Case ID: ohio-st_26/html/0385-01.html
Source: Caselaw Access Project
Author: {"author": "Welch, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Farmers’ and Traders’ Bank of Jamestown v. Thomas I. Lucas and Edward Boteler.
    Calhoun as principal, and Lucas and Blessing as his sureties, made their promissory note to a hank, and at its maturity the bank agreed to give further time, if Calhoun would procure Boteler to sign the note in place of Blessing; thereupon Calhoun, with the consent of the bank, took the note to Boteler, and by falsely representing to him that Lucas had consented to the extension of time, procured Boteler to erase the name-of Blessing and sign his own name in its place, and then redelivered the note to the hank, representing to the cashier that Lucas had agreed to the arrangement—Held: 1. That this was equivalent to the making of a new note by Calhoun and Boteler, of like tenor and effect as the original. 2. That the sureties, Blessing and Lucas, were thereby discharged. 3. That Calhoun, in procuring the name of Boteler, did not act as the agent of the bank, and, therefore, as between him and the bank, Boteler is bound by the note, notwithstanding the fraud of Calhoun.
    Error to the District Court of Greeue county.
    
      The essential facts of the case are these: Calhoun as principal, and Thomas I. Lucas and Henry 0. Blessing as his sureties, made their note to the bank for $737. Shortly before the maturity of the note, Blessing gave verbal notice to the cashier of the bank that he wished the note collected at its maturity, and that he would stand surety upon it no longer. The cashier, four days before the note matured, informed Calhoun of this request of Blessing, and insisted that Calhoun should consent to the payment of the note out of his funds which the bank then had in its possession. This Calhoun objected to, and proposed to get another surety upon the note in place of Blessing, and to have the time extended some ten days. With the consent of the cashier, Calhoun then took the note, and after erasing the name of Blessing, which was written in pencil, procured Boteler to sign his name to the note in place of Blessing’s, •and then returned the note to the cashier, who thereupon, in consideration of $3.75 paid to him as interest, agreed to -extend the time of payment for ten days. At the time Boteler signed the note he was falsely assured by Calhoun that Lucas had consented to the extension of the time of payment. He also objected to this form of renewing or changing the contract, but was told by Calhoun that the •cashier said it would be all right. Calhoun, on returning the note to the bank, represented to the cashier that Lucas had consented to the arrangement.
    The note not having been paid at the end of the ten •days, an action was brought thereon by the bank against ■Calhoun, Lucas, and Boteler, and the court held that neither Lucas nor Boteler were liable upon the note, and gave judgment in their favor. This judgment was afterward affirmed by the District Court, and it is now claimed that both judgments are erroneous.
    
      J. J. Winans, for plaintiff in error:
    Calhoun did not act as plaintiff’s agent, nor did Boteler -.treat him as acting in that capacity.
    The bank on the one side, and the makers—whether by -original or secondary signature, or alteration—on the -other, were adverse parties in negotiation, and, when the note was accepted, in the contract. Calhoun, therefore, in procuring Boteler’s signature for his own accommodation, was necessarily acting only for himself; and, having procured the erasure and substitution, became, and was, Boteler’s agent in the further negotiations and contract with the plaintiff. Fullerton v. Sturges, 4 Ohio St. 536; Selser v. Brock, 3 Ohio St. 302.
    By erasing the name of Blessing, and substituting his -own at the instance of Calhoun, and by intrusting Calhoun with his signature, Boteler enabled Calhoun to defraud the plaintiff', if there was vice in the transaction ; and in such case Boteler should bear the loss. Selser v. Brock, 3 Ohio •St. 302; Story on Agency, sec. 56; 4 Ohio St. 534.
    Having erased Blessing’s name, and inserted his own at the request of Calhoun, and Calhoun as his agent having procured the acceptance of the altered note, an extension -of time, and the discharge of Blessing by the plaintiff, Boteler ought now to be estopped from denying his liability. 1 Greenleaf’s Ev., see. 207; Douglass v. Scott, 5 Ohio, 197; Morgan v. Spangler, 14 Ohio St. 119; Beardsley v. Foot, 14 Ohio St. 416.
    As to Boteler, the note was a novation, and was as if he had signed a new note to be negotiated by Calhoun. 8 Ohio St. 409.
    
      M. Barlow &¡ Sabin, for defendants in error:
    This note did not go abroad as a blank in the hands of the principal to obtain names of sureties upon which the principal would make a loan from a payee, lending his money on the faith of paper fair upon its face, and without notice of defects or infirmities. That state of facts had passed nearly two months before, when the plaintiff' bought and paid for the note. It was a perfect instrument, .and the property of plaintiff'. The relation between the makers, as principal and sureties, was known to plaintiff'. Any ■alteration of the note, or tampering with it, by plaintiff, or with his consent or privity, was at his peril. He could not, with respect to this, his own property, ignore the rights of the sureties, or at will assume the position of a disinterested person, and send, or suffer Calhoun to take, the note abroad, and upon its return, altered materially, receive it as his own, with new parties and new rights, and himself be exonerated from the .duty of inquiry, except of the man whose statements he was bound by legal principles not to take. Me Cramer v. Thompson, 7 Am. Law Reg. 98 (Iowa Rep.)
    The maxim, “ sic utere tuo ut alienum non laedus,” should be applicable.
    The note came back to its owner altered by the obliteration of the name of one maker, and the substitution of another. Plaintiff' saw it, and was at once put upon inquiry. 2 Lead. Cas. in Eq. 154,159.
    Calhoun was not the agent of Boteler, but was of the plaintiff'.
    The fraud of an agent is that of his principal. Story on Agency, sec. 250; 6 Mann & Grange, 236; 1 Parsons on Con. 50; Kerr on Fraud, 112.
    The maxim, “when one of two innocent persons must suffer from the act of a third,” etc., invoked by plaintiff, applies to our side, for the plaintiff enabled Calhoun to deceive us.
    As to alteration of a note and its effect in discharge of parties, see 21 Ohio St. 163; 2 Parsons on Notes and Bills, 544, 558, and 571.
   Welch, C. J.

It is very plain to us that the court was right in holding that Lucas was discharged from liability. It is enough to say that time was given without his consent, and against his express request, by an agreement which bound the bank. But we fail to see on what ground Boteler’s liability can be denied. As between him and the bank, his signature to the note, and its redelivery to the bank by Calhoun, were in legal effect the making of a new note by them. True, his signature was obtained by fraud ulently representing that Lncas consented to the arrangement; but this was the fraud of Calhoun, and the bank was in no sense a party to it. Calhoun, in procuring the signature of Boteler, did not act as the agent of the bank, .as counsel seem to suppose. He acted entirely on his own behalf and for his own interest, and the cashier of the bank merely consented that he might do so. All the bank ■did was to agree that if Calhoun would procure the name of Boteler to the note, the ten days’ further time would be given. The cashier insisted that the note should be paid, and the substitution of the new name upon the note was a matter between Calhoun and Boteler alone.

Ve think, therefore, that as to Boteler these judgments 'must be reversed. As to Lucas, they will be affirmed.

Judgment accordingly.

White, Rex, Gilmore, and McIlvaine, J.J., concurred.