text:
    Standard Accident Insurance Company, Appellant, v. J. H. Mueller et al., Appellees.
    Gen. No. 39,474.

      O’Connor, P. J., dissenting.
    Heard in the first division of this court for the first district at the April term, 1937.
    Opinion filed June 28, 1937.
    Rehearing denied July 10, 1937.
    Cassels, Potter & Bentley, of Chicago, for appellant; Ralph F. Potter, Leslie H. Vogel and Richard H. Merrick, all of Chicago, of counsel.
    Litsinger, Healy, Reid & Bye, of Chicago, for appellees ; Daniel M. Healy, of counsel.
   Mr. Justice McSurely

delivered the opinion of the court.

Plaintiff brought suit as assignee of an indemnifying bond signed by certain directors of the Forest Park Trust & Savings Bank running to Albert C. Roos as treasurer and ex oficio township clerk of schools, and upon trial by the court suffered an adverse judgment from which it appeals.

The only defense presented by plea and upon the trial was that the bond sued on was never fully executed because it was agreed that to be effective all of the directors should sign it, and three of the fifteen directors of the Forest Park Bank did not sign it; that it was delivered only conditionally and never became effective.

Boos was appointed treasurer of Township 39, Bange 12, in Cook county for the term commencing July 1, 1930, ending June 30, 1932; by virtue of the statute (ch. 122, par. 68, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 123.071) he was required to give bond with surety, conditioned upon his delivery to his successor in office of all moneys, securities and property coming into his hands as township treasurer; Boos gave such bond in the amount of $300,000, with plaintiff as surety.

Boos as township treasurer deposited large sums in the Forest Park Trust & Savings Bank, of which he was president and defendants were directors. There were three other directors — H. E. Jenkins, August Thode and Albert C. Boos himself.

October 5, 1931, plaintiff, evidently becoming concerned as to the deposits, wrote to Boos suggesting some rearrangements of deposits in some of the banks where the township funds were deposited; that his deposit in the Forest Park Bank was oyer $111,000, and requested him to transfer some of this to another bank, also that he secure a depository bond from the Forest Park Bank for at least $75,000, to be signed by the directors. The letter called attention to the “present condition of banks, ’ ’ which was not getting any better. To this Boos replied October 17th that he had submitted depository bonds as suggested to the banks named in plaintiff’s letter, including the Forest Park Bank for $75,000, and that he had advised the Forest Park Bank directors that if they did not sign the bonds it would be necessary for him to withdraw the township deposits.

October 20th a meeting of the directors of the Forest Park Bank was held and defendants assert that at this meeting it was agreed that all the 15 directors must sign the depository bond to become effective. Boos told the directors that the surety company required him to get a depository bond signed by the directors, and that if he did not secure this he would have to withdraw the township deposit from the bank; there was a general discussion, some of the directors first objecting to signing the bond. One director, Mr. Hann, said if they all signed he would sign. Director Arch testified that Boos said he would not deliver the bond until all the directors had signed. Boos prepared the bond and the directors, except Boos, Jenkins and Thode, signed it. Jenkins left the meeting early, apparently before the bond was signed; Thode was home suffering from a fatal illness from which he shortly died; neither Jenkins nor Thode was asked to sign the bond.

In the body of the bond appears only the names of the 12 directors who signed it. This would indicate that only these were expected to sign it. Defendants called Boos as their witness; he testified that he said nothing to the. directors about getting Thode’s or Jenkins’ signature. This tended to contradict Arch’s testimony that Boos had said he would not deliver the bond until every director signed it. . Boos, the third man who did not sign the bond, was the obligee to whom the bond ran. Apparently it was intended that he should not execute an obligation running to himself, as he was obligated to the township without the bond.

In the bond sued on, the 12 directors, naming them, are designated as sureties, bound unto Albert 0. Boos, treasurer, and ex oficio clerk of township schools, called the obligee, in the sum of $75,000, for the payment of which the principal and sureties bind themselves jointly and severally. It further recites that whereas the Forest Park Trust & Savings Bank is a depository' for moneys for the custody of which the obligee may be responsible, and if, during the term of his office, ending June 30, 1932, he shall faithfully account for. and pay over on legal demand all moneys deposited with the bank by him, then the obligation to be null and void, otherwise to remain in full force. This is signed by the bank, by its vice president, and the 12 directors, and was delivered to and retained by Boos in his possession.

Boos’ retention of the bond in his possession was prima facie evidence of its effective delivery. The facts in Comstock v. Gage, 91 Ill. 328, are very similar to those before us. There all the directors of. a bank were to give a bond to secure the deposit of Cage; it was delivered to Cage before the signature of one of the directors was obtained; the jury found that the bond had been delivered and was effective without the signature of one of the directors. The Supreme Court held that the acquiescence in the retention of the bond without anyone afterward speaking to Cage on the subject was strong evidence “either that there was an unconditional delivery to Cage, or that if there was such a condition attached to the taking of the bond by Cage as testified to by Holmes (that all the directors sign) it'was waived, or that it was one only for the interest of the obligee and to satisfy him, and not one' which was considered as of importance to'tlie'.signers of the bond to be performed before they were’wining the bond should be delivered and have effect as tlieir bond.” The verdict of the jury that there was an effective delivery was upheld.

