Case ID: nys_15/html/0924-01.html
Source: Caselaw Access Project
Author: {"author": "Dwight, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Conable v. Smith et al.
    
    
      (Supreme Court, General Term, Fifth Department.
    
    October, 1891.)
    Estoppel in Pais—Alteration op Note.
    Xu an action against the indorser of a promissory note, defendants alleged a material alteration. It appeared that the maker of the note became bankrupt, and that the assignee undertook to compromise with creditors at 25 per cent., whereupon application was made to defendants to consent to the release of the maker on payment by him of 25 per cent, of the note. Defendants agreed to such release by a writing under seal, which set out a copy of the note, including the alleged alteration, and covenanted that such release should not affect their liability for the remaining 75 per cent, of the note. Defendants admitted that plaintiff had no reason to believe that the note had been altered. Meld, that defendants were estopped to insist that there was an alteration.
    Appeal from circuit court, Erie county.
    Action by Benjamin B. Conable against Edgar K. Smith and another. From a judgment entered on a verdict for plaintiff, defendant Smith appeals.
    Argued before Dwight, P. J., and Macomber and Lewis, JJ.
    
      L. W. Thayer, for appellant. Byron Healey, for respondent.
   Dwight, P. J.

The action was against the two indorsers" (the defendant Smith and one Brown) of a promissory note, made Ijy one Garretsee, and delivered to the plaintiff before due, for value. Two defenses' were set up by the answer,—one of a material alteration in the note after its indorsement, the other qf usury. The latter defense was abandoned on the trial, and the case seems to have been submitted to the jury on two questions of fact: (1) Was there a material alteration in the body of the note after its indorsement by the defendants? (2) If so, was that alteration ratified, or objection on account thereof waived, by the defendants, or were the defendants estopped from alleging such alteration as a defense to the plaintiff’s action? The alleged alteration consisted of the addition of the words “and interest after the first day of March next” at the end of the note. The note was dated February 1, 1871, and was drawn and executed by both maker and indorsers about that time, but was not negotiated until about the last of that month, when, as the allegation is, the words in question were added. There was no motion on the part of the defendants for a nonsuit, nor for the direction of a verdict; so that the defendants are not in a position to question the propriety of the submission of either of the questions of fact to the jury. Those questions were not separately submitted, so that it cannot be certainly affirmed whether the jury "found in favor of the plaintiff upon both, or upon which, of the questions submitted; but, even if it were to be assumed that the finding was in favor of the defendants on the question of the alteration of the note, we think the verdict in favor of the plaintiff was conclusively supported by a finding in his favor on the second question of fact above stated, viz., of conduct on the part of the defendants constituting a ratification, a waiver, or an estoppel. The undisputed facts bearing upon this branch of the case are that, within the year after the note was made, Garretsee, the maker, became bankrupt, and his assignee took measures to procure a compromise with his creditors at the rate of 25 cents on the dollar of his indebtedness. Accordingly, application was .made to the defendants, as indorsers of the note in question, to consent to his release from liability on that note, on payment by or for him of the agreed percentage of the amount due thereon ; and they thereupon executed an instrument in writing, under seal, which set out a copy of the note in the same terms as those in which the note sued upon is set out in the complaint, including the alleged alteration or addition, whereby they gave their consent, in the most formal and explicit terms, to the release and discharge of the maker of the note from all liability thereon, upon the receipt and indorsement by the holder of 25 per cent, of the amount due thereon, and covenanted that such release and discharge should not in any manner affect or modify their liability as indorsers for the remaining 75 per cent, of such amount due, etc. And thereupon the plaintiff, as the owner and holder of the note, did accept from the assignee of Garretsee the percentage agreed upon, and indorsed the same on the note, and executed a full and formal discharge of the maker from all liability thereupon. Of course, this transaction on tile part of the defendants constituted a complete ratification or adoption by them of the contract as represented by the note as it was set out in the instrument executed by them, unless they have in some way overcome the presumption, which arose upon their execution of that instrument, that they knew its contents, including the terms in which the note was set out therein; and that question seems to have been submitted to the jury. This was quite as much as the defendants were entitled to ask, because, as we suppose, upon the question of estoppel there was no question at all for the jury. The defendants expressly admitted on the trial that the plaintiff was the owner of the note in good faith; that is, without any knowledge or reason to believe that the note did not truly represent the contract both of maker and indorsers. Such being the case, the defendants, in order to induce the plaintiff to release the maker of the note from liability for 75 per cent, of the amount for which it stands, unite in a solemn and formal instrument under their hands and seals, by the terms of which they represent the note indorsed by them to have been in the terms of that in his hands, and consent and request him to release the maker from liability thereon to the extent mentioned, and declare that such release, if made, shall not in any manner affect their liability as indorsers thereon; and thereupon, and in reliance thereupon, the plaintiff does release the maker, as requested, and surrenders the security of the contract of "the latter to the extent of 75 per cent, of the note.'

It is impossible to entertain the proposition that the defendants can escape •the effect of this instrument as an estoppel on the ground that they did not know what the instrument contained, unless the plaintiff himself is in some way responsible for their ignorance, and of that there is no pretense. The • defendants execute the instrument of their own accord, so far as the plaintiff is concerned, and thereby induce him to relinquish his claim upon the maker of the note, in reliance upon their representation that they are liable as its indorsers, and their promise to pay it, notwithstanding his release of the maker. The case presents all the features of an estoppel, and its effect is not dependent upon the question whether the defendants knew what the instrument contained. It was their business to know, they had every opportunity to know, the plaintiff was not responsible if they did not know, and the effect upon his rights and interests was the same whether they knew or not. We thmk the plaintiff would have been entitled to the direction of a verdict in his favor if it had been asked for. Certainly, upon the finding of the jury that the defendants were not ignorant of the contents of the instrument signed by them, the verdict was undoubtedly correct.

There was no motion for a new trial, so that we are not permitted to in•quire as to the sufficiency of the evidence upon any question submitted to the Jury. The judgment appealed from must be affirmed. All concur.