Case Name: Emerine v. O'Brien
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1881-01
Citations: 36 Ohio St. 491
Docket Number: 
Parties: Emerine v. O’Brien.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 36
Pages: 491–498

Head Matter:
Emerine v. O’Brien.
1. The surrender of a promissory note to the maker, upon receiving in payment thereof a new note, the signatures to which were supposed to be genuine by the payee, but one or more of which were forged, does not operate as payment of the original note, nor extinguish the right of action thereon.
2. E., the owner of a promissory note executed by M., as principal maker, and 0., as surety, agreed with M. that he would accept his note with E. and V. as sureties thereon, in payment of the note of M. and O. Whereupon, M. delivered to E. a promissory note, executed by himself, and purporting to be executed by P. and V. as sureties, but whose signatures M. had forged to the note. E. received the forged note believing it to be genuine, and delivered to O. the original note, which was destroyed.
Held, that said new note did not operate as payment of the original note, nor relieve O. from liability thereon.
Error to the District Court of Seneca County.
The original action was brought by the plaintiff in error, Andrew Emerine, against Thomas O’Brien, to recover the amount alleged to be due on a promissory note, executed by the defendant as surety of John T. Mitten'. The petition alleged, in substance, “that on the 15th day of March, 1872, the plaintiff loaned to one John T. Mitten, $600 ; that Mitten then gave the plaintiff his promissory note for that amount, with the defendant, Thomas O’Brien, as surety thereon.
“ That on the 16th day of May, 1872, about a month after the note became due, the plaintiff and O’Brien called on Mitten for payment; that Mitten then paid $100 on the note and gave a renewal note for $509, the balance then due upon the original note, and that Mitten then agreed to procure one ITenry Fleck and one Frank Yogle, to sign the renewal note as his sureties ; that Mitten signed the renewal note and wrote upon it the names of Fleck and Yogle as his sureties, without their knowledge or consent; that this signing was done not in the presence of the plaintiff, and that the plaintiff had no knowledge or suspicion that the names of Fleck and Yogle were forged upon the note, until after the maturity thereof.”
That the original note was joint and several.
Upon this state of facts, the plaintiff asked judgment against O’Brien for the*balance remaining unpaid on the original note, after deducting all actual payments .made upon it.
The answer admits these facts, except that the names of Fleck and Yogle were forged, and as a defense sets up that the transaction in which the renewal note was given did not occur in the presence of O’Brien, and that he knew nothing of it until some time after the renewal .note had been given.
This alleged defense is denied in the reply.
On the trial Emerine testified as follows:
“ On the 16th day of May, 1872, I went with the defendant, at his request, from Fcstoria, in Seneca county, where we resided, to Upper Sandusky, in Wyandot county, Ohio, to collect the money on a note I then held against John T. Mitten and the defendant for $600. I called on Mitten for the money due on the note and he proposed to pay me $100 on it, and wanted thirty days’ time on the remaining $509 then due on the note, and offered me Henry Eleclc and Frank Vogle, merchant tailors, as sureties with him, on his note for $509, at thirty days. He paid me $100, and I renewed the balance with said Fleck-and Vogle as his sureties. I did not know nor suspect that the names of Fleck and Vogle were forged. The original note of Mitten and the defendant was dated March 15th, 1872, and was written £ we or either of us promise to pay, &c.’
“I found out that the names of Fleck and Vogle were forged some time in December, 1872 — after Mitten had run away and left the country.
“The defendant and. Mitten came to my office together, when I loaned him the money, on the 15th of March, 1872; O’Brien spoke for Mitten and wanted $600 for six months ; I loaned Mitten $600, and he and O’Brien gave their note for it, payable about the 1st of April, 1872 ; O’Brien was surety on this note. When I took the new note for $509 at Upper San-dusky, I went there at O’Brien’s request; he said Mitten was not worth anything. When I took the new note O’Brien and-Mitten and myself were present; there was nothing done till O’Brien came in; this occurred in Mitten’s store room. Mitten went out of the store to get the signatures of Fleck and Vogle on the note, and in a few minutes returned with the note with the names of Fleck and Vogle on it. I had no suspicion of any forgery, and I supposed I had good security for the balance due, so I delivered up the old note to the defendant, O’Brien, and upon his demanding it.”
Proof was given that the names of Fleck and Vogle were forged, and written upon the note by Mitten.
