Ofenstein v. Bryan

20 App. D.C. 1, 1902 U.S. App. LEXIS 5422

• Court: District of Columbia Court of Appeals
• Decided: April 3, 1902
• Docket: No. 1140
• Status: Published

Opinion

Mr. Justice Shepard

delivered the opinion of the Court:

1. This suit ivas begun by the appellant, John Ofenstein, as indorsee and holder for value, against Charles C. Bryan, Gilbert B. Towles, Henry O. Towles, and'Zenas O. Bobbins, upon the following note:

$1,000. Washington, H. C., July 26, 1899.

Three months after date we, jointly and severally, promise to pay to the order of Zenas O. Bobbins one thousand dollars at the Lincoln National Bank.

Value received, with interest, at the rate of 6 per cent, per annum, until paid.

(Signed) G. B. Towles,

“ C. O. Bryan,

1413 N. Y. Ave.

(20c. int. rev. stamps affixed.)

The note bears the indorsements of Zenas O. Bobbins, Henry O. Towles, and G. B. Towles. It is one of a number of notes alleged to have been negotiated, after material alterations therein, by Gilbert B. Towles whose conviction, under an indictment for the forgery of one of them, has recently been affirmed. Towles v. United States, present term [19 App. D. C. 471].

The declaration is in the ordinary form. The defendants — Gilbert B. Towles excepted — appeared with separate pleas of non assumpsit, nil debet, and special denials of execution or indorsement.

2. The general bill of exceptions is a lengthy document, involves many minor points of exception, and is of such intricate construction that it is difficult to extract from it, with any degree of certainty, the manner in which some of the controlling questions were actually presented and determined. Instead of undertaking to give the entire history of the case and proceedings on the trial, as narrated in the bill of exceptions, which would occupy great, .and not apparently necessary space, we shall content ourselves with taking up the questions which we conceive are important to a final disposition, in their natural order, stating such of the essential facts bearing on these as we have been able to extract with reasonable certainty from the general mass.

3. Preliminary to the offer to introduce the note, plaintiff offered two witnesses tending to prove the genuineness of each signature and indorsement of the note. One of these admitted that the word “ we,” in the clause “ we promise to pay,” was somewhat blurred and “ mixed up;” and apparently changed from “I;” that the words “jointly and severally ” were interlined and so blurred that he would not undertake to say who wrote them, but thought Gilbert B. Towles did. Plaintiff having stated that he obtained the note, about the day of its date, from Samuel H. Walker, one of the foregoing witnesses, offered to read it to the jury. Defendants objected on the ground of material and suspicious alterations, apparent on the face of the note, which should first be explained.

The court after inspection of the note sustained the objection on the following grounds substantially: It is apparent that the note is not all in the same handwriting, there appears to be a change in the date; the first signature in order — G. B. Towles — seems to> have been signed after that of C. C. Bryan; there seems to be a discrepancy in the “ three months ” and in the amount. Galled upon by counsel for plaintiff for further specification, the court said that he " found from the inspection aforesaid, alterations to exist in the date of the note; in its amount; the writing over the word 'I’ of 'we;’ the insertion of the words 'jointly and severally;’ the difference in ink; the peculiar look of certain names, the body seeming to be in the same ink that the second maker (Bryan) signed with.” (It may be added here, that at a subsequent stage of the case, an expert in handwriting testified, pointing out in detail many indications that the note had been tampered with; among these, indications that the amount had been erased by the use of acid and another written, the acid giving the note a yellow stain. Our own view upon inspection of the note agrees generally with that; of the court below.) Tbe exception taken to tbe exclusion , of the note is tbe basis of tbe first error assigned.

There is a great mass of conflicting opinions and decisions in respect of tbe question — in tbe varying phases of its occurrence: Upon whom lies tbe duty of explanation, and what is tbe measure of its discharge, when a negotiable instrument, that has apparently been altered in a material respect, is offered in evidence by one claiming under it?

