Savage v. Savage

59 P. 461, 36 Or. 268, 1899 Ore. LEXIS 85

• Court: Oregon Supreme Court
• Decided: December 26, 1899
• Status: Published

Opinion

Me. Chief Justice Wolveeton,

after stating the facts in the foregoing language, delivered the opinion.

1. It is first insisted that the court erred in overruling the demurrers to the complaint, but, inasmuch as the defendants have answered over, we can only consider whether the complaint is sufficient after verdict. The contention is that, having brought his action upon an express contract, which appears to have been purposely-altered, plaintiff cannot recover against the defendant Frank Savage upon an implied promise. This proposition assumes that the complaint is based upon the note, while, upon the other hand, it is contended that the action is founded upon the original consideration, and not upon the note. But, before considering the question here made, we will dispose of another. It is argued that, as the money was loaned and the note executed and delivered at the same time, there was but one transaction, and the loan was merged in the note ; hence that there could be but one cause of action, and that upon the note. The authorities, however, establish the converse of the proposition. The able authors of the American & English Encyclopedia of Law (2 ed., vol. 2, p. 200) lay down the rule that ‘ ‘where a promissory note is given for the purchase price of goods, or for money lent, or for any precedent indebtedness which is not extinguished by, and exists independently of, the writing, and the payee innocently makes a material alteration therein, although the note itself is avoided, and, since the liability of the surety exists solely by virtue of the writing, there can therefore be no recovery against him, there may nevertheless be a recovery by the payee against the maker on the original indebtedness:” Matteson v. Ellsworth, 33 Wis. 488 (14 Am. Rep. 766); Gorden v. Robertson, 48 Wis. 493 (4 N. W. 579), and Sullivan v. Rudisill, 63 Iowa, 158 (18 N. W. 856), are instances of actions maintained upon the original consideration, disregarding the note given in evidence thereof where it was for money loaned ; and this court, in Black v. Sippy, 15 Or. 574 (16 Pac. 418), and Schreyer v. Turner Flouring Co. 29 Or. 1 (43 Pac. 719), has given its sanction to the same doctrine. Is the present action based upon the note ? That it was not so intended is apparent, as a prior surrender of it is alleged by the complaint, and the relief demanded is commensurate only 'with the idea of money had and received to the use of the defendants. True, the note is set out; but the material alteration thereof is also shown, and the count is upon the loan as distinguished from the note. The count would, perhaps, be more technically correct had it been for money had and received to the use of the defendants ; but it is immaterial, and it may now be so treated.

2. The question of graver importance is whether, having changed the note without the consent of Frank, the plaintiff has not destroyed his right of action as against him, even for the original consideration. The rule is laid down by one of the appellate courts in Illinois that “the fraudulent alteration of a note, in a material part thereof, by the payee or holder, not only destroys the instrument, but it also extinguishes the debt for which it was given, and no recovery can be had upon either. But if the alteration, though material, be made without any fraudulent purpose, it is to be regarded as a mere spoliation of the instrument, and the holder may surrender it up, and resort to the original indebtedness. The effect of the alteration depends upon its nature, the person by whom and the intention with which it was made:” Black v. Bowman, 15 Ill. App. 166. Folgeb, J., expresses it in different order, but with like effect, in Booth v. Powers, 56 N. Y. 22. He says : “If a note be altered in a material part, without authority, after execution, that avoids the note. It is not of moment whether it be done with fraudulent intent, save as the existence of such intention affects the right to resort to the original indebtedness ; and then the fact of the unauthorized material alteration is a matter for the consideration of the jury in determining the question of fraudulent intention. * * * If the alteration was made without fraudulent intention, the payee may resort to the original indebtedness, if that was independent of the note, and has not been discharged by the execution of it, and pursue the maker upon that. But, to have such resort, he must be able to produce and surrender the note.” There is some dissent among the cases touching the soundness of the rule thus denoted, but we think it is supported by the great weight of authority. See Wallace v. Tice, 32 Or. 283 (51 Pac. 733); Elliott v. Blair, 47 Ill. 342; Vogle v. Ripper, 34 Ill. 100 (85 Am. Dec. 298); Wallace v. Wallace, 8 Ill. App. 69 ; Owen v. Hall, 70 Md. 97 (16 Atl. 376); Clough v. Seay, 49 Iowa, 111; Hunt v. Gray, 35 N. J. Law, 227 (10 Am. Rep. 232); York v. Janes, 43 N. J. Law, 332; Merrick v. Boury, 4 Ohio St. 60; State Savings Bank v. Shaffer, 9 Neb. 1 (31 Am. Rep. 394, 11 N. W. 980); Matteson v. Ellsworth, 33 Wis. 488 (14 Am. Rep. 766); Gorden v. Robertson, 48 Wis. 493 (4 N. W. 579); Sullivan v. Rudisill, 63 Iowa, 158 (18 N. W. 856).