The defendant testified as follows:
“ I told Emerine he should collect the money from Mitten, as I was afraid he was not worth anything; and I hired a team and took Emerine up to Upper Sandusky for that purpose, when he made this new arrangement with Mitten. 1 was not present when Emerine and Mitten made the new arrangement. Emerine told me to stay on Main street and he would go and settle with Mitten, so that Mitten and I wouldn’t ■ quarrel. I stayed out about half an hour, when Emerine came and called me into the store and said to me, ‘ I have settled this matter with Mitten, and you have nothing more to do with it.’ I said, ' Then am I free ?’ and he told me ‘Yes.’ I said, ‘Then give me up my note,’ and he gave me my note and I took it and tore it up into small ‘ bits’ there in the presence of Emerine and Mitten.
“ I did not see the new note and knew nothing about how he had settled, until he told me on the way coming home.
“ I intended to get an attachment for Mitten if the matter was not settled that day.
“I asked Emerine and urged him to go and collect the money from Mitten. I did not see Mitten pay any money; Emerine called me in the store. I did not see Mitten go out to get the note signed. Emerine handed my note to me when I demanded it, and Mitten was there. Emerine said to me, in Mitten’s store, that he had arranged the matter with Mitten and I had nothing to do with it any more, and that I should not quarrel about it.”
After the close of the argument, the plaintiff requested the court to instruct the jury :
“ That if the plaintiff received of Mitten $100 in money, and his note of $509, with Henry Fleck and Frank Yogle as sureties thereon, and for the money thus paid and the note signed by Mitten, Fleck and Yogle, he surrendered and gave up to Mitten and to the defendant the original note signed by Mitten and the defendant, and if the signatures of Fleck and Yogle to the note for $509 were forged upon said note, then the plaintiff should recover of the defendant the amount remaining unpaid on the original note, after deducting from the full amount thereof any and all payments made on it in money.”
Which instruction the court refused to- give, but instructed the jury:
1 “ That if the defendant took the plaintiff to Upper Sandusky in order to have this note, on which this action is brought, paid, or in some way arranged, so that he — the defendant— should be no longer liable on it; and if, after the parties got there, the defendant took no part in getting this new • note spoken of in the testimony, but the taking of it was the work of the plaintiff only, and the defendant had no knowledge as to whether the names of the sureties to it were genuine or not; and if, after this new note was taken, the note sued on in this case was delivered up to the defendant, as canceled, and he then acted on the faith, or fact, that he was no longer liable on it, then the plaintiff cannot recover, and the defendant is entitled to your verdict, although the names of the sureties to this new note are forged.
“ But if the defendant was present and took part in making the arrangement for the renewal of the note, and knew what was done, and how it was done, then, if the names of the sureties on the renewal note are not genuine, the plaintiff is entitled to recover.” To which charge and instructions so given, the plaintiff then excepted.
The jury found for the defendant, and a judgment was rendered for him, which judgment, on error, was affirmed by the district court.
John McGamley, for plaintiff in error:
Forgery is not a payment. Ritter v. Singmaster, 73 Pa. St. 400; Goodrick v. Tracy, 43 Vt. 314; Scholefield v. Trumpler, 4 De Gex & J. 429.
Noble <& Lutes, Nelson B. Lutes, and Nettie O. Lutes, for defendant in error:
As to whom the loss must fall upon, where neglect or fault can be traced to either party, see 3 Ohio St. 302; 5 Ohio, 222; 13 Wend. 572.
For the rule, where one of two innocent parties must suffer, see Gloucester Bank v. Salem Bank, 17 Mass. 41.
By the plaintiff taking the new note and surrendering the old note to defendant, the defendant was discharged from liability on the old note. Goodwin v. The State, 18 Ohio, 6; Baker v. Briggs, 8 Pick. 121; 7 Watts (Penn.) 523; 54 Geo. 277; 21 Pick. 195; 1 Bush, 412; Bank v. Haskell, 51 N. H. 116; High v. Cox, 55 Geo. 662; Waters v. Creagh, 4 Stew. & P. (Ala.) 410; Thornburg v. Marden, 33 Iowa, 380 ; Carpenter v. King, 9 Met. (Mass.) 511; Teague v. Russell, 2 Stew. (Ala.) 420; Roberts v. Miles, 12 Mich. 297; White v. Walker, 31 Ill. 422.

Opinion:
Boynton, C. J.
