169 Pa. 564 | Pa. | 1895

Opinion by

Mr. Justice Green,

It was an entirely undisputed fact in this case that the defendant’s obligation in suit was altered, after it left him, and without his knowledge or consent. The alteration was made by a visible interlineation of the words “ with interest at six per cent.” That this alteration was not merely a fraud, but was also a criminal forgery of the instrument, is manifest upon the present state of the testimony. From the evidence given on the trial it appears that the alteration was made by the payees’ agent, and as the payees are chargeable with knowledge of the state of the instrument when it came to them, and also *569when it was used by them in bank, they must accept responsibility for the alteration. So far as the legal effect of the alteration is concerned it is quite as important, as if the note had been changed from sixty-six dollars to sixty-six hundred dollars. It is as much an alteration of the defendant’s contract iii the one case as it would have been in the other, and the alteration must be regarded as being made by the payees. There is no room for an inference, and there is no proof in the cause, that the alteration was made innocently. It was certainly done for the purpose of increasing the liability of the defendant, and that alone stamps the transaction with fraud and with guilt. It is not disputed, indeed is conceded, that there could be no recovery on this instrument by the payees. It is urged however that the plaintiff, being an innocent holder for value, can recover notwithstanding the alteration, because they propose to recover only the. amount of the note as it was before the alteration. If such were the law forgeries by alteration would be protected by the law. The fraudulent payee would run no risk of loss because he would only have to transfer the note to an indorsee who might recover the original amount of the note by simply proving that he was innocent of the fraud. But the law is not so charitable to this class of persons. So far as the indorsee is concerned in this case, the note was not innocently acquired, because the interlineation was apparent on the face of the note, and was notice sufficient to put the plaintiff upon inquiry. The words “ with interest at 6 per cent,” do not occupy the whole line, but only a little more than half of it. These words look as if they were interlined and in point of fact they were so.

In Simpson v. Stackhouse, 9 Pa. 186, the added words were “ Payable at the Bank of Pittsburg,” but they were written at the end of the instrument, and the only circumstance upon which we held the plaintiff, the indorsee, responsible for the alteration was that the added words were in a different handwriting from the rest of the instrument, which was written by the defendant. Gibson, C. J., said in the opinion, “ The principle of the English cases is that an alteration so far apparent on the face of a bill or note as to raise a suspicion of its purity, makes it incumbent on the plaintiff to prove that it is still available, and that it is not incumbent on the defendant to dis*570prove it. . . . He who takes a blemished bill or note takes it with its imperfections on its head. He becomes sponsor for them and though he may act honestly he acts negligently. . . . Mr. Chitty says in his Treatise on Bills, p. 213, that a drawee ought not to aceept a bill which has the least appearance of alteration, and it was not disputed at the trial that this note had that appearance or that the alteration was in a material part of it."

In Kennedy v. Bank, 18 Pa. 347, the action was brought by a bank, as holder, against the indorser, and it appeared that the date of the note had been altered from the 12fch to the 13th of August. It was held that this alteration vitiated the note although the bank officers purged themselves of all knowledge of the alteration. We decided that it was not sufficient for the holder to show that the date was not altered after he received it; in order to recover, it was necessary for him to show that the alteration existed when the defendant indorsed it, or that he assented to the alteration.

In the ease of Paine v. Edsell, 19 Pa. 178, the action was brought by an innocent holder against the indorser and it was alleged the date had been altered. The court below admitted the note in evidence sajdng, “ But this note presents no such marks of alteration as make it necessary for the plaintiff to offer explanatory proofs. The date is disfigured by a blot, on which one of the figures is made, and very few written instruments are free from similar defects." But Black, C. J., said “ In Simpson v. Stackhouse, 9 Pa. 186, it is decided on principles perfectly satisfactory, that an apparent alteration in a material part of a negotiable instrument avoids it, unless it be proved that such alteration was lawfully made, and the burden of proving how it was made is on the holder. That the note in question was altered in its date can be seen at a glance, and, inasmuch as no evidence was given to explain it the jury should have been instructed that the plaintiff was not entitled to recover."

This note, also, was in the hands of an indorsee of the payee, but that circumstance did not help his right of recovery. As it was not proved, and probably is not possible to prove, in the case at bar, that the alteration was lawfully made, it is difficult to see how, under the foregoing decisions, there can be any recovery.

