Brown v. Reed

Mr. Justice Sharswood

delivered the opinion of the court, November 4th 1875.

The learned counsel for the plaintiff in error has appealed to us to reconsider and overrule Phelan v. Moss, 17 P. F. Smith 59; and Garrard v. Haddan, Id. 82; since followed in Zimmerman v. Rote, 25 P. F. Smith 188. We mean, however, to adhere to those cases, as founded both on reason and authority, and as settling a principle of the utmost importance in the law of negotiable securities. That principle is that, if the maker of a bill, note or check issues it in such a condition that it may easily be altered without detection, he is liable to a bond fide holder who takes it in the usual course of business, before maturity. The maker ought surely not to be discharged from his obligation by reason or on account of his own negligence in executing and issuing a note that invited tampering with. These cases did not decide that the maker would be bound to a bond fide holder on a note fraudulently altered, however skilful that alteration might be, provided that he had himself used ordinary care and precaution. He would no more be responsible upon such an altered instrument than he would upon a skilful forgery of his handwriting. The principle to which I have adverted is well expressed in the opinion of the court in Zimmerman v. Rote, 25 P. F. Smith, 191: “ 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.”

But would the facts offered to be given in evidence and rejected by the court below, have brought this case within the line of their decisions ? We think not. In Phelan v. Moss and in Zimmerman v. Rote, the party signed a perfect promissory note, on the margin or underneath which was written a condition which as between the parties was a part of the contract and destroyed its negotiability. But it could easily be separated, leaving the note perfect, and no one would have any reason to suspect that it had ever existed. In Garrard v. Haddan the note was executed with a blank, by which the amount might be increased, without any score to guard against such an alteration. In all these cases the defendants put their names to whatw'ere on their face promissory negotiable notes. In the case before us on the defendant’s offer, he did not sign a promissory note, but a contract by which he was to become an agent for the sale of a w'ashing machine. It was indeed so cunningly framed *373 that it might be cut in two parts, one of which with the maker’s name would then be a perfect negotiable note. Whether there was negligence in the maker was clearly a question of fact for the jury. The line of demarcation between the two parts might have been so clear and distinct and given the instrument so unusual an appearance as ought to have arrested the attention of any prudent man. But it may have been otherwise. If there was no negligence in the maker, the good faith and absence of negligence on the part of the holder cannot avail him. The alteration was a forgery, and there was nothing to estop the maker from alleging and proving it. The ink of a writing may be extracted by a chemical process, so that it is impossible for any but an expert to detect it, but surely in such a case it cannot be pretended that the holder can rely upon his good faith and diligence. We think then that the evidence offered by the defendant below should have been received.

Judgment reversed and venire facias de novo awarded.