Without spending time in an unnecessary review of these decisions, we think it sufficient to say, that, in our judgment, tbe weight of authority as well as reason supports tbe proposition, that, in such case, where tbe alteration is material, and such as reasonably to excite suspicion, it is incumbent upon the party offering it in support of bis claim thereunder, to give some evidence tending to explain its condition. This proposition has tbe support of Greenleaf and Wharton, and is said by tbe latter to embody tbe doctrine of tbe Roman law. 1 Greenl. Ev., Sec. 564; 1 Whart. Ev., Sec. 621. And in at least two decisions it has been approved by tbe Supreme Court of tbe United States. United States v. Linn, 1 How. 104, 111; Smith v. United States, 2 Wall. 219, 232, 233. We would content ourselves with citing those cases alone, as settling tbe law in this jurisdiction, but for tbe contention that a different doctrine has been, or would seem to have been enounced in several later decisions. Among these are Little v. Herndon, 10 Wall. 26, 31; Hanrick v. Patrick, 119 U. S. 156, 171, 172; Sturm v. Boker, 150 U. S. 312, 340. In Little v. Herndon, it is true that IVCr. Justice Nelson did say, in delivering tbe opinion of tbe court.: “ In tbe absence of any proof on tbe subject tbe presumption is that tbe correction was made before tbe execution of tbe deed.” And it is also true that tbe same thing was said, substantially, in Hanrick v. Patrick, with tbe citation of Little v. Herndon. No mention was made of tbe earlier cases, and tbe question, being a minor one as stated in Little v. Herndon, and wholly immaterial under tbe facts proved in Hanrick v. Patrick, given scant mention. In Hanrick v. Patrick a deed was offered in proving title. It showed upon its face that the name of the grantee, Elizabeth O’Brien, had been scratched so as to read Eliza O’Brien.

The court overruled the objections to the introduction of the deed in evidence, but before reading it the party offered evidence of the genuineness of the signature of the subscribing witness, and proved that Elizabeth and Eliza O’Brien were one and the same person, and also proved that the deed was made as a gift to Eliza O’Brien. The Supreme Court, before the allusion to Little v. Herndon had declared the admissibility of the deed upon the supporting proof, saying: “ The only erasure appearing, being a change from one name to the other, was sufficiently explained by the proof of identity.”

It must be noted, moreover, that the instruments in those cases were deeds. Now, some of the decisions which apply the rule of the presumption of innocence to the producer of a deed, deny its application in the case of negotiable instruments. 1 Whart. Ev., Sec. 629. As has been said by the Supreme Court of Pennsylvania: “As a general rule the law presumes in favor of innocence, but this presumption of innocence does not extend to the alteration of negotiable instruments. He who takes a blemished bill or note, takes it with all its imperfections on its head. He becomes sponsor for them, and though he acts honestly he acts negligently. But the law presumes against negligence as a degree of culpability ; and it presumes that he had not only satisfied himself of the innocence of the transaction, but that he had provided himself with the proofs of it, to meet a scrutiny he had reason to expect.” Estate of Nagle, 134 Pa. St. 31, 44.

But whilst it may be conceded that there are stronger reasons for imposing the burden of explanation upon one who offers a suspiciously altered negotiable instrument in evidence, than in case of a deed, because of essential differences in the purposes and uses of such instruments, and of the usual formal execution of the latter with attesting witnesses, we are not to be understood as expressing the opinion that, in case of the palpable and suspicious alteration of a ■deed the burden of explanation ought not likewise to be cast upon the one who, claiming under it, offers it in evidence Sturm v. Boker, supra, is not in point. It was a suit in equity involving various matters of account between the parties growing out of consignments of goods for sale, and collections of insurance thereon, etc. Two important exhibits were filed by the plaintiff, consisting of memoranda relating to the shipping of goods, and insurance thereon, over the signatures of the defendants. Defendants first declared the signatures forgeries; they afterwards admitted their genuineness, but declared that the overwritten memoranda were forged. Discussing the point, the court said: “A great deal of proof was taken to establish this contention, but it fails, in our opinion, to show that these documents were forgeries. The signature being genuine, the burden of proof was clearly upon the defendants to establish that the written part above the signatures was forged.” 150 U. S. 840.

The last sentence quoted is claimed as authorizing the admission of the note in this case upon the formal proof of the signatures, and as casting the burden of proof upon the defendants to show that the notes had been altered after signing and without their consent. It is impossible, however, to conceive that the court meant more than to state the simple rule of daily practice, namely, that an executed instrument without blemish is established prima facie by formal proof of execution.

• This formal proof of execution is the condition of the.admissibility of all instruments of whatsoever nature that may be offered in evidence. Where, however, the vice of the instrument is not in the signature but in the suspicious appearance of erasures and alterations in the writing above the signature, this rule of admissibility fails with the reason for its existence, and is succeeded by the rule hereinabove stated,, which then becomes applicable.

The court was, therefore, right in rejecting the note without some proof in explanation of its suspicious appearance.

4. Another error is now to be considered. Though late in the order of its assignment it properly follows the one just disposed of.

