against the maker in the form in which it was executed, and if such a completed instrument should be intentionally, fraudulently and materially altered by a person claiming a benefit thereunder, the alteration avoids the whole contract, at the option of the other party. And it is essential, for an alteration to have this result, that it be such as to effect some change in the meaning or legal operation of the instrument. Where such a change is effected it operates to create a new contract, one which is different from that into which the parties originally entered, and to which the consent of one is necessary in order to bind him. And a ratification of a note, as altered by an unauthorized change of date by an attorney, is not affected by suit on the note and to foreclose the mortgage securing it, where the bill alleges an alteration and sets forth the facts and circumstances thereof, and prays a correction of the alteration and a foreclosure as corrected, or of the original. The alteration of a check duly signed and delivered, without the knowledge or consent of the drawer, although done in such manner as to leave no mark or Campbell, 107 Iowa 397, 78 N. W. 56; Fraker v. Cullum, 21 Kans. 555; New York Life Ins. Co. v. Martindale, 75 Kans. 142, 88 Pac. 559, 21 L. R. A. (N. S.) 1045, 121 Am. St. 362, 12 Ann. Cas. 677; Waterman v. Vose, 43 Maine 504; Lee v. Starbird, 55 Maine 491; Stoddard v. Penniman, 108 Mass. 366, 11 Am. Rep. 363; Aldrich v. Smith, 37 Mich. 468, 26 Am. Rep. 536; Fillmore County v. Greenleaf, 80 Minn. 242, 83 N. W. 157; Trigg v. Taylor, 27 Mo. 245, 72 Am. Dec. 263; Presbury v. Michael, 33 Mo. 542; First Nat. Bank v. Fricke, 75 Mo. 178, 42 Am. Rep. 397; McMillan v. Hefferlin, 18 Mont. 385, 45 Pac. 548; VanAuken v. Hornbeck, 14 N. J. L. 178, 25 Am. Dec. 509; Hunt v. Gray, 35 N. J. L. 227, 10 Am. Rep. 232; Woodworth V. Bank of America, 19 Johns. (N. Y.) 391, 10 Am. Dec. 239; Weyerhauser v. Dun, 100 N. Y. 150, 2 N. E. 274; Reeves v. Pierson, 23 Hun (N. Y.) 185; First Nat. Bank v. Laughlin, 4 N. Dak. 391, 61 N. W. 473; Sturges v. Williams, 9 Ohio St. 443, 75 Am. Dec. 473; Hepler v. Mt. Carmel Sav. Bank, 97 Pa. St. 420, 39 Am. Rep. 813; Craighead v. McLoney, 99 Pa. St. 211; Stephens v. Davis, 85 Tenn. 271, 2 S. W. 382; Farmers & Merchants Nat. Bank v. Novich, 89 Tex. 381, 34 S. W. 914; Adams v. Faircloth (Tex. Civ. App. 1906), 97 S. W. 507; Batchelder v. White, 80 Va. 103; Bank of Ohio Valley v. Lockwood, 13 W. Va. 392, 31 Am. Rep. 768; Bathe v. Taylor, 15 East 412; Outhwaite v. Luntley, 4 Camp. 179; Walton v. Hastings, 4 Camp, 223; Paton v. Winter, 1 Taunt. 420; Halcrow v. Kelly, 28 Up. Can. C. P. 551. 6 Atlanta Nat. Bank v. Bateman, 21 Ga. App. 624, 94 S. E. 853; Shaw v. Probasco, 139 Ga. 481, 77 S. E. 577. 7 Huntington v. Finch, 3 Ohio St. 445. 8 Mackay v. Dodge, 5 Ala. 388. See Chism v. Toomer, 27 Ark. 108, in which it is declared that the test is whether the alteration made creates a ew contract. new 9 Fry v. Jenkins, 173 Ill. App. 486. indication of an alteration observable by a man of ordinary prudence, avoids the check as to the drawer, even in the hands of an innocent purchaser for value without notice of the alteration.10 Under the Georgia code, the alteration of a note must have been made with intent to defraud, or it will not have the effect to avoid the whole contract.11 As is said in a case in Georgia in regard to a party who has not consented to such an alteration: "He is not bound. by the old contract, for that has been abrogated; neither is he bound by the new contract, because he is no party to it."12 Not only will an alteration of this kind in negotiable paper be a good defense to an