The directors signing'the instant bond were not acting as gratuitous sureties. Boos told them that unless the bond was forthcoming it would be necessary to withdraw the township deposits from the bank; they executed the bond for the purpose of retaining this deposit. It was for their benefit and interest to execute the bond. In Overly Special School Dist. v. Haber, 193 Wis. 403, where a decree against a defendant surety was affirmed, it was held that under such circumstances directors who were sureties do not stand upon the same basis as do gratuitous sureties; that “they occupy a position very similar to that occupied by surety companies receiving pay for the protection offered and furnished in a surety bond.” To the same effect are Vogel v. City of Vinita, 170 Okla. 235, and Holmes v. Eller, 170 Tenn. 257.

■ Defendants cite Belleville Sav. Bank v. Bornman, 124 Ill. 200, and Essington v. Estate of Wylie, 273 Ill. App. 272, involving facts unlike those now before us. In the Belleville case the conditional character of a guaranty was established, and in the Essington case the agreement purported to bind one who did not agree. In the present case the fact of a conditional undertaking of the directors is not established by the evidence.

The trial court held with plaintiff as to the effective-. ness of the execution and delivery of the bond. The court said: “I hold that if nothing else intervened, the directors would be liable. The delivery of the bond was to Roos. He was the custodian of it. When they signed it, and let it out of their hands, and gave it to him, it was a delivery. . . . ”

Under Rule 36 of the Supreme Court and Rule 1 of this court a brief statement by the trial judge of the reasons for his conclusions may be included in the report of the proceedngs at the trial. It has been held in many cases that the finding of the court, upon trial without a jury, will not be disturbed on appeal unless it is palpably against the manifest weight of the evidence. Bullman v. Cooper, 362 Ill. 469, 477.

We see no reason to disagree with the conclusion of the trial court in this respect, and, moreover, as was said in the Comstock case, supra, the alleged condition of signing the bond by all the directors was not considered as of importance to those who signed it before they delivered it. The trial court held, however, that the subsequent letters of plaintiff showed a repudiation by it of the bond; that it refused to accept it and is estopped from maintaining suit by reason of this repudiation. This defense was not raised by plea nor presented by the defendants upon the trial. It originated exclusively with the trial court. Under such circumstances the defense advanced by the court should not be upheld.

The correspondence does not sustain the assertion that plaintiff repudiated the bond and is therefore estopped from claiming under it. We have noted plaintiff’s letter of October 5th to Boos, insisting that he secure from the directors of the Forest Park Bank and the other banks in which he had funds on deposit a depository bond to secure such funds. October 17th he replied that such depository bonds would be signed. Plaintiff then writes Boos on October 30th asking for information as to the amount he has on deposit in the several banks. November 4th Boos replies that his balance in the Forest Park Bank is over $91,000 and that he holds the depository bond in the amount of $75,000, signed by the directors of this bank. There was no further correspondence until November 20th when plaintiff wrote to Boos saying that it had received late financial statements of the various banks in which Boos, as treasurer, had deposits, and saying that it was positive that it and the reinsurers “will not continue on your bond . . . unless you protect the funds in some other way than by accepting bonds signed by the directors,” and saying, “You should insist upon the banks depositing collateral security with you.” There were also other suggestions touching the protection of the deposits which the letter said might save Boos possible embarrassment if the surety should petition for release on the official bond. The letter concluded by saying that Boos “must get the Banks to put up collateral security or we will be forced to petition for our release under your bond.”

Apparently the banking situation was becoming more precarious, and on November 27th the Chicago office of plaintiff wrote that they were under instructions from the home office to move to get released as surety on the bond, with the question as to whether Boos would be willing to resign his official position or should plaintiff petition the county court for release. The bank closed its doors December 16th, shortly after the last letter.

We do not find in the correspondence any repudiation by plaintiff of the bond. ' It was secured in the first instance at its request, but when the banking situation became more critical it naturally sought for increased protection. It wanted Boos to have, not only the depository bond, but also collateral to secure the deposit. Its letters show apprehension and dissatisfaction with the protection of the deposits, but this is quite different from repudiating whatever protection there was. Boos made no reply and did nothing about the matter. It is well settled law that a surety does not, by taking additional security against loss, waive his right to be subrogated to any security held by the principal. Crawford v. Richeson, 101 Ill. 351; Gossin v. Brown, 11 Pa. 527; Smith v. Dinsmoor, 119 Ill. 656, 663; and Worcester Nat. Bank v. Cheeney, 87 Ill. 602, 615. Also many other cases.

