Edington v. McLeod

87 Kan. 426 | Kan. | 1912

The opinion of the court was delivered by

Benson, J.:

The general finding for the appellees determines the disputed facts as testified to by them. It therefore must be taken as a fact that the alteration of the note was made without their consent. ' As it changes the sum payable it is material and avoids the *429note. (Neg. Inst. Law, Gen. Stat. 1909, §§ 5377, 5378; Davis v. Eppler, 38 Kan. 629, 16 Pac. 793; Insurance Co. v. Martindale, 75 Kan. 142, 88 Pac. 559; Merritt v. Dewey, 218 Ill. 599, 75 N. E. 1066.) .

The appellant contends that recovery should have been allowed upon the mortgage, although denied upon the note.

It was held in Hocknell v. Sheley, 66 Kan. 357, 71 Pac. 339, that:

“The fraudulent alteration of a promissory note in a material respect destroys the note as a cause of action and will defeat a recovery on the original consideration, and if the note is secured by a mortgage such alteration operates to discharge the mortgage.” (Syl.)

The alteration in that case was found to have been fraudulently made and the opinion is based upon that finding.

In an action to enforce the lien of a chattel mortgage where the accompanying promissory note had been innocently although materially altered, it was said in Simpson v. Sheley, 9 Kan. App. 512, 60 Pac. 1098, that:

“Justice and the authorities unite in holding that in such a case the mortgagee may enforce his mortgage notwithstanding the alteration of the note, if the debt still exists and can be proved independently of the altered note.” (p. 515.)

The principle so declared by the court of appeals is sustained by many authorities. (Clough v. Seay, 49 Iowa, 111; Jeffrey v. Rosenfeld, 179 Mass. 506, 61 N. E. 49; Walton Plow Co. v. Campbell, 35 Neb. 173, 52 N. W. 883, 16 L. R. A. 468; Matteson v. Ellsworth, 33 Wis. 488; Smith v. Smith, 27 S. C. 166, 3 S. E. 78, 13 Am. St. Rep. 633; 2 Cent. Digest, Alt. of Inst. § 160; 1 Dec. Digest, Alt. of Inst. § 20.)

In a note on the Alteration of Instruments, in 86 Am. St. Rep. 123, the principle is thus stated:

“But if the alteration of the note was without fraud*430ulent intent, it will vitiate only the instrument altered and the mortgage still remains a valid security for the original consideration.”

The action was not only upon the note but upon the mortgage, and the contract was pleaded in the reply. The whole transaction was before the court. The property was a homestead and Mrs. McLeod was in the situation of a surety, but she freely consented to the lien to secure an obligation which she fully understood and executed the mortgage jointly with her husband. As the law allows six per cent interest in such a transaction she is chargeable with knowledge of that rate, ■independently of the note. The mortgage with interest at that rate is the very obligation that she intended to give, and justice requires that it be enforced. While the general finding may be interpreted to include a finding that the alteration was made fraudulently, the evidence, including the testimony of the parties who seek to be released, proves the contrary.

The judgment is reversed with directions to enter judgment for appellant for the amount due upon the mortgage, including interest from its date computed at six per cent per annum, and for foreclosure of the mortgage. . (Civ. Code, §§ 581, 594; Worth v. Butler, 83 Kan. 513, 520, 112 Pac. Ill.)