Case Name: Lucy A. Colby, appellant, v. Mary J. Foxworthy, appellee
Court: Nebraska Supreme Court
Jurisdiction: Nebraska
Decision Date: 1907-12-05
Citations: 80 Neb. 239
Docket Number: No. 15,330
Parties: Lucy A. Colby, appellant, v. Mary J. Foxworthy, appellee.
Judges: Duffie and Good, GO., concur.
Reporter: Nebraska Reports
Volume: 80
Pages: 239–249

Head Matter:
Lucy A. Colby, appellant, v. Mary J. Foxworthy, appellee.
Filed December 5, 1907.
No. 15,330.
1. Alteration of Instruments: Burden of Proof. The burden is upon the party alleging' the material alteration of an instrument to prove that it was altered by the holder thereof after the execution and delivery of the same.
2. Evidence examined, and held insufficient to prove that the instruments in controversy had been altered after their execution by •defendant.
Appeal from the district court for Lancaster county: Edward P. Holmes, Judge.
Reversed with directions.
Flansburg & Williams, for appellant.
L. G. Burr, contra.
Rehearing denied. See opinion, p. 244, post.

Opinion:
Epperson, C.
This is an action for the foreclosure of a mortgage, and for the fourth time appears in this court. See 64 Neb. 216, 72 Neb. 378, 78 Neb. 288. A history of the case is given in the opinion by Mr. Commissioner Albert in 78 Neb. 288. Since then a new trial has been had, resulting in a judgment for defendant. Plaintiff again appeals.
It is contended by defendant that the rules announced in the opinion in 72 Neb. 378, supra, became the law of the case, and terminate the issues now involved in her favor. But the issues there involved and disposed of are no longer in the. case, and it will be impossible to apply the law there announced to the case in hand. The court then construed a certain amended petition, holding that it stated a cause of action, and that the alleged spoliation of the instrument sued' on would not avoid the contract. No doubt the rules announced became the law of the case; but they ceased to operate on any issue in this case upon the withdrawal of the amended petition before the last trial. In commenting upon the opinion filed in this case (72 Neb. 378), the learned commissioner said: "Three propositions are involved in this controversy, and but three are determined in our former opinion, and are now governed by the rule of The law of the case.' The first of these is that the alteration of the instrument by inserting the word 'gold' before dollars was a material alteration; the second is that the defendant is not estopped from pleading this defense by paying without objection the nine interest coupons attached to the note, which contained this condition; third, that the alteration was made without defendant's knowledge and after the execution of the note and mortgage." As to the first and second propositions, no doubt exists but that they were established as the law of the case. However, we find nothing in the first opinion concluding that the alleged alteration was made after the execution of the note and mortgage. It is -true, the trial court had found that such was the case, and the finding was mentioned in the opinion as a fact, but the sufficiency of the evidence was never determined by this court; instead, the case was remanded for further proceedings. It cannot be said that it was established as the law of the case that the word "gold" was inserted in the bond and mortgage after its execution. It was not so considered in the third opinion, wherein it was determined that a judgment could not at that time be predicated upon the findings made on the first trial. The lower court saw fit to grant a new trial, and, having done so, the district judge was required to make his findings from the evidence there adduced. There are three rules established as the law of this case: (1) That, if the word "gold" was inserted by the mortgagee after the execution and delivery of the mortgage and bond, it was a material alteration; (2) that the defendant by the payment of the interest coupons from time to time was not estopped from alleging a material alteration; and (3) the findings of fact at the first trial cannot be adopted by the trial court. These eliminate all issues existing prior to the last trial, and confine our inquiry here to the sufficiency of the evidence to sustain the judgment rendered.
