In Jeffrey v. Rosenfeld, 179 Mass., 506; 61 N. E., 49, the question is raised (obiter) whether the correct construction of this section is that an alteration by a stranger avoids the instrument as to all parties, except subsequent indorsers, whether they authorized or assented to it or not, or that a material alteration, whether made by a stranger or by a party avoids the instrument, except only as to those who authorized or assented to it and as to subsequent indorsers. The language of the section seems too clear to admit of doubt that the latter construction is the correct one. Although a party may not have authorized or assented to the alteration, yet where he has himself, by careless execution of the instrument, left room for insertions amounting to material alterations to be made without exciting the suspicion of a careful man he will be liable to a holder in due course notwithstanding such alterations. This rule rests on the principle of estoppel, that the party so negligent has invited the public to receive the instrument and that he, and not an innocent holder, must bear the loss occasioned by his own negligence. Woolfolk v. Bank of America, 10 Bush (73 Ky.) 514; Blakey v. Johnson, 13 Bush (76 Ky.) 197; Newell v. First Nat. Bank, 13 K. L. R., 775; Cason v. Grant County Deposit Bank, 97 Ky., 487; 17 K. L. R., 344; 31 S. W., 40; Hackett v. First Nat. Bank, 24 K. L. R., 1002; 70 S. W., 664; But in such a case a reply merely denying an allegation that the instrument had been materially altered does not raise the issue of such negligence in the execution of it. Bank of Commerce v. Haldeman, 109 Ky., 222; 22 K. L. R., 717; 58 S. W., 587. The intent with which a material alteration is made does not change the effect of it as to the instrument, but a material alteration fraudulently made not only avoids the instrument, but extinguishes the debt for which it was given. See Daniel, Neg. Inst. (5th Ed.) section 1410a. Jeffers v. Simpson, 11 K. L. R., 328. Subsequent erasures of the matter constituting the alteration will not restore validity to the instrument. Cotton v. Edwards, 2 Dana (32 Ky.) 106; Lochnane v. Emmerson, 11 Bush (74 Ky.) 79. The burden of explaining an alteration apparent on the instru ment is on the party producing the paper, though the alteration be against his own interest; but where the alteration does not appear on the face of the instrument, the holder is not called on to explain nor introduce testimony until the fact of alteration has been shown by evidence outside the paper. Elbert v. McClelland, 8 Bush (71 Ky.) 579; Cason v. Grant County Deposit Bank, 97 Ky., 487; 17 K. L. R., 344; 31 S. W., 40. The question of whether an alteration is material or not is for the court; the question of whether or not any alteration has been made is a question of fact. Blades v. Robbins, 9 K. L. R., 197; Fowler v. Gordon, 3 K. L. R., 616. (b) Mutual Loan Ass'n. v. Lesser, 78 N. Y. S., 629; 76 App. Div., 614. Packard v. Windholz, 82 N. Y. S., 392; 40 Misc. Rep,, 347; 84 N. Y. S., 666. This provision also has changed the law in Kentucky. Formerly, a material alteration vitiating the instrument altogether, no action could be maintained by the holder on an altered instrument, even according to its original tenor. Rucker v. Howard, 2 Bibb (5 Ky.) 167; Stout v. Cloud, 5 Litt. (15 Ky.) 206; Terry v. Hazlewood, 1 Duv. (62 Ky.) 109; Duker v. Franz, 7 Bush (70 Ky.) 275. § 125. What Constitutes a Material Alteration.Any alteration which changes: 1. The date (a). 2. The sum payable, either for principal (b) or inter est (c). 3. The time (d) or place (e) of payment. 4. The number of the relations of the parties (f). 5. The medium or currency in which payment is to be made. Or which adds a place of payment where no place of payment is specified (g), or any other change or addition which alters the effect of the instrument in any respect, is a material alteration (h). Eaton and Gilbert, Com. Paper, 561. Norton, B. & N., 249, 295. (a) Stout v. Cloud, 5 Litt. (15 Ky.) 296; Lee v. Alexander, 9 B. M. (48 Ky.) 26; Duker v. Franz, 7 Bush (70 Ky.) 275. (b) Newell v. First Nat. Bank, 13 K. L. R., 775; Hackett v. First Nat. Bank, 24 K. L. R., 1002; 70 S. W., 664. (c) Lochnane v. Emmerson, 11 Bush (74 Ky.) 69; First Nat. Bank v. Dawson, 2 K. L. R., 230; Gaines v. Scott, 3 K. L. R., 418; (d) Blakey v. Johnson, 13 Bush (76 Ky.) 197; First Nat. Bank v. Payne, 19 K. L. R., 839; 42 S. W., 736. (e) Marion Nat. Bank v. Russell, 14 K. L. R., 368; Cason v. Grant County Deposit Bank, 97 Ky., 487; 17 K. (f) The word "of" in this sentence should be read "or." Shipp