settlement of accounts, it may be shown that the balance was produced by mistake when, in fact, nothing was due. 14 Again, it has been decided that in such an action a maker may show that by mistake there was an omission of certain provisions, either from the note itself or the contract in connection with which it was executed.15 But a note in settlement of an account is not subject to the defense of mistake when the parties did not intend that the settlement was to be final and accurate, but by oral agreement the terms of the settlement might be varied so as to conform to the facts.16 However, mistake by the maker as to the character of the instrument executed by him is available as a defense, as where one executed notes believing them to be for the purchase-price of land, when in fact they were lien notes on cotton for rent; and in such case the defense is available both to the maker of the notes and to the mortgagee of the cotton. 17 But the defense of mistake in the insertion of the indorsers' names as payees in a note instead of the plaintiff's name, and that on discovery of the mistake the note was indorsed to plaintiff under agreement with him that the indorsers should not be liable on their indorsements, held not available in an action against the maker and the payee indorsers. 18 Nor is the defense of mistake as to the terms of a note available, where the maker took no precautions as to its terms, and such mistake would not be ground for canceling the note. 19 Such defense is available, however, where a husband died leaving no estate, but leaving a life policy of which his widow was the beneficiary, and she was caused by false statements

Equity will cancel a note executed by mistake for an amount not due. FitzMosier, 116 Ind. 363, 16 N.

maurice v.

E. 363, 16 N. E. 175, 19 N. E. 180, 9 Am. St. 854. Compare Capehart v. Mhoon, 5 Jones Eq. (N. Car.) 178. To the extent of what is actually due a note given for an indebtedness will be sustained. Wilson v. Forder, 20 Ohio St. 89, 5 Am. Rep. 627. In the case of negligence on the part of the maker in omitting to use the means within his power of obtaining correct information a mistake has been held to be no defense. Capehart v. Mhoon, 5 Jones Eq. (N. Car.) 178.

14 Mercer v. Clark, 3 Bibb (Ky.) 224.

15 Byrd v. Campbell Printing Press & Mfg. Co., 94 Ga. 41, 20 S. E. 253; Glisson v. Craig, 1 Tex. Civ. App. 42. But see Bradley v. Anderson, 5 Vt. 152.

16 Stacer v. Ehrlich, 22 Ga. App. 285, 95 S. E. 1016.

17 Herzfeld v. Hayne, 200 Ala. 615, 76 So. 973.

18 Blair v. McQuary, 100 Kans. 203, 162 Pac. 1173, 164 Pac. 262.

19 Avery Co. v Powell, 174 Mo. App. 628, 161 S. W. 335.

to execute the note in suit for a debt of her deceased husband under the belief, induced by such statements, that she could not get the insurance money without giving the note.20 The defense that one who indorsed the note of a corporation did so under the mistaken belief that another who had indorsed the note was the maker is not available, unless his signature was procured by deceit as to such fact.21 The fact, however, that a note was executed under a mistake of law will not operate to defeat recovery in an action thereon.22 It can not affect the right to defend for a mutual mistake that defendant neglected to inform plaintiff that the note was made for too large an amount.23 It has also been decided that it can not be shown in defense that a note was given under a mutual mistake and error of the parties, not in reference to any material fact, but to some future imaginary or speculative event, provided there was no fraud or misrepresentation.24 So, a wife who signed a note under the mistaken belief and information that she would be personally bound only to the extent of her interest in land which was mortgaged to secure the note, is not released from liability on the note unless the mistake was a mutual one. 25 One can obtain relief from mistake in the execution of a promissory note only by a cross-bill in equity, when sued on the note, and not by setting such fact in answer;26 but an independent action in equity to cancel the note could, no doubt, be maintained.

20 Sykes v. Moore, 115 Miss. 508, 76 So. 538, L. R. A. 1918B, 491.

21 Watt v. German Sav. Bank, 183
Iowa 346, 165 N. W. 897.

22 Short v. Thomas, 178 Mo. App.
400, 163 S. W. 252; Pool v. Alexander,
26 La. Ann. 669. A director of a cor-
poration signing a note can not set up
that he signed it in the belief that it
was necessary to make it binding on the
corporation and without any intention
to bind himself. Maledon v. Leflore,
62 Ark. 387, 35 S. W. 1102.
will grant relief in the case of an
honest mistake of law as to the effect
of an instrument on the part of both
contracting parties when such mistake

Equity

operates as a gross injustice to one and gives an unconscionable advantage to the other. Thus it was so held where a note was given as a donation and there was no intention that it should bear interest, and to effect this purpose, the interest clause was left out. Loudermilk v. Loudermilk, 98 Ga. 780, 25 S. E. 927.

