Warder, Bushnell & Glessner Co. v. Willyard

• Decision Date: 10 July 1891
• Citation: 49 N.W. 300,46 Minn. 531
• Parties: WARDER, BUSHNELL & GLESSNER CO. v WILLYARD.
• Court: Minnesota Supreme Court

46 Minn. 531

49 N.W. 300

WARDER, BUSHNELL & GLESSNER CO.vWILLYARD.

Supreme Court of Minnesota.

July 10, 1891.

(Syllabus by the Court.)

1. Admissions found in an unauthorized pleading filed in justice's court may be considered and treated by the court in the nature of formal admissions made by the party upon the trial of the cause.

2. Where the holder of written security or evidence of a debt has altered or changed the instrument in a material part to his own advantage, and with intent to defraud his debtor, a recovery will not be permitted in any form of action. The fraudulent alteration of the instrument extinguishes the debt which it secured or evidenced.

3. Where an action is brought as on the original indebtedness in such a case, the alteration of the written security, or evidence of the debt, is presumed fraudulent, and the burden of the proof is upon the plaintiff to show that there was no fraudulent intent when the alteration was made.

Appeal from district court, Rock county; PERKINS, Judge.

P. E. Brown, W. N. Davidson, and W. E. Akers, for appellant.

E. H. Canfield and A. J. Daley, for respondent.

COLLINS, J.

This was an action originally brought in justice's court to recover the sum of $40 alleged to have become due on November 1, 1889, as an installment of the agreed price of a harvesting-machine sold and delivered by plaintiffs to defendant. The latter by his answer admitted the sale and delivery, but averred that, in accordance with the terms therewith, he executed and delivered to the plaintiffs his three negotiable promissory notes, each payable to their order, aggregating in amount the stipluated price of the machine; one of the same being for $40, maturing November 1, 1889, and having been given for the identical installment to recover which the action had been instituted. He further alleged that, after the making and delivery of said note, the plaintiffs, without the knowledge or consent of defendant, willfully and fradulently altered the note by changing the amount of the same from $40 to $45. On these pleadings the parties proceeded to trial, although the plaintiffs made and filed a so-called reply, in which the execution, delivery, and alteration of the note for $40 were admitted. It was further averred therein that the alteration was not willful or fraudulent, and that it was made without plaintiffs' knowledge or consent. The plaintiffs had a judgment, from which an appeal on questions of law alone was taken to the district court, all of the proceedings and the evidence being returned. The appeal here is from a judgment in plaintiffs' favor in the last-named tribunal.

1. The paper styled a “reply” was unauthorized as a pleading in the case, and, as such, must be treated as a nullity. The statute, Gen. St. 1878, c. 65. § 28, authorizes a reply in justice's court only when a counter-claim is set up in the answer. But it was filed by the plaintiffs without objection from the defendant, and beyond a doubt was considered by the parties and the justice as properly in the case. In the district court it was not regarded as a reply, but its contents were treated as in the nature of formal admissions made by the plaintiffs upon the trial, and this view of the effect of the paper was not erroneous.

2. As the plaintiffs could not maintain an action upon the materially altered promissory note, they were compelled to resort to the original consideration as a foundation for their claim; and the question then arose, and is now presented, of their right to recover on the indebtedness for which the note was given. From an examination of the authorities, it appears to be well settled that a recovery is not permitted, in any form of action, where the holder of a written security or evidence of a debt has altered or changed the instrument in a material part to his own advantage, and with intent to defraud his debtor. The law is stated to be that, when the holder of a bill or note fraudulently alters its legal effect, he not only destroys the instrument by thus destroying its legal identity, but he also extinguishes the debt for which it was executed and delivered. Daniel, Neg. Inst. § 1410a; Rand. Com. Paper, § 1763; Chalm. Dig....