Robertson v. Hay ex rel. McCandless

1. R. executed to H. a bond and mortgage, and gave therewith a certificate of no defence. These instruments were all placed in the hands of G. for the purpose of raising money for R., as the latter should need it, and give an order therefor. Without any instructions from R., G. negotiated the mortgage. Held, that although G. sold the mortgage, and caused it to be transferred without an order from R., and failed to account for the money received therefor, these facts were insufficient to defeat a recovery by the assignee. The papers which R. placed in the hands of G., not only impliedly authorized a sale of the bond and mortgage, but invited purchasers by expressly declaring that he had u no defence of any kind whatever.” 2. Where one of two innocent persons must suffer from the tortious act of a third, he who gave the wrongdoer the means of perpetrating the wrong must bear the consequences of the act. 3. An alteration of a deed, although material, if made by a stranger, will not affect the validity of the instrument. 4. An immaterial alteration of a deed, although made by a party thereto, will not avoid the same or make it inadmissible in evidence.

Error to the Court of Common Pleas, No. 1, of Allegheny county: Of October and November .Term 1879, No. 110. Scire facias sur mortgage by A. B. Hay, to the use of James McCandless, against Stewart Robertson. On June 18th 1873, defendant executed his bond and mortgage for $15,000 to A. B. Hay, who was the law partner of S. B. W. Gill. The mortgage was acknowledged June 24th 1873, and recorded June 28th 1873. The defendant also executed a “ certificate of no defence,” dated July 18th 1873, and acknowledged July 19th 1873. Robertson received no consideration at the time these instruments were executed, but they were all handed to Gill, who was to retain them, and raise money thereon for Robertson, in case he needed it, and in that event he was to notify Gill, who was then to negotiate the mortgage to procure the funds required. Without any notification from Robertson, Gill, on June 24th 1873, sold the mortgage to McCandless, and at the instance of Gill, Hay, his law partner, assigned it to the purchaser. McCandless, in the negotiations, treated with Gill alone, and afterwards received from Gill the instalments of interest on the mortgage, as they severally fell due. Whether or not Robertson received from Gill any of the consideration paid by McCandless for this assignment, was disputed. There was no testimony to show positively that Robertson did know anything about the transaction, other than the fact that in 1875 he procured a policy of insurance on the property mortgaged, which contained this recital: “ Loss, if any, first payable to James McCandless, mortgagee.” Subsequent to the assignment, Gil'l, who was the agent and attorney of McCandless, and retained the mortgage in his custody, inserted therein a clause waiving the right of exemption under the Act of February 25th 1873, Pamph. L. 161, which act was repealed by the Act of April 10th 1873, Pamph. L. 712. He also modified the “ certificate of no defence” so as to make it appear as an extension by the mortgagor of the mortgage for one year. Gill absconded in 1877, and the interest remaining unpaid, McCandless brought this suit on the mortgage. At the trial, before Railey, J., the plaintiff offered in evidence the certificate of no defence. Defendant objected, because it showed material interlineations, which were made while in possession of the plaintiff, without the authority of the defendant, and without his knowledge or consent; and that the paper was, therefore, void - and incompetent and irrelevant. The court overruled this objection, and admitted the paper, saying : “ There is no such material alteration as would warrant you in disregarding this certificate of no defence.” (8th assignment of error.) In his fourth point, the defendant asked the court to charge:— That the alteration in the mortgage in evidence (as shown by a comparison of that mortgage with the record offered in evidence) is a material alteration; and.if the jury believe from the evidence that said alteration was made after the execution and acknowledgment of said mortgage, while it