If a written contract is altered intentionally and in a material part thereof by a person claiming a benefit under it with intent to defraud the other party, the alteration voids the whole contract, at the option of the other party. If the alteration is unintentional or by mistake or in an immaterial matter or not with intent to defraud and if the contract as originally executed can be discovered and is still capable of execution, it shall be enforced by the court. If the alteration is made by a stranger and not at the instance or by collusion of a party or privy and if the original words can be restored, the contract shall be enforced.
(Orig. Code 1863, § 2793; Code 1868, § 2801; Code 1873, § 2852; Code 1882, § 2852; Civil Code 1895, § 3702; Civil Code 1910, § 4296; Code 1933, § 20-802.)
Cross references.- Discharge of surety for changes in contract without his consent, § 10-7-21.
Effect of alteration of negotiable instrument, § 11-3-407.
JUDICIAL DECISIONS
Regarding to ordinary contracts, common-law rule was changed by this statute. Overcash v. First Nat'l Bank, 117 Ga. App. 818, 162 S.E.2d 210 (1968).
Section applies to written, executed agreement which before agreement's alteration was effective, but does not apply to paper which never became a contract because it was never delivered. Anderson Banking Co. v. Chandler, 151 Ga. 408, 107 S.E. 60 (1921).
Application only to executed agreements. Winkles v. Guenther & Co., 98 Ga. 472, 25 S.E. 527 (1896).
Application to release of surety.
- See Paulk v. Williams, 28 Ga. App. 183, 110 S.E. 632 (1922).
If completed instrument is altered, alteration voids whole contract, at option of other party. Atlanta Nat'l Bank v. Bateman, 21 Ga. App. 624, 94 S.E. 853 (1918); Craig v. National City Bank, 26 Ga. App. 128, 105 S.E. 632 (1921).
Alteration by authorized agent voids contract at option of other party.
- If alteration was made by person claiming benefit under contract, or by the person's agent authorized to represent the person in transaction, such alteration voids whole contract at option of other party. Shaw v. Probasco, 139 Ga. 481, 77 S.E. 577 (1913).
If material alteration is made by stranger, that alteration will not vitiate contract. Probasco v. Shaw, 144 Ga. 416, 87 S.E. 466 (1915).
Addition of language to a guaranty agreement, to the effect that upon the death of either of the guarantors, the guarantors' heirs or estates would not be responsible for subsequent sales to the principal, added at the guarantors' request and obviously intended for guarantors' their benefit, did not constitute an attempt to defraud them, thus voiding the agreement. Columbia Nitrogen Corp. v. Mason, 171 Ga. App. 685, 320 S.E.2d 838 (1984).
Repudiation of contract due to alteration must be in toto.
- Offending party, in action at law against maker, is not entitled to recover anything upon instrument, where defendant sets up alteration as defense. But rescission of contract by injured party must be in toto; one cannot affirm contract in part and repudiate the contract in part. Thompson v. Growers' Fin. Corp., 49 Ga. App. 119, 174 S.E. 192 (1934).
To avail oneself of right to treat note as void because of alterations, maker must elect to rescind whole contract of which note forms a part. One cannot enforce for one's benefit a portion of that contract, and repudiate another portion of the contract. Glover v. Green, 96 Ga. 126, 22 S.E. 664 (1895); Shaw v. Probasco, 139 Ga. 481, 77 S.E. 577 (1913).
If option to void exercised, party making alteration loses all rights the party may have had. Rives v. Thompson, 41 Ga. 68 (1870).
Although restitution not required of injured party upon rescission, affirmative relief on rescinded contract denied.
- While defendant may, at least in action at law upon instrument, raise defense of fraudulent alteration to defeat action, without offering to restore consideration or benefits which defendant has received, defendant is not entitled, in such action at law, to obtain affirmative relief upon rescinded contract, or to restore defendant's own status quo without regard to status quo of plaintiff. Thompson v. Growers' Fin. Corp., 49 Ga. App. 119, 174 S.E. 192 (1934).