Moreover, plaintiff could not repudiate the bond as it ran to treasurer Boos. Until plaintiff, as surety upon Ms official bond, paid the loss which occurred when the bank failed, it had no rights in the bond, and so long as Boos did not repudiate or terminate it, plaintiff could not. . A legal right cannot be relinquished before it comes into being. Hansell-Elcock Co. v. Frankfort Marine Accident & Plate Glass Ins. Co., 177 Ill. App. 500, 503, 504. Plaintiff acquired no right in the depository bond until it was assigned by Boos to it.

June 2, 1932, plaintiff paid on its bond to the township trustees $94,334.56, the amount of the deposit in the Forest Park,Panic when it suspended, and December 24th took a written assignment from Boos of his rights under the bond. This indicated its attitude toward the bond.

Defendants’ brief does not attempt to support the theory of repudiation advanced by the court. It only questions the right of Boos to proceed on the bond because of alleged ineffective delivery, and correctly says that plaintiff is “in Boos’ shoes. They are claiming by assignment and subrogation. Their position is the same as though Albert C. Boos were suing.” As we are in accord with the trial court in holding that the bond was effectively delivered to Boos he could have maintained his action thereon, and plaintiff, the assignee, now has this right.

Plaintiff asks us to enter judgment in this court, under section 92 of the Civil Practice Act, Ill. State Bar Stats. 1935, ch. 110, ¶ 220; Jones Ill. Stats. Ann. 104.092. There is some uncertainty in our mind as to the amount for which judgment should be entered. Upon the trial statements were made by respective counsel indicating that plaintiff had received dividends from 15 per cent to 20 per cent of its claim and that still larger dividends might be expected. Evidence should be heard as to the proper amount for which plaintiff is entitled to judgment.

.For the reasons indicated the judgment is reversed and the cause is remanded for further proceedings consistent with this opinion.

Reversed and remanded.

Matchett, J., concurs.

O ’Connor, P. J., dissents.


source: Caselaw Access Project

author: Mb. Justice Matchett

license: Public Domain

text:
    George Craig Stewart, Appellant, v. Arthur T. McIntosh and A. W. Hannah, Appellees.
    Gen. No. 39,380.
    McSurely, J., dissenting.
    Heard in the first division of this court for the first district at the February term, 1937.
    Opinion filed June 28, 1937.
    F. F. & J. V. Norcross, of Chicago, for appellant; John V. Norcross, William Ruger and James A. Velde, all of Chicago, of counsel.

      Foreman, Bluford, Krinsley & Schultz, of Chicago, for appellees; Raymond H. Schultz, Victor J. Voorheis, Victor Hedberg and David C. Kenyon, all of Chicago, of counsel.
   Mb. Justice Matchett

delivered the opinion of the court.

In an action upon an implied promise to pay a promissory note executed May 1, 1928, for $30,000 with interest, upon trial by .the court there was a finding for defendants with judgment, from which plaintiff appeals. The evidence as to the facts can hardly be said to be conflicting.

Defendants McIntosh and Hannah on February 27, 1926, entered into a trust agreement with the Chicago Title and Trust Company, which bore that company’s number 16289. At that time Hannah was the owner of premises in the city of Chicago known as the northeast corner of State and Chestnut streets, which was subject to a mortgage of $30,000, made March 26, 1923, which by its terms would mature on the first day of May, 1928. Upon the organization of the trust this property was conveyed to the Chicago Title and Trust Company, as trustee, and became subject to all the terms and conditions of the trust of which McIntosh and Hannah were beneficiaries, holding an undivided one-half interest in the proceeds of the real estate which was subject to the terms of the trust. The trust agreement provided that the trustee should deal with the real estate only upon the written direction of Hannah and McIntosh.

May 1,1928, the trustee at their request, for the purpose of refinancing the mortgage which had matured, made an instrument in writing of that date which is designated a “principal note.” The writing provided that the maker would pay to the bearer $30,000 five years after date, with interest represented by coupons. The writing distinctly stated that it was executed by the Trust company, “not personally but as trustee,” and by its terms expressly provided in substance that neither the trustee nor any beneficiary of the trust should^ be personally liable by reason thereof, but that the principal amount named should be payable only out of the real estate conveyed by a trust deed of the same date which conveyed to the State Bank of Chicago, as trustee, by proper legal description, this property located at the northeast corner of State and Chestnut streets. The writing designated “principal note,” the trust deed and the coupons expressly provided that there should be no personal liability of the maker, trustee, or any beneficiary, and that the obligations thereby created were secured only by the premises conveyed, every other liability being negatived in express terms, both in the “principal note” and in the trust deed. The note expressly provides, “In case of default in the payment of this note or of any instalment of interest the sole remedy of the holder hereof or of any of the interest coupons hereto attached shall be by foreclosure of the said trust deed.”

