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Danville Uaw Cio Credit Union v. Randle

APRIL 19, 1965.




Appeal from the Circuit Court of Vermilion County; the Hon. JOHN F. SPIVEY, Judge, presiding. The judgment of the trial court is affirmed.


The plaintiff, Danville UAW CIO Local No. 579 Credit Union appeals from the judgment of the Circuit Court for the Fifth Judicial District, Vermilion County, that plaintiff take nothing by its action on a judgment note against the nine defendants, who were cosigners on the note. Plaintiff seeks a reversal of that judgment and asks judgment in its favor in the amount of $4,472.29 and costs.

The promissory note, which is the basis of the action and bears date March 7, 1961, was given to secure a loan by the plaintiff credit union to one William R. Fultz, who subsequently became bankrupt and was not made a party defendant. The note is a negotiable instrument upon which the nine defendants were accommodation makers. One E.V. Thompson was also an original signer of the note as an accommodation co-maker, but his signature has been lined through with three or four lines, and E.V. Thompson was not made a defendant. The note contained a power of attorney to confess judgment and an original judgment was entered against the nine defendants on a cognovit. This original judgment was vacated on motion, the cause heard by the trial judge, without a jury, and judgment for the defendants was entered as above stated. A post-trial motion was denied.

The plaintiff contends that the drawing of lines through the signature of E.V. Thompson, co-maker, was not a material alteration but a mere spoliation of the note, having no legal effect thereon. The defendants contend that the crossing out of the signature was a material alteration, which invalidated the instrument sued on.

In support of its contention, plaintiff says the note was completed with eleven signatures as an effective note, and that one George Lawrence, the credit union treasurer, who was deceased at the time of the trial, crossed out the name of E.V. Thompson, without having authority to do so. They contend, therefore, that the co-maker, E.V. Thompson, remained liable upon the note and, as a result, no material alteration occurred. Pursuing this line plaintiff contends that the claim of material alteration is an affirmative defense which must be supported by proof of authority of the agent to cross out the signature, which proof is said to be wholly lacking. Additionally, plaintiff says that, as a matter of law, an agent cannot release his principal's debtor without consideration, that no proof of consideration has been made, and hence, the authority of Lawrence to cross out the name has not been proven.

Defendants contend that the action of George Lawrence, treasurer of the credit union, was within the scope of his authority, and that where the alteration appears on the face of a negotiable instrument, the burden of proof of lack of authority to alter a negotiable instrument is upon the person asserting such want of authority; that no proof of want of authority was introduced, but rather, there was plentiful evidence of conduct ratifying the action of the agent.

This court is required to affirm the judgment of the trial court, after trial without a jury, if issues of fact could determine the matter, unless the judgment of the trial court, is clearly contrary to the manifest weight of the evidence. Horns v. Johnson, 17 Ill. App.2d 314 on 318, 149 N.E.2d 437; Floyd v. Smith's Estate, 320 Ill. App. 171 on 177, 50 N.E.2d 254; United States v. Chicago, R.I. & P. Ry. Co., 171 F.2d 377 (CCA 10). If necessary, this court will search the record to affirm the trial court. Richman Chemical Co. v. Lowenthal, 16 Ill. App.2d 568, 571, 149 N.E.2d 351.

We think that under the evidence, the trial court was correct in entering judgment for the defendants.

We must hold that where a signature on a negotiable instrument appears to have been cancelled, the burden of proof lies upon the party asserting that such cancellation was made without authority. (Ill. Rev Stats 1961, c 98, § 144.) In this case the signature of E.V. Thompson does appear to have been cancelled. This cancellation is on the face of the instrument. The language of the statute is so specific that nothing else is required to support this position. An almost identical principle is announced by the Illinois Supreme Court on alteration of documents other than negotiable instruments. In Ruwaldt v. McBride, 388 Ill. 285, 57 N.E.2d 863 (1944), the court, referring to an alteration of an oil lease, said at p 292:

"Where an alteration in a deed is admitted, or where it is established by inspection, the burden of proof shifts to the person claiming the benefit of the instrument, as altered, to show the alteration was made under circumstances rendering it lawful. (Tucker v. Kanatzar, 373 Ill. 162; Waggoner v. Clark, 293 Ill. 256.). . . . The rule is elementary that any alteration of a written instrument is material which so changes its terms as to give it a different legal effect from what it originally had, and thus work some change in the rights, obligation, interests or relations of the parties. It is immaterial whether this effect is brought about by interlineation, substitution, change of words or erasures, or by deleting some material provision of the instrument. Such an alteration renders the instrument void. Newlan v. Harrington, 24 Ill. 207; Hayes v. Wagner, 220 Ill. 256; Wood v. Steele, 6 Wall 80, 18 L Ed 725; Keller v. State Bank of Rock Island, 292 Ill. 553." (Emphasis supplied.)

In Merritt v. Dewey, 218 Ill. 599, 75 N.E. 1066 where an alteration, not apparent on the face was shown, the court said at p 606:

"When the defendant had introduced evidence showing a material alteration the burden of proof then shifted to the plaintiff, and it was for him then (where he did not meet such evidence by denial) to show that such alteration had been made under circumstances rendering it lawful or under circumstances which would not preclude a recovery by him. 2 Cyc 234; Shroeder v. Webster, 88 Iowa, 627; Maguire v. Eichmeier, 109 id. 301; Winter v. Pool, 100 Ala. 503; Glover v. Gentry, 104 id. 222; National Ulster County Bank v. Madden, 114 N.Y. 280; Gleason v. Hamilton, 138 id. 353; Capital Bank v. Armstrong, 62 Mo 59; Dewees v. Bluntzer, 70 Tex 406."

The general rule is that one claiming under an instrument shown to have been materially altered after execution has the burden of establishing the liability of the maker notwithstanding the alteration. 4 Am Jur2d 78, sec 85. This is made so specifically, in the case of apparent cancellation of a signature on a negotiable instrument. Britton, Handbook of the Law of Bills and Notes, 2d ed 1961, p 650 et seq.

A change in the number of the parties is a material alteration (Ill. Rev Stats 1961, c 98, par 146(4)) and avoids the instrument ...

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