v. Suggett, 9 B. M. (48 Ky.) 8; Singleton v. McQueery, 85 Ky., 41; 8 K. L. R., 710; 2 S. Rumley Co. v. Wilcher, 23 K. L. R., 1745; 66 S. W., 7; A note drawn by A. to his own order and delivered by him without indorsement to B. to be used to take up a note in bank made by B. and endorsed by A. was by the bank altered without A.'s knowledge, by striking out his name as payee and inserting that of B. Held, that the alteration was material and avoided the note as to A. Hoffman v. Planters' Nat. Bank, 99 Va., 480; 39 S. E., 134. (g) Whitesides v. Northern Bank of Kentucky, 10 Bush (73 Ky.) 503. (h) Warren v. Fant, 19 Ky., 1. An alteration which does not change the legal effect of the instrument is immaterial and does not vitiate it. Phillips v. Breck, 79 Ky., 465; 3 K. L. R., 271; Tranter v. Hibbard, 108 Ky., 265; 21 K. L. R., 1710; 56 S. W., 69. In Rogers v. Poston, 1 Met. (58 Ky.) 645 and in Todd v. Bank of Kentucky, 3 Bush (66 Ky.) 626, it was held that where one indorses a bill for the accommodation of the drawee, it bearing at the time the drawee's name written across its face, and leaves it with the drawee to be used by him to raise money, the drawee might thereafter write out an acceptance above his signature and designate a place of payment, and that the bill was not thereby materially altered. This section has probably changed the rule laid down by these cases. TITLE II.-BILLS OF EXCHANGE. ARTICLE 1. FORM AND INTERPRETATION. Section 126. Bill of exchange defined. 127. Bill not an assignment of funds in hands of drawee. 128. Bill addressed to more than one drawee. 129. Inland and foreign bills of exchange. 130. When bill may be treated as promissory note. 131. Drawee in case of need. § 126. Bill of Exchange Defined.-A bill of exchange is an unconditional order (a) in writing (b) addressed by one person to another, signed by the person giving it (c), requiring the person to whom it is addressed to pay on demand (d), or at a fixed or determinable future time (e), a sum certain (f) in money (g) to order (h) or to bearer (i). Eaton and Gilbert, Com. Paper, 577. Norton, B. & N., See Gaar v. Louisville Banking Co., 11 Bush (74 Ky.) 180. A general request in writing to pay money to the drawer's own order is a bill of exchange which the drawer may make payable to himself by indorsement. Rice v. Hogan, 8 Dana (38 Ky.) 134. Note. The numbers of the sections of this article in other States. than Kentucky are as follows: Arizona, 3429-3434; Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Massachusetts, Montana, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, Tennessee, Utah, Virginia and Washington, 126-131; Maryland, 145-150; New York, 210-215; Ohio, 3175p-3175v; Rhode Island, 134-139; Wisconsin, 1680-1680e. (a) As to what orders are unconditional, see section 3. (b) "Writing" includes print, section 190. (c) As to what is a sufficient signature, see section 1, note (c). An unsigned order reading, "Six months after date, pay to the order of J. T.," &c., addressed to R. and accepted by him on its face, and indorsed by J. T. on its back, is not a bill of exchange. Tevis v. Young, 1 Met. (58 Ky.) 197. (d) As to what instruments are payable on demand, see section 7. (e) As to what constitutes a determinable future time, see section 4. An instrument reading, “August 14th, 1901, Mr. Wm. Tebo will please pay R. J. Torpey or order $250.00. Due Oct. 1st," and signed by the drawer, is due October 1st, 1901. Torpey v. Tebo, 68 N. E. (Mass.) 223. The words in a bill, "one hundred and eighty days, pay to the order of," mean that it is due one hundred and eighty days after the date. Moreland v. Citizens' Savings Bank, 24 K. L. R., 1354; 71 S. W., 520. (f) As to certainty of sum payable, see section 2. (g) As to the meaning of "money," see section 1, note (f). (h) A writing in the form of a bill, but not payable to order or to bearer, is not a bill of exchange. Westberg v. Chicago Lumber & Coal Co., 117 Wis., 589; 94 As to when instruments are payable to order, see section 8. § 127. Bill Not an Assignment of Funds in Hands of Drawee.-A bill of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof, and the drawee is not liable on the bill unless and until he accepts (a) the same. Eaton and Gilbert, Com. Paper, 578. (a) The acceptance of a bill amounts to an appropriation of funds of the drawer in the acceptor's hands to its payment, and the acceptor can not pay the funds or any part of them to the drawer or to a volunteer under the drawer, such as an assignee for the benefit of the drawer's creditors. Buckner v. Sayre, 18 B. M. (57 Ky.) 746. |