Immediately after the record of the proceedings above discussed, the bill of exceptions contains the following recital:

“And thereupon the plaintiff was recalled as a witness and his testimony conduced to show that he received the note sued on from the witness Walker on or about the 26th day of July, 1899, along with $218 in money in exchange for another note in the same form for $1,200, dated April 26, 1899, and due in three months; that he merely looked at the names on it and put it in his safe; that no change was made in it after he received it and he noticed no discoloration in it, and he delivered it back to Mr. Walker for collection shortly before it fell due.

“And thereupon the plaintiff recalled the witness Walker, whose testimony conduced to show that on the date of the note sued on there was a note for $1,200 due by the same parties, and that Gilbert B. Towles then brought him the note in suit and gave it to him with a check for $218.00; that the witness had been a notary public for twenty or twenty-five years, and had been connected with the National Capital Bank for twelve years and was familiar with commercial paper, and he examined it with his eyeglasses; the signatures were apparently the same as before, and there was no apparent discoloration; that his attention was then not called to anything except the bad writing in the words ‘ jointly and severally,’ which now appear to be a little faded, but then was more of the same appearance as the balance of the note; that the note in suit was identical in every way on the face and the signatures with the previous note for $1,200 before referred to.

“ That he delivered it the next day to the plaintiff and never saw it again until the plaintiff handed it back to Mm for collection a few days before its maturity, and that he had duly protested as a notary public this note and sent proper notices, and that on two different occasions within a month after the protest he had seen the defendant Henry O. Towles and exhibited to him the note sued on and said Towles then inspected the note face and back and said the note was all right, and he was making arrangements to pay it.”

Certain other evidence relating to the business relations of all the parties in what was called the Gettysburg Company, was then offered, some of which was excluded. The point made on the exclusion will be passed for later consideration. The defendants introduced the expert testimony before referred to. Bryan testified that his signature was not genuine; that he had signed only notes for small amounts for Gilbert Towles save one (consolidated) for $1,000; he admitted the receipt of notices of protest during the fall of 1899 of paper of Gilbert B. Towles — could not remember as to this particular note — and that he always sent them to Gilbert B. Towles. A paper was introduced signed by witness, Gilbert B. Towles, and H. O. Towles, dated August 8, 1898, acknowledging to the Lincoln National Bank that a note of that date with an erasure and change as to date, was correct and bore their genuine signatures; and would be substituted with a new note as soon as the indorsement of Zenas C. Bobbins could be secured, he then being absent. The signatures to this paper were admitted. Henry O. Towles denied his own indorsement of the note in the condition as now appeal’s, and denied seeing the note in Walker’s hands as well as a promise to pay it, and further stated that he had no suspicion that alterations had been made in notes until after Gilbert Towles’ confessions, December 11 or 12, 1899. His cross-examination was upon his connection with the Gettysburg Company, for which Gilbert Towles was raising money by notes. He stated that in September, 1898, he took a note at the request of his brother Gilbert to the Columbia Bank in order to get an extension of thirty days on a similar note for $2,500. He was in a hurry and did not discover that the note showed an alteration on its face. His brother had perpetrated a fraud upon him. For these reasons he had never denied his liability on said note. Bobbins, whilst admitting the indorsement, for Gilbert B. Towles, of many notes in 1899, a memorandum of which he produced, denied that he had ever indorsed a note of the date and amount of the note sued upon. He was cross-examined at great length, and some contradictions shown in his statements; his denial of an interest in the Gettysburg speculation was contradicted by written evidence of assignments made to him by Gilbert B. Towles. This witness was 92 years of age. The confession of Gilbert B. Towles in December, 1899, was first brought out by plaintiff in the cross-examination of Henry O. Towles, in which he also stated that all the money obtained by him on notes discounted had not been used in paying obligations of the Gettysburg Company. This evidence occupies great space in the bill of exceptions; but the foregoing condensation is sufficient for the purposes of the discussion. Plaintiff was also permitted, in rebuttal, to offer the evidence of a witness, that in the early part of July, 1899, he saw Bobbins indorse three or four blank notes and leave them with Gilbert B. Towles for the purpose of renewing and taking care of notes in bank. At the conclusion of all of the testimony the court, upon motion of the defendants, instructed the jury to find a verdict for the defendants Bryan and Bobbins, because the plaintiff had not introduced proof sufficient to sustain the burden of proof cast upon him; so the bill of exceptions recites.

We are constrained to hold that the court erred in not submitting the question of execution, and of alteration after execution, to the jury, with an appropriate charge on the burden of proof throughout.