May 2, 1928, Hannah applied in writing to the loan department of the State Bank of Chicago for a loan of $30,000, offering to the bank this note, the coupons and the trust deed. The application states the size of the lot, states that it is improved by a two-story “very old” building of no value, consisting of two apartment of five rooms and two stores; that the value of the ground is $75,000; that the land is encumbered for $30,000; that the trust deed offered would be a first valid lien upon the premises; that the title to the property was in the Chicago Title and Trust Company as trustee under trust agreement 16289; that the notes would be dated May 1,1928, and signed by the Chicago Title and Trust Company; that the applicant agreed to pay for internal revenue stamps and a fee for recording the trust deed and a commission of 2 per cent on the amount of the loan for the services of the bank in negotiating the same. This application was written on stationery of the State Bank of Chicago real estate loan department, bore the signature of A. W. Hannah, and bears on its face the initials of Jevne Haugan approving the same.

On the same day defendant Hannah wrote a letter to the State Bank • of Chicago, “Attention of Mr. Haugan,” stating that he was handing to the bank a trust deed on the property securing the $30,000 note with all coupons, the same having been indorsed by Mr. Arthur T. McIntosh and himself. The letter also states that he was exhibiting the title guaranty policy; that the title had been continuously in the Chicago Title and Trust Company, and that the applicant desired to have the matter of paying off the encumbrance which had accrued expedited, and requested that “upon presentation to you of the final interest coupons and the two notes for $15,000 each, mentioned in the policy, you pay out of thé proceeds of the new loan and notify me as to the further amount required, which amount I will immediately remit to you. I will then see that the trust deed securing the old loan is released and that a mortgage policy is issued under your mortgage and delivered to you. In the event of my failure to procure such an acceptable mortgage policy for yon within thirty days I agree to refund such amount as you shall advance as requested in this letter. ’ ’

Having indorsed this “principal note” and the 10 interest coupons, • defendants Hannah and McIntosh delivered the same to the bank with the trust deed on May 2, 1928. On the next day the State Bank issued its checks in payment of the mortgage then existing upon this land at the northeast corner of State and Chestnut streets in Chicago, under the trust agreement of which McIntosh and Hannah were beneficiaries, After receiving the notes, coupons and trust deed the real estate loan department transferred same to the trust department where these securities were allocated as an investment to a trust fund designated by the bank as No. 3459 and known as the Bishop’s Benevolent Fund. It had been established in the State Bank by the Right Rev. Charles P. Anderson, then the Bishop of the Protestant Episcopal Church in the Diocese of Chicago. The State Bank, as trustee of this fund, was authorized to invest and reinvest it. Upon receiving the “principal note,” trust deed and coupons the trust department transferred out of this Benevolent fund the principal sum of $30,000 with interest from May 1, 1928, to the real estate loan department in payment for the note, trust deed and coupons with accrued interest. The State Bank was afterward consolidated with the Foreman National Bank of Chicago, and this consolidated bank passed into receivership and these securities into the hands of its receiver, Mr. Albers. October 10, 1933, plaintiff Bishop elected to terminate Trust No. 3459, and these securities with other assets of the trust were delivered by the receiver to him. Three interest notes for $825 each are due and unpaid. The “principal note” fell due May' 1,1933, and has not been paid. There is now due under the terms of the “principal note” the sum of $38,084.69.

Defendant Hannah was not served and has availed himself of bankruptcy in California. He did not testify. McIntosh was called as a witness by plaintiff under section 60 of the Civil Practice Act. (See Ill. State Bar Stats. 1935, ch. 110, ¶ 188; Jones Ill. Stats. Ann. 104.060.) McIntosh testified to the facts heretofore stated with reference to the creation of the trust, the incumbrance on the land, the execution of the “principal note” and trust deed. He further testified that he indorsed the “principal note” at the request of Hannah, who then took the note to the bank. The testimony of McIntosh is to the effect that Hannah brought the note to his office, said the bank wanted the beneficiaries under the trust to indorse it; that he did so; that Hannah said he had arranged to refinance the property and witness “assumed” Hannah took the note to the bank and got the money. In reply to a question McIntosh said that he put his name on the back of the “principal note” to get credit for the trust, whereupon his attorney suggested “all the bank wanted on this was the acknowledgment of the beneficiaries here that they were satisfied for the Chicago Title and Trust Company to mortgage this piece of property which had a value of $75,000.” The witness adopted the suggestion and thereafter adhered to it consistently.

Jevne Haugen, vice president of the State Bank of Chicago, testified. He was asked whether when he 0. K.’d the loan he understood it would bear the indorsement of defendants. An objection by defendants was sustained. Mr. Haugen said he talked about the loan with Mr. Hannah; that when the securities were brought they bore the signatures of Hannah and McIntosh and he did not know whether these indorsements were on them when first presented to him. Mr. Hannah, he said, was the only person with whom he dealt in the matter.