23 Short v. Thomas, 178 Mo. App. 400, 163 S. W. 252.

24 Cartwright v. Gardner, 5 Cush. (Mass.) 273.

25 Grant v. Isett, 81 Kans. 246, 105 Pac. 1021.

26 Lumbermens Nat. Bank v. Campbell, 61 Ore. 123, 121 Pac. 427.

§ 90. Change of mind or purpose by maker. The fact that after execution of a note the maker changes his mind or purpose in regard to the note is no defense to an action thereon. Thus, where a father executed a note to a college for the tuition of his son whenever the latter should attend the college, the subsequent change of the father's mind in regard thereto is no defense, even as against one who is not a bona fide holder for value.27

§ 91. Reliance on recitals in note.-A recital in a note as to the place of execution is a representation, upon which an innocent holder has a right to rely, that the note was executed at the place designated, and his right to recover can not be defeated by showing that it was not so executed. 28

§ 92. As to revenue stamp.-Where a revenue stamp is required upon a note, it is no defense to an action by a bona fide holder that such stamp was not placed thereon at the time of execution, if it was properly stamped when negotiated, he having received it in ignorance of such facts;29 and the fact that the revenue stamps on a note were not marked "canceled" was not sufficient to put the purchaser of the note on inquiry.30 So, failure to place required revenue stamps on a note does not destroy its negotiability.31

§ 93. Execution or indorsement in blank-In general.31a_ The Uniform Negotiable Instruments Act provides: "Where the instrument is wanting in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein. And a signature on a blank paper delivered by

30 State Nat. Bank v. Potter (Tex. Civ. App.), 231 S. W. 828.

31 Farmers Sav. Bank v. Neel, 193 Iowa 685, 187 N. W. 555; Richardson v. Cheshire, 193 Iowa 930, 188 N. W. 146. Notes executed in a foreign country, treated as negotiable under the laws of this country, are not necessarily void here for want of tax stamp required by the foreign country. Beadall v. Moore, 191 N. Y. S. 826.

31 & See Ch. 8, "Alteration of Paper," as to filling in blanks.

the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount. In order, however, that any such instrument when completed, may be enforced against any person who became a party thereto prior to its completion, it must be filled up strictly in accordance with the authority given and within a reasonable time. But if any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time."32 Thus, as a general rule, one who signs and delivers an incomplete bill or note authorizes the payee or subsequent holder to fill in the blanks.33 This implied. power extends to every incomplete feature of the instrument.3 But as to persons who became parties to the instrument before it was completed, it must be shown that it was filled in in accordance with authority given by the signer or signers of the blank instrument.35 And where a bill or note, as signed, is incomplete by reason of unfilled blanks, the fact that it is subsequently filled fraudulently or in a manner not contemplated will be no defense to an action by a bona fide holder against the drawer, maker or indorser, for one who signs or indorses such an instrument furnishes

32 Negot. Inst. Act, art. "Form and Interpretation" $14.

33 Filling in blanks, see Ch. 8, "Alteration of Instruments." Grand Lodg K. of P. v. State Bank, 79 Fla. 471, 84 So. 528; Roth v. Donnelly Groc. Co., Ga. App. 851, 70 S. E. 140; Schnitzer v. Kramer, 268 Ill. 603, 109 N. E. 695, affg. 189 Ill. App. 350; Linthicum v. Bagby, 131 Md. 644, 102 Atl. 997; Bank of Houston v. Day (Mo. App.), 122 S. W. 756; Business Mens League v. Sragow, 153 N. Y. S. 231: Chelsea Exch. Bank v. Warner, 195 N. Y. S. 419; Phillips v. Hensley, 175 N. Car. 23, 94 S. E. 673; Abram v. Greer (R. I.), 88 Atl. 884. At common law, if a check was signed without designating a payee, no one else had the authority to insert the name

31

of a payes, unless the check was issued by the aker. Reed v. Mattapan Deposit &c. Co., 198 Mass. 306, 84 N. E. 469.

