Court Opinion

ID: 6675379
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:15:20.825057+00
Date Added: 2024-06-11T16:00:39.952969
License: Public Domain

Me. Justice McIvee
dissenting. It appears to me that the question as to what effect the alteration of a note, secured by a mortgage, has upon the right to foreclose a mortgage, depends altogether upon whether such alteration was fraudulently made by the plaintiff. If it was, then the plaintiff not only loses his right of action on the note, but also his right to the aid of the court in enforcing the collection of his debt in any form. This is the penalty which he incurs for his fraud. The court withholds the use of its process to enforce the collection of a debt which may be due to a person who has, for the purpose of committing a fraud upon his debtor, made an alteration in any one of the evidences of such debt. If, however, the alteration is not shown to have been done fraudulently by the plaintiff, then the only effect is to deprive the plaintiff of the right of action upon the note or other evidence of debt which has been altered, but does not affect his right of action for the debt, if he can establish it by any other evidence. He cannot sue upon the altered note, because that is not the contract into which the defendant entered, but he still may sue for the debt and will be permitted *268to establish such debt by any other evidence than that afforded by the altered note, which it may be in his power to produce. These views, it seems to me, are fully supported by the authorities. Masters v. Miller, 4 T. R. 320; Mills v. Starr, 2 Bailey 359; McCorkle v. Doby, 1 Strobh. 396.
■ As is said by Lord Kenyon, in Masters v. Miller, supra, “ No man shall be permitted to take the chance.of committing a fraud, without running any risk of losing by the event when it is-detected,” so in Mills v. Starr, supra, Johnson, J., in delivering the opinion of the court, after laying down the rule that the alteration of a note by the parly claiming under it, for the purpose of fraud, renders it void, uses this language: “ To prevent fraud was the obvious policy of the rule which avoids a written contract on account of a fraudulent alteration in a material part, and a forfeiture of the benefit to be derived from it is the means used to enforce it. It is apparent that if the party guilty of the fraud may found a claim upon the original consideration, the rule itself Avould be defeated, and that he cannot is demonstrable from various considerations. * * * The forfeiture of the benefit to be derived from the contract is a just retribution for the fraudulent intent.” And in McCorkle v. Doby, supra, it is said : “A person is not at liberty to say, ‘ I have made two contracts, and if one of them is avoided for fraud I will set up the other.' Selway v. Fogg, 5 Mees. & W. 83; 9 Car. & P. 59; 1 Adolph. & E. 40.”
It seems to me that any other rule would destroy the distinction between a fraudulent and an innocent alteration of a note. The latter destroys the right of action on the note, but does not impair the right of action on the original consideration for which such note was given (Hunt v. Cray, 35 N. J. 227; S. C., 10 Am. Pep. 232), and if the former did no more it would be placing the guilty in no worse position than the innocent. Upon the same principle, it seems to me that where a note secured by a mortgage has been fraudulently altered by the plaintiff, he not only loses his right of action on- the note, but also on the mortgage. To apply the principle announced in McCorkle v. Doby, quoted above, he is not at liberty to say: “I have made two contracts to secure my debt: one evidenced by *269a note and the other by a mortgage, and, although the contract evidenced by the note has been avoided by my own fraud, yet I will set up the other.”
It seems to be supposed that this case is concluded by the decision in Gillett v. Powell, Spears Eq. 155, but I do not so understand that case. ■ There are1 at least three distinctions between that case and the one now under consideration : First. There the mortgage was of personal property, and it is well settled that in such case the mortgagee becomes the legal owner of the mortgage property after condition broken, while here the mortgage is of real estate where that rule does not obtain. Second. In that case the mortgage did not in any way refer to the bond which had been altered, and, although I must confess that I have never been able to appreciate the force of this circumstance, as I suppose there can be no doubt that the bond and mortgage were given to secure the payment of the saíne debt, yet, as this seems to be one of the circumstances relied upon by the distinguished chancellor who delivered the Circuit decree, it may be proper to mention it. Third. But the material distinction is that in Gillett v. Powell there was no evidence tending to show that the alteration was made with any fraudulent intent, while here the jury have found, and their finding is approved and concurred in by the Circuit judge, that the alteration was fraudulently made by the plaintiff.
Again, in Gillett v. Powell, the case of Mills v. Starr, upon which I, in large measure, base my conclusion, is distinctly recognized, and the court disavows any disposition to call it in question. This case, therefore, in my judgment, stands upon an entirely different footing from Gillett v. Powell, for, as we have seen, the fact that the alteration was fraudulently made by the plaintiff, is the fact upon which the principle I am contending for rests; and, as that fact did not appear in Gillett v. Powell, the decision in that case is in no way inconsistent with the view which I take of the case now under consideration.
So, too, the recent decision in Nichols v. Briggs rests upon a totally different foundation. In that case no element of fraud entered. It simply decided, and properly decided, that a plaintiff did not lose his right of action to foreclose a mortgage by *270reason of the fact that his right of action on the note given for the same debt was barred by the statute of limitations. It is well settled that the statute affects the remedy only, and does not extinguish the debt. That still remains, and if a creditor is so fortunate as to have his debt secured by a mortgage as well as by note, I can conceive of no reason why he should be deprived of his right of action upon the mortgage simply because his right of action on the note is barred. If a creditor holds two securities, for the same debt, he may sue upon the one or the other as he pleases. If he sues upon the one on which his right of action is barred by the statute, of course the action cannot be maintained; but if he sued upon the other before the expiration of the statutory period which applies to it, he meets with no such obstacle and therefore may recover. But this matter has been so fully and satisfactorily discussed by Mr. Justice McGowan in Nichols v. Briggs, that it is needless for me to pursue the subject.
I am, therefore, unable to concur in so much of the opinion of the majority of this court as holds that the action may proceed for the foreclosure of the mortgage notwithstanding the fraudulent alteration by the plaintiff of the note given for the same debt which the mortgage was given to secure, and, on the contrary, think that the judgment of the Circuit Court should be affirmed.
Judgment modified.