*571In Neff v. Horner, 63 Pa. 327, the instrument upon which' suit was brought was a promissory note in form, but the parties signed it with seals, making it substantially a bond. The parties'signing it were a.principal debtor and four sureties. When the paper was brought to the payee he declined to receive it unless the words, “interest semi-annually,” were added. The principal debtor then added at the end of the instrument the words, “ interest to be paid semi-annually,” without obtaining the consent of the sureties. We held the instrument avoided by the alteration. Agnew, J., said, “It seems to be settled that a voluntary alteration of a bond, note or other instrument under seal, in a material part, to the prejudice of the obligor, or maker avoids it, unless done with the assent of the parties to be affected by it, (citing numerous authorities). . . . In respect to bills, notes or other commercial paper, the rule is even more stringent, the law casting on the holder the burthen of disproving any apparent material alteration on the face of the paper.” We held also that there could be no recovery of the principal without the interest. The court below had held that this could be done but in this respect we reversed the judgment saying, “ The note was, therefore, avoided as to the sureties, and the court erred in holding that the plaintiff could recover the principal from all the parties, disregarding his claim for the interest. It is argued that a recovery of the principal sum does no harm, for to that extent the sureties bound themselves. But the conclusive answer is that stated by Mr. Greenleaf, supra, sec. 565. The ground of th'e rule is public policy to insure the protection of the instrument from fraud and substitution. The writing goes into the hands of the party who claims its benefit, and the purpose is to take away the motive for alteration, by forfeiting the instrument on discovery of the fraud. When the sureties signed it they had a right to have it delivered unaltered to the plaintiff. He was bound to know that the alteration was rightfully done, and that the penalty of his negligence, or his wrongful act, was the loss of the security.”

A similar attempt to recover the principal without the interest was made, on the trial, in Fulmer v. Seitz, 68 Pa. 237, but we’ declined to permit it. The alteration there, as here, was of a promissory note to which the words, “interest payable semi*572annually,” Avere added by the principal debtor at the end of the note. The alteration was made by the payee in the presence, and with the consent of the principal debtor. The suit was brought to recover the whole amount of principal and interest, and the note was signed directly by all the parties, three of whom were sureties. On the trial the plaintiff made application to strike out the added words and recover only the principal sum. This was refused by the court beloAv and sustained by this court. Agnew, J., said, “Failing to show his right to recover against them, because of his failure to prove their assent to the alteration, he fell directly Avithin the rule of policy Avhich forbids the recovery of anything upon the altered instrument. . . . One who makes a voluntary and unauthorized alteration of a written contract, and insists upon it by going to trial to recover upon the altered state of the instrument, has no locus penitentiae, Avhich, on his failure to establish his right to recover, Avill enable him to undo the wrong at the trial, and to stand as one avIio has made an innocent mistake, and never has insisted upon his right to enforce it.”

In the present case the alteration was most probably made by an agent of the payee, and it was entirely without the knoAvledge and consent of the defendant who was the maker of the note. Of course the payee could not recover on the note" for any amount, because it was an altered instrument, and is avoided altogether by public policy. Certainly he could not restore life to it by passing it over to an indorsee.

In Hartley & Co. v. Corboy, 150 Pa. 23, we revierved the authorities upon this subject, and it is not necessary to do so again. There also an attempt Avas made to recover on the original state of the note before the alteration Avas made, and the court allowed it to be done, but Ave reversed the judgment Avithout a A'enire, holding there could be no recovery of anything. We said, “It matters not the least whether the alteration Avas made innocently, or in the belief that such a change could be lawfully made without the consent of the indorser. It is against public policy to permit such things to be done.” In Hill v. Cooley, 46 Pa. 259, the action Avas by an indorsee of a note against the maker, and the alteration consisted in the addition of the Avords, “ Payable at N. Holmes & Son,” introduced between the end of the note and the signature of the *573maker. The court below held that the alteration was apparent, and charged the indorsee with the duty of explaining it by proof that the maker consented to it. In the absence of such proof it was refused admission in evidence and this court sustained the judgment. Woodward J., said, “The words, ‘ payable at N. Holmes & Son,’ were alleged to have been added to the note after it was signed and appearances favored the allegation. They were admitted to be in the handwriting of one of the payees who wrote the body of the note, and they certainly look as if added after the signature. . . . All the authorities cited in argument bear against the plaintiff in error, while Simpson v. Stackhouse, 9 Pa. 186, is conclusive in favor of the ruling below. According to the doctrine of that case the indorsee who sues this note, took it with its imperfections on its head, and was bound to come into court prepared to explain them.”

The case of Kountz v. Kennedy, 68 Pa. 187, has no application as was well shown by Agnew J., in Fulmer v. Seitz. In this case the action was originally brought before a magistrate and the whole amount of principal and interest was claimed and recovered. The transcript of the justice shows this, and, by rule of court, the transcript takes the place of the declaration, and therefore supports the allegation that the plaintiff sought to recover interest on the trial, until it asked leave to file an amended statement claiming only the principal without the interest. This was allowed by the court below, and in this, as we think, there was error. There is no merit in the objection that the pleas were not verified by affidavit. The note in question being before the court, and being shown by undisputed testimony to have been altered without the defendant’s consent, and there being no evidence to explain the alteration, which was in a material part, or to show that it was lawfully made, was void as against the defendant, and no recovery could be had upon it.

Judgment reversed.

Mitchell, J.:

The alteration being in the same hand and ink as the rest of the note, the question of when it was made should go to the jury. I would therefore award a venire de novo.

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