action against one not consenting thereto, but it is also decided that a bill or note may be avoided by an alteration in a contract to secure which the paper is given as collateral;13 and likewise that a material alteration in a collateral mortgage given to secure a note will be a good defense to an action on the note.14 That the instrument has been materially altered without the defendant's consent is sufficient to defeat recovery, no allegation or proof of fraud being necessary.15 It has, however, been decided that a maker can not avail himself of this defense unless he rescinds the whole contract. 10 And the fact that a note has been altered is not a defense to an action by a bona fide holder, where it appears that the note was restored to its original form prior to its passing into his hands,17 and a holder in due course, who was not a party to the alteration, can enforce the note according to its original tenor.18 Whether a note attached to an order or contract is rendered void by detaching it there from depends on the question whether or not the detachment alters the 10 Arnold v. Wood, 127 Ark. 234, 191 S. W. 960; Jones v. Bank of Horatio, 102 Ark. 302, 143 S. W. 1060. 11 Peeples v. Berrien County Bank, 19 Ga. App. 319, 91 S. E. 436. See Ga. Civ. Code, 1910, § 4296. 12 Bethune v. Dozier, 10 Ga. 235. 13 Brigham v. Wentworth, 65 Mass. (11 Cush.) 123. 14 Williams v. Barrett, 52 Iowa 637, 3 N. W. 690. But see Kime v. Jesse, 52 Nebr. 606, 72 N. W. 1050. 15 Zeiglar v. Vollers, 59 Okla. 74, 157 Pac. 1035; Eckert v. Pickel, 59 Iowa 545, 13 N. W. 708. Compare Burch v. Pope, 114 Ga. 334, 40 S. E 227, holding that under a provision of the code in Georgia it must appear that an alteration relied on as a defense was made with intent to defraud, the fact that it was material not being sufficient. 16 Glover v. Green, 96 Ga. 126, 22 S. E. 664. 17 Shepard v. Whetstone, 51 Iowa 457, 1 N. W. 753, 33 Am. Rep. 143. 18 Bledsoe v. City Nat. Bank, 7 Ala. App. 195, 60 So 942; Ensign v. Fogg, 177 Mich. 317, 143 N. W. 82. contract.19 If so, the note is void either in the hands of the payee or subsequent holder with notice.20 A general plea of non est factum will entitle the party interposing it to prove that after the execution of the instrument in question it was altered without his consent.21 And an affidavit of defense, however, which sets up an alteration of the instrument should, it is held, be specific and certain enough to show a valid defense that would answer the declaration and defeat the entire right to recover thereon, if the case were put to trial on the pleadings.22 The question whether an alteration is material is one of law for the court to determine and not one for the jury.23 § 257. Rule as to bona fide holders.-The Uniform Negotiable Instruments Act provides that, "when an instrument has been materially altered, and is in the hands of a holder in due course, not a party to the alteration, he may enforce payment thereof according to its original tenor."24 This provision of the statute has been held not to apply to alterations made in overdue notes.25 So an altered instrument can be enforced only according to its original tenor, even by a holder in due course, and if a material alteration is made by one, who claims under it, as to him it is void at the option of the party sought to be charged.26 The rule that a material alteration of a bill or note will be a good defense to an action against a party not consenting thereto extends generally to those cases where the instru 19 Weinstein Bros. v. Citizens Bank, 13 Ala. App. 552, 69 So. 972. 20 Stevens v. Venema, 202 Mich. 232, 168 N. W. 531, L. R. A. 1918F, 1145. 