Albin V. Gustafson, who at the time of this transaction was employed by the State Bank of Chicago in its real estate loan department, called by defendants, testified and identified the loan file in which the securities were placed. He also identified the signature of Harley A. Miller, who at the time of the transaction was an employee of the State Bank but at the time of the trial was in St. Louis.

The question for determination is whether on these undisputed facts defendant McIntosh is liable for the amount of this loan. The defendant concedes that the instrument designated “promissory note” is non-negotiable, but contends further that it is not a promissory note at all. Plaintiff says that the question of whether the note is a promissory note is wholly immaterial. He cites a large number of cases from jurisdictions other than Illinois which he interprets to hold as a matter of law that, “wherever it appears that the irregular indorser of a non-negotiable note or instrument for the payment of money attaches his signature in order to obtain credit from the other party to the transaction, or does in fact receive or participate in the consideration, he is universally held (in all cases not controlled by statute or proof of an express promise) to be an original promissor for the repayment of the debt.” Among the many cases cited are Barrows v. Lane & Benham, 5 Vt. 161; Duchaine v. Phoenix, 100 Vt. 112, 135 Atl. 715; Wetherwax v. Paine, 2 Mich. 555; Dow Law Bank v. Godfrey, 126 Mich. 521; Richards v. Warring, 1 Keyes 576; Strong v. Strong, 247 N. Y. S. 773; Houghton v. Ely, 26 Wis. 181; Fayetteville Bldg. & Loan Ass’n v. Crouch, 115 W. Va. 651, 177 S. E. 532; L. R. A. 1916 D, p. 223; and Kingsland v. Koeppe, 137 Ill. 344. Practically all the cases cited are discussed in an annotation to Brown v. Cook, L. R. A. 1916 D, and a similar annotation to the case of Barnes v. Rowles, 84 Mont. 393, 79 A. L. R. 717, 719. In the annotation last cited the annotator says:

“As shown by the cases cited in the several subdivisions of this annotation, the weight of authority supports the rule that the indorser of a non-negotiable bill or note, whether he be the payee or transferee indorsing the same for the purpose of transfer, or a stranger writing his name thereon before delivery, is liable on his indorsement. A study of the history and evolution of the subject, or a consideration of the necessities of commerce, convinces one that this doctrine is a sound one.”

However, at page 728 the annotator states:

“Although the weight of authority and the better reasoning support the contrary rule (see subd. Ill. a, 1, supra), it is held in some jurisdictions that the mere blank indorsement by payee or transferee of a nonnegotiable note does not, of its own force and without evidence of the actual agreement of the parties, render him liable to the indorsee.”

As supporting the minority view are cited Smith v. Myers, 207 Ill. 126, 69 N. E. 858; Fidelity & Deposit Co. of Maryland v. Young, 159 Ill. App. 531, and First Nat. Bank of Cass Lake v. Lamoreaux, 255 Ill. App. 15. At p. 737 the annotator states in substance that an examination of the cases confirms the statement in 3 R. C. L. 1160, that “the authorities are in hopeless conflict both as to the extent and nature of the liability of an indorser of non-negotiable paper.” The trial court was of the opinion that Smith v. Myers, 207 Ill. 126, was controlling, and that under the law as settled by that decision plaintiff cannot recover. The court was also of the opinion that parol evidence was inadmissible to establish the liability of defendants. Nevertheless the court admitted parol evidence and plaintiff does not complain that any material evidence offered by him was excluded. As already stated, the plaintiff contends that whether this instrument designated a “principal promissory note” was or was not a promissory note is not material or important. We think these Illinois cases show that the distinction is vital.

