Wyerhauser v. Dun

• Decision Date: 06 October 1885
• Parties: WYERHAUSER and others v. DUN and others.
• Court: New York Court of Appeals Court of Appeals

100 N.Y. 150

2 N.E. 274

WYERHAUSER and others

v.DUN and others.

Court of Appeals of New York.

Filed October 6, 1885.

W. S. B. Milliken, for appellants, R. Graham Dun and others.

Walter Edwards, for respondents, Frederick Wyerhauser and others.

FINCH, J.

A possible view of the facts in this case is that the defendants were authorized by the plaintiffs to surrender the note, for the conversion of which they are sued, upon receiving in exchange the renewal note of the railroad company drawing 10 per cent. interest, and with the same indorsers. The note which the agents of the defendant took was a printed form, indorsed by Smith and Griggs, while blanks for the date, the amount, and the payees were left unfilled, and was one of a number placed by them in the hands of Lewis, the secretary and treasurer of the railroad company, for use in that company's business. One of the indorsers, Smith, was president of the company, and, so far as he is concerned, there was sufficient evidence in the case to have made possible a finding by the jury that he had authorized the insertion of the special clause making the note draw 10 per cent. interest after maturity. The law of Indiana, while fixing the normal rate of interest at 6 per cent., permitted special agreements for a higher rate, not exceeding 10 per cent., and the debt of which the last note was an attempted renewal had drawn 10 per cent. interest upon its origin. Smith must be presumed to have known and understood the fact, and Lewis swears that the president expressly authorized the final note to be given; while further proof indicates a ratification by Smith, who offered to settle the note by turning out bonds. But there are no such facts as to Griggs. The case does not show that he was in any manner connected with the company; that he knew the terms or amounts of the renewals; that he in any form recognized or ratified the note, or consented to the special agreement for interest. So far as he is concerned, he stands simply as an accommodation indorser, delivering the note in blank to Lewis, and conferring upon the latter no other authority than that which the law implies from such delivery.

The first question, therefore, presented by the appeal is whether the delivery of the note in blank authorized Lewis to add to it the clause fixing a rate of 10 per cent. interest after maturity. The general doctrine appears to be that one who signs and delivers a note in blank to be used as a security authorizes the holder to fill the blanks in respects essential to the completeness of the note as a note. The transaction implies that the indorser meant to become liable, as such, upon a completed and perfected note; and so far as the same is, at the time of his signature, an incomplete and imperfect instrument, he must be held to have authorized the filling of such blanks by the agent intrusted with the note for use. The date, the amount, the name of the payee, and place of payment may be inserted in their appropriate blanks. Page v. Morrell, 42 N. Y. 117;Van Duzer v. Howe, 21 N. Y. 531;Kitchen v. Place, 45 Barb. 465;Angle v. Northwestern Ins. Co. 92 U. S. 339. But in all the cases cited there was a blank so left in the body of the note as to indicate to the eye of the indorser, when it left his hand, that something needed to be supplied which was necessary to be inserted to make the instrument operate as the note for which it was intended.

The form of the note in question, as signed by the indorsers, gave no indication that it was to draw interest at all, and left no blank for that purpose. At its commencement, in the place usually occupied by a date, a blank was left between the word ‘Indianapolis' and the figures ‘1875,’ which the indorser would expect, and so authorize, to be filled by completing the imperfect date. Another blank existed at the beginning of the note, before the words ‘after date.’ The length of time the note should run before maturity was here indicated, and properly filled by inserting the words ‘four months.’ The printed form ran on in the usual way until a remaining blank was left between the words ‘to the order of’ and the word ‘dollars,’ which ended the body of the note. The words ‘to the order of’ indicated, and so authorized, the insertion of the name of the payee, and the word ‘dollars' permitted the prefix in the blank of the principal sum to be paid. In that blank, and between those printed words, nothing else was indicated or authorized. Nothing else can be said to have been within the intention or expectation of Griggs, or within his authority, he standing as a mere accommodation indorser, and ignorant of the particular purpose or precise debt to which the completed note was to be applied. To go further than that would be to break down prudent barriers, and reach beyond any reasonable inference to be derived from the presence of the blanks. In this case, matter wholly foreign to the indicated words of completion, and needless for such completion, was inserted, and crowded in for want of sufficient room. Such matter consisted of a special agreement that the note, from and after its maturity, should draw 10 per cent. interest. That was a material alteration of the note from its terms as authorized by the...