The plaintiff’s evidence was positive that the note had undergone no alteration after its receipt by him, and he and Walker, who presented the note for Gilbert B. Towles, testified that there was nothing suspicious in its appearance when received. This proof has been held sufficient to warrant the introduction of the note, and we think rightly so. Miller v. Stark, 148 Pa. St. 164; Stough v. Ogden, 68 N. W. Rep. 516 (Nebraska, Oct. 1896). Pennsylvania and Nebraska are both States which also maintain the rule that a note showing a suspicious alteration on its face is not admissible in evidence without some explanatory proof. Nesbitt v. Turner, 150 Pa. St. 429, 437; McHale v. McDonnell, 175 Pa. St. 632, 643; Johnson v. Bank, 28 Neb. 792.

No matter how improbable this evidence of the condition of the note may have appeared to the learned justice who presided on the trial, with the note itself under his eye, and in the light of the established as well as confessed fact of Gilbert Towles’ criminal conduct in the matter of altering and raising similar notes, it nevertheless raised an issue of fact to be submitted to the jury. Each defendant’s personal testimony related solely to his own defense, and considering the facts brought out in cross-examination and other conditions of evidence, heretofore briefly stated, we cannot say that there was nothing whatever in the evidence that involved the credibility of the witnesses. The preliminary question, whether, on the face of the note, the alteration is material and so plainly suspicious as to warrant the requirement of some explanatory evidence as the condition of its admission, is for the determination of the court. But when admitted after some such proof, the question whether the alteration was made before or after delivery, or with or without the knowledge or consent of the several signers and indorsers, is one that must be submitted to the jury. Steele v. Spencer, 1 Pet. 552, 563.

It is scarcely necessary to add, that notwithstanding the evidence of plaintiff of the failure to observe any blemish or other circumstance of suspicion on the face of the note when received, the defendants cannot be bound, though their signatures may have been written with their own hands, if the note was, in fact, altered by Gilbert B. Towles, in a material particular, thereafter and without their knowledge and consent. It would be none the less a forgery. Wood v. Steele, 6 Wall. 80; Angle v. N. W. Mut. Life Ins. Co., 92 U. S. 330, 341.

5. As the case must be remanded for a new trial, such of the remaining questions raised by the assignments of error as may re-occur, will be briefly considered:

(1) The court was right in holding that the facts concerning the Gettysburg Company’s purchase, its embarrassed condition, the interests of all the defendants therein, and the execution of notes for negotiation by Gilbert B. Towles for the needs of the company, were admissible only as a foundation for other evidence that might be introduced on behalf of the plaintiff, tending to show that authority had been given to Gilbert B. Towles to erase the dates and amounts of former notes executed by them, substitute them at his will, and then again offer them for discount; or that with full knowledge of the facts they had admitted the genuineness of the note, and promised to pay it to an innocent holder.

That other altered notes, not part of the transaction with the plaintiff, may have been paid by the parties with knowlelge of their forgery, is not a relevant fact, much less can it operate as an estoppel to deny the authority to alter the note sued on. Cohen v. Teller, 93 Pa. St. 123, 127, 128; Whiteford v. Munroe, 17 Md. 135, 142, 149; Walters v. Munroe, 17 Md. 150, 153; Woodruff v. Munroe, 33 Md. 146, 159.

(2) The fact that the defendants attended a meeting of creditors of the Gettysburg Company and holders of some of the forged notes that had been altered by Gilbert B. Towles, with a view to taking steps to secure that indebtedness upon condition of extensions and so forth, was, for the same reasons, irrelevant. The only ground upon which it could become relevant, would be as necessary introduction to admissions made in the course thereof by one or all of the defendants, of the authority of Gilbert B. Towles to erase, alter and then reissue notes that had formerly been executed by them, or that his erasures and alterations were made with their knowledge and consent. The fact that they may have contemplated arrangements by which all the obligations of either kind might be secured, extended, and thereafter paid is not of itself relevant. See cases last above cited.

(3) The confessions of Gilbert B. Towles were first brought out by the plaintiff on cross-examination.

They would be clearly inadmissible on behalf of the defendants, unless as connected with the general meeting of creditors, should that become admissible under the conditions before stated.

