Commercial Investment Co. v. Whitlock , 217 Mo. App. 676 ( 1925 )

^* Headnotes 1. Bills and Notes, 8 C.J., Section 684; 2. Alteration of Instruments, 2 C.J., Section 48; 3. Alteration of Instruments, 2 C.J., Section 53; 4. Bills and Notes, 8 C.J., Section 471; 5. Bills and Notes 8 C.J., Section 314; 6. Bills and Notes, 8 C.J., Section 1011. Plaintiff sued on three trade acceptances or bills of exchange for $150 each. The cause was tried before the court and a jury. The verdict and judgment went for defendants and plaintiff appealed.

February 6, 1922, R.F. Whitlock and L.E. Lines under the partnership name of Whitlock-Lines were conducting a feed store at Monett, Mo. On the date mentioned a representative of the Guardian Food Company of New York City took defendants' order for stock food amounting to $450. At the time of the order defendant Whitlock, acting for his firm, accepted the bills sued on. On the same day of the order, but after the representative of the food company had left town, defendant Whitlock decided he had made a bad bargain and cancelled his order by telegram and by letter addressed to the food company in New York. No attention was given to the cancellation, and the feed was shipped, but defendants refused to receive it.

Plaintiff claims to be a holder in due course. Defendants contend that under the facts they may interpose any defense they had as between them and the food company.

Defendants' contention that they can rely upon the equities between them and the food company to defeat plaintiff is based upon alleged material alterations in the bills after delivery by defendants to the food company. The bills were all the same in form. All were dated February 6, 1922, and were due respectively sixty, ninety and one hundred twenty days after date. The bill due April 7, 1922, is as follows:

"TRADE ACCEPTANCE No. 113 Feb. 6, 1922 $150.00 Sixty days after date pay to order of The Guardian Food Company One Hundred Fifty no/100 _______________________ Dollars

The obligation of the acceptor arises out of the purchase of goods from the drawer.

Accepted Date, Feb. 6, — 1922 Payable at First Nat. Bank

Whitlock-Lines R.F. Whitlock

THE GUARDIAN FOOD COMPANY By K. ROCKFELLER, Secy." To Whitlock-Lines R.F. Whitlock Monett, Mo. Due Apr. 7, 1922

As we understand, after Whitlock signed and delivered the bills "Feb. 6, 1922" and "First Nat. Bank" were filled in across the face of each. Also the name of the drawee, "Whitlock-Lines-R.F. Whitlock, Monett, Mo.," was added in the lower left hand corner after delivery. It does not appear when these additions were made except that they were made prior to February 20, 1922, when plaintiff purchased. Defendants further contend that the bills were incomplete when accepted by them in that the name of the drawee did not appear therein, and that such being true plaintiff did not and could not become a holder in due course.

A holder in due course is defined by our Negotiable Instrument Law, section 838, Revised Statutes 1919, as follows: "A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it."

So far as appears plaintiff meets every requirement of a holder in due course as defined by the statute. The bills when purchased by plaintiff were complete and regular on their face, and plaintiff became the holder in good faith and for value before they were overdue; and when purchased plaintiff had no notice of any infirmity or defect in the title of the food company. Plaintiff, in other words, had no notice of the equities existing between the food company and defendants, growing out of the transactions resulting in defendants accepting the bills.

Section 911, Revised Statutes 1919, reads as follows: "Any alteration which changes: (1) The date; (2) the sum payable, either for principal or interest; (3) the time or place of payment; (4) the number or relation of the parties; (5) the medium of currency in which payment is to be made, or which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect, is a material alteration."

Section 910, Revised Statutes 1919, reads: "Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who himself made, authorized or assented to the alterations and subsequent indorsers. But 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."

When the First National Bank was designated as the place of payment a place of payment was added when none was theretofore specified, and such addition under the facts was a material alteration. [Sec. 911, supra.] Section 800, Revised Statutes 1919, provides that where an acceptance of an instrument payable at a fixed period after sight is undated any holder may insert therein the true date of acceptance. Hence the insertion of the date of the acceptance did not affect the validity of the bills. Defendants accepted the bills and thereby admitted that they were the drawees and are estopped from defending on the ground that there was no drawee designated in the original bills. [Daniel On Negotiable Instruments (6 Ed.), secs. 486, 497; 7 Cyc. 570; 6 C.J., 299, sec. 471; Davis v. Clark, 6 Q.B. 16; Pete v. Reynolds, 9 Exch. 410.] Also the rule is that where the drawee's name is left blank such may be filled in under an implied authority like any other blank. [7 Cyc. 570, and 620; Clay and Funkhouser Banking Co. v. Dobyns et al., 213 Mo. App. 468,255 S.W. 946.] The point was not directly ruled in the case last cited, but the rule mentioned was fully recognized.

Under section 910, supra, plaintiff, who according to the evidence, is a holder in due course, can enforce payment according to the original tenor of the bills notwithstanding the material alteration. [See also 8 C.J. 750; Munroe v. Stanley,220 Mass. 438, 107 N.E. 1012; Broadway Nat. Bank v. Heffernan,220 Mass. 247, 107 N.E. 921; Washington Finance Corp. v. Glass,74 Wash. 653, 134 P. 480, 46 L.R.A. (N.S.) 1043.] Plaintiff's case, therefore, is upon bills which have no place of payment designated.

It is not necessary to discuss instructions. They were bottomed upon an erroneous notion of the law applicable to the facts of the case. We might mention also the law applicable to proof of endorsement where an alleged holder in due course is suing, and where the answer raises the question of ownership. [See Bank of Bernie v. Blades, 247 S.W. (Mo. App.) 806; Metropolitan Discount Company v. Indermuehle, 217 Mo. App. 326.]

The judgment should be reversed and cause remanded, and it is so ordered. Cox, P.J., and Bailey, J., concur.