Garrard v. Haddan ( 1871 )

The opinion of the court was delivered,

by Thompson, C. J.

There could be no question but that the alteration made in the note in this case would avoid it as between the maker and payee, the consent of the latter to it being wanting, and there being neither an implied nor express authority for making it.

But how is it with the plaintiff, an innocent holder for value in the usual course of business ? There was a blank in.the body of the note (a printed note) between the words “ one hundred” and “ dollars,” when the maker signed and delivered it. 'The payee afterwards filled the blank with the words “ and fifty,” which made the note read “ one hundred and fifty,” instead of “one hundred dollars,” the sum for which it was drawn. In this condition it was taken by the plaintiff without the least grounds existing for any doubt of its entire genuineness. “ By inspection of the note,” says the learned judge -in his opinion on the reserved question, “ the most skilled expert would have failed to detect any alteration in its make.” There was no difference in the handwriting between the words added and those which preceded them; no difference in the ink, and no crowding of words, to put the most careful man on inquiry, or to raise a suspicion that all was not right. The note thus clear on its face, was taken on the credit of the drawer, and now shall he be discharged from his obligation by reason, or on account, of his own negligence in delivering a note that invited tampering with ? He could have saved all difficulty by scoring the blank with his pen. It would have been impossible almost to have written over this without leaving traces of the alteration. In that case a purchaser of the note would take it at his own risk. This is, therefore, one of the cases in which it is a maxim, “ that where one of two innocent persons must suffer, he shall suffer who by his own acts occasioned'the confidence and the loss:” Story’s Eq., ss. 387. “ If a bill or check be drawn in so careless a manner as thereby to enable a third person to practise a fraud, the customer and not the banker must bear the loss:” Chitty on Bills, s. 60; Byles on Bills 332; 22 Eng. L. and Eq. 516; 31 Barb. 100; 41 Ib. 465. “ A party who intrusts another with his acceptance in blank is responsible to a bond fide holder, although the blank be filled with a sum exceeding that fixed as a limit by the acceptor. Though the filling of the blank in violation of the agreement of the parties be a forgery, the acceptor is estopped from setting up the fact: 7 Smith (N. Y. Rep.) 531. Denio, J., in delivering the opinion of the Court of Appeals in this case says, among other things, “ that the principle which lies at the foundation of these actions, Í think, is, that the maker who by putting his paper in circulation has invited the public to receive it of any one having it in possession with apparent title, is estopped to urge the actual defect of title against a bond fide holder.”

The doctrine of the point is ably discussed by the learned judge, and the easés touching the subject are noticed and discussed. The doctrine is, however, but an elaboration of a. great principle of justice, that if one by his acts, or silence, or negligence, misleads another, or in'any manner affects a transaction whereby an innocent person suffers a loss, the blameable party must bear it: Story’s Eq. 386-87.

In Young v. Grote, 4 Bing. 253, and also reported in 12 Moore 484, the very case in principle with the one,in hand may be found. It was an alteration by filling spaces or blanks negligently left in a check, and filled by the holder so as to increase the amount and not be detected by inspection of the paper. The bank paid it, and the drawer was held chargeable for the full amount on the ground of his negligence. The same doctrine was held in two Scotch cases, viz.: Ragore v. Wylie, and Graham v. Gillespie, to be found in full in Ross on Bills and Promissory Notes, 104-95. It is true, in 1st Allen (Mass.) 561, the case of Wade v. Whittington seems to limit the doctrine to cases where the alteration is made hy an agent, clerk or confidential party; but this, in my opinion, is against an earlier decision in that state — I refer to Putman v. Sullivan, 4 Mass. 45, in which no such restriction appears. It seems an impracticable limitation.

In Hall v. Puller, 5 B. & C. 750, the case was that of an alteration of a bill perceptible on its face. The bankers paying it were allowed only to charge the drawer with the original amount put in the draft, for it was negligence on their part to pay the face of it in its altered aspect. Such seems to have been the doctrine applied by this court in Worrall v. Gheen, 3 Wright 388; although the case of Hall v. Fuller, asserting the same doctrine, does not seem to have been cordially approved in that opinion.

I regard this case as depending on the principles of the other cases cited above, and not on Worrall v. Gheen. That was a case of a perceptible alteration, and the plaintiff was allowed to recover only to the extent of the original unaltered note (the plaintiff), being entirely innocent of the alteration, or of knowing anything about it. But in the case in hand there was no perceptible alteration on the face of the note whatever. The handwriting was all the same, and no crowding of words to effect the insertion — all was natural and regular in appearance. The words “ and fifty” were inserted in the space between the words “ one hundred” and the word “ dollars” in the note, by the same hand that filled up the note originally. It had been delivered to plaintiff in this condition. The authorities I have referred to hold the drawer of such a note answerable for the full face of the note as altered, to any bond, fide holder of it for value, on the ground of the negligence of the maker in leaving the blank in the note which was thus filled up after its execution, and so we now hold, notwithstanding, as between the maker and payee or other person making the alteration, it would be a forgery and void.

We think this rule is necessary to facilitate the circulation of commercial paper, and at the same time increase the care of drawers and acceptors of such paper, and also of bankers, brokers and others in taking it. This rule will not apply to cases where the alteration is apparent on the face of the paper. There it is possible the rule in Worrall v. Gheen may apply. The only error, therefore, which we discover in the judgment on the reserved question, was against the defendant'in error. By the rule which I have endeavored to deduce from the cases, he was entitled to judgment for the face of the note and interest. But the defendant in error is not a complainant here, and the plaintiff in error makes no complaint that the judgment against him is too small, and therefore the judgment is affirmed.