21 Fudge v. Marquell, 164 Ind. 447, 72 N. E. 565, 73 N. E. 895. 22 Bryan v. Harr, 21 App. D. C. 190, decided under Act of Congress January 12, 1899, §§ 58, 59, 124. 23 Overton v. Matthews, 35 Ark. 146, 37 Am. Rep 9; Pritchard v. Smith, 77 Ga. 463; Winkles v. Guenther, 98 Ga. 472, 25 S. E. 527; Hill v. Calvin, 15 Miss. (4 How.) 231; Fisherdick v. Hutton, 44 Nebr. 122, 62 N. W. 488; Bowers v. Jewell, 2 N. H. 543. 24 Negot. Inst. Act, art. "Discharge of Negotiable Instruments", § 124. Where a bank, which was holding a note as collateral security, permitted the payee to take the note, and the latter without the consent of the bank indorsed thereon the words "without recourse," it is not such alteration as will constitute a defense in an action by the bank against the maker; but the note may be enforced in accordance with its original tenor. Continental Bank & Trust Co. v. Sacks (La.), 92 So. 747. 25 Fairfield County Nat. Bank v. Hammer, 89 Conn. 592, 95 Atl. 31, L. R. A. 1918E, 163. 26 Craig v. Nat. City Bank, 26 Ga. App. 128, 105 S. E. 632. ment has come into the hands of a bona fide holder.27 And the application of this rule will not be affected by the fact that the alteration 27 Exchange Nat. Bank v. Bank of Little Rock, 58 Fed. 140, 22 L. R. A. 686; Overton v. Matthews, 35 Ark. 146, 37 Am. Rep. 9; Fordyce v. Kosminski, 49 Ark. 40, 3 S. W. 892, 4 Am. St. 18; Sudler v Collins, 2 Houst. (Del.) 538; Hill v. O'Neill, 101 Ga. 832, 28 S. E. 996; Simons v. McDowell, 125 Ga. 203, 53 S. E. 1031; Burwell v. Orr, 84 Ill. 465; Hovorka v. Hemmer, 108 Ill. App. 443; Hert v. Oehler, 80 Ind. 83; Cronkhite v. Nebeker, 81 Ind. 319, 42 Am. Rep. 127; Laub v. Paine, 46 Iowa 550, 26 Am. Rep. 163; Knoxville Nat. Bank v. Clark, 51 Iowa 264, 1 N. W. 491, 33 Am. Rep. 129; Charlton v. Reed, 61 Iowa 166, 16 N. W. 64, 47 Am. Rep. 808; Derr v. Keough, 96 Iowa 397, 65 N. W. 339; Horn v. Newton City Bank, 32 Kans. 518, 4 Pac. 1022; Lisle v. Rogers, 18 B. Mon. (Ky.) 528; Burrows v. Klunk, 70 Md. 451, 17 Atl. 378, 3 L. R. A. 576, 14 Am. St. 371; Schwartz v. Wilmer, 90 Md. 136, 44 Atl. 1059; Belknap v. Nat. Bank, 100 Mass. 376, 97 Am. Dec. 105; Wait v. Pomeroy, 20 Mich. 425, 4 Am. Rep. 395; Holmes v. Trumper, 22 Mich. 427, 7 Am. Rep. 661; Bradley v. Mann, 37 Mich. 1; Washington Sav. Bank v. Ecky, 51 Mo. 272; Middaugh v. Elliott, 61 Mo. App. 601; Davis v. Henry, 13 Nebr. 497, 14 N. W. 523; Bruce v. Westcott, 3 Barb. (N. Y.) 374; Mount Morris Bank v. Lawson, 10 Misc. 359, 31 N. Y. S. 18, 63 N. Y. St. 432; Bank of United States v. Russel, 3 Yeates (Pa.) 391; Gettysburg Nat. Bank v. Chisolm, 169 Pa. St. 564, 32 Atl. 730, 47 Am. St. 929; Sanders v. Bagwell, 32 S. Car. 238, 10 S. E. 946, 7 L. R. A. 743; Central Nat. Bank v. Efird, 91 S. Car. 135, 74 S. E. 136; Stephens v. Davis, 85 Tenn. 271, 2 S. W. 382; Farmers & Merchants Nat. Bank v. Novich, 89 Tex. 381, 34 S. W. 914; Landon v. Halcomb (Tex. Civ. App.), 184 S. W. 1098; Master v. Miller, 4 Term. R. 320; Outhwaite v. Luntley, 4 Camp. 179; Vance v. Lowther, 1 Exch. Div. 176; Burchfield v. Moore, 3 El. & Bl. 683. "The material and unauthorized alteration of a promissory note renders it invalid in the hands of the bona fide holder as well as in the hands of the payee." Young v. Baker, 29 Ind. App. 130, 64 N. E. 54. The fraudulent alteration must have been a material one before it will be a defense to an action by a holder in due course. Citizens State Bank v. Johnson County, 182 Ky. 531, 207 S. W. 8. "It is a general rule that any alteration in a material part of a bill of exchange or promissory note as in the date, sum, or time when payable or consideration or place of payment, will render the bill or note invalid as