Material alteration of a promissory note voids the instrument and defeats recovery where the loan claim rests solely on it.
Material alteration of a promissory note, including a subsequently inserted date in different ink, renders the instrument void and unenforceable against a non-consenting party unless the party relying on it explains the alteration and proves consent or common intention. Where no satisfactory explanation is provided, recovery cannot be founded on the altered instrument. When the pleaded loan transaction is contemporaneous with, and solely founded on, that promissory note, an alternative claim for recovery is also unavailable. The suit claim therefore fails entirely.
Issues: (i) Whether the promissory note was vitiated by a material alteration on account of a later insertion of the date, and if so, whether it became void and unenforceable. (ii) Whether the plaintiff could still recover the amount on an alternative basis after the promissory note was held void.
Issue (i): Whether the promissory note was vitiated by a material alteration on account of a later insertion of the date, and if so, whether it became void and unenforceable.
Analysis: The date appearing on the promissory note was found to be in a different ink from the body of the instrument, indicating a subsequent insertion. A change or insertion of date is a material alteration within the meaning of the governing law on negotiable instruments. Where the instrument appears altered, the party relying on it must explain the alteration and establish that it was made with consent or in furtherance of the common intention of the parties. The plaintiff offered no satisfactory explanation for the later insertion.
Conclusion: The promissory note was held to have been materially altered and therefore void and unenforceable.
Issue (ii): Whether the plaintiff could still recover the amount on an alternative basis after the promissory note was held void.
Analysis: The claim for recovery was founded solely on the promissory note, and the loan payment was treated as contemporaneous with the instrument. Once the instrument was held void for material alteration, the alternative route of recovery could not be invoked on the facts pleaded and proved in the case.
Conclusion: The alternative claim for recovery was rejected.
Final Conclusion: The appellate court's decree was reversed and the suit claim failed in entirety, leaving the appellant successful in the second appeal.
Ratio Decidendi: A negotiable instrument that shows a material alteration, including a later insertion of the date, is void against a party not consenting to the alteration, and the party producing such an instrument bears the burden of explaining it.