The bond in controversy is a printed form with blanks for amount, date, etc. Before the word "dollars" a blank line was filled, so that it now reads: "I promise to pay the sum of eight hundred and no-100 gold dollars," etc. The words and figures "eight hundred and no-100" were filled in with pen and ink, and the word "gold" stamped in the blank with a rubber stamp. In like manner a blank in the mortgage was filled out. The defendant asks the court to regard the inserting of the word "gold" as an obvious alteration, and to cast upon the plaintiff the burden of proving that it was made before the execution of the contract. It may properly be called an obvious alteration; that is, it is obvious that the word "gold" was inserted. It was no part of the form upon which the contract was written, nor was it necessary to make a complete contract between the parties. But we cannot agree with the defendant as to the rule of evidence she invokes. It is unnecessary to review the conflicting authorities as to the burden of proof in such cases. This court held in Dorsey v. Conrad, 49 Neb. 443, "Where a written instrument shows upon its face a material and obvious alteration, the presumption of law is that such alteration was made before; the instrument was finally executed and delivered." It would seem from this that, unless the instrument itself indicated an alteration after its execution, and in the absence of extraneous evidence, the party seeking to enforce the instrument would prevail. It also follows that the party alleging a material alteration carries the burden of proving it. This, we think, is the better rule and in accord with the weight of authority. In Hagan v. Merchants & Bankers Ins. Co., 81 Ia. 321, it is said: "If we are to presume from the fact of alteration that it was fraudulently made, then the burden is upon the plaintiff to rebut this presumption; but if no presumption arises, or if the alteration is presumed to have been made before delivery, then the burden is upon the defendant. If the instrument shows upon its face, as it is possible it may, that the alteration was fraudulent, then it proves more than the mere fact of alteration; but when the fact of alteration alone appears from it, and it is silent as to the time or authority by which it was made* there is no evidence upon which to base the presumption that it was fraudulently done." See, also, Fudge v. Marquell, 164 Ind. 447; Wilson v. Hayes, 40 Minn. 531, 4 L. R. A. 196; National Bank v. Feeney, 12 S. Dak. 156, 46 L. R. A. 732, 737. In McClintock v. State Bank, 52 Neb. 130, it was held, in a case wherein the note itself did not disclose the alteration, that the burden of proof is upon the party alleging the alteration. Such is the rule also where the presumption is that a change appearing upon the face of the instrument was made at or before its execution. 2 Cyc. 234, note 92, pp. 239, 240, note 18. No witnesses were called at the last trial, and the evidence there given consisted of depositions, the testimony given by witnesses at former trials, and written instruments, and, under the rule announced in Faulkner v. Simms, 68 Neb. 299, and Roe v. Howard County, 75 Neb. 448, we have examined the evidence and arrived at an opinion uninfluenced by the decision of the district court.
There is a conflict in the evidence. The defendant produced the testimony of Miss Dowden, who, when the loan was made, was employed as a clerk in the mortgagee's office. She also negotiated the loan for defendant. She testified positively that she read the bond and mortgage immediately before they were signed, and that the word gold was not therein. Defendant herself gave testimony on two occasions. First, in 1899, she testified in reference to the bond and mortgage: "Miss Dowden read them over to me. Of course, I did not read them over. I didn't read them very carefully myself. I cast my eye over that to see the amount. There was |800, and the word 'gold' was not there. Q. You were not looking in that mortgage, to see that word 'gold'? A. No, sir; because, of course, my attention was limited, and I could not tell. All I was looking for was to see the number of dollars, of $800 gold dollars, and it was not. there. Q. Where did this conversation in regard to gold occur? A. I think about the first time I went there." In 1906 the defendant gave her deposition, in which she said: "Q. At that time did you read over the note, coupons, and mortgage? A. Yes, sir; two different times. Q. State whether any agreement was made'or attempted to be made with you to pay this loan in gold as testified to by John I Vest? A. No, sir; there was not, and this young man is mistaken. Q. When was the word 'gold' stamped in the note, mortgage and coupons, if you know? A. Between the first day of September and the time when I got the money. It was not in there when I signed them, and when Miss Dowden and I read them over." Contrary to the defendant's testimony, we find the depositions of John West and E. C. Jones. The former was a clerk in the office of the mortgagee. I-Ie prepared the papers in controversy, and says: "Mrs. Foxworthy and Miss Dowden were in the office to sign up these papers. After some conversation between Mrs. Foxworthy and Miss Dowden, they left the office,- Mrs. Foxworthy refusing to sign the papers at that time, as they were made payable in gold— the bond, mortgage and coupons—which was explained to her 'by both Miss Dowden and myself. There was no mortgages or loans made by the Lombard Investment Company at that time without the gold clause being inserted. They then left the office. Whether they returned again that same day or thé next morning, I am not sure; but return they did, and Mrs. Foxworthy then signed the papers in our office. Before signing these papers, it was again made clear to her that they would be made payable in gold. The word 'gold' was stamped in the body of the bond, coupons and mortgage, and the red-ink ruling in the body of the instrument was made before they were signed by Mrs. Foxworthy." E. C. Jones, cash ier of the mortgagee, in'his deposition says that he examined the papers immediately after their execution, and that the word "gold" was there at that time, and he approved the papers and stamped them with his "O. K.," closed the loan, and paid defendant the money. The execution of the mortgage was also acknowledged before him as notary public. The mortgage itself shows that it was acknowledged on October 24, 1891, instead of September 1, as testified to by defendant. Miss Dowden's memory is shown to be defective, in that she remembered John West only as a schoolboy, and not as a fellow employee. It appears, and Ave are convinced, that he was an employee of the mortgagee, and was about 23 years of age when the papers in the controversy were executed, and that they were prepared for execution by him.
The following opinion on motion for rehearing was filed April 10, 1908. Rehearing denied:
A preponderance of the evidence does not disclose that the alteration Avas made subsequently to the execution of the bond and mortgage. The plaintiff was entitled to a decree of foreclosure, and Ave recommend that the judgment be reversed and the cause remanded, with instructions to the loAver court to make a computation of the amount due plaintiff and to enter a decree of foreclosure.
Duffie and Good, GO., concur.
By the Court: For the reasons stated in the foregoing opinion, the judgment of the district court is reversed and the cause remanded, with directions to enter a decree of foreclosure.
Reversed.