against any party thereto not consenting to such alteration, even in the hands of an innocent party." Trigg v. Taylor, 27 Mo. 245, 72 Am. Dec. 263. "It is well settled that material alterations of an instrument invalidate it as to the maker, who has not assented to or ratified the change, even in the hands of a bona fide holder for value." Erickson v. First Nat. Bank, 44 Nebr. 622, 62 N. W. 1078, 28 L. R. A. 577, 48 Am. St. 753. "In a suit on a promissory note by a purchaser in due course before maturity and without notice of any defense, the maker may answer, and thereafter offer proof to establish that when executed and delivered the note was nonnegotiable and contained no words of negotiability, but that it had been materially altered by their insertion after delivery and before its purchase, by erasure of the line striking out the words of negotiability." Aamoth v. Hunter, 33 N. Dak. 582, 157 N. W. 299. 31 was of such a character that it could not have been detected,28 a holder in due course being entitled to recover only according to the original tenor of the note,29 but there can be no recovery thereon by one not an innocent holder.30 This provision of the Negotiable Instruments Law, however, is held not to cover a case where a blank has been negligently left and the instrument has been changed by filling in the blank; but in such case the rules of the law merchant apply. So, where one signed as maker an incomplete negotiable note and delivered same with the understanding that it would not be filled out without his consent, the filling in of the blanks without the maker's consent is no defense against a holder in due course, to whom the note was transferred. 32 Again the maker may, by his careless execution of a negotiable instrument, so as to make it possible to alter it without exciting the suspicion of an ordinarily careful man, be held liable on the altered instrument in suit by a bona fide holder without notice.33 And a holder in due course may enforce the note against the original maker, where the note has been altered, changing the name of the maker, to which act the holder was not a party."34 In an action, however, by a bona fide holder of a bill of exchange against the acceptor, it has been decided that the latter can not defeat recovery on the ground of a material alteration made before the acceptance.35 But the detachment of a note from a contract of which it formed a part, and negotiating it, is an alteration which may be set up in defense to an action by 28 Wade v. Withington, 83 Mass. (1 Allen) 561. 29 Redfield State Bank v. Myrick, 108 Kans. 191, 194 Pac. 648; Tower v. Stanley, 220 Mass. 429, 107 N. E. 1010; Mechanics American Nat. Bank V. Helmbacher, 199 Mo. App. 173, 201 S. W. 383; Smith v. Freeman, 93 N. J. L.. 45, 106 Atl. 22; Citizens State Bank v. Grant, 52 Okla. 256, 152 Pac. 1082; Voris v. Birdsall (Okla.), 153 Pac. 673; Zehr v. Champlin, 60 Okla. 242, 159 Pac. 1185; Conqueror Trust Co. V Simmon, 62 Okla. 252, 162 Pac. 1098; Hammer v. Garrett (Tex. Civ. App.), 218 S. W. 812. 30 Zehr v. Champlin, 60 Okla. 242, 159 Pac. 1185. 31 National Exch. Bank v. Lester, 119 App. Div. 786, 104 N. Y. S. 418. 32 Hart V. Metropolitan Discount Co., 24 Ga. App. 807, 102 S. E. 375. 33 Diamond Distilleries Co. v. Gott, 137 Ky. 585, 126 S. W. 131, 31 L. R. A. (N. S.) 643; Broad Street Bank v. National Bank, 183 N. Car. 463, 112 S. E. 11, 22 A. L. R. 1124 (where a bank issued cashier's checks without the use of the protectograph, and the amounts of the checks were raised). 34 Public Bank v. Knox-Burchard Mercantile Co., 135 Minn. 171, 160 N. W. 667. 35 Ward v. Allen, 43 Mass. (2 Metc.) 53, 35 Am. Dec. 387. |