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.
Whether the alteration of one contract affects another contract or instrument in some way connected with the former instrument is a question sometimes presented for consideration. A material alteration in one of two instruments secured by a mortgage does not discharge the other.1 A material alteration of some of a series of notes given under a conditional contract of sale does not avoid the contract of sale or the rest of the notes.2 An alteration which avoids a mortgage does not avoid the note to secure which it was given.3 In some jurisdictions the converse of this rule is applied, and it is held that the alteration of a note, even though fraudulent, can not affect the validity of the mortgage by which it is secured.4 Some justification for this result can be found in jurisdictions in which a mortgage is regarded as a conveyance on condition subsequent;5 but it seems rather to be based on the theory that the original debt remains in existence for some purposes in spite of the alteration.6
Whether the alteration of a note discharges the mortgage given to secure the note depends in most jurisdictions, however, on the nature of the alteration and the purpose for which it was made. An immaterial alteration would, of course, have no effect on either note or mortgage. Such an alteration does not, therefore, discharge the mortgage. A material alteration, if innocent, discharges the written contract, but leaves the obligor thereon liable for the original consideration received by him, and the mortgage remains as a valid security for such debt.7 On the other hand, a material fraudulent alteration of a note is held to operate as a discharge of the original liability, and therefore as a discharge of the mortgage which is given to secure such debt.8
7 Glover v. Green, 96 Ga. 126, 22 S. E. 664. See for similar facta, Singleton v. McQuerry, 86 Ky. 41, 2 S. W. 652.
1 Parke, etc., Co. v. White River Lumber Co., 110 Cal. 658, 43 Pac. 202.
2 Edward Thompson Co. v. Baldwin, 62 Neb. 530, 87 N. W. 307.
3 Kime v. Jesse, 52 Neb. 606, 72 N. W. 1050; Zeiglar v. Vollers, 59 Okla. 74, 157 Pac. 1035.
4 Bobb v. Taylor (Mo.), 184 S. W.
1028; Cheek v. Nall, 112 N. Car. 370, 17 S. E. 80; Plyler v. Elliott, 19 S. Car. 257; Smith v. Smith, 27 S. Car. 166, 13 Am. St. Rep. 633, 3 S. E. 78.
5 See Van Eps v. Newald, 139 Wis. 129, 120 N. W. 853, in which a chattel mortgage was enforced in spite of the alteration of the note, on the theory that the action was not on the note, but to recover property.
6 Smith v. Smith, 27 S. Car. 166, 13 Am. St. Rep. 633, 3 S. W. 78.