(4) The testimony of one E. J. Smith to the effect that he had seen Bobbins indorse several blank notes and leave them with Gilbert B. Towles in June or July, 1899, was rightly admitted as tending to impeach the evidence of Robbins in respect of his dealings with, and confidence reposed in Towles ; but it could have no possible relevancy to the case against the other defendants ■ — • Bryan and Henry O. Towles. Even if Robbins did indorse blank notes and leave them with Gilbert B. Towles to fill up at his discretion, still, whilst said Towles might have completely bound him by filling the blanks for any amount and negotiating it to an innocent holder, his erasure or interlienation of material words so as to change the terms of words written or printed in the blank form, would be fatal to its validity. Wood v. Steele, 6 Wall. 80; Angle v. N. W. Mutual Life Ins. Co., 92 U. S. 330, 340.

And for stronger reason, the same result would follow if, after having filled the blanks in such a note and used it, he should subsequently have recovered it, erased material words and substituted and interlined others.

(5) The testimony of E. L. Hawks tending to show that he had seen blank notes in the possession of Gilbert B. Towles with what he believed to be the genuine signature of Robbins indorsed thereon, was properly excluded. As he did not see Robbins indorse the notes, as Smith claims to have done, it could not be proper impeachment of Robbins. It sought to establish one inference from another.

(6) The evidence tending to show that bottles of “ Collins’ Ink Eradicator ” had been found in the desk of Gilbert B. Towles was made relevant by the expert evidence in regard to the apparent use of that preparation upon the note in controversy.

(Y) The last point to be considered in this connection is thus stated in the bill of exceptions. In the course of the examination of the witness E. J. Smith, he was asked “ Whether he was ever present in Gilbert Towles’ office when he used acid in altering any notes, the plaintiff avowing that he expected to prove by the witness that he saw this done in the presence of Robbins and Henry O. Towles and possibly Mr. Bryan.” This was excluded on the objection that it was immaterial and not proper rebuttal testimony.

This testimony, we are constrained to hold, was competent.. That the truth of the proposed statement might seem improbable under all the circumstances, is not a question of law, and it should go to the jury for all that they may consider it worth. In a case like this where a fact is sought to be established by circumstantial evidence, great latitude ia often permitted. Holmes v. Goldsmith, 141 U. S. 150, 164.

And we are not prepared to say that the fact here offered to be proved is entirely too remote.

As regards the objection that the evidence was not properly in rebuttal, it is only necessary to say that a wide discretion is given the trial court in respect of the order of proof, and in cases of doubt it is better to permit additional evidence, though it ought to have been given in chief, where it is clear that no improper advantage has been sought by withholding it and no necessary injury would occur to the opposing party through surprise. See Robinson v. Parker, 11 App. D. C. 132, 138; Throckmorton v. Holt, 180 U. S. 552, 564.

(6) The last assignment of error relates to the instructions given to the jury in submitting the case as to Henry O. Towles’ liability. The case against him differed from that against his co-defendants in that there was evidence tending to show his acknowledgment of the validity of the note and a promise to pay it, with request for indulgence.

The following instruction was given at the request of the plaintiff.

6. If the jury believed from the evidence that the defendant Henry O. Towles, after the note matured, and after an inspection thereof, and with knowledge of its then condition, recognized and promised to pay or asked for indulgence thereon, then any alteration previously made will not prevent a recovery against him.

On behalf of said Towles two additional instructions were given to which plaintiff excepted. These are substantially to the effect:

(1) That an acknowledgment of liability on the note, to be ■ binding, must have been made with full knowledge that it had been altered. (2) That the alterations being material, the verdict should be for defendant unless the plaintiff has shown by a fair preponderance of the evidence that the alterations were made before he indorsed the note, or that if made afterwards, the defendant with full knowledge of said alterations ratified the same.

Whilst there is a conflict of authority on the point whether one can bind himself by the acknowledgment of an altered or forged instrument and a promise to pay the same without a new consideration, or some special ground of estoppel, we agree with the trial court that he can do so, provided the paper is in the hands of one who had no connection with the forgery, and the promise is not involved in an attempt to compound the felony. Bank v. Crofts, 4 Allen, 447, 454; Hefner v. Vandolah, 62 Ill. 483; 1 Am. & Eng. Encyc. of Law (2d ed.), 1187; McKenzie v. British Linen Co., L. R., 6 App. Cas. 82, 99.

The court was also right in charging the jury that such acknowledgment or ratification, in order to bind, must be with full knowledge of all the facts. Tucker v. Moreland, 10 Pet. 58, 75; 1 Am. & Eng. Encyc. of Law, 1189.

Without further discussion of possible questions that may arise on a new trial, the judgment will be reversed with costs for the error pointed out, and the cause remanded with directions to grant a new trial. It is so ordered. Reversed.