. 551; Newcomb v. Blakely, 1 Mo.App. 289.
III. The indorsement on the certificate was not usurious nor void, and was a good and valuable consideration. Compare sects. 2727 and 2728, Rev. Stat.; Montang v. Rock, 10 Mo. 506; Farmers', etc., Bank v. Harrison, 57 Mo. 503.
IV. But if the agreement were usurious, appellant cannot avail himself of it. The statute gives that right solely to a defendant. Rev. Stat., sect. 2727; Billington v. Wagoner, 33 N.Y. 31; Lemmon v. Whitman, 75 Ind. 318; Hamilton v. Prouty, 50 Wis. 592; Scott v. Harris, 76 N.C. 205. Even on a plea of usury by defendant (and there is no such plea in this case), the agreement, under the statute, is binding, for legal interest. But the promise to pay a legal rate, for an extension of time, without any payment of interest in advance, constitutes a good consideration, and will discharge the surety. Brandt on Suretyship, etc., sect. 307; Wood v. Newkirk, 15 Ohio St. 295; Berry v. Pullen, 69 Me. 107; 31 Ohio St. 637.
BERRY & THOMPSON and HARRINGTON, on motion for re-hearing.
I. The memorandum here is no part of the note, and is not to be construed in connection with the note, but independent of it.
II. The memorandum imports no change or alteration of the instrument. It was a new contract. But that sort of agreement was no agreement at all, whether written on the note or elsewhere. It was nothing, and effected nothing.
If the indorsement of the memorandum of the agreement between the plaintiff and the bank upon the back of the instrument in suit was an alteration of the instrument, then thereby was Shortridge, the surety, released, under the facts hypothetically stated to the jury in the instruction given by the court. Because " the rule is now firmly established in this state that any alteration of a written instrument, after delivery, however immaterial in its nature, or however innocently made, without the consent of all the parties, vitiates the instrument." Morrison v. Garth, 78 Mo. 437; Bank v. Fricke, 75 Mo. 178; Moore v. Hutchinson, 69 Mo. 429; Bank v. Armstrong, 62 Mo. 59; Bank v. Dunn, 62 Mo. 79; Evans v. Foreman, 60 Mo. 449; Haskell v. Champion, 30 Mo. 136.
The first question for our determination, therefore, is, was such indorsement an alteration of the instrument?
This identical question was passed upon in Bucklen v. Hubb (53 Ind. 474). That was an action upon a promissory note. The defendant in his answer, as a defence, pleaded that he was a surety only; that between the principal in the note and the plaintiff, an agreement had been made for the extension of the time of the payment of the note for an indefinite period of time, without the defendant's knowledge or consent, and that in pursuance of such agreement the note was, without defendant's knowledge or consent, " altered and changed in a material part thereof, by writing on the back thereof the following agreement:
A demurrer was sustained by the trial court to so much of the answer as set up said defence, and the supreme court held, properly sustained. The court said: See, also, Huff v. Cole, 45 Ind. 300.
The agreement for the extension of time was held to constitute no defence for the surety, because it was for an indefinite time.
The question we are now considering is different, and must be distinguished from a change of the contract, such, for instance, as a valid agreement for the extension of the time of the payment of the note without the surety's consent. We are now...
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