Result under statute is same although altered note transferred before due to one without notice. Shaw v. Probasco, 139 Ga. 481, 77 S.E. 577 (1913).
Elements essential to void instrument.
- Before alteration in written instrument will vitiate whole instrument, three things must appear: Alteration must be material, must have been made by one claiming benefit under it, and must have been made with intent to defraud. Unless all three of these things appear, contract as originally executed will be enforced, if it can be discovered and is still capable of execution. Lowry v. McLain, 75 Ga. 372 (1885); Hotel Lanier Co. v. Johnson, 103 Ga. 604, 30 S.E. 558 (1898); Burch v. Pope, 114 Ga. 334, 40 S.E. 227 (1901); Morgan v. Nashville Grain Co., 12 Ga. App. 574, 77 S.E. 913 (1913); International Harvester Co. v. Davis, 13 Ga. App. 1, 78 S.E. 770 (1913); Vaughn v. Farmers & Merchants Bank, 20 Ga. App. 725, 93 S.E. 228 (1917); Watkins Medical Co. v. Harrison, 33 Ga. App. 585, 126 S.E. 909 (1925).
Essential elements must be alleged. Gwin v. Anderson & Bros., 91 Ga. 827, 18 S.E. 43 (1893); Miller v. Slade & Farish, 116 Ga. 772, 43 S.E. 69 (1902).
Intentional alteration of contract.
- Beneficiary's intentional alteration of contract and fraud claims under O.C.G.A. § 13-4-1 failed because there was insufficient evidence to support either claim in that there was no evidence that the insured actually answered "yes" to a question as to whether the insured had been convicted of driving under the influence and there was no evidence that the insurer's agent intentionally altered the application that the insured had responded "no" instead of "yes." Dracz v. Am. Gen. Life Ins. Co., 427 F. Supp. 2d 1165 (M.D. Ga. 2006).
Allegation of material alteration with intent to defraud required.
- Where, in suit by obligee in bond against principal and surety therein, principal denied liability, and surety contended that there had been change in terms of bond after the surety had signed the bond, which was made without the surety's knowledge or consent, and that the surety was therefore discharged from liability thereunder, and, where there was no contention by either principal or surety that there was material intentional alteration in bond, made by obligee with intent to defraud the principal or surety, it was error for court to charge jury the provisions of this statute. Smith v. Georgia Battery Co., 46 Ga. App. 840, 169 S.E. 381 (1933) (see O.C.G.A. § 13-4-1).
Change of amount payable to larger sum ordinarily per se material, fraudulent alteration.
- To change promise to pay, from one amount to larger sum, without maker's consent, is ordinarily to be considered, per se, as materially and fraudulently altering instrument. Howard Piano Co. v. Glover, 7 Ga. App. 548, 67 S.E. 277 (1910).
Insertion of additional property in chattel mortgage by mortgagee renders instrument void. Bedgood-Howell Co. v. Moore, 123 Ga. 336, 51 S.E. 420 (1905).
Addition of words "or bearer" to note, after name of payee, is material alteration. McCauley v. Gordon, 64 Ga. 221, 37 Am. R. 68 (1879).
Insertion of interest rate and name of bank as place of payment is material alteration. International Harvester Co. v. Davis, 13 Ga. App. 1, 78 S.E. 770 (1913).
Alteration in promissory note after the note's execution, so as to make the note bear more than statutory rate, is material alteration. Shaw v. Probasco, 139 Ga. 481, 77 S.E. 577 (1913).
Materially altered deed.
