ligible that he should not be permitted to set up his own act or neglect to the prejudice of the banker whom he has misled or by neglect permitted to be misled." And may it not be said that if an acceptor "by any act of his has induced " a transferee in due course "to act upon the document by his act or neglect of some act usual in the course of dealing between " merchants, "it is quite intelligible that he should not be permitted to set up his own act or neglect to the prejudice of the" transferee, "whom he has thus misled or by neglect permitted to be misled?" The principle is the same. In both cases a party to a negotiable instrument is guilty of the neglect of "some act usual in the course of dealing" (whether "between them " as individuals or as members of the public is immaterial); in both that neglect has been taken advantage of by another person who "has induced the banker (or transferee) to act upon the document;" in both, therefore, there ought to be estoppel. Further support may also be obtained from the law with reference to blanks wilfully left in a negotiable instrument, as distinguished from spaces carelessly left there. In the chapter on "Execution of Documents" it is shown that if an acceptance be intrusted to another, with authority to fill it up for £100, and he fraudulently insert £500, and the bill come to the hands of a transferee in due course in complete form, the ground of the acceptor's liability is estoppel. The estoppel results from the representation made by the negotiator to the transferee that the bill was the real, completed obligation of the acceptor, and the acceptor is estopped by such misrepresentation (although not his) because he assisted it, provided an opportunity for it, did that which was necessary to make it credible. The acceptor's liability in such a case is undisputed; and the only possibility of distinction between it and the case under discussion is that in the one (when blanks left) opportunity for fraud was wilfully given, whereas in the other (when spaces left) it was carelessly supplied. In both there was crime; in both opportunity was given for the crime; in both "the cause of the mishap was" (or was not, as one may choose to say) It may safely be affirmed that negotiable instruments are not usually drawn as was the one in question. 2 See ch. X. 3 Ch. XXV. the forgery, and not the blanks or spaces; in both there ought' or ought not to be estoppel. An acceptor may then be liable although a forgery has intervened; and the only question is: Should he be liable if he have, with careless indifference to the interests of others, supplied "too much opportunity" for the fraud-if he have not used "reasonable care not to afford opportunity for it." Bearing in mind the general principle of social life, that every one " is required to use due diligence to avoid causing harm to others," it is submitted that the answer ought to be in the affirmative. IV. IMPOSSIBILITY OF A RULE NOT TO FACILITATE FRAUD. Lord Justice Rigby, as to the possibility of framing a rule as to facilities for fraud, said:2 "I pass from the question of negligence to consider the duty that is set up. The duty as formulated is one not, in accepting the bill, to facilitate fraud. This is a difficult proposition to deal with. What is a duty not to facilitate fraud? If such a duty exists it must, of necessity, be limited to a duty not to facilitate a particular kind of fraud. To illustrate my meaning, I may point out that any one who accepts a bill payable to order does, in one sense, an act which facilitates fraud; for any one into whose hands the bill may get can commit a forgery in regard to indorsements. There is no great difficulty in so doing, and I do not see, if the duty as formulated exists to its full extent, why it should not apply to the case I have suggested." And Lord Halsbury added: ' "I cannot myself understand why the particular form of fraud adopted in this case should have any different operation in giving validity to a forged instrument, rather than other forms of fraud to which instruments are subject." A good rule may easily be spoiled by stating it too broadly. It is a good rule that a driver of horses must use reasonable care to avoid killing people. But changing it to a declaration that no one shall endanger life would be to invite the criticisms that that would be "a difficult proposition to deal with," and that, if any one drove a horse at all, he did, "in one sense, an act which" endangered life. And in much the same way a rule that an acceptor of a negotiable instrument must "take reasonable care that the document should be so framed as not to offer obvious opportunities for the commission of crime" will undoubtedly become much more vulnerable if expressed as "a duty not to facilitate fraud." Such a form of it 1 Van Duzen v. Howe (1860), 21 N. Y. 531. 