§ 1372a. When forged paper need not be returned. If the party has paid money for or upon a forged instrument, and some parties to it are genuine, he must in a reasonable time after discov ering the forgery offer to return the paper, so as to enable the party responsible to him to make the best of it he can; but if it be an utter forgery, with no genuine party to it but the transferrer, it would be an idle ceremony to do it, and the consideration paid may be recovered without doing so.

21

§ 1372b. If a person wrongfully convert a bili or note and receive the amount, the owner may either sue in tort, or may waive the tort and recover the money as received to his use." And the party wrongfully collecting, and holding on deposit, the amount paid to him, upon a check bearing a forged indorsement, is liable to the owner, notwithstanding he may have forwarded the check in a negligent manner; such negligence being collateral to the transaction, and not the proximate cause of leading the third party into the mistake committed.23

"I

ants till they accidentally discovered the forgery. If there had been any unreasonable delay after such discovery, another question would be presented. I infer from the rigor of the case cited by the defendants' counsel (Cocks v. Masterman, 9 B. & C. 902), that he would exact as great, indeed greater, diligence in giving notice than is necessary to fix an indorser." doubt whether this case can be sustained, except upon its own peculiar circumstances, if it can be sustained at all. In all the previous cases, where a recovery had been denied, there was carelessness or delay, or both." Alabama Nat. Bank v. Rivers, 116 Ala. 1, 27 So. 580, 67 Am. St. Rep. 95.

21. Brewster v. Burnett, 125 Mass. 68; Smith v. McNair, 19 Kan. 382; First Nat. Bank v. Peck, 8 Kan. 660; Alabama Nat. Bank v. 1, 22 So. 580, 67 Am. St. Rep. 95.

Rivers, 116 Ala.

22. Lamine v. Dorrell, 2 Ld. Raym. 1216; Neate v. Harting, 6 Exch. 349; Hollins v. Fowler, 44 L. J. Q. B. 169; Arnold v. Cheque Bank, L. R., 1 C. P. Div. 578.

23. Arnold v. Cheque Bank, L. R., 1 C. P. Div. 578 (1876); 18 Moak's Eng. Rep. 204.

CHAPTER XLIII.

ALTERATION OF NEGOTIABLE INSTRUMENTS.

SECTION I.

DEFINITION AND NATURE OF ALTERATION.

§ 1373. Any change in the terms of a written contract which varies its original legal effect and operation, whether in respect to the obligation it imports, or to its force as matter of evidence, when made by any party to the contract, is an alteration thereof, unless all the other parties to the contract gave their express or implied consent to such change. And the effect of such alteration is to nullify and destroy the altered instrument as a legal obligation, whether made with fraudulent intent or not.2

§ 1373a. Difference between spoliation and alteration. This principle of law is essential to the integrity and sanctity of contracts; and in England it has been extended to a degree which has not found favor in the American courts. There it has been adjudged that a deed, bill, note, guaranty, or other written executory contract is avoided by any material change in the terms. thereof, although that change be made by a stranger, upon the ground that the custodian of an instrument is bound to preserve its integrity; and as it would be avoided if altered by himself, so

1. Mersman v. Werges, 112 U. S. 141; Wood v. Steele, 6 Wall. 80; Angle v. N. W. Ins. Co., 92 U. S. 330; Greenfield Sav. Bank v. Stowell, 123 Mass. 196; Eckert v. Louis, 84 Ind. 101, citing the text; Adair v. England, 58 Iowa, 316, citing the text; Kulb v. United States, 18 Ct. of Cl. 565, citing the text; Hodge et al. v. Farmers' Bank of Frankfort (Ind.), 7 Ind. App. 94, 34 N. E. 123, quoting the text; Greene v. Beckner, 3 Ind. App. 39, 29 N. E. 172; Middaugh v. Elliott, 61 Mo. App. 601.