3. There is a legitimate and just presumption attending the material alteration of a bill or note, made subsequent to its execution and delivery, without the consent of the makers, and which operates to their injury, that it was done fraudulently : 2 Daniel, Neg. Inst. (4 ed.) § 1412 ; Whitmer v. Frye, 10 Mo. 221; Robinson v. Reed, 46 Iowa, 219. It is important, therefore, in suing upon the original consideration, to rebut the presumption of fraud where it is shown that the change was purposely made ; and we are to consider whether it has been done in the present case as it affects the defendant Frank Savage. The complaint states how -the change came to be made ; that it was wholly without the assent of Frank, while with the entire concurrence of his joint maker. There is no specific allegation that it was innocently made, or without intent to defraud ; thus directly negativing the presumption. Nevertheless, it is in a manner negatived by the frankness with which the entire transaction is disclosed. However, the answer alleges that the change was fraudulently made, which the reply denies, and the whole case went to the jury upon the question whether or not the alteration was, in fact, fraudulent; so that the case has been tried out upon the very hypothesis which, for want of alleged facts to support it, the defendants contend renders the complaint insufficient. Whenever the complaint contains allegations which, in their legal effect, are sufficiently general to comprehend a matter so essential and necessary to be proved that, had it not been given in evidence, the jury could not have found the verdict, the want of an exact statement of such a matter will be cured by the verdict, as the fact would be the same whether the allegation of the complaint was complete or imperfect: Booth v. Moody, 30 Or. 222 (46 Pac. 884). In such a case there is a defective statement of a good cause of action, for which the verdict furnishes a remedy : Olds v. Cary, 13 Or. 362 (10 Pac. 786); Drake v. Sworts, 24 Or. 198 (33 Pac. 563). The first of these cases was upon an undertaking for 'an injunction, wherein the complaint failed to allege that the injunction was wrongful, or without sufficient cause ; and the latter was upon an attachment bond, a similar allegation being omitted. It was held that, although the complaint was insufficient, as challenged by the demurrer in the first instance, yet that the verdict cured it. We think, while it is not altogether free from doubt, that the present case falls within the doctrine. The proceedings are so nearly in line with such as were pursued in Matteson v. Ellsworth, 33 Wis. 488 (14 Am. Rep. 766), and sustained in the end, that we are constrained to regard that case as good authority in support of the present. There has been some criticism of the case as promulgating the doctrine that, although the alteration be material and fraudulent, yet recovery could be had upon the original consíá&etion : 2 Daniel, Neg! Inst. (4 ed.) § 1413. But in this the author is in error. In Gorden v. Robertson, 48 Wis. 493 (4 N. W. 579), the distinguished jurist who wrote the two opinions in Matteson v. Ellsworth, says of the latter case that it “does not lay down any such doctrine, whatever may be the logical result of the decision. There the effect of an alteration of a promissory note by the payee, without the consent of the maker, made under an honest mistake of right, was considered; and it was held that such an alteration would not prevent a recovery on the original consideration.” We hold, therefore, that the complaint is sufficient upon which to charge the defendant Frank Savage, and, being sufficient as to him, it follows that it is also sufficient as to John Savage, Jr.; so that the demurrers, in the light in which we are now permitted to consider them, were properly overruled.