2 Scholfield v. Londesborough (1895), 1 Q. B. 553; 64 L. J. Q. B. 293. 3 Id. (1896), A. C. 521; 65 L. J. Q. B. 593. almost forces the remark that, if so, no one must accept a bill at all; an observation which is quite inapplicable to the rule as more carefully framed. Because the law does not prohibit the use of the streets, or the making and circulation of negotiable instruments, it does not necessarily follow that it must altogether refrain from propounding regulations for the conduct of persons using or making them. It is true, no doubt, that "It is impossible to carry on the common affairs of life without doing various things which are more or less likely to cause loss or inconvenience to others, or even which obviously tend that way; and this in such a manner that their tendency cannot be remedied by any means short of not acting at all.”1 But although true, it is not a very convincing argument against the validity of a declaration that "The law of negligence enforces the duty of fellow-citizens to observe in varying circumstances an appropriate measure of prudence to avoid causing harm to another." 2 Nor is it a satisfactory reply to the remark of Lopes, L. J., in an earlier stage of the Scholfield v. Londesborough case: 3 "It would be passing strange if a person who accepts a negotiable instrument, such as a bill of exchange, and who thus permits it to go forth on the credit of his name, he being the person primarily liable to all subsequent holders, should not owe to those subsequent holders the duty of taking reasonable care that the document should be so framed when accepted as not to offer obvious opportunities for the commission of a crime." As to highways, the rule is that "For the convenience of mankind in carrying on the affairs of life, people as they go along roads must expect or put up with such mischief as reasonable care on the part of others cannot avoid.”4 And in the ways of commerce may it not be said with Bovill, C. J., in a case of the class in hand: 5 "Parties cannot prevent forgery being committed; they must use reasonable care not to afford opportunities for it." Again in the law of torts the rule is undoubted that "A man who orders a work to be executed, from which in the natural course of things injurious consequences to his neighbor must be expected to arise, unless means are adopted by which such consequences may be prevented, is bound to see to the doing of that which is necessary to prevent the mischief."6 And was not Cockburn, C. J., undoubtedly right when he said: "The mercantile community are as a body honorable men; but experience unfortunately tells us that frauds occasionally happen when they 1 Pollock on Torts (5th ed.), 141. 2 Id. 22. 8 (1895) 1 Q. B. 546; 64 L. J. Q. B. 293. 4 Per Bramwell, B., in Holmes v. Mather (1875), L. R. 10 Ex. 267; 44 5 Société v. Metropolitan (1873), 27 L. T. N. S. 854. 6 Per Cockburn, C. J., in Bower v. might least be expected. In the majority of instances this occurs, as in this case, from carelessness of those concerned, and the omission to take the precautionary measures which the regular course of business would prescribe." 1 There is, surely, no more difficulty in applying this rule of reasonable care to the form of negotiable instruments than to the execution of them,2 or to the multitudinous incidents of every-day physical life. Test Cases. Those who support the view that "every one has a right to suppose that a crime will not be committed, and to act on that belief," 3 require some courage to maintain it under all circumstances. For example, suppose that to a bill for £5,000 written in ink, some material condition is added as a foot-note in light lead pencil; the acceptor is struck with the facility offered to fraud, but nevertheless accepts; and the drawer at once rubs out the foot-note and passes the bill. Or suppose that the condition is written in ink, but upon a wide margin which may be readily cut off without affording the slightest appearance of alteration. Such cases are of frequent occurrence in the United States. Unfortunately, however, there is much disagreement as to the law, and judges and text-writers can be cited upon both sides of the question. Mr. Bigelow affirms that "It may be safely stated that in principle, and by the weight of authority, a material