
    LANIER v. CLARKE et al.
    (Court of Civil Appeals of Texas.
    Dec. 10, 1910.)
    1. Trial (§ 191) — Instructions — Assuming Pacts.
    Where, in an action on a promissory note, defended on the ground of an alteration made after the note left the maker’s hands, there was evidence which would support a finding that the note was not altered, it was error for the instructions to assume that it was altered.
    [Ed. Note.1 — For other eases, see Trial, Cent. Dig. §§ 420-435'; Dec. Dig. § 191.]
    2. Appeal and Error (§ 1033) — Harmless Error.
    Error, in an action on a. promissory note against the maker, in assuming in the instructions that the note was altered after it left the maker, when there was evidence to support a finding that no alteration was made, was favorable to defendant, so as to preclude him from complaining thereof.
    [Ed. Note. — Por other cases, see Appeal and Error, Cent. Dig. §§ 4052-4062; Dec. Dig. § 1033.]
    3. Bills and Notes (§ 378) — “Porgery”— Negligence in Execution.
    Any material alteration in an instrument evidencing a pecuniary liability is a “forgery,” which the maker is not bound to anticipate and guard against by making such alteration difficult or impossible.
    [Ed. Note. — Por other cases,' see Bills and Notes, Cent. Dig. §§ 985-992 ; Dec. Dig. § 378.
    
    Por other definitions, see Words and Phrases, vol. 3, pp. 2900-2909; vol. 8, p. 7065.]
    4. Bills and Notes (§ 378) — Negotiable Notes — Effect of Alteration on Rights of Parties.
    If a condition of a negotiable promissory note made in lead pencil on the margin thereof below the maker’s signature, to the effect that it was given in consideration of four lots, was erased from the note after it left the maker’s hands, and 'before it was transferred to plaintiffs in due course and for value, the maker was not liable thereon in an action by plaintiffs ; the maker of a note not being liable upon a contract different from that made by him.
    [Ed. Note. — Por other cases, see Bills and Notes, Cent. Dig. §§ 985-992; Dec. Dig. § 378.]
    Appeal from Haskell County Court; Joe Ir-by, Judge.
    Action by L. A. Clarke and another against B. T. Lanier and another. Prom a judgment for plaintiffs, defendant named appeals.
    Reversed and remanded for new trial.
    Helton & Murchison and Harry P. Law-ther, for appellant. H. G. McConnell and Gordon B. McGuire, for appellees.
    
      
      For other eases see same topic and section NUMBER in Dee. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   SPEER, J.

L. A. Clarke and H. A. Knight filed this suit in the county court of Haskell county to reepver from B. T. Lanier and W. R. Miller the amount of a promissory note dated November 14, 1908, for the sum of $407.25, due 30 days after date, payable to the order of W. R. Miller, providing for 10 per cent, interest per annum from maturity and 10 per cent, attorney’s fees. They alleged that said note was executed by La-nier and delivered by bim to W. R. Miller, and that afterwards before maturity in due course of trade for a valuable consideration they became the owners of said paper. Miller filed no answer, and the defendant Lanier filed his sworn plea of non est factum; the particular vice in said note sought to be reached by the plea being that the note had been fraudulently altered after its delivery to Miller by erasing therefrom the following memorandum: “The consideration of this note to be paid by four lots in Bunkley’s addition to the town of Stamford.” Plaintiffs replied that, if such alteration had been made, they had no notice of the same, and that said note was by defendant Lanier so carelessly drawn and made that such change, if any, did not and does, not show or evidence itself to plaintiffs or any other prudent person whereby the defendant is es-topped to deny the execution of the note as sued on. The court thus submitted the case to the .iury: “In this cause you will find for plaintiffs for the full amount sued for, unless you find for defendant B. T. Lanier under the following instructions, viz.: If you find from the evidence that' at the time the note in question was transferred by W. R. Miller to L. A. Clarke and H. A. Knight after certain alterations of said note were made and that said L. A. Clarke and H. A. Knight knew or had cause to know that an alteration of said note had been made, then, and in that event, you will find for defendant B. T. Lanier, or if you find from the evidence that there was an alteration of said note made after it came into possession of L. A. Clarke and H. A. Knight, then, and in that event, you will find for defendant B. T. Lanier.” There was a finding for the plaintiffs, and judgment was accordingly entered against both Lanier and Miller, and Lanier has appealed.