In Smith v. Myers, 207 Ill. 126, it appeared W. C. Myers, on August 1, 1893, at Waterbury, Conn., made his note due August 1,1894, to the order of N. D. Gfrannis. By the terms of the note the maker agreed to pay a certain sum of money “and taxes.” Indorsements on the back of the note showed payments on February 8, 1894, and December 3, 1894. Beneath these indorsements appeared the indorsement, “Dwight L. Smith, Aug. 3, 1893. ’ ’ Underneath the Smith indorsement appeared the indorsement, “Rev. Johnston Myers, Cin., O., July 31, 1893,” and underneath this indorsement was the indorsement of the payee, “N. D.. Grannis.” Smith brought suit against Rev. Johnston Myers and filed a declaration consisting of two special counts and the common counts. In the first count Smith declared himself to be a second indorser and charged defendant as first indorser. By the second count plaintiff, as indorser or assignee, charged defendant as indorser. Each count averred that defendant, Rev. Myers, indorsed the note before the delivery thereof at Waterbury, Connecticut, and that by the laws of Connecticut the blank indorsement of a negotiable or non-negotiable note by a person who is neither maker nor payee, before or after its indorsement, imported the contract of an ordinary indorsement of negotiable paper as between the payee or subsequent holder of the paper. The evidence taken upon the trial showed that plaintiff, the payee, Grannis, and Myers, the maker, all lived at Waterbury, Conn, at the time the note was executed and delivered at that place; that when the note became due it was protested for non-payment; that the payments credited thereon were made by the trustees of the maker of the note, who in the meantime had become insolvent; that plaintiff Smith paid the balance due on the note at the time he received it. The Connecticut statute was introduced in evidence and plaintiff offered to prove by a conversation between plaintiff and defendant prior to the indorsement that there was a consideration for plaintiff’s indorsement, in that defendant also agreed to indorse. Evidence was also offered to the effect that defendant admitted liability in letters. This evidence was excluded. Plaintiff asked an instruction in his favor, which was refused, and an instruction requested by defendant in his favor was given. The Supreme Court affirmed the judgment for defendant. It held the character of the instrument to be decisive of the case, and said, citing many authorities, that the amount due could only be ascertained by reference to extrinsic circumstances; that the amount to be paid by the maker was, therefore, left indeterminate and subject to possible contention; that instruments whose consideration was thus fluctuating and indefinite and which were laden with such embarrassments to their circulation conld not perform the functions and did not possess the character of negotiable paper. After quoting the Connecticut statute in full the court said:

“The contention of appellant is that the instrument sued on is a promissory note, carrying with it all the legal effects and incidents of such writing, while the appellee contends that said instrument is only an ordinary contract for the payment of money, and not a promissory note, because of the addition of the words ‘and.taxes,’ following the provision for interest and preceding the name of the maker. ’ ’

The court pointed out that the action was controlled by the Connecticut statute where the instrument was made and delivered, but if the instrument was not a promissory note then it was clear that the defendant bore no such relation to it as would render him liable under the proof disclosed. The opinion concludes:

“We are unwilling to assent to the contention that such instruments can or ought to be construed as negotiable instruments or promissory notes.”

It is apparent from this analysis of this case that it is not controlling or decisive. The plaintiff there was suing under a Connecticut statute by which it was claimed the defendant indorser was liable to the same extent as if the instrument not negotiable had been in fact negotiable. That was the theory and the only theory upon which the plaintiff sought to hold the defendant. The question of what inference might arise from the indorsement of instruments which were neither negotiable in their nature or promissory notes was not involved in the case and was not considered.

A like analysis of Fidelity & Deposit Company of Maryland v. Young, 159 Ill. App. 531, and First Nat. Bank of Cass Lake v. Lamoreaux, 255 Ill. App. 15, discloses that these cases also are not controlling or decisive for the same reason, namely, that in each case the plaintiff sought to hold the defendant liable upon the theory that the indorsement of his name upon the instrument carried with it all the liability which would result from an indorsement made upon an instrument which was negotiable. In each of these cases the court held that plaintiff could not recover upon that theory. In the Fidelity & Deposit Company case the court said:

‘‘The instrument in question, however, is not a promissory note, either negotiable or non-negotiable. Smith v. Myers, 207 Ill. 126. It is a mere contract, to pay money, a mere chose in action.”

In the Lamoreaux case the court, quoting with approval from Chicago Trust & Savings Bank v. Chicago Title & Trust CVo., 190 Ill. 404, said:

“No contract or agreement is a promissory note, either negotiable or non-negotiable, which does not provide for payment absolutely and unconditionally. If payment depends upon a contingency which may never happen, it is not a promissory note.”

The sum and substance of these Illinois cases, as it seems to us, is that a plaintiff may not recover upon a mere irregular indorsement made by one not a party to the instrument before its delivery, unless the instrument is, first, a negotiable instrument within the meaning of the law merchant (see Ill. State Bar Stats. 1935, ch. 98, secs. 21 and 23, ¶¶ 41, 43; Jones Ill. Stats. Ann. 89.041, 89.043); or, secondly, an instrument which although not negotiable within the terms of that statute is recognized by the law generally as a promissory note. In either of these two classes of instruments an irregular signer may become liable by mere indorsement. It is apparent, we think, under the decisions of the courts of this State that the instrument here indorsed is neither a negotiable instrument nor a promissory note, and therefore defendants are not liable merely by reason of the indorsement, and plaintiff cannot recover solely upon the indorsement for the reason that under our law the instrument in question is a mere chose in action, the indorsement of which does not necessarily justify an implication of any contractual relationship. While this is true, we do not think that any one of these Illinois cases goes to the extent of deciding that an indorser of a chose in action may not become liable under any circumstances. Nor does any one of these cases hold that proof of such indorsement might not be supplemented by proof of extrinsic facts from which a contractual liability might be inferred. Plaintiff, we understand, brings his case upon this theory. We do not understand the Illinois cases hold to the contrary but think the courts of Illinois free to follow the majority rule in such cases. 26 Illinois Law Review, 911. We think the trial court erred in holding that extrinsic evidence was not admissible for the purpose of establishing liability. However, no material evidence was excluded and all the evidence taken is in the record before us.