After the plaintiff had rested, the defendant Frank Savage took the stand in his own behalf, and testified substantially as follows : “On the morning of December 12, 1891,1 went to Savage’s, my cousin John’s, residence, to borrow some money for myself and brother to invest in Myrtle Creek Mining Company, or in mines. I told him I wanted to borrow some money. I told him what it was for, and the amount. I asked him for a greater loan than he was able to let us have. He said he had three thousand dollars that was available, and, if that would do us, we could have it. And whether I told him just how many shares that would buy, I do not know ; but I told him that I wanted half of it, and my brother wanted half of it. He says, ‘I would not like to let John have money alone ;’ and he gave me his reasons, and he say's, ‘If you will make a joint note out of it, I will loan the money ;’ that is, he would let John have what he asked for and me what I asked for. I got fifteen hundred dollars and my brother got fifteen hundred dollars, and so we all went to the bank, and the note was made out. We signed the note, both of us, and the money was counted out on the counter to both of us, and Mr. Hammer was there, he being agent for the Myrtle Creek Mining Company, and he then and there delivered to me my two hundred shares, and to my brother his two hundred shares, and received the money in a pile. ’ ’ This testimony was stricken out by the court below, over the objection of defendants, and error is assigned. The defendants insist that the testimony tended to show a several liability against each of the defendants for $1,500, and not a joint liability for the whole amount, and, therefore, that he cannot recover as to either ; or that he should have dismissed as to one of the defendants and proceeded against the other singly and for one-half the amount loaned, thus invoking the doctrine of misjoinder in bar of the action, either pro tanto or as a whole. But, whatever may be the force or tendency of the testimony, the defendants were not injured by striking it out, for the reason that their answer, in effect, admits the joint liability, and they cannot be heard to contradict it by the testimony. The answer states that the defendants applied to the plaintiff for a loan to each of $1,500, and for such loan they proffered their several promissory note for the sum of $3,000, and the loan was consummated upon that basis. The transaction, without question, created a joint liability for the whole sum loaned. The note is not pertinent evidence of the transaction where the action is upon the original consideration, but it is set out in the answer, so that it is made perfectly apparent that they proffered their joint as well as several obligation (1 Daniel, Neg. Inst. [4 ed.] § 94), which the plaintiff accepted accordingly, and advanced the money. The effect of the offer was to borrow on joint account, and the acceptance of that offer was the consummation of a joint undertaking on the part of the defendants to repay the $3,000, and hence their joint liability to plaintiff became fixed, so that the action was properly prosecuted against the defendants jointly. This appears to us to be the most reasonable construction of which the answer is susceptible, and it is plain, therefore, that the striking out of -the testimony of Frank Savage did not injure the defendants, or either of them, and they cannot, therefore, predicate error upon the action of the court in that respect.

4. At the instance of the plaintiff, the altered note was offered and received in evidence, but only for the purpose of throwing light upon the question whether the change was innocently or fraudulently made, and for this purpose it was competent.

5. The instruction requested by the defendants-, as shown by the eleventh assignment of error, was properly refused, for the reason that it assumes the alteration was willfully made, which was a disputed fact in the controversy.

6. The legal propositions involved in the instruction requested, as shown by the twelfth assignment, were fully covered by the general charge, and no error, therefore, can be predicated upon the court’s refusal to give it.

7. The court instructed the jury, among other things, that the plaintiff must assume the burden of proof to show that the change was made honestly, or in good faith, or under the honest belief that he had a right to make it, and that it was done without an intent to defraud the defendants, or either of them. In a subsequent paragraph it made use of this language : “It is presumed that the plaintiff is innocent of any crime or wrong, and you are entitled to consider that presumption in connection with the evidence about intent and honest belief of the plaintiff when you consider that question.” It is contended that this latter paragraph is inconsistent with the charge touching the burden of proof. But we do not think it can be so construed, or, at least, the jury must have fully understood from the court’s entire instruction the precise question at issue, and have passed upon it intelligently. This disposes of all questions of vital importance attending the appeal, and, there being no reversible error, the judgment of the court below is affirmed.

Affirmed.