The court of common pleas gave entirely too much importance to the facts which were held sufficient to exonerate the defendant from liability on the note that he executed as surety for Mitten. The fact that the new note was a forgery left the liability of the defendant on the original note, to the extent that the new note was received in payment, entirely unaffected, unless there were circumstances attending the taking of the note, that relieved him from such liability. No principle is better settled or rests upon more solid reason, than that a forged note delivered in payment does not operate as ^ satisfaction or extinguishment of an antecedent debt or demand. Goodrick v. Tracy, 43 Vt. 314; Ritter v. Singmaster, 73 Pa. St. 400 ; Eagle Bank of New Haven v. Smith, 5 Conn. 71; Markle v. Hatfield, 2 Johns. 455 ; Cook v. Barnes, 3 N. Y. 520; Scholefield v. Templer, 4 De Gex & J. 429 ; Stedman v. Gooch, 1 Esp. 3 ; 2 Par. on Notes and Bills, 205 ; 2 Daniel on Neg. Inst. § 1274. The circumstances which the court held sufficient to relieve the defendant from the obligation to pay the amount remaining due on the original note, the new note being a forgery, were, that he took the plaintiff to Mitten's residence in order to have the note paid, or in some way arranged so that'he should-be relieved from liability thereon, took no part in obtaining the forged note, and had no knowledge whether the name of the sureties thereon were genuine or not, received his own note as canceled, and thenceforward acted on the faith that he was no longer liable thereon. The fact that he took the. plaintiff to the residence of the principal maker in order to have the note paid, or some arrangement made by which he was to be relieved from further liability for the debt, is of no importance whatever, unless the arrangement made, or the new relation created, was a valid substitute for the original debt. Nor is it of the slightest importance that the defendant took no part in obtaining the new note. It is sufficient to preserve his liability, that the new note was void. It is not pretended that the plaintiff agreed to take the genuine note of Mitten, with the forged signatures of Eleck and Yogle as sureties, in payment of the note of Mitten and the defendant. ITe supposed and had the right to suppose that their signatures were genuine. There was an implied representation that the note was genuine in its delivery. In Goodrick v. Tracy, supra, the principal maker of the note sued on gave a new note with a forged signature of a surety thereon, and the names of the principal maker aud surety on the original note were torn therefrom. The surety in that case had no part in obtaining the new note, yet in the disposition of the case that fact was not even noticed. The new note being void, his liability on the original note was held to be in nowise affected.
Nor does the circumstance that the note in the present case was delivered up as canceled affect the defendant's liability thereon. This was done in the belief, which the facts fully justified, that the new note was genuine. That it was not genuine was not the fault of the plaintiff. As was said by Lord Kenyon, in Puckford v. Maxwell (6 Term, 52), •" In cases of this kind, if the bill which is given in payment does not turn out to be productive, it is not what it purports to be and which the party receiving it expects it to be, and therefore he may treat it as a nullity and act as if no such bill' had been given at all." Payment by a forged note or check is not different in its effect upon the liability of the debtor, than payment in counterfeit money. The pretended payment in either case is void, and leaves the original liability subsisting, although the written evidence of it may have been destroyed. Hughes v. Wheeler, 8 Cow. 77; Arnold, v. Crane, 8 Johns. 79 ; Pierce v. Crafts, 12 Johns. 90; Young v. Adams, 6 Mass. 182; Gerwig v. Sitterly, 56 N. Y. 214; Alcott v. Rathbone, 5 Wend. 490.
The remaining circumstance to which the court seems to have attached some importance, is, that the defendant may have acted on the faith that he was no longer liable on the note. It is, no doubt, a well-settled rule of law, that where the holder of the note assures the surety that he will look to the principal maker lor payment, knowing the surety is about to obtain indemnity against his liability, and who is thereby induced to relax or forego all efforts to obtain indemnity, which he otherwise would have obtained, the holder of the note would be estopped from insisting that the surety continued bound upon the note. This is the result of the cases cited in argument by counsel for the defendant, and they rest wholly upon the doctrine of estoppel.
It is clear to us, that the present case does not fall within the principle of these cases. The mere fact that the defendant, supposed the note signed by him had been paid by the new note, and that he acted on the belief that he was discharged, does not relieve him from liability. It was evidently the understanding of both parties that the new note was genuine, and operated as payment of the first one. But this understanding was founded on a mistake of facts, for which mistake the plaintiff was no more responsible than the defendant.
It was no more the duty of the plaintiff to ascertain that the signatures of Fleck and Yogle were genuine, than of the defendant. Being a maker of the original note, and equally as liable thereon as Mitten, it was his duty to see that it was paid. Nothing short of payment, or a release by a valid contract, or by circumstances creating an estoppel, would cancel his obligation to pay, or discharge him from liability. The facts which, if found, the jury were told entitled the defendant to a verdict, considered either separately or as a whole, were entirely insufficient to defeat the plaintiff's right •to recover, on his establishing the fact that the note received an payment was a forgery.
Judgment reversed, cmd cause rema/nded.