- Deed was materially altered when an attachment containing the description of one of two parcels of property was removed, the deed was ineligible for recordation, and the buyer's failure to object to the recording of the altered deed did not support a finding that the buyer accepted the altered deed without objection as: (1) the seller did not re-sign the deed and the deed was not re-attested; (2) the buyer was not sent the altered deed or land description; (3) there was no evidence that the buyer consented to the alteration or that the buyer otherwise agreed to accept only one parcel of land; (4) the delivery of the altered deed to the bank's attorney was not constructive delivery to the buyer as the attorney represented the bank and the buyer had not authorized the attorney to accept and retain the recorded deed on the buyer's behalf; and (5) the buyer never received a copy of the altered deed or land description before or after the deed was recorded. Z & Y Corp. v. Indore C. Stores, Inc., 282 Ga. App. 163, 638 S.E.2d 760 (2006).
Removing provision giving purchaser six-month trial period voids contract.
- Expunging from instrument of agreement whereby purchaser was given six months to test commodity purchased, with option of return if not satisfactory, would void contract. Colt Co. v. Butler, 29 Ga. App. 396, 115 S.E. 503 (1923).
Guaranty not void.
- Meaning of a guaranty was not changed by a handwritten entry and, therefore, the agreement was not void because the guaranty was already limited by a specified term; the guarantor did not show that the change materially altered the agreement. Patterson v. Bennett St. Props., 314 Ga. App. 896, 726 S.E.2d 147 (2012).
Cited in Banks v. Lee, 73 Ga. 25 (1884); Smith v. Wrightsville & T.R.R., 83 Ga. 671, 10 S.E. 361 (1889); Mozley v. Reagan, 109 Ga. 182, 34 S.E. 34 (1899); Shirley v. Swafford, 119 Ga. 43, 45 S.E. 772 (1903); Hipp v. Fidelity Mut. Life Ins. Co., 128 Ga. 491, 57 S.E. 892, 12 L.R.A. (n.s.) 319 (1907); Knight v. Forbes, 19 Ga. App. 320, 91 S.E. 445 (1917); Avera Loan & Inv. Co. v. Jackson, 30 Ga. App. 504, 118 S.E. 432 (1923); Watkins Medical Co. v. Harrison, 33 Ga. App. 585, 126 S.E. 909 (1925); Blaylock v. Walker County Bank, 36 Ga. App. 377, 136 S.E. 924 (1927); Gardner v. Fleetwood, 39 Ga. App. 51, 146 S.E. 127 (1928); Aspinwall v. Holland, 39 Ga. App. 603, 147 S.E. 897 (1929); Miller v. Griffin, 39 Ga. App. 705, 148 S.E. 354 (1929); Cook v. Parks, 46 Ga. App. 749, 169 S.E. 208 (1933); Hamby v. Crisp, 48 Ga. App. 418, 172 S.E. 842 (1934); Mann v. Carter, 213 Ga. 85, 97 S.E.2d 137 (1957); Van Norden v. Auto Credit Co., 109 Ga. App. 208, 135 S.E.2d 477 (1964); Overcash v. First Nat'l Bank, 115 Ga. App. 499, 155 S.E.2d 32 (1967); Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975); Phillips v. Hertz Com. Leasing Corp., 138 Ga. App. 441, 226 S.E.2d 287 (1976); James Talcott, Inc. v. Dettlebach, 138 Ga. App. 475, 226 S.E.2d 309 (1976); Price v. Mitchell, 154 Ga. App. 523, 268 S.E.2d 743 (1980); Tyson v. Henson, 159 Ga. App. 684, 285 S.E.2d 27 (1981); Olympic Dev. Group, Inc. v. American Druggists' Ins. Co., 175 Ga. App. 425, 333 S.E.2d 622 (1985).
RESEARCH REFERENCES
Am. Jur. 2d.
- 17 Am. Jur. 2d, Contracts, §§ 458 et seq., 505.
C.J.S.- 17A C.J.S., Contracts, §§ 373 et seq., 535, 578, 579, 588, 598, 607.
ALR.- What constitutes reservation of right to terminate, rescind, or modify contract, as against third party beneficiary, 44 A.L.R.2d 1270.
Construction and effect of "changed conditions" clause in public works or construction contract with state or its subdivision, 56 A.L.R.4th 1042.