Opinion
(August Term, 1847.)
1. The alteration of a bill or note in a material part vacates the bill or note, except as between the parties consenting to such alteration.
2. Cutting off the name of one of the makers of a promissory note and substituting another is a material action.
3. A payment made by one of the makers of a promissory note, within three years, will take the debt out of the statute of limitations as to all.
4. Where the contract for the loan of money is made in Georgia, it will bear Georgia interest, though the note for the amount loaned be executed in this State.
APPEAL from HENDERSON Spring Term, 1847; Dick, J.
Debt, brought on a promissory note, executed by William T. and George S. Coleman, as principals with William Coleman and J. F. E. Hardy as sureties, payable to the plaintiff. The defendants pleaded the general issue, payment, statute of limitations, and statute against usury. The rule bears date 25 November, 1836. The facts agreed on by the parties were as follows: The plaintiff was, and now is, a citizen of the State of Georgia, but for several years before and since 1836 spent the summer months in the county of Buncombe, State of North Carolina. William T. and George S. Coleman were merchants and partners doing business in the town of Asheville, North Carolina, under the firm name of William T. George S. Coleman, in 1836, and for some time after. The note was originally made by William T. George S. Coleman, William Coleman and John Osborne. After the note had stood three years, Osborne became dissatisfied, and it was agreed by W. W. Davis, the plaintiff, William T. Coleman, John Osborne, and J. F. E. Hardy that Osborne's name should be cut off the note and that J. F. E. Hardy should sign it, which was done (425) accordingly, in the town of Asheville, North Carolina. George S. Coleman was not present and had no knowledge of the change being made. This change in the note was made in November, 1839. The copartnership between William T. and George S. Coleman expired in 1838. It was further agreed that William T. Coleman, on 15 January, 1840, executed a deed in trust to one Isaac T. Poor, by which deed he conveyed to the said Poor all the partnership effects for the purpose of paying the creditors of the firm and the note on which this suit is brought is mentioned in the said deed as one of the debts to be paid out of the said effects. Poor, the trustee, made sundry payments on the said note during his lifetime, one of which was within three years before this suit was brought. The executor of the said trustee made payments on the said note out of the partnership effects within three years before the commencement of this suit.
The defendants contended, first, that the cutting off of Osborne's name and the signing by Hardy, without the consent of all the parties to the note, rendered it void, so that no suit could be brought on it. Secondly, that if the note was not void, it could take effect only from the signing by Hardy, and was a new instrument, made in North Carolina. Thirdly, that the note was barred by the statute of limitations, and the payments made by the executor of Poor, the trustee, would not take the case out of the operation of the statute. Fourthly, that the note was infected with usury, and therefore void. Evidence was given to show that the note was to bear 8 per cent interest, that being allowed by the laws of Georgia. The note bore date at August, Georgia.
The court charged the jury that the cutting off of Osborne's name and the signing by Hardy did not destroy the note, but the plaintiff would be entitled to recover the amount due on it unless it was infected with usury or barred by the statute of limitations. The court further charged the jury that the trustee, Poor, having made (426) sundry payments on the note out of the funds of the copartnership, by the direction of William T. Coleman, and one payment being within three years before this action was brought, and the executor of Poor having also made payments on said note out of said funds, all of which were within three years before action brought, the statute of limitations did not bar. The court further charged the jury that if they believed from the evidence that there was a corrupt bargain made between the plaintiff and the defendants William T. and George S. Coleman in the State of North Carolina, for the purpose of securing to the plaintiff more than 6 per cent on the money loaned, and that the note was dated "Augusta, Georgia," for the purpose of giving a false coloring to the transaction, when in fact the contract was fully consummated in North Carolina, the note would be void, and they ought to find for the defendants. The court further charged the jury that if they found there was no such corrupt intent to evade the statute against usury, yet if they found that the contract was fully consummated in North Carolina, although the note was dated "Augusta, Georgia," they ought not to allow the plaintiff more than 6 per cent interest. But if they found that the note was in fact made in Augusta and to be paid in Augusta, and it was not infected with usury, the plaintiff was entitled to recover the balance due, with 8 per cent interest on the principal money, that being the rate of interest in the State of Georgia.
The jury found a verdict for the plaintiff for the balance due on the note, and further found that the note was made in Augusta and to be paid in Augusta, and allowed interest at 8 per cent on the principal money due. The defendants moved for a new trial, which was refused, and judgment being rendered for the plaintiff, the defendants appealed.
Baxter for plaintiff. (427)
Gaither and Avery for defendant.
The judge charged the jury that the cutting off from the note the name of Osborne did not destroy it, and the plaintiff was entitled to recover notwithstanding. The plaintiff had a verdict and judgment against William Coleman (who was not present when the alteration in the note was made and who never assented to the making of the alteration) and J. F. E. Hardie. We do not agree with his Honor; for we think that the alteration of a bill or note in a material part vacates the bill or note, except as between the parties consenting to such alteration. Downs v. Richardson, 5 Barn. Ald., 674; 1 Steph., N.S., 788. The cutting off the name of one of the makers of the promissory note and substituting that of another was a material alteration of the note, and vitiated it as to William Coleman, for he agreed to be bound with Osborne, and it may be that Hardy is not a substantial cosurety. Secondly, we concur with his Honor that the action was not barred by the statute of limitations. William T. Coleman, one of the makers of the note, made a payment on it by his agent, Poor, within three years next before the commencement of this action. Poor had funds placed in his hands by William T. Coleman to aid in paying this very note, and he did aid in paying as aforesaid. This payment, made by one of the makers of the note, according to numerous decisions, took the case out of the act of limitations as to all the other makers of the note. Cases were cited to show that dividends received by the creditor under a commission of bankruptcy against one of the joint debtors will not repel the statute as to the others; and we approve of those cases, because (428) there the payments are by the force of law, and are not the acts of the parties. But the payments here are made by the debtor himself, or under his authority by his agent and out of his funds, which distinguishes this from the other cases. Thirdly, the money was loaned by the plaintiff to the Messrs. Coleman in Georgia, and the note for the repayment was then and there given. The fact that Hardy, by the consent of the plaintiff and one of the borrowers, placed his name on the paper as one of the makers of the note in North Carolina, did not make it, as to him, a North Carolina contract. The name of Hardy on the note, without a consideration, would only have been a nudum pactum. It was the loan made in Georgia by a Georgia citizen that constituted contract of loan having been in Georgia, even a note given here might properly reserve Georgia interest. McQueen v. Burns, 8 N.C. 476. Therefore, this note, purporting to be given in Georgia, though executed by Hardy here, is no evasion of our law against usury, but properly drew 8 per cent interest, which is admitted to be the rate in that State.
We think the judgment must be reversed because the judge charged that the plaintiff was entitled to recover against William Coleman, although he did not assent to the alteration made in the note. The recovery ought to have been against Hardy only.
PER CURIAM. Judgment reversed, and venire de novo. Cited: Anderson v. Doak, 32 N.C. 297; Roberts v. McNeely, 52 N.C. 507; Lane v. Richardson, 79 N.C. 161; Green v. Greensboro College, 83 N.C. 451; Long v. Mason, 84 N.C. 16; Wood v. Barber, 90 N.C. 80; Taylor v. Sharp, 108 N.C. 381; Wicker v. Jones, 159 N.C. 109.
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