Sec. 14. Blanks, when may be filled.
— Where the in- strument is change the amount after it has been filled in or to insert the words
wanting in any material particular, the person in possession
thereof has a prima facie authority to com- plete it by filling up the
blanks therein. And a signature on a blank paper delivered by the
person making the signa- ture in order that the paper may be
converted into a ne- gotiable instrument operates as a prima facie
authority to fill it up as such for any amount. In order, however,
that any such instrument when completed may be enforced
against any person who became a party thereto prior to its
completion, it must be filled up strictly in accordance with the
authority given and within a reasonable time. But if any such
instrument, after completion, is negotiated to a holder in due
course, it is valid and effectual for all pur- poses in his hands, and
he may enforce it as if it had been filled up strictly in accordance
with the authority given and within a reasonable time.
Steps in issuance of negotiable instrument.
There are always two steps involved in the issuance of every
negotiable instrument, namely:
(1) the mechanical act of writing the instrument completely and in
accordance with the requirements of Section 1; and
68 THE NEGOTIABLE INSTRUMENTS LAW Sec. 23
(2) the delivery of the complete instrument by the maker or the
drawer to the payee or holder with the intention of giving effect to
it. Such instrument, complete and delivered, is negotiable and may
be enforced accordingly.
Application of Sections 14,15, and 16. Section 14 applies only to an
incomplete instrument which has been delivered by the maker or
the drawer to the payee or holder; Section 15, to an incomplete
instrument and undelivered; and Section 16, to a complete
instrument but undelivered. When considering Section 14, it is
important to bear in mind the distinction between the two classes
of instruments:
(1) Those in which obvious blanks are left at the time they are made
or indorsed, of such a character as manifestly to indicate that the
instruments are incomplete until such blanks shall be filled up; and
(2) (2) Those which are apparently complete, containing blanks only
because the written matter does not so fully occupy the entire paper
as to preclude the insertion of additional words or figures, or both.
With respect to the first class, one who signs or indorses is liable to
bona fide holders thereof on the doctrine of implied authority, while
with respect to the second class, the liability for the amount of the
instrument which has been increased by filling up unoccupied
spaces therein is placed upon the doctrine of negligence. (Canon v.
Gregslay, 116 111. 151; National Exchange Bank v. Lester, 194 N.Y.
464.)
Rules where instrument incomplete but delivered.
(1) Authority to fill up the blanks. — The holder or the person in
possession has prima facie authority to complete an incomplete
instrument by filling up the blanks therein. • (a) The law speaks of
material particular. It may be defined as any particular proper to be
inserted in a negotiable instrument to make it complete; and the
power to fill in blanks extends, therefore, to every incomplete
feature or the instrument. (Linthlicum v. Bagby, 102 AtL 997.) The
word "material," as used in Section 14, is not synonymous with
"necessary" so as to restrict the right of filling a blank to something
essential to a complete negotiable instrument. (Johnson v. Hoover,
117 N.W. 277.) Thus, blanks for date, due date, name of payee,
amount, or rate of interest may be filled in. It has been held that
even the blank for the name of the drawer may be filled in.
(Commercial Investment Co. v. Whitlock, 247 S.W. 833.) Also, a blank
for the place of payment (Johnson v. Hoover, 117 S.W. 277.) for the
amount of attorney's fees where it supplies a manifest omission and
is in accord with the character and object of the blank. (Kramer v.
Schmitzer, 109, S.W. 695.)
EXAMPLE: Suppose M issues a note to P with the space for the date
left blank in payment for goods purchased by M from P. This gives
prima facie authority to fill up the blanks. (b) The authority to
complete is not an authority to alter, (see Section 124; Hoffman v.
Plasters Nat. Bank, 39 S.E. 134.) So the holder has no authority to
"or order" or "or bearer" after the name of the payee. Neither may
authority be presumed, unless the character of the instrument
directly indicates it, to add at die end of the instrument the words
"with interest." (Dunbrew v. Golb, 130, N.Y.S. 182)
(2) Authority to put any amount. — A signature on a blank paper
delivered in order that it may be converted into a negotiable
instrument operates as a prima facie authority to fill it up as such for
any amount.
EXAMPLE: Suppose that in the same example, M just delivered a
blank paper containing his signature to P. In order that P may have
authority to fill it up for any amount, it must be shown by him that
the purpose of M was to convert the said blank paper into a
negotiable instrument. In
70 THE NEGOTIABLE INSTRUMENTS LAW Sec. 23
the absence of such a showing, there cannot arise a prima facie
authority on the part of P to fill it up for any amount. ; Thus, if M
signs his name on a piece of paper and delivers it to P for the
purpose of identifying or comparing it with M's other signatures. M
will not be liable even to a holder in due course after it is converted
into a negotiable instrument.
(3) Right against party prior to completion. — The instrument may
be enforced only against a party prior to completion if filled up
strictly in accordance with the authority given and within a
reasonable time. (a) If an instrument is incomplete when delivered,
the holder has prima facie authority to fill up the blanks thereon. If a
blank paper is delivered by the person making the signature, the
holder has prima facie authority to fill it up for any amount if the
person making the signature intended to convert it into a negotiable
instrument. In either case, the presumption is that the blank was
filled up in accordance with the authority given and within a
reasonable time, (see Sec. 193.) (b) The person who signed his name
has the burden to rebut the presumption of agency by contrary
proof of want of authority, or proving that the authority granted was
exceeded. Such "reasonable time for filling up the Instrument is to
be reckoned from the time of the issuance of the instrument
because the interest involved is that of the issuer, and! not from the
time of each successive negotiation.
EXAMPLE: Suppose that in the first example, M authorized P to put
in the blank only P10,000.00. However, P inserts the sum of
P2,000.00 and then indorses the note to A, from A to B, and from B
to C who is not a holder in due course. It is believed that C, not being
a holder in due course, can collect nothing on the note from M The
implication of the law is that when one or both requisites are
absent, the holder not in due course cannot recover. Such a holder is
to be treated the same way as a holder not in due course of a
materially altered instrument, (see Sec. 124.)
Sec. 15 NEGOTIABLE INSTRUMENTS IN GENERAL I Form and
Interpretation
71
(4) Right of holder in due course. — The defense that the instrument
had not been filled up in accordance with the authority given and
within a reasonable time is not available as against a holder in due
course.
EXAMPLE: Let us now assume that C is a holder in due course. The
defense that P exceeded his authority will not avail against C for in
such case, the note "is valid and effective for all purpose in his hands
and he may enforce it as if it has been filled up strictly in accordance
with the authority given and within a reasonable time." In other
words, Section 14 merely raises a personal defense, (see Sec. 58.)
The rule is founded upon the principle that where one of two
persons must suffer by the bad faith of another, the loss must fall
upon the one who first reposed confidence and made it possible for
the loss to occur. (Philips v. Hensley, 175 N.W. 23.)