Nissen v. Ehrenpfort

KERRIGAN, J.

The plaintiff, as the assignee of the National Bank of San Mateo, brought suit against the defendants upon five promissory notes executed by defendant Lindeman in favor of said bank, and indorsed as guarantor

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by defendant Ehrenpfort. Lindeman answered, setting up that in a proceeding in bankruptcy he had been duly discharged from the payment of his indebtedness represented by said promissory notes. Judgment was rendered against him for the amount due thereon, but its execution was perpetually stayed. Defendant Ehrenpfort answered, and among other defenses pleaded that since the delivery of said promissory notes they had been materially altered by said National Bank of Sari Mateo without his knowledge or consent, by virtue of which alteration he had been discharged from liability upon said notes. The trial court found in accordance with this plea, and rendered judgment in his favor. The plaintiff appeals from such judgment.

It is an undisputed fact in the case that the payee of said notes, through one of its officers, and at a time when said notes were overdue, wrote upon the margin of each of them, with the consent of their maker, Lindeman, but without the knowledge or consent of Ehrenpfort, the words: “Int. from Feb. 20,1916, 7%. O. K.,” and that Lindeman indicated his concurrence in said alteration by placing thereafter his initials. By the terms of the promissory notes as originally executed they bore interest at the rate of six per cent only.

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It is well settled, not only in this statd but wherever the law-merchant prevails, that the alteration of a negotiable instrument by which its meaning and effect is changed avoids the instrument as to any noneonsenting party thereto. Dealing with this subject in his work on Negotiable Instruments (sixth edition, volume 2, section 1373), Mr. Daniels says: “Any change in the terms of a written contract which varies its legal effect and operation, whether in respect to the obligation it imports or as 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 even in the hands of a