This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The Negotiable Instruments Law provides: "Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration, and subsequent indorsers. But when an instrument has been materially altered and is in the hands of a holder in due course, not a party to the. alteration, he may enforce payment thereof according to its original tenor." 1 The first part of this section did not change the pre-existing law, but the last paragraph revolutionized the preexisting law as to the effect of alteration. Under this statute, the courts have no choice but to enforce it literally and to allow a bona fide holder to recover upon the original form of the instrument, in spite of the material alteration thereof.2 Under this section, a bank which has paid a raised check in good faith may charge the account of its depositor with the amount for which such check was originally given.3 If a note is altered by changing the name of the maker thereof, a holder in due course may enforce it against the original maker.4 This section has, by its terms, no application if the instrument is in the hands of one who is not a holder in due course,5 as where the holder knows of the alteration,6 or the alteration was made after maturity.7
4 Fordyce v. Kosminski, 40 Ark. 40, 4 Am. St. Rep. 18, 3 S. W. 892; Her-ington Bank v. Wangerin, 65 Kan. 423, 50 L. R. A. 717, 70 Pac. 330; Mid-daugh v. Elliott, 61 Mo. App. 601; Rochford v. McGee, 16 S. D. 606, 61 L. R. A. 335, 94 N. W. 695.
1 See Sec. 124, Negotiable Instruments Law.
2 Kentucky. Commercial Bank v. Anion, 177 Ky. 520, L. R. A. 1918B, 320, 197 S. W. 951.
Massachusetts. Tower v. Stanley, 220 Mass. 429, 107 N. E. 1010; Munroe v. Stanley, 220 Mass. 438, 107 N. E. 1012.
Michigan. Ensign v. Fogg, 177 Mich. 317, 143 N. W. 82.
Minnesota. Public Bank of New York v. Burchard, 135 Minn. 171 [sub nomine, Public Bank v. Knox-Burch-ard Mercantile Co., 160 N. W. 667].
Nebraska. Bothell v. Schweitzer, 84 Neb. 271, 133 Am. St. Rep. 623, 22 L. R. A. (N.S.) 263, 120 N. W. 1129.
Ohio. Dick v. Hyer, 94 O. S. 351, 114 N. E. 251.
Oklahoma. Conqueror Trust Co. v, Simmon, - Okla. -, 162 Pac. 1093.
3 Commercial Bank v. Arden, 177 Ky. 520, L. R. A. 1918B, 320, 197 S. W. 951.
4 Public Bank of New York City v. Burchard, 135 Minn. 171 [sub nomine, Public Bank v. Knox-Burchard Mercantile Co., 160 N. W. 667.