8 Colo. App. 325 | Colo. Ct. App. | 1896
delivered the opinion of the court.
The foundation of the defense to this action was the alleged alteration of a note, executed by the appellant to his own order, and indorsed by him on the date of its execution and delivered to Rabb Brothers in settlement of a bill of goods which that firm had heretofore sold to the maker. The note was indorsed by Rabb Brothers, and discounted before maturity with the American National Bank of Denver, which passed the proceeds to Rabb Brothers’ account, and became under the law merchant bona fide holders for value.
Subsequent to the apparent maturity of the note, it was sent to the correspondent of the bank for collection, presented, but not paid. This suit was then begun. The complaint set up the making of a note, dated the 8th of February, 1892, as follows:
“Four months after date I promise to pay to the order of myself, nineteen hundred seventeen and 50-100 (1917.50) dollars, with interest thereon at the rate of six per cent per annum after maturity — for value received.
“ Cha’s. Mater.”
The plaintiff simply alleged the execution and delivery of the note, its transfer, and their title. The defendant answered, admitted the execution of the note, but alleged an alteration in a material part without his consent. It was averred that on the bottom of the paper on which the note was written, the following memorandum had been written and signed:
*327 “ It hereby agreed that after the expiration of four months, the above Cha’s Mater shall be privileged to have twelve months instead of four months on the above note.
“ Attest: Rob’t. J. Geiee.
• “ R. M. Dick.”
The defendant then averred at the time of the indorsement he wrote his name across the back of it in two places. The first was an indorsement of the note. The other was an indorsement of the note and contract, which extended on to the note as well as across the agreement of extension. Mater pleaded the execution of both papers at the same time and prior to the delivery to Dick, and the alteration of the paper by the tearing off of the memorandum. Mater did not otherwise plead any defense, nor did he set up a request for an extension of time, nor plead any premature institution of the suit. He relied solely and wholly on the legal effect of the alteration, whereby, as he now contends, the contract or promise to pay was destroyed. It is well in this connection to state some facts disclosed by the bill of exceptions which are not to be found in the abstract. The appellant relied on the legal proposition involved in the removal of the subsequent agreement of extension, if such it be, and deemed it wholly unnecessary to present any other portion of the record to our attention. Since we think some of the proof of very considerable significance and of great importance, we shall state it.
Rabb Bros, and Mater had been dealing together as wholesale vendors and retail purchasers of cigars and tobacco, and in the course of their transactions Rabb Bros, had sold Mater a bill of goods amounting to the sum named in the note. The goods were sold by Dick, who was their traveling salesman. According to direct testimony, Dick had instructions from the house with reference to the prices at which goods should be sold and the time to be allowed purchasers for payment. There is no dispute respecting the time 'on which the goods were bought. The memorandum of sale delivered to the ven
A good deal of testimony was introduced respecting the manner in which the original note or memorandum was signed and executed. Mater testifies the indorsement extended on to the note as well as across the agreement of extension, and attempts to testify that if it did not so appear, it had been altered and erased from the back of the note. Competent and expert testimony was introduced to show that no alteration whatever had been made on the face or the back of the paper, and that a close inspection by the eyes, as well as by a glass, failed to disclose any erasure, and that an erasure without detection was impossible. We are unable to determine from the record whether the trial court accepted the latter contention, for there is nothing to disclose its views respecting this matter. The original note is preserved in the bill of exceptions and presented for our inspection. We are very frank to say we do not believe the note was altered
The simple issue is as to the legal effect of such an alteration of the paper. It must be conceded there are many reputable authorities which hold that the removal of a memorandum from the bottom of a note destroys the paper as the contract of the maker, though it was so negligently attached as to permit its removal without the possibility of detection. The negligence of the maker is held to furnish no protection to the title of a holder for value. In all'the cases which have been presented to our attention, the rule has been laid down, where the condition, if taken as a part of the note, would render it a nonnegotiable contract, the holder would only take title subject to any defenses available against the original payee. There is another line of authorities of equal repute, and possibly of equal volume, which adjudge the title of a bona fide holder for value good, where the note and memorandum were so negligently executed as to permit a separation without detection. If we did not deem ourselves concluded by antecedent adjudications of the supreme court of the state, we should unhesitatingly follow that line which holds the maker liable on his paper where he has so negligently executed it as to permit the separation of a memorandum which, had it remained, would vary, alter, or completely annul his liability on the instrument. This view seems to us to be recognized by the better authorities and by learned text writers. It is put on the principle that where one of two innocent persons must suffer, the loss must fall
The general doctrine expressed in these eases has undoubtedly been recognized by the supreme court. We regard the principle underlying these decisions as entirely analogous to those declared in the antecedent authorities. In determining which line we will follow, we are therefore very much concluded by the indicated opinion of the supreme court on cognate questions. Wyman v. Colo. National Bank, 5 Colo. 30; Merchants’ Bank v. McClelland, 9 Colo. 608; Coors v. German National Bank, 14 Colo. 202.
We are not compelled, however, to go quite to this extent, because, as we view it, the promise with reference to the extension, if such it may be termed, was never executed by the payee, nor by the creditors who were the vendors of the
In the present case, however, we do not regard the alteration as coming within the cases which adjudge an altered note invalid in the hands of an innocent holder. Take the memorandum away, the note still remains a promise to pay a fixed sum of money for a valuable consideration with a definite rate of interest and at a definite time. Of course, the time expressed in the original paper is four months. If the memorandum is a part of it, then the note would be for twelve months if the option should be demanded. This statement, of course, is on the hypothesis that Dick pos
There is a very grave question whether this case does not fall within the four' corners of those decisions. As we view it, there is an impregnable basis on which to put this decision. There is no specific contract on the part of Dick or Rabb Bros., whereby Mater acquired the right to twelve months’ time to pay that paper. It was not agreed that he should have twelve months, nor was there anything in the original contract which indicated that his time should run to that limit. The indorsement is that he shall have the privilege of twelve months. We take it this means, if it means anything, that he had the option to take twelve months in which to pay the paper, instead of the four nominated in the instrument itself. Under these circumstances, the paper still remained a promissory note, payable to his own order for a specific sum, and bearing a definite rate of interest. If the twelve months is to be incorporated into the note, it would stand as a promise on his part to pay $1,917.50, with interest at the rate of six per cent after maturity in one year from February 8, 1892, instead of within four months from the same date. It therefore follows the note was a negotiable promissory note, executed by Mater for a valuable consideration, by him indorsed and put on the market before maturity, and acquired before maturity by the appellees, who
Aside from this consideration, there is another already suggested, which is equally controlling. The condition was no part of the note. It was not executed by Mater, nor was his note executed on that condition. The agreement was not executed by the payees, but by an agent who had no authority to make it, and it was therefore nugatory. Had it remained at the bottom of the instrument, the purchaser of the paper before maturity would have taken good title, unless Mater could plead and prove Dick’s authority to execute it. In our judgment, the memorandum was not the agreement of the payees. The condition, therefore, whatever it may have been, or however it may have been construed, in no manner tended to modify or control the original promise, and the note signed remained a promise to pay within four months, and when indorsed and delivered became, like any other commercial obligation, unimpeachable, because of any matters pleaded or proven. We therefore conclude the condition attached to the note was not of the class called material by the books, even in those cases which adjudge an altered note unenforcible against the maker, regardless of his negligence.
The judgment is right and ought to be affirmed.
Affirmed.