2. Heath v. Blake, 28 N. C. 406; Stutts v. Strayer, 60 Ohio St. 384, 54 N. E. 368, 71 Am. St. Rep. 723; Casto et al. v. Evinger et al., 17 Ind. App. 298, 46 N. E. 648; Green v. Sneed, 101 Ala. 205, 13 So. 277, 49 Am. St. Rep. 119; Kingston Sav. Bank v. Bosserman, 52 Mo. App. 269; McMurtrey v. Sparks, 71 Mo. App. 126.

it should be avoided if, through his negligence, it were altered by another. And the like views prevail in Scotland.*

3

In the United States a more liberal view prevails as to the rights of the beneficiary of a written contract, and if a stranger, without any complicity with him, intermeddles and changes its terms, he is deemed a spoliator, and the act is termed a spoliation, being an infringement of the right of all parties; but it is considered more the misfortune than the fault of the holder, that a third party should have trespassed on his property, and he is not, therefore, made the victim of his conduct. Therefore, the term "alteration" in this country is understood to signify a material change in the contract by a party thereto, and no spoliation will avoid a bill or note (being the act of a stranger), unless it be so great as to render the words unintelligible or uncertain, in which case it is regarded as a virtual destruction of it.5

6

The English doctrine that spoliation by a stranger avoided the instrument, has been characterized by Judge Story as repugnant to common sense and justice, and deserving no better name than a technical quibble. In California, where a draft was delivered to S. for plaintiff, and S. altered it, it was held, in the absence of proof, that the plaintiff authorized the alteration, to be a spoliation, and not to vitiate the draft. Alteration may

3. Master v. Miller, 4 T. R. 320; 2 H. Bl. 140, where the alteration was made by a stranger. Davidson v. Cooper, 11 M. & W. 778, 13 M. & W. 243. 4. Rob. Pr. (new ed.) 137; Byles on Bills (Sharswood's ed.), 472; Murchie v. Macfarlane, Thompson on Bills, 110.

5. Tutt v. Thornton, 55 Tex. 96, citing the text; Church v. Fowle, 142 Mass. 13; Andrews v. Callaway, 50 Ark. 359, citing the text; Eckert v. Louis, 84 Ind. 99, in which case it was held that an agent of the payee is not a stranger within the rule. Contra, if the agent acts without authority. Ballard v. Insurance Co., 81 Ind. 242; Whitlock v. Manciet, 10 Oreg. 166; Piersol v. Grimes, 30 Ind. 129 (1868); Crockett v. Thomason, 5 Sneed, 342; Bigelow v. Stephen, 35 Vt. 521; Terry v. Hazlewood, 1 Duv. 101; Lubbering v. Kohlbrecher, 22 Mo. 596; Medlin v. Platte & Co., 8 Mo. 235; Ford v. Ford, 17 Pick. 418; Lee v. Alexander, 9 B. Mon. 25; Waring v. Smith, 2 Barb. Ch. 119: Davis v. Carlisle, 5 Ala. 707; Vogle v. Ripper, 34 Ill. 106; Blakey v. Johnson, 13 Bush, 197; Laugenberger v. Kroeger, 48 Cal. 147; Cochran v. Nebeker, 48 Ind. 459; Bucklen v. Huff, 53 Ind. 474; Union Nat. Bank v. Roberts, 45 Wis. 373; Murry v. Peterson, 6 Wash. 418, 33 Pac. 969; Waldorf v. Simpson, 15 App. Div. 297, 44 N. Y. Supp. 921; Kingan & Co., Lmtd. v. Silvers et al., 13 Ind. App. 80, 37 N. E. 413; Perkins Windmill, etc., Co. v. Tillman, 55 Nebr. 652, 75 N. W. 1098; Walsh v. Hunt, 120 Cal. 46, 52 Pac. 115.

6. United States v. Spalding, 2 Mason, 478.

7. Laugenberger v. Kroeger, 48 Cal. 147; Kingan & Co., Lmtd. v. Silvers et al., 13 Ind. App. 80, 37 N. E. 413; Hays et al. v. Odom, 79 Mo. App. 425.

be made before delivery to the payee as well as afterward. Thus if a note be signed by a surety, or coparty, and left in the hands of a coprincipal, be altered before delivery by one of the promisors, the surety copromisor is discharged, although the alteration be made without the payee's knowledge. And if a note be indorsed by the payee for the maker's accommodation, be materially altered, however innocently, by the accommodation maker, and then discounted, the holder cannot recover."

