Saxon v. McGill

• Decision Date: 29 April 1929
• Docket Number: 273
• Citation: 16 S.W.2d 987,179 Ark. 415
• Parties: SAXON v. MCGILL
• Court: Arkansas Supreme Court

16 S.W.2d 987

179 Ark. 415

SAXON v. MCGILL

No. 273

Supreme Court of Arkansas

April 29, 1929

Appeal from Pulaski Circuit Court, Third Division; Marvin Harris Judge; reversed.

STATEMENT OF FACTS.

This is an action by R. L. Saxon against J. J. Beavers, Jr., I. W McGill and Dr. George Mason, to recover the principal and interest of a promissory note which reads as follows:

"$300 Little Rock, Ark., Oct. 28, 1927.

"Ninety days after date, I, we, or either of us, promise to pay to the order of___ three hundred & no/100 dollars. For value received, negotiable and payable without defalcation or discount, at Central Bank, in Little Rock, Arkansas, with interest at 10 per cent. per annum from date until paid. We the makers and endorsers, hereby severally waive presentment for payment, notice of nonpayment and protest of this note and all defense on the grounds of extension of time of its payment."

The record shows that the defendant, together with Lee V. Casey desiring to borrow $ 300 with which to conduct a business of buying and selling used Ford cars, procured a blank printed form of note of the Central Bank of Little Rock, Arkansas. Casey wrote in the blank form of note the amount to be borrowed and turned it over to Beavers to procure the signatures of McGill and Mason. When McGill and Mason signed the note, the printed form showed the following: "promise to pay to the order of Central Bank," and also contained the following: "with interest at ten per cent. per annum from maturity until paid."

It was first the intention of the parties that the money should be procured from the bank, and the interest would be deducted at the time. After Beavers had procured McGill and Mason to sign the note, he returned with it to Casey for his signature. Casey declined to sign the note, and then Beavers went to R. L. Saxon for the purpose of negotiating the note to him. The word "maturity" was marked out, and "date" substituted for it. The words "Central Bank" were scratched out, and left the following: "promise to pay to the order of ___." Before the word "promise" was written "I, we, or either of us." R. L. Saxon paid Beavers $ 300 for the note on the day of its date. Before purchasing the note from Beavers, Saxon called Dr. Mason over the telephone and asked him if he had signed a note with Beavers and McGill for $ 300, and Mason replied that he had. Saxon told him that he was contemplating buying the note. Saxon then called McGill, but failed to reach him. Saxon then consulted a lawyer about the blank in the note not having a payee. He was told that this didn't make any difference. The words "Central Bank" were marked out of the printed form of the note before Saxon purchased it, and the word "maturity," as it appeared in the printed form of the note, was marked out by Beavers before he presented the note to Dr. Saxon for sale to him. These words were in the note at the time they were signed by McGill and Mason. Saxon did not have any notice that these words had been marked out after the note was signed by McGill and Mason. He saw that the words "Central Bank" had been marked out, and that no payee had been substituted, and that the word "maturity," as it appeared in the printed form, had been marked out, and "date" substituted for it; but he did not know that this had been done after the note had been signed by McGill and Mason.

The court directed a verdict in favor of the defendants; and from the judgment rendered on the verdict the plaintiff has prosecuted an appeal to this court.

Reversed.

Barber & Henry, Troy W. Lewis and Clayton Freeman, for appellant.

Osborne W. Garvin and Charles Q. Kelley, for appellee.

OPINION

HART, C. J., (after stating the facts).

The court erred in directing a verdict for the defendants. Under the facts stated, before the enactment of our Negotiable Instruments Act, the plaintiff, as payee, could be a bona fide holder for value without notice, and was entitled to recover.

In White-Wilson-Drew Co. v. Egelhoff, 96 Ark 105, 131 S.W. 208, it was held that one who signs as surety a note, blank as to the amount, under an agreement with the maker that it should be filled in for an amount not to exceed a specified sum, and the maker filled in the blank in an amount greatly in excess of the agreed sum, was liable to a payee who took without notice of the violation of the agreement as to the amount. The court said that in such cases the payee was a bona fide holder, even though he knew that the note was signed in blank. The reasoning of the court was that the signing in blank authorized the filling of the blank by the person to whom the signers delivered it, although the specific directions might not have been followed. The court said that the signatures of the sureties operated as a general letter of credit, which authorized the party to whom it was delivered to fill it up in any...