alteration ... in a note, bill or check, delivered as a complete instrument, by writing or printing words in a blank space destroys the instrument, so that no action can be maintained against the maker or drawer or other non-consenting parties, even by a bona fide holder for value."4 “Marginal terms which are intended to be part of the written contract are treated by the better authorities as inseparable from the main writing to which the signature is given. . . . Accordingly to remove such terms by cutting them off, or in any other way, without consent, will be fatal."5 Mr. Daniel, on the other hand (more reasonably, as the present writer thinks), declares the law in this way: "There is a general principle which pervades the universal law merchant respecting alterations (which when they are material will, as we have seen, vitiate the bill or note even in the hands of a bona fide holder without notice); a principle necessary to the protection of the innocent and prudent from the negligence and fraud of others. That is, that when the drawer of the bill or maker of the note has himself, by careless execution of the instrument, left room for any alteration to be made, either by insertion or erasure, without defacing it or exciting the suspicions of a careful man, he will be liable upon it to any bona fide holder without notice, when the opportunity which he has afforded has been embraced, and the instrument filled up with a larger amount or different terms than those which it bore at the time he signed it." "The true principle applicable to such cases is that the party who puts the paper in circulation invites the public to receive it of any one having it in possession with apparent title, and he is estopped to urge an actual defect in that which through his act ostensibly has none." "It is the duty of the maker of the note to guard not only himself but the public against frauds and alterations, by refusing to sign negotiable paper made in such a form as to admit of fraudulent practices upon them with ease and without ready detection." "The inspection of the paper itself furnishes the only criterion by which a stranger to whom it is offered can test its character, and when the inspection reveals nothing to arouse the suspicions of a prudent man he will not be permitted to suffer when there has been an actual alteration." › Some cases no doubt may be very close to the line which separates the prudent from the imprudent act. For example, leaving a very small space after the word "eight," which is made use of to insert the letter "y," may to some appear in one light, and to some in another. Such border cases, however, embarrassing as they may be, are never thought in other branches of the law to vitiate the rule which requires "an appropriate measure of prudence to avoid causing harm to one another." Nor do such difficulties render impossible the assertion of a duty "to take reasonable care that a document should be so framed . as not to offer obvious opportunities for the commission of crime," or of a duty to keep your signature under your own control. 1In favor of Mr. Bigelow's view are: Swaisland v. Davidson (1882), 3 Ont. 320; Holmes v. Trumper (1871), 22 Mich. 427; Benedict v. Cowder (1872), 49 N. Y. 396; Greenfield v. Stowell (1877), 123 Mass. 196; Knoxville Bank v. Clark (1879), 51 Iowa, 269, 1 N. W. R. 491; Fordyce v. Kos. minski (1887), 49 Ark. 40, 3 S. W. R. 892; Columbia v. Cornell (1888), 130 U. S. 655; Burrows v. Klunk (1889), 70 Md. 451, 17 Atl. R. 378; Simmons v. Atkinson (1892), 69 Miss. 862, 12 S. R. 263; Exchange Bank v. Bank (1893), 7 C. C. A. 111, 58 Fed. R. 140; Searles v. Seipp (1895), 6 S. D. 472; 61 N. W. R. 804; Walsh v. Hunt (1898), 120 Cal. 46, 52 Pac. R. 115. Upon the other hand Mr. Daniel's language: "It is the duty of the maker of the note to guard not only himself but the public against fraud 3 and alterations, by refusing to sign negotiable paper made in such a form as to admit of fraudulent practices upon them with ease and without ready detection," is to be found in Goodman v. Eastman (1828), 4 N. H. 455; Isnard v. Torres (1855), 10 La. Ann. 103; Yocum v. Smith (1872), 63 Ill. 321; Zimmerman v. Rote (1874), 75 Pa. St. 190; Brown v. Reed (1875), 79 Pa. St. 370; Blaky v. Johnson (1877), 13 Bush, 197 (Ky.); Leas v. Walls (1882), 101 Pa. St. 57; Scotland v. O'Connell (1886), 23 Mo. App. 165; Lowden v. National Bank (1888), 38 Kan. 533, 16 Pac. R. 748; Weidman v. Symes (1899), 79 N. W. R. 894. 2 Société v. Metropolitan (1873), 27 L. T. N. S. 854; Leas v. Walls (1882), 101 Pa. St. 57. 3 Ante, p. 49. |