34 Grand Lodge, Knights of Pythias v. State Bank, 79 Fla. 471, 84 So. 528; Stanley v. Davis, 32 Ky. L. 1135, 107 S. W. 773; Linthicum v. Bagby, 131 Md. 644, 102 Atl. 997; Linick v. Nutting, 140 App. Div. 265, 125 N. Y. S. 93; Simpson v. First Nat. Bank, 94 Ore. 147, 185 Pac. 913.

35 Equitable Trust Co. v. Lyons, 129 N. Y. S. 79. In this case it was held that the presumption arising from delivery of an incomplete note is overcome by testimony of the maker that he gave no authority to fill in the blank.

The

the means of fraud, and is estopped to deny his liability.36 proper rule in this class of cases has been declared by the United States Supreme Court in the following words: "Where a party to a negotiable instrument intrusts it to the custody of another with blanks not filled up, whether it be for the purpose to accommodate the person to whom it was intrusted, or to be used for his own benefit, such negotiable instrument carries on its face implied authority to fill up the blanks and perfect the instrument; and as between such party and innocent third parties, the person to whom it was so intrusted must be deemed the agent of the party who committed such instrument to his custody, or, in other words, it is the act of the principal and he is bound by it." And in a case in New York it is said: "It is settled law that when a person signs a note in blank, he impliedly confers upon the person to whom it is entrusted authority to fill up the usual and ordinary blanks, such as date, name of payee, amount and time of payment. ** The note having found its way into the hands of an innocent holder,

36 Angle v. Northwestern Mut. &c. Co., 92 U. S. 330, 23 L. ed. 556; National Exch. Bank v. White, 30 Fed. 412; Roberts v. Adams, 8 Port (Ala.) 297, 33 Am. Dec. 291; Herbert v. Hule, 1 Ala. 18, 34 Am. Dec. 775; Decatur Bank v. Spence, 9 Ala. 800; Robertson v. Smith, 18 Ala. 220; Prim v. Hammell, 134 Ala. 652, 32 So. 1006, 92 Am. St. 52; Riddell v. Stevens, 32 Conn. 378, 87 Am. Dec. 181; Moody v. Threlkeld, 13 Ga. 55; Atlanta Nat. Bank v. Bateman, 21 Ga. App. 624, 94 S. E. 853; Hudson v. Hanson, 75 Ill. 198; Wilson v. Kinsey, 49 Ind. 35; Gothrupt v. Williamson, 61 Ind. 599; Bowen v. Laird, 166 Ind. 421, 77 N. E. 852; Iowa College Trustees v. Hill, 12 Iowa 462; McDonald v. Muscatine Nat. Bank, 27 Iowa 319; Lowden v. National Bank, 38 Kans. 533, 16 Pac. 748; Bank of Commonwealth v. Curry, 2 Dana (Ky.) 142; Sowders v. Citizens Nat. Bank, 12 Ky. L. 356; Battalora v. Erath, 25 La. Ann. 318; Abbott v. Rose, 62 Maine 194, 16 Am. Rep. 427;

9937

*

Roberts v. Lane, 64 Maine 108, 18 Am. Rep. 242; Breckenridge v. Lewis, 84 Maine 349, 24 Atl. 864, 30 Am. St. 353; Putnam v. Sullivan, 4 Mass. 45, 3 Am. Dec. 206; Ives v. Farmers Bank, 84 Mass. (2 Allen) 236; Androscoggin Bank v. Kimball, 64 Mass. (10 Cush.) 373; Goad v. Hart, 8 Sm. & M. (Miss.) 787; Tumilty v. Bank of Missouri, 13 Mo. 276; Iron Mountain Bank v. Murdock, 62 Mo. 70; Clifford Banking Co. v. Donovan Commission Co., 195 Mo. 262, 94 S. W. 527; Green v. Kennedy, 6 Mo. App. 577; Griggs v. Howe, 31 Barb. (N.

Y.) 100; Van Duzer v. Howe, 21 N. Y. 531; McArthur v. McLeod, 51 N. Car. 475; Fullerton v. Sturges, 4 Ohio St. 529; Ross v. Doland, 29 Ohio St. 473; Simpson v. Bovard, 74 Pa. St. 351; Frazier v. Gains, 61 Tenn. (2 Baxt.) 92; Johnston Harvester Co. v. McLean, 57 Wis. 258, 15 N. W. 177, 46 Am. Rep. 39. See also chs. 7, 8.

37 Bank of Pittsburgh v. Neal, 22 How. (U. S.) 96, 16 L. ed. 323.