Union Nat. Bank of Chicago v. Hines

• Citation: 177 Ill. 417,53 N.E. 83
• Parties: UNION NAT. BANK OF CHICAGO v. HINES. HINES v. UNION NAT. BANK OF CHICAGO.
• Decision Date: 21 December 1898
• Court: Supreme Court of Illinois

177 Ill. 417

53 N.E. 83

UNION NAT. BANK OF CHICAGO

v.HINES.¹

HINES

v.UNION NAT. BANK OF CHICAGO.

Supreme Court of Illinois.

Dec. 21, 1898.

Appeals from appellate court, First district.

Bill by Deward Hines against the Union National Bank of Chicago and S. B. Barker. From a decree of the appellate court (69 Ill. App. 518) reversing a decree for defendant bank, and affirming an order refusing leave to file a bill of review, complainant and defendant bank appeal. Affirmed.Moran, Kraus & Mayer, for plaintiff.

Tenney, McConnell, Coffeen & Harding, for defendant.

These two appeals, which involve the same matter, grew out of a suit in equity originally begun in the superior court of Cook county by Edward Hines, complainant, against the Union National Bank of Chicago and S. B. Barker, defendants, to enjoin the bank from selling certain stock of the Edward Hines Lumber Company, which it held as collateral security. The facts alleged in the bill are: That on September 29, 1892, Edward Hines executed and delivered to S. B. Barker a promissory note, as follows: ‘$15,000. Chicago, June 27, 1892. On or before May 1, 1895, after date, I promise to pay to the order of S. B. Barker, fifteen thousand dollars, at his office in Chicago, value received, with interest at seven per cent. from date until paid. Edward Hines.’ Across the face of this note, at the time of its execution, was written in red ink, ‘This note is nonnegotiable.’ It is alleged: That the note was executed September 29, 1892, but dated back to June 27th, even date with a certain other note executed by S. B. Barker to the Edward Hines Lumber Company, a corporation. That it was expressly agreed that this note should be nonnegotiable. That the reason it was so made was to protect Hines against loss by failure of Barker to carry out the terms of a certain agreement between the parties looking to the organization, management, and control of the Edward Hines Lumber Company. That on September 29, 1892, Hines delivered to Barker, as collateral security for the payment of his $15,000 note, 150 shares of the capital stock of the Edward Hines Lumber Company, of the par value of $100 per share. That thereafter, March 21, 1893, Barker requested Hines to guaranty the payment of certain notes which he (Barker) was then about to deliver to the firm of McElwee & Carney. That this request was contained in a letter written to Hines, as follows: ‘Chicago, March 21, 1893. Friend Hines: I bought a lot of lumber from McElwee & Carney during Mr. Carney's absence, giving them my notes for it. Carney has just returned, and says they have too much of my paper, and wishes to return the notes, and cancel the sale, unless I can give him other paper or security. This I cannot conveniently do just now. As I have relied on this lumber for spring trade, I want you to help me out by indorsing the notes or guarantying the same, so that I can get the lumber. This, I feel, will be satisfactory to Mr. Carney, and you will be amply safe in doing so, as I always pay my paper promptly, and as I talked with you considerably how it is made out, I cannot make use of it. When I have helped you, surely you ought to try and return the favor. I will rely upon your doing so. I will be easier soon, as trade will be better, and I intend to crowd sales. Come down to-morrow, and let me know if you will do so. Very truly yours, S. B. Barker.’ It is then alleged that on March 22, 1893, in pursuance of this request, relying on the fact that Barker then held his note for $15,000, Hines executed to McElwee & Carney the following instrument: ‘March 22, 1893. Messrs. McElwee & Carney, City-Gentlemen: I am in receipt of a letter from S. B. Barker requesting me to indorse or guaranty some notes which Mr. Barker owes you for lumber purchased by him from you. I do not care to place my name on paper which is to be put in circulation, but, as you know, Mr. Barker holds my nonnegotiable promissory note for $15,000, with interest at seven per cent., and which matures May 1st, 1895, at which time there will be due thereon about $18,000. I have told Mr. Barker, while I will not indorse his paper I will guaranty the same to the amount which will be due on my note which he holds, when the same becomes due, provided that, if Mr. Barker fails to pay the notes which he gives to you, I shall be given time on my liability until my note to him matures. If you care to accept his notes with my guaranty upon the above condition you can do so, and hold this letter as evidence of my obligation. Very truly yours, Edward Hines.’ It is further alleged that on March 22, 1893, said McElwee & Carney accepted this guaranty, and accepted the notes executed by Barker to them, and delivered the lumber purchased by Barker with the notes and guaranty; that at the time Barker requested Hines to guaranty the notes to McElwee & Carney he owned and held and had in his possession the Hines note for $15,000, and the collateral stock in the Edward Hines Lumber Company, and that afterwards Barker, for the purpose of defrauding Hines, attempted to pledge said note and stock to defendant, the Union National Bank of Chicago, as collateral security for a large debt then owing it by him, and that the bank then knew Barker held said stock as collateral security to the $15,000 note, and not otherwise; that in May, 1893, after Hines had executed his guaranty to McElwee & Carney, Barker became absolutely insolvent, and has remained so ever since, and consequently defaulted in the payment of his notes to McElwee & Carney, which were four in number, dated March 16, 1893, aggregating $16,426.06; that, when Barker became insolvent, McElwee & Carney looked to complainant, Hines, to take up these notes under his letter of guaranty, and that he was obliged to and did take up and make payment thereof to McElwee & Carney in pursuance to the terms of said guaranty, and McElwee & Carney thereupon indorsed the notes without recourse, and delivered them to him, the said Hines, who has been, and now is, the owner of and in possession of the same; that at the time Hines entered into the guaranty to McElwee & Carney, and at the time he paid the notes under his guaranty, he had no notice or information that the defendant bank had