After an examination of the evidence we hold the proof here is insufficient to justify an inference of contractual liability as guarantor of the “principal note,” as against these defendants. There was, of course, proof of the indorsement, but proof of a mere indorsement, as we have seen, is not sufficient. If it had been the intention of the parties that the indorsers should assume a guaranty of payment of the note, it would seem such an intention would have been made to appear from something said or done at the time the transaction was consummated. Especially is this true since any such liability as is now contended for is expressly negatived by the language of the note and trust deed. Such liability is directly contrary to the express language of the written documents — the trust indenture, the “principal note,” the coupons and the trust deed. To give this indorsement the meaning for which plaintiff contends would be to destroy the very purpose for which the trust was created, as appears from the documents in evidence. The indorsement was probably merely for the purpose of showing that the beneficiaries consented to the transaction and apparently for that reason alone was requested by Haugen. Any contrary inference would rest upon mere speculation, which cannot create a legal liability. It follows, assuming (which we do not doubt) that the plaintiff is the owner and has a right to sue (the obligation being payable to bearer) that he cannot recover against the defendant McIntosh on the evidence.

The judgment of the trial court is affirmed.

Affirmed.

O’Connor, P. J., concurs.

McSurely, J., dissents.


author: Mr. Justice Matchett

text:
    Mary Sommer, Appellee, v. Clarence Dexter Sr., Trading as Dexter Wholesale Fish Dealers, Appellant.
    Gen. No. 39,457.

      Heard in the first division of this court for the first district at the April term, 1937.
    Opinion filed June 28, 1937.
    Patton J. Tuohy, of Chicago, for appellant; Ralph J. Helperin, of Chicago, of counsel.
    No appearance for appellee.
   Mr. Justice Matchett

delivered the opinion of the court.

November 7, 1932, Elsie Sommer, minor, by Mary Sommer, her mother and next friend, filed a suit in the superior court of Cook county against Clarence Déxter and Clarence Dexter, Jr., in an action of trespass on the case. Clarence Dexter was served and entered his appearance. December 20, 1932, Elsie Sommer filed a declaration of nine counts, containing averments that through the negligence of the servants of defendants she was injured on July 11, 1932, when an automobile in which she was riding was struck by a truck owned by defendants and negligently operated. The accident was said to have occurred at the intersection of Went-worth and Archer avenues in Chicago. One count of the declaration charged that the negligence of defendants was wilful and wanton.

Clarence Dexter on December 29, 1932, filed a plea of the general issue with a special plea denying ownership and operation.

April 2, 1934, on motion of plaintiff’s attorney, the court entered an order that the name of Mary Sommer be substituted for that of Elsie Sommer, and that plaintiff have 10 days to file an amended declaration. This amended declaration was filed in the name of Mary Sommer April 3, 1934, and like the declaration of Elsie Sommer is based upon the collision which occurred July 11, 1932, at the intersection of Wentworth and Archer avenues.

April 18, 1934, defendants filed a plea of the general issue. September 28, 1934, defendant Clarence Dexter made a motion for leave to withdraw this plea. The motion was denied, and on motion of plaintiff leave was given to amend the process in the cause, and it was ordered that new process issue. Alias and pluries summons were issued and the pluries summons returned as served upon the defendants November 30, 1935. June 15, 1936, defendants moved the court for leave to withdraw the pleas theretofore filed and for leave to file a motion to strike the amended declaration filed on behalf of the substituted plaintiff, Mary Sommer; that the summons issued thereunder be quashed, and the cause dismissed and terminated for the reason that by virtue of the order entered April 2, 1934, the suit had been discontinued. Suggestions filed in behalf of the motion asserted that the amended declaration set up an entirely new cause of action; that the first declaration was a suit by the minor, Elsie Sommer, for injuries to her, while in the amended declaration the mother, Mary Sommer, asked damages for an injury to herself. This motion was renewed June 15, 1936, and the court reserved its ruling on the motion. The case was tried by a jury. Upon trial the defendant Clarence Dexter, Jr., was dismissed from the case. The jury returned a verdict of guilty against defendant Clarence Dexter, Sr., and damages at the sum of $250. Defendant, by motion for a new trial, again urged that the suit was in fact dismissed by the order of April 2,1934, substituting Mary Sommer as sole plaintiff in lien of Elsie Sommer, the original sole plaintiff. The motion for a new trial was, however, denied and September 11, 1936, judgment was entered on the verdict in favor of the plaintiff, Mary Sommer, and against defendant, Clarence Dexter, Sr., trading as Dexter Wholesale Fish Dealers, for the sum of $250 and costs. To reverse that judgment the defendant has appealed.

