Savage v. Savage

• Decision Date: 26 December 1899
• Citation: 59 P. 461,36 Or. 268
• Parties: SAVAGE v. SAVAGE et al. [1]
• Court: Oregon Supreme Court

59 P. 461

36 Or. 268

SAVAGE v. SAVAGE et al. ^[1]

Supreme Court of Oregon

December 26, 1899

Appeal from circuit court, Marion county; George H. Burnett, Judge.

Action by John Savage, Sr., against John Savage, Jr., and another. Judgment for plaintiff. Defendants appeal. Affirmed.

The complaint herein states, in effect, that on December 12 1891, the plaintiff lent to defendants $3,000 in United States gold coin, which they promised to repay within one year, in like coin, with interest from date at the rate of 8 per cent. per annum, and also that they would pay all taxes assessed and levied upon said money; that, as evidence of said loan, the defendants executed and delivered to plaintiff their promissory note, a copy of which is set out. The note runs, "One year after date, without grace, I promise to pay," etc., and "all taxes that may be levied thereon." It provides for the payment of interest annually, and a reasonable attorney's fee. The complaint after reciting that certain payments were made on the loan further alleges, in substance, that defendants failed and neglected to pay the taxes, or any part thereof, so assessed or levied, by reason whereof the plaintiff was compelled to and did pay the same, and that on or about March, 1894, for and in consideration and pursuance of an agreement by plaintiff to pay all taxes that might thereafter be assessed against said loan, the defendant John Savage, Jr., agreed to and did pay interest thereon at the rate of 10 per cent. per annum from December 12, 1893; that thereafter, about November, 1894, the plaintiff, in accordance with said agreement, and with the knowledge and consent of John Savage Jr., at the banking house of Ladd & Bush at Salem, and in the presence of the employés at said bank, altered the note by changing the rate of interest from 8 to 10 per cent. per annum; "that the plaintiff, before the commencement of this action, surrendered to the defendants said note"; that there is now due and owing upon said loan from defendants to the plaintiff the sum of $2,893, with interest at the rate of 8 per cent. per annum from December 7, 1896, which the defendants neglect and refuse to pay. The prayer is for judgment against the defendants for the sum last named, with interest, costs, and disbursements. To this complaint the defendants demurred separately, each assigning as a reason therefor that said complaint does not state facts sufficient to constitute a cause of action against him. The demurrers being overruled, the defendants answered separately, each setting up identically the same defense, which, after denying the material allegations of the complaint, is as follows: "That at Salem, Oregon, on the 12th day of December, 1891, the defendant answering herein and the other defendant, John Savage, Jr., applied to the plaintiff herein, each for a loan of fifteen hundred dollars, and for such loan they proffered to give the plaintiff their several promissory note for the sum of three thousand dollars, each being surety for the other in the sum of fifteen hundred dollars, and in pursuance of such an agreement, and in consummation thereof, at the same time and place, the defendant answering herein, with the defendant John Savage, Jr., made, executed, and delivered to plaintiff, in payment for the fifteen hundred dollars loaned to each, a certain promissory note, of which the following is a true copy, and the whole thereof." Then follows a copy of the note as set out in plaintiff's complaint, and a minute of the indorsements thereon; and, continuing, it is further alleged: "That after the making and delivery of said promissory note to the plaintiff, and on or about the 7th day of December, 1895, after the payment of three hundred dollars, the plaintiff herein, without the knowledge or consent of the defendant answering herein, and with the intent to wrongfully cheat and defraud this defendant, wrongfully and fraudulently materially altered said promissory note by changing the rate of interest therein named from eight to ten per cent., with the intent to wrongfully and fraudulently exact from this defendant interest upon said promissory note at the rate of ten per cent. per annum, according to the tenor of said note; that this defendant had no knowledge of the said material alteration of the said promissory note by plaintiff then, nor has he since assented to or consented to said alteration." A reply was filed to each of these separate answers, denying every material allegation of the new matter set up therein. Trial being had before a jury, the verdict and judgment were for plaintiff, and defendants appeal.

H.J. Bigger and Geo. G. Bingham, for appellants.

John A. Carson, for respondent.

WOLVERTON C.J. (after stating the facts).

It is first insisted that the court erred in overruling the demurrers to the complaint, but, inasmuch as the defendants have answered over, we can only consider whether the complaint is sufficient after verdict. The contention is that, having brought his action upon an express contract, which appears to have been purposely altered, plaintiff cannot recover against the defendant Frank Savage upon an implied promise. This proposition assumes that the complaint is based upon the note, while, upon the other hand, it is contended that the action is founded upon the original consideration, and not upon the note. But, before considering the question here made, we will dispose of another. It is argued that, as the money was loaned and the note executed and delivered at the same time, there was but one transaction, and the loan was merged in the note; hence that there could be but one cause of action, and that upon the note. The authorities, however, establish the converse of the proposition. The able authors of the American & English Encyclopedia of Law (2d Ed., vol. 2, p. 200) lay down the rule that: "Where a promissory note is given for the purchase price of goods, or for money lent, or for any precedent indebtedness which is not extinguished by, and exists independently of, the writing, and the payee innocently makes a material alteration therein, although the note itself is avoided, and, since the liability of the surety exists solely by virtue of the writing, there can therefore be no recovery against him, there may nevertheless be a recovery by the payee against the maker on the original indebtedness." Matteson v. Ellsworth, 33 Wis. 488, Gorden v. Robertson, 48 Wis. 493, 4 N.W. 579, and Sullivan v. Rudisill, 63 Iowa, 158, 18 N.W. 856, are instances of actions maintained upon the original consideration, disregarding the note given in evidence thereof where it was for money loaned; and this court, in Black v. Sippy, 15 Or. 574, 16 P. 418, and Schreyer v. Flouring-Mills Co., 29 Or. 1, 43 P. 719, has given its sanction to the same doctrine. Is the present action based upon the note? That it was not so intended is apparent, as a prior surrender of it is alleged by the complaint, and the relief demanded is commensurate only with the idea of money had and received to the use of the defendants. True, the note is set out; but the material alteration thereof is also shown, and the count is upon the loan as distinguished from the note. The count would, perhaps, be more technically correct had it been for money had and received to the use of the defendants; but it is immaterial, and it may now be so treated. The question of graver importance is whether, having changed the note without the consent of Frank, the plaintiff has not destroyed his right of action as against him, even for the original consideration. The rule is laid down by one of the appellate courts in Illinois that: "The fraudulent alteration of a note, in a material part thereof, by the payee or holder, not only destroys the instrument, but it also extinguishes the debt for which it was given, and no recovery can be had upon either. But if the alteration, though material, be made without any fraudulent purpose, it is to be regarded as a mere spoliation of the instrument, and the holder may surrender it up, and resort to the original indebtedness. The effect of the alteration depends upon its nature, the person by whom and the intention with which it was made." Black v. Bowman, 15 Ill.App. 166. Folger, J., expresses it in different order, but with like effect, in Booth v. Powers, 56 N.Y. 22. He says: "If a note be altered in a material part, without authority, after execution, that avoids the note. It is not of moment whether it be done with fraudulent intent, save as the existence of such intention affects the right to resort to the original indebtedness; and then the fact of the unauthorized material alteration is a matter for the consideration of the jury in determining the question of fraudulent intention. *** If the alteration was made without fraudulent intention, the payee may resort to the original indebtedness, if that was independent of the note, and has not been discharged by the execution of it, and pursue the maker upon...