Court Opinion

ID: 9668644
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:20:33.381247+00
Date Added: 2024-06-11T18:15:46.767912
License: Public Domain

ASSOCIATE JUSTICE SMITH
concurring.
The filling in of blank spaces of negotiable instruments is governed by Section 14 of Article 5932, Vernon’s Annotated Civil Statutes of Texas. The insertion of a place of payment in a blank space provided for that purpose is not a material alteration as defined in Section 125 of Article 5939, Vernon’s Annotated Civil Statutes. Strealy pleaded that it was such a material alteration as to render the note void, and that the fraudulent action of the bank in filling in the place of payment discharged the underlying debt. We have held against such contention. In so doing, we have held that the bank was in legal possession of the note; that the note was wanting in a material particular, namely, the place of payment was not inserted in the blank space provided therefor at the time of delivery, and that under such circumstances the bank had a prima facie authority to complete the note.
The bank pleaded that it acted “in good faith reliance on the law as plaintiff supposes it to be that plaintiff had implied authority to fill in the blank following the word ‘at’ on the promissory note executed by defendant, filled in said blank with the words *47‘Dallas, Texas’. Thus, plaintiff, suing on the note, asserts its claim based either on the note as it existed before it was thus changed, or on the note after it was thus changed, alternatively.”
Of course, the bank sued alternatively upon the promissory note and upon the obligation underlying it. The bank also pleaded for attorneys’ fees in connection with such alternative actions.
Strealy did not defend on the ground that the act of the bank in filling in the place of payment was not performed within a reasonable time. There are no pleadings and no evidence was tendered or introduced that Strealy suffered any injury as a consequence of the bank’s authorized act in filling in the blank space in the note. Strealy’s only defense was that the note was voided because petitioner materially altered it.
Thus, it remains that the prima facie authority, granted by Section 14 of the Negotiable Instrument Act, to fill in an instrument wanting in any particular, can be overcome only by evidence of an express agreement or stipulation by the maker as to the place of payment. In the absence of such an agreement or stipulation by Strealy, it must be presumed that the bank was authorized to fill in “Dallas, Texas”, or any other place of its choice. The burden of proving such an express agreement and the violation thereof was on Strealy. See Citizens State Bank v. Martens, 204 Iowa 1378, 215 N.W. 754 (Sup. Ct. Iowa).
Certainly, the note was wanting in material particular. See Howard National Bank v. Arbuckle, 92 Vt. 86, 102 A. 477, for a definition of “material particular” as used in the Negotiable Instrument Act. When the note was completed it was just as though “Dallas, Texas” had been a part of the note from its inception. The holder of the note was not only authorized to fill in the blank and thereby complete the instrument, but the bank in this case was invited to do so. See Diamond Distilleries Co. v. Gott (1910), 137 Ky. 585, 126 S.W. 181, 31 L.R.A. N.S. 643. Not only that, the record in the present case shows that Strealy’s action was in accordance with his express agreement that he would make payments under the note to the bank in Dallas, Texas. However, the bank as the “person in possession” had, by statute, “prima facie authority” to type “Dallas, Texas” in the blank space, and was not required to rely upon the authority to do so, which is clearly evidenced by his letter of agreement of February 3, 1958.
It is true that under Section 14, N.I.L., the implied authority *48of the ■ bank to fill in the blanks continued for “a reasonable time”. What “a reasonable time” is depends upon the circumstances of each case. See Article 5948, Section 193, Texas Negotiable Instrument Act. The fact that the blank was not filled in until after an action was commenced on the note, Allen v. Rousevill Cooperage Co., 157 Va. 355, 161 S.E. 50, or even that the blank had not been filled in until a trial was actually in progress, Cassetta v. Baima, 288 P. 830 (Cal. App.) would not mean that an unreasonable time had elapsed. The blank in our case was filled up within a reasonable time as a matter of law. This is especially true in the absence of any pleading or proof that Strealy suffered injury as a direct result of the delay of the bank in actually filling in the blank, an act which had been impliedly authorized upon delivery of the note. Why should the bank be required to prove that it acted within a reasonable time when there was no denial or claim that it had not so acted?
While in the case of Finley v. Rose (Ky.), 224 S.W. 1059, it is not expressly held that the burden rests upon the maker of the note to prove that the blank space for place of payment was not filled in within a reasonable time, no one can read the opinion without reaching the conclusion that such is the effect of the holding. In that case, the Court held that a delay of seven years in filling in a blank did not prevent recovery upon the note involved. The Court said:
“Manifestly, plaintiffs as holders of the note, had the right to fill in the blank and make the note payable to themselves as executors, with the consequent right to bring the suit in their names. * * * In so holding, the original purpose of the parties is carried out and no right of the makers is injuriously affected. We therefore conclude that the insertion of the name of the deceased holder as payee was not fatal to a recovery on the note. * * * It is therefore insisted that the blank was not filled in within a reasonable time * * * but where, as in this case, only the name of the payee is left blank, and both of the joint makers are alive, and the note has never been negotiated so as to cut off defenses, we are unable to perceive how the rights of the makers have been prejudiced by the delay of seven years.” (Emphasis added.)
No injury to Strealy has been shown in the present case. The argument that Strealy was caused injury by the suit being filed in Dallas County is untenable. In fact, the suit filed in Dallas County was dismissed, and the present cause of action was filed in Tarrant County, Texas, the county of Strealy’s residence. The *49case was tried to a court and jury in Tarrant County. The jury found the bank guilty of fraud, and that the bank did not act “in the good faith belief that it had the legal right to do so [fill in the words ‘Dallas, Texas’] under the laws of the State of Texas.”
There was no evidence raising the issue of either fraud or bad faith. Therefore, the bank’s motion for an instructed verdict should have been granted. Further, the bank’s motion for judgment notwithstanding the jury verdict should have been granted.
Judgment should be here rendered that the bank recovered on the note in accordance with its prayer. That prayer is:
“By delivering to Ray K. Glenn a promissory note with the space for a place of payment left blank, Respondent impliedly authorized Mr. Glenn to fill up the blank space with a place of payment convenient to himself. Under the express provisions of Section 14 of the N.I.L., Petitioner (who stood in Mr. Glenn’s shoes) had the right, prima facie at least, to insert ‘Dallas, Texas’ in the blank space, as it did. If there had been an express agreement between the parties that the note was not to be paid in Dallas, Petitioner’s authority would have been limited by such agreement, and it would have been required to fill up the blanks ‘strictly in accordance with the authority given’. There was, however, no evidence of such an agreement. On the contrary, the undisputed evidence showed that Respondent had agreed with Petitioner that he would make his payments under the note in Dallas, Texas. Thus, when Petitioner wrote ‘Dallas, Texas’ in the blank space, it was in full compliance with the law and with the understanding and practice of the parties. The note, therefore, is still in effect, and Petitioner is entitled to its judgment thereon.”
Opinion delivered November 1, 1961.