
    Benjamin B. Conable, Resp’t, v. Edgar K. Smith, Impl’d, App’lt.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed October 23, 1891.)
    
    Bills and Notes—Alteration—Estoppel.
    In an action against the endorsers of a note, the defense was that it had been altered by inserting a provision for the payment of interest. It appeared that the maker became insolvent and his assignee in procuring a compromise obtained defendants’ consent to the maker’s release from liability on the note, on payment of twenty-five per cent, thereon, and they executed an instrument to that effect, setting out a copy of the note as it now appears and covenanted that such release should not affect their liability. It was admitted that plaintiS was the owner of, the note in good faith. The court submitted to the jury the questions whether there was an alteration, and if so, whether it was ratified or objection waived by defendants. Held, that this was quite as much as defendants were entitled to ask, and that the verdict in plaintiff’s favor was conclusively supported by a finding in his favor on the second question of fact.
    Appeal by the defendant, Smith, from a judgment entered on the verdict of a jury at the Brie circuit.
    
      L. W. Thayer, for app’lt; Byron Healey, for resp’t.
   Dwight, P. J.

The action was against the two endorsers, the defendant Smith and one Brown, of a promissory note made by one Garretsee and delivered to the plaintiff before due, for value. Two -defenses were set up by the answer, one of a material alteration in the note after its endorsement, the other of usury. The latter ■defense was abandoned on the trial, and the case seems to have been submitted to the jury on two questions of fact. (1) Was there a material alteration in the body of the note after its indorsement by the defendants; (2) if so, was that alteration ratified or objection on account thereof waived by the defendants ; or were the defendants estopped from alleging such alteration as a defense to the plaintiff’s action.

The alleged alteration consisted of the addition of the words and interest after the first day of March next,” at the end of the note. The note was dated February 1, 1871, and was drawn and ■executed by both maker and endorsers about that time, but was not negotiated until about the last of that month when, as the allegation is, the words in question were added.

There was no motion on the part of the defendants for a non-suit nor for the direction of a verdict, so that the defendants are not in position to question the propriety of the submission of either of the questions of fact to the jury. Those questions were not ■separately submitted; so that it cannot be certainly affirmed whether the jury found in favor of the plaintiff upon both or upon which of the questions submitted, but even if it were to be .assumed that the finding was in favor of the, defendants on the question of the alteration of the tíote, we think the verdict in favor of the plaintiff was conclusively supported by a finding in his favor on the second question of fact above stated, viz.: of conduct on the part of the defendants constituting a ratification, a waiver or an estoppel.

The undisputed facts bearing upon this branch of the case are that, within the year after the note was made, Garretsee the maker became bankrupt, and his assignee took measures to procure a compromise with his creditors at the rate of twenty-five cents on the dollar of his indebtedness. Accordingly, application was made to the defendants, as endorsers of the note in question, to consent to his release from liability on that note, on payment by or for him of the agreed percentage of the amount due thereon, and they thereupon executed an instrument in writing, under seal, which set out a copy of the note in the same terms as those in which the note sued upon is set out in the complaint, including the alleged alteration or addition, whereby they gave their consent, in the most formal and explicit terms, to the release and discharge of the maker of the' note from all liability thereon upon the receipt and endorsement by the holder of twenty-five per cent, of the amount due thereon; and covenanted that such release and discharge should not in any manner affect or modify their liability as endorsers for the remaining seventy-five per cent, of such amount due, etc. And thereupon the plaintiff as the owner and holder of the note did accept from the assignee of Garretsee the percentage agreed upon and endorsed the same on the note, and executed a full and formal discharge of the maker from all liability thereupon. Of course this transaction on the part of the defendants constituted a complete ratification or adoption by them of the.contract as represented by the note as it was set out in the instrument executed by them, unless they have in some way overcome the presumption which arose upon their execution of that instrument, that they knew its contents including the terms in which the note was set out therein, and that question seems to have been submitted to the jury. This was quite as much as the defendants were entitled to ask; because, as we suppose, upon the question of estoppel there was no question at all for the jury. The defendants expressly admitted on the trial that the plaintiff was the owner of the note in good faith; that is, without any knowledge or reason to believe that the note did not truly represent the contract both of maker and endorsers.

Such being the case, the defendants, in order to induce the plaintiff to release the maker of the note from liability for seventy-five per cent, of the amount for which it stands, unite in a solemn and formal instrument under their hands and seals, by the terms of which they represent the note endorsed by them to have been in the terms of that in his hands, and consent and request him to release the" maker from liability thereon to the extent mentioned, and declare that such release, if made, shall not in any manner affect their liabilit)r as endorsers thereon. And thereupon, and in reliance thereupon, the plaintiff does release the maker as requested, and surrenders the security of the contract of the latter to the extent of seventy-five per cent, of the note. It is impossible to entertain the proposition that the defendants can escape the effect of this instrument as an estoppel on the ground that they did not know what the instrument contained unless the plaintiff himself is in some way responsible for their ignorance, and of that there is no pretense.

The defendants execute the instrument of their own accord so' •far as the' plaintiff is concerned, and thereby induce him to relinquish his claim upon the maker of the note in reliance upon their representation that they are liable as its endorsers, and their promise to pay it notwithstanding his release of the maker. The case presents all the features of nn estoppel, and its effect is not dependent upon the question whether the defendants knew what the instrument contained. It was their business to,know, they had every opportunity to know, the plaintiff was not responsible if they did not know, and the effect upon his rights and interests was the same whether they knew or not. We think the plaintiff would have been entitled to the direction of a verdict in his favor if it had been asked for. Certainly upon the finding of the jury that the defendants were not ignorant of the contents of the instrument signed by them the verdict was undoubtedly correct.

There was no motion for a new trial, so that we are not per- • mitted to inquire as to the sufficiency of the evidence upon any question submitted to the jury.

The judgment appealed, from must be affirmed.

Judgment affirmed.

Macomber and Lewis, JJ., concur.  