It is contended here that the substitution of Mary Sommer as sole plaintiff in lieu of Elsie Sommer, the original sole plaintiff, operated to discontinue and abate the suit, and that any further order entered by the court was a nullity, the court having lost jurisdiction April 2, 1934, the date of the substitution. The suit was begun and the cause at issue prior to January 1, 1934. Defendant contends, and we will assume for the purpose of this decision, that under Bule 1 of the Supreme Court the Practice Act of 1907, then in effect, is determinative of the rights of the parties. (See Ill. State Bar Stats. 1935, ch. 7, ¶ l; Jones Ill. Stats. Ann. 107.026 and Cahill’s Ill. Rev. Stats. 1931, ch. 110, sec. 39, p. 2176.) The plaintiff has not appeared in this court to support the judgment, and we regret the necessity of deciding the question without assistance by brief of one of the parties. A.t common law the introduction of a new plaintiff into a cause of action was not permitted. Ency. Pleading and Practice, vol. 1, p. 541. The rule in that respect was changed by statute in this and other States. Section 39 above cited provides in substance that at any time before judgment in a civil suit, amendments may be allowed on such terms as are just and reasonable, “introducing any party necessary to be joined as plaintiff or defendant, discontinuing as to any joint plaintiff or joint defendant, changing the form of the action and in any matter either of form or substance, in any process, pleading or proceeding which may enable the plaintiff to sustain the action for the claim for which it was intended to be brought or the defendant to make a legal defense. The adjudication of the court allowing an amendment shall be conclusive evidence of the identity of the action.” Defendant relies upon Henry v. Seaton, 170 Ill. App. 1; Zukowski v. Armour, 107 Ill. App. 663; Staunton Coal Co. v. Fischer, 119 Ill. App. 284, and a number of cases construing similar statutes in the State of New York, holding that while the statutes are to be construed liberally, they do not authorize the substitution of plaintiff or defendant, and that such attempted substitution operates to discontinue the cause of action.

In Redlowski v. Grossfeld & Roe Co., 192 Ill. App. 534, where in an action of the fourth class in tort, begun in the municipal court of Chicago, the name of Joseph Redlowski was substituted as plaintiff for Stanislaw.-Rutkowski, we said:

“We do not think that it is shown in the transcript before us that any error was committed by the trial court. While the cases of Zukowski v. Armour, 107 Ill. App. 663, and Henry v. Seaton, 170 Ill. App. 1, cited by counsel for defendant, seem to support their contention, the decisions of our Supreme Court and other decisions of the Appellate Court appear to be the other way. Teutonia Life Ins. Co. v. Mueller, 77 Ill. 22, 23; McDowell v. Town, 90 Ill. 359; Thomas v. Fame Ins. Co., 108 Ill. 91, 99; United States Ins. Co. v. Ludwig, 108 Ill. 514, 518; Congress Const. Co. v. Farson & Libbey Co., 199 Ill. 398, 404; Kanawha Dispatch v. Fish, 219 Ill. 236, 241; Chesapeake & O. Ry. Co. v. Fish, 170 Ill. App. 359, 363; Chicago-Virden Coal Co. v. Bradley, 134 Ill. App. 234, 237.”

We accept this construction of the statute.

It follows that there was no reversible error in the order denying the motion of defendant to dismiss the suit.

It is contended by defendant that the verdict is against the manifest weight of the evidence. The evidence for plaintiff tends to show that on July 11, 1932, she and her daughter, then 13 years of age, accepted the invitation of a neighbor, Mr. D ’Este, to ride home in his automobile. Plaintiff and her daughter had gone downtown that day; their home was at 5930 South Honoré street on the south side of Chicago. Mr. D ’Este drove south on Clark street to Archer avenue and turned southwest on that street. At the intersection of Archer and Wentworth avenues the automobile was struck by a truck which was being driven south on Wentworth avenue by defendant’s chauffeur at a speed of 35 miles an hour. D ’Este testified that he had passed the corner of the intersection when on his right he saw the truck about 50 feet away, coming south on Went-worth avenue. He applied his brakes and swung to the left, but notwithstanding his efforts the automobile collided with the truck.

The evidence for the defendant was to' the effect that a street car had stopped at the intersection, and that the automobile in which plaintiff was riding came from behind the street car and struck the truck as it was moving toward the south. The evidence on this point is quite conflicting. Plaintiff, her daughter and Mr. D ’Este testified positively that there was no street car there at the time, and that the automobile was not driven past any street car prior to the accident. The chauffeur and other witnesses for defendant testified to the contrary. If there was a street car there, neither the persons in charge of it nor any of the passengers were produced as witnesses. Apparently the jury accepted plaintiff’s version of the occurrence. The trial judge who saw and heard the witnesses has approved the verdict of the jury.' In view of this conflict in the evidence this court cannot hold that the verdict and judgment are against the weight of the evidence, and the judgment is therefore affirmed.

Affirmed.

O’Connor, P. J., and McSurely, J., concur.