135 Mass. 514 | Mass. | 1883
In May, 1876, the Wellfleet Insurance Company lent to the Union Wharf Company $5000, and took therefor the note of the wharf company, with Stephen T. Nickerson and Francis Nickerson as sureties, payable on demand, with interest at the rate of six and one half per cent per annum. Interest at that rate was paid for six months, when the words “Interest to be at the rate of 7 per cent per annum from
The first suit is a bill in equity by the Nickersons, the sureties, for relief, upon the ground that they were discharged from their liability as sureties by reason of a contract between the two companies made before the note was given, in regard to the interest which should be paid upon it, and the subsequent payment of interest under it; and by reason of the alteration in the note after it was delivered. The second suit is a cross bill by the insurance company, and seeks to have the words which were added to the note stricken out, for the reason that they were written by mistake, and without the authority of the plaintiffs.
The cases were heard by a single justice, and come up on appeals from decrees ordered by him, with a report of the evidence. The decree in the first case ordered the bill to be dismissed. In the second case, a decree was entered in accordance with the prayer of the bill.
One question is presented in both cases, whether the sureties were discharged. As the answer to this question must depend upon the evidence, it is not important to consider particularly the allegations of the pleadings.
There was no express agreement between the insurance company and the wharf company except the note; but in the negotiations between the companies in regard to the loan, it was understood that the money would not be wanted for more than six months, and that interest should be at the rate of six and one half per cent per annum, and that, if the loan should be continued for more than six months, interest after that time
The words added to the note were not put there with the consent of the sureties, and, if they stand as part of the note, would constitute a material alteration of it, and operate to discharge the sureties, because the effect would be to destroy the original note, and substitute for it another to which the sureties are not parties. Prima facie, this would be the effect. The 'words were so written as apparently to form part of the note, while it was in the custody of the payee, and by its agent, who had the custody. The inference from these facts, unexplained, would be that the words were written by the authority of the payee, and with the intention of altering the note, and the payee would not be permitted to say that the note was not altered. But the payee contends that it appears from the evidence that it did not authorize an alteration of the note, and
It appears that the words were written by one Kemp, who was the secretary of the payee, and its agent for the purpose of receiving payments of interest upon it. He had no authority to make or change any contract, or to alter the note. The facts that he was a member of the association, and that it was not an incorporated body, gave him no authority. After the expiration of six months from the date of the note, he believed, from information received from Dyer, the agent of the wharf company, and from other sources, that all the parties to the note had agreed that the loan should be continued longer, and that interest thereafter should be paid at the rate of seven per cent per annum; and in this belief, and to express the agreement of all parties to the note, he wrote the words. In fact there was no such agreement. The only understanding was the original one between the principal parties, that, if the loan should be continued more than six months, the interest should be increased. Kemp made the writing in the reasonable and the mistaken belief that it expressed the agreement of all the parties to the note.
It is immaterial whether the payee can show, as it introduced evidence to show, that the writing was a mere memorandum made by Kemp for Ms own guidance, or whether the conclusive inference is that it was made as a part of the note. In the former case, the act might be one within the scope of the agent’s authority, because it would not be an alteration of the note; in the latter case, if held conclusively to have effect only as an alteration of the note, it would not be within the scope of his agency ; and in either case, the act would have been done under a mistake as to the contract between the parties, and their consent to it, and the authority of the agent. The question is not whether the insurance company is liable to the sureties for injuries resulting to them from the conduct of its agent; it is, whether the agent has done an act which of itself estops the payee from denying that it has altered the note. If any act of an agent of the payee with authority only to hold and collect the note for his principal can have that effect, it is clear that
As the words appear upon the note, and apparently form a part of it; as they were put there while the note was in the custody of the payee, and by its agent, but an agent who had no authority to make any alteration of the note or add any words to it; as they were put there without fraud and in good faith, and under a mistake of fact as to the existence of the contract they expressed and the consent of the parties to have them placed there; and as the sureties have not been injured, and cannot suffer injury if the note is returned to its original and true condition, the words should be stricken from the note. See Homer v. Wallis, 11 Mass. 309; Nevins v. De Grand, 15 Mass. 436 ; Smith v. Dunham, 8 Pick. 246; Adams v. Frye, 3 Met. 103; Willard v. Clarke, 7 Met. 435; Ames v. Colburn, 11 Gray, 390; Thornton v. Appleton, 29 Maine, 298; Kountz v. Kennedy, 63 Penn. St. 187.
Other aspects of the case have been presented in argument, which it has become unnecessary to consider.
Decrees affirmed.