The evidence was such that the jury could have found that no alteration of the note was ever made, and the court should not, therefore, have assumed, as he did in the charge quoted, that the alteration had been made. But this error is in appellant’s favor, and no one is complaining of it, and we only mention it in view of the reversal of the case. Under the instruction the jury were required to find against appellant if the note had been fraudulently altered after it left his hands, unless the jury further found that the alteration was made after the paper came into the hands of plaintiffs, or that they knew or had cause to know of the same. This ought not to be the law in this state. There are many authorities here and elsewhere holding that where a maker of a note or bill delivers it in an uncompleted condition, as, for instance, with unfilled blanks in its body, he impliedly authorizes the payee or drawee to perfect the instrument by filling the blanks and will be held liable to an innocent holder of the paper as against a plea of non est factum. The principle is discussed by our Supreme Court in Farmers’ & Merchants’ National Bank v. Novich, 89 Tex. 381, 34 S. W. 914, wherein it is said: “The liability of the maker of a note when it has been changed without his authority depends upon the question as to whether or not he has committed it to another person in such form as to imply authority in that person to make the change, and, if he has done so, the law holds that he has been negligent in so executing and putting it in circulation, and as a result he must suffer from the acts of the person whom he trusted, rather than to throw the loss upon another who did not trust in the matter to the person who made the alteration.” Some courts have gone very much further and made the issue to turn upon the question whether or not the maker had been negligent in the execution of the instrument, and, if he had, have held him liable upon the altered instrument, even though the alteration was forgery and a felony. Indeed, some of the authorities go to the extent of holding, as the court in the charge quoted assumed, that it is negligence as a matter of law for a maker to attach to a note a condition written in pencil, as this one was, in such manner as easily to be erased without defacing the note. Such is the holding in Harvey v. Smith, 55 Ill. 224, wherein it is said: “If a person signs a note partly in ink but containing a material condition qualifying his liability written only in pencil, he is guilty of gross carelessness, and if the writing in pencil is erased so as to leave no trace behind or any indication of alteration, as it easily may be, we are of opinion an innocent holder taking the note before maturity for a valuable consideration will take it discharged of any defense arising from the erased portion of the note or from' the fact of such alteration. Young v. Grote, 4 Bing. 258, 13 Eng. Com. L. R. 420.” There are other authorities substantially to the same effect. See Palmer v. Largent, 5 Neb. 223, 25 Am. Rep. 479; Noll v. Smith, 64 Ind. 511, 31 Am. Rep. 131; Zimmerman v. Rote, 75 Pa. 188.

But we believe the better reasoning and the weight of authority is otherwise. It is not fair to apply the maxim, “Where one of two innocent parties must suffer loss by the fraud of a third, he who had made the loss possible by his negligence must bear the burden of loss,” or, “He who trusts most should suffer most,” for in such a case it cannot be said that the maker who delivers a perfect and completed note or bill into the hands of another trusts more than he who purchases the same from thát other on his guaranty of its genuineness. Strictly speaking, the doc. trine of estoppel ought not to apply except in those eases where the person making the alteration is in some way clothed with agency as by an apparent authority to make the change. Any material alteration in an. instrument evidencing a pecuniary liability is“forgery,” and it cannot be said that the maker of a negotiable or nonnegotiable note ought to anticipate that any one would commit a forgery and, therefore, be required to so execute his instrument that such a forgery would be difficult, if not impossible. The law attaches great importance to that quality of commercial paper known as negotiability, and has gone very far in protecting innocent holders of such paper against all manner of defenses when interposed by the maker; but it should never go to the extent of holding such maker liable upon a contract different from what it appeared to be when it left the maker’s hand. In Waite v. Pomeroy, 20 Mich. 425, 4 Am. Rep. 395, it is well said: ‘.‘If a party makes a contract in such manner as is authorized by law, he has a right to object to being bound by any other. A bona fide holder before maturity is allowed to receive the genuine contract discharged from any equities attaching to the contract itself as between the original parties, but he cannot get a contract where none is made.” See Cronkhite v. Nebeker, 81 Ind. 319, 42 Am. Rep. 127; Bank of Herington v. Wangerin, 65 Kan. 423, 70 Pac. 330, 59 L. R. A. 717; Stephens v. Davis, 85 Tenn. 271, 2 S. W. 382.

While the condition, the erasure of which is made the basis of appellant’s plea, is shown to have been made in pencil and on the margin of the note beneath appellant’s signature, nevertheless it constituted an integral part of appellant’s contract, and, together with other portions, made up a completed instrument, and, if the condition was removed as alleged by him, such fact will constitute a complete defense to appellees’ suit. “The simple and fair rule for all is that the purchaser of paper, whether negotiable by the law merchant or not, is put upon inquiry as to the genuineness of the paper in all its material parts by the mere fact that it is offered for sale; and, if he sees fit to omit making inquiry of .the maker, he buys at his own risk and upon the faith of his immediate indorser or other parties, if any, against whom he may have recourse.” Cronkhite v. Nebeker, supra.

For the charge given, the judgment is reversed, and the cause remanded for another trial.  