Court Opinion

ID: 3520409
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:32:08.005539+00
Date Added: 2024-06-11T14:05:52.501408
License: Public Domain

This is an appeal from the circuit court of Jones county, in which a judgment was entered in favor of Bush and Walters, appellees here, and against Upton, the plaintiff in the case below, and appellant here. *Page 664 
The following is the agreed statement of facts:
"It is agreed by and between the attorney for the plaintiff and attorneys for the defendant that the following are the facts in this case:
"That J.H. Wiggington went to the First National Bank of Laurel, Miss., and had a note for seventy-five dollars prepared by one of the authorities of the bank on the regular blank form of the notes used by said bank, which note was payable to the First National Bank, or bearer, Laurel, Miss. The said J.H. Wiggington, desiring to borrow some money on the said note from the said bank, was informed by the said bank that it was necessary for him to get two good men to sign with him as sureties on said note. Whereupon he affixed his signature to said note as principal maker, and procured the signature of U.P. Walters and F.S. Bush, the other defendants to the said note, with the understanding that, if the said note was presented to the First National Bank and the First National Bank did not make a loan on the indorsement, the note should be destroyed. It is further agreed that Upton did not know of the above agreement.
"The said J.H. Wiggington after securing these signatures went to the First National Bank and presented the said note to the bank for the loan, and the bank refused to loan him the money with these indorsements, whereupon he, before the note was due, took the note, and went to the plaintiff, T.L. Upton, and he and Upton erased the First National Bank as payee and inserted the name of T.L. Upton as payee in said note, and Mr. Upton then let him have seventy-five dollars on said note.
"It is further agreed that Mr. T.L. Upton knew that the said note was presented to the First National Bank and was turned down by it before it was presented to him, and that he knew and was a party to striking out the First National Bank as payee and inserted his own name therein."
"When the note became due the said T.L. Upton presented it to the said F.S. Bush and U.P. Walters for *Page 665 
payment and that was the first information that they had that the said T.L. Upton was in possession of said note, and F.S. Bush and U.P. Walters, upon default of J.H. Wiggington, refused to pay said note, and this suit was brought in the justice court to recover on said note.
"It is the contention of the defendants F.S. Bush and U.P. Walters in said note that the striking out of the First National Bank as payee and inserting the name of T.L. Upton as payee was a material alteration in said note and rendered the note absolutely void, and, for that reason, T.L. Upton cannot recover from U.P. Walters and F.S. Bush, who are the only ones appealing from the judgment in the justice court."
                           OPINION OF THE COURT.
It will be noted that Upton took the note with the knowledge that it had been presented to the First National Bank, the original payee, and with the knowledge that Wiggington spoliated it by changing the name of the payee, erasing the First National Bank therefrom, and inserting his (Upton's) name. It will be further noted that Wiggington had agreed with Bush and Walters, the defendants, that he would destroy the note in case the First National Bank did not make the loan.
The appellant's only point here is that after the name of the payee, as originally written, appeared the words "or bearer." We fail to see how Upton can escape his knowledge of the spoliation of the instrument which knowledge required of him an investigation of the circumstances attending the execution of the paper, which, if followed up, would have developed that the payee in the note was a material element in obtaining the signatures of the defendants.
It occurs to us as a fact that the signers of a note are willing to execute the note for a small sum payable to a bank, knowing the custom of banks not to rediscount this character of paper, and are willing to obtain credit from a banking institution, whereas they would not be *Page 666 
willing to have their note in the hands of private individuals, who are not usually so careful about the preservation of the secrets and obligations of their neighbors as is a banking institution.
The general rule is that a change in the name of the payee in a promissory note without the consent of the makers is a material alteration of the instrument and avoids it as to such makers.
The only effect that might be given to the words "or bearer" might be to relieve one who was an innocent holder for value, which we expressly do not decide. Upton was not in this category, but knowingly accepted the note after he had witnessed the spoliation.
In the case of Simmons v. Atkinson  Lampton Co.,
12 So. 263, 69 Miss. 862, 23 L.R.A. 599, where a note was changed or altered by adding the words "or bearer" for the word "Camp 
Ames" and by the addition of the words "Bank of Summit, Miss.," after the word "at," was a material alteration and avoided the note in the hands of the bona-fide purchasers for value before maturity, though there was nothing on the face of the note indicating an alteration and the added words were written in blank spaces that had been left blank by the maker; and, in concluding the opinion, Judge COOPER, the organ of the court, said:
"So one who issues negotiable paper is under liability only to those who take the contract he has made. He assumes no obligation of another contract, though it may be written on the same paper, and is equally free from liability if the agreement he has made is materially changed; for the agreement as changed is no more than if all its terms were forged.
"The judgment is reversed, the demurrer to the replication sustained, and cause remanded."
The test is whether there is a material change in the contract by its alteration and is not one of injury or benefit to the maker. In this case the contract completely lost its identity. *Page 667 
The only effects of the Negotiable Instrument Law (Hemingway's Code, section 2702) would be as to whether or not an innocent holder might be protected, which we do not here deem necessary to decide.
In 3 Ruling Case Law, p. 1115, section 330, the rule is stated: "As a general rule any alteration in the parties to an instrument without the consent of the obligors is material and discharges the latter from their obligation. A change in the name of the payee is a material alteration."
In the same volume, section 328, p. 1112, there is this statement: "Unquestionably, every alteration in a negotiable instrument whereby the identity of the paper is in any way affected is material. And any alteration which causes the instrument to speak a language different, in legal effect, from that which it originally spoke, is a material alteration."
It is unimportant that the alteration was or was not beneficial or injurious to the party whom it is sought to charge on the instrument, but whether the contract in its altered condition is the contract into which he entered; also the alteration of the name of the payee of a promissory note where the holder of the note is a party to or cognizant of the alteration by changing the name of the payee of a promissory note is a material change, which avoids the note. We also cite the notes to the case ofBurgess v. Blake, 86 Am. St. Rep. 82, et seq.
Affirmed.