American Trust Co. v. Greuner

TYLER, P. J.

Action upon a promissory note to recover an unpaid balance due thereon. The complaint alleged that defendant W. M. Greuner, on the 5th day of December, 1929, executed a promissory note in favor of plaintiff American Trust Company in the sum of $65,000 with interest at the rate of six and a half per cent per annum and that the note became due June 5, 1930. It was further alleged that the sum of $37,063.94 had been paid thereon, leaving a balance of $27,936.06 together with interest. Defendant Greuner by answer admitted the execution of said note, but alleged that it had been altered on the face thereof, by increasing the interest from six and a half per cent to seven per cent, with the resulting release of all its obligations. Trial was had before a jury which rendered a verdict in favor of the plaintiff in the amount claimed, and judgment was rendered in conformity with the verdict. Motion for a new trial was made and denied. Since the rendition of judgment defendant has died and his special administrator has been substituted in his place and stead.

The main ground relied on for a reversal is the claim that the note was erroneously received in evidence. Whether the note was properly admitted revolves upon the question of whether there was a material alteration of the instrument as to avoid it under the provisions of section 3206 of the Civil Code. It appeared in evidence that the note sued upon was an unconditional promise to pay although it was secured by several other underlying notes which in turn were secured by deeds of trust. Defendant failing to pay, foreclosure upon the trust deeds was had in 1932 and the amount received was credited on the note sued upon. Prior to the foreclosure and at the time of the maturity of the note on June 5, 1930, defendant became apprehensive that the bank would start proceedings against him and secure a deficiency

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judgment, and he visited offices of the bank requesting further time to meet his obligation. He was informed that the note would be allowed to run for a while longer but that defendant would have to pay an additional one-half per cent, or seven per cent, interest for the period of the extension. Defendant denied that he ever expressly agreed to the increase. At the time the forbearance was agreed upon one of the officers of the bank informed a note teller who had charge of the note of the increase in interest, whereupon the teller for his own guidance, in order to keep his instructions before him and without any directions from anyone in authority so to do, placed a pencil notation or memorandum on the note, reading “7%, 6-5-30”. It is under these facts that appellant claims the ease is brought within the provisions of section 3206 of the Civil Code, which provides in effect that any alteration which changes the sum payable, either for principal or interest, is a material alteration which voids the instrument. It is true that any material alteration in an instrument avoids it. This rule, however, has application to cases where such alteration has been made by the payee or party seeking to enforce it. It has no application where the alteration has been made by a stranger who acts without authority.