8

1374. It was insisted at one time that the avoidance by alterations applied only to deeds, because of their solemn character; but where the date of a bill was altered by the payee, and then indorsed by him to a holder for value without notice, it was held that the latter could not recover, and it was well said by Ashurst, J.:10 "There is no magic in parchment or wax, and the principle to be extracted from the cases is that any alteration avoids the contract." And such are the constant and essential uses to which negotiable instruments are put, that it has been considered that more dangerous consequences would flow from a leniency toward alterations in bills and notes than in deeds.11

§ 1375. In what alteration consists. The alteration may consist in changing (1) its date, or (2) the time or (3) place of payment, or (4) the amount of principal or (5) interest to be paid, or (6) the medium or currency in which payment is to be made, or (7) the number or the relations of the parties, or in (8) the character and effect of the instrument as matter of obligation or evidence, 12

And the alteration may be effected by adding to the instru ment some new provision, or by substituting one provision for another, or by obliterating or subtracting from it some provision incorporated in it.

It will be no answer to a plea of alteration that its operation is favorable to the parties affected by it, whether in lessening the

8. Greenfield Sav. Bank v. Stowell, 123 Mass. 196; Draper v. Wood, 112 Mass. 315; Wood v. Steele, 6 Wall. 80; Fay v. Smith, 1 Allen, 477; Flanigan v. Phelps, 43 N. W. 1113; Goodman v. Eastman, 4 N. H. 455, 17 Am. Rep. 92, 97; Blakey v. Johnson, 13 Bush, 202; Bank of United States v. Russell, 3 Yeates, 391; Aldrich v. Smith, 37 Mich. 470; Bradley v. Mann, 37 Mich. 1. Contra, Bingham v. Reddy, 5 Bened. 266.

9. Aldrich v. Smith, 37 Mich. 470.

10. Master v. Miller, 4 T. R. 320; 2 H. Bl. 140.

11. United States Bank v. Russell, 3 Yeates, 391.

12. Drexler v. Smith, 30 Fed. 757, citing the text; Little Rock Tr. Co. v. Martin, 57 Ark. 277, 21 S. W. 468.

amount to be paid, enlarging the time of payment, or otherwise. No man has a right to vary another's obligations at his discretion, whether for his good or ill. It ceases when varied to be that other's act, and it suffices for him to say, " Non hæc in fœdera veni." 13 It may be questioned whether or not prolongation of time, decrease of amount, or other apparently beneficial alteration, is really so. A debtor may make provision for payment on one day, and not be ready on another. A decrease of the amount destroys the identity, and confuses the traces of his obligation, and every reason of policy and principle forbid that the laws should tolerate tampering with the rights and engagements of others. In Indiana, where the note bore interest at ten per cent., and the holder inserted the words "after maturity," it was held that these words avoided it "because they changed in a material matter the legal effect of the note," although they did not operate to the prejudice of the maker.14 An alteration of a bill before acceptance discharges drawer and indorsers.15 Evidence of alteration is admissible under a plea of non assumpsit, or nil debet,16 but it is safer to allege the alteration.17

SECTION II.

ALTERATIONS OF DATE, TIME, PLACE, AMOUNT, AND MEDIUM OF PAYMENT.

§ 1376. In the first place, as to the DATE of the bill or note, it is obviously a most material part of it, indicating the time it became a subsisting contract, and the time when the contract is to be performed in many cases, and a thousand circumstances may arise adding consequence to the question when the instrument was issued. Therefore, any change in the date imparts a new legal effect and operation to it, and is a material alteration, which avoids it as against prior parties and sureties even in the hands of a bona fide holder without notice.18

13. Weir v. Walmsley, 110 Ind. 246; Warden v. Ryan, 37 Mo. App. 466; Wager v. Brooks, 37 Minn. 392; Stutts v. Strayer, 60 Ohio St. 384, 54 N. E. 368, 71 Am. St. Rep. 723; Payne, Exr. v. Long, 121 Ala. 385, 25 So. 780. 14. Coburn v. Webb, 56 Ind. 100.

15. Bathe v. Taylor, 16 East, 412.

16. Boomer v. Koon, 6 Hun, 645; Cock v. Coxwell, 2 C. M. & R. (Exch.) 291. 17. Van Santvoord on Pleading (3d ed.), 565.

18. Master v. Miller, 4 T. R. 320; 2 H. Bl. 140; Owings v. Arnott, 33 Miss. 406; Britton v. Dierker, 46 Mo. 592; Brown v. Straw, 6 Nebr. 536; Overton