was in the custody of the plaintiff, or his agent or attorney, and without the knowledge or consent of the defendant, then the plaintiff cannot recover The court, in their answer, inter alia, said:— “ There was no Act of Assembly in existence on June 18th 1873 to waive, so that the interlineation was wholly immaterial. There was nothing for the defendant to waive at that time. * * * For this reason I refuse the point, and you will regard the question which has been raised about the addition to or alteration of the mortgage as not existing, so far as its effect upon- this case is concerned.” (5th assignment of error.) In affirming the plaintiff’s points, the court charged:— “ If you find that Stewart Robertson executed and acknowledged this mortgage, together with the accompanying bond and certificate of no defence, and placed them jn the hands of Gill, for the purpose of negotiation at some time or other, and Gill, on the 24th of June 1873, exhibited to Mr. McCandless the mortgage, bond and certificate of no defence, in the condition McCandless testifies they then were, and if, upon the faith of these papers, McCandless then purchased the mortgage for the sum of, $13,000, and made payment to Gill, by his check, and that McCandless acted in good faith — and that you must find from the evidence— then the plaintiff is entitled to a verdict for the amount of his claim with interest.” (1st, 2d and 3d assignments of error.) The verdict was for plaintiff for $17,382.75; and after judgment, defendant took this writ, among his assignments of error being those above noted. If a stranger, without the privity of the obligee, alters a deed by interlineation, addition, erasing, or by drawing of a pen through a line or word, or in any point not material, it will not avoid the deed; but if the obligee himself alters the deed, by any of these ways, though it is in words not material, or a stranger does it in a point material, the deed is void: Pigot’s Case, 11 Co. 27; Moore v. Bickham, 4 Binn. 1; Marshall v. Gougler, 10 S. & R. 164; Adams v. Frye, 3 Metc. 103; Smith v. Weld, 2 Barr 54; Neff v. Horner, 13 P. F. Smith 331; Morris v. Vanderen, 1 Dall. 67. The assignee of a mortgage stands in no better position than the mortgagee, because the security is not negotiable: Duquesne Bank’s Appeal, 24 P. F. Smith 426; McMullen v. Wenner, 16 S. & R. 20; Weaver v. McCorkle, 14 Id. 306. A party about to purchase a security is -bound, as a requisite to holding it discharged of equities existing between the original parties, to inquire of the obligor if he have any defence or set-off to it: Eldred v. Hazlett’s Adm’r, 9 Casey 315; Frantz v. Brown, 1 P. & W. 257; McCandless v. Engle, 1 P. F. Smith 314; Michener v. Cavender, 2 Wright 334. It was not sufficient to put reliance in the certificate of no defence: Wilcox v. Howell, 44 N. Y. 398. —An immaterial alteration of an instrument will not avoid or affect it: Burkholder v. Lapp’s Ex’r, 7 Casey 322; Gardinier v. Sisk, 3 Barr 326; Miller v. Gilleland, 7 Harris 119; Miller v. Reed, 3 Casey 244. The alteration of an instrument by a stranger, though material, does not avoid it, but leaves it as effectual in law as it was before: Whart. on Evid., sects. 627, 628; Withers v. Atkinson, 1 Watts 249; Fritz v. Commissioners, 5 Harris 131; Neff v. Horner, 13 P. F. Smith 327. A mortgagor who gives a certificate of no defence is estopped from setting up a defence against the assignee: Ashton’s Appeal, 23 P. F. Smith 153; McMullen v. Wenner, 16 S. & R. 18; Edgar v. Kline, 6 Barr 327; Weaver v. Lynch, 1 Casey 449; Scott v. Sadler, 2 P. F. Smith 211. If Robertson’s own version of the transaction be true, the case is simply that Gill sold the mortgage prematurely and in disregard of the private arrangement between him and Robertson. But how is McCandless, a bona fide purchaser for value, without knowledge of the secret arrangement, to be affected by the unfaithfulness of Robertson’s own agent ? Where one of two innocent persons must suffer by the hand of a third, whichever has accredited him must bear the loss: Mundorff v. Wickersham, 13 P. F. Smith 87; Pennsylvania Railroad Co.’s Appeal, 5 Norris 80; Bank of Kentucky v. Schuylkill Bank, 1 Pars. Eq. 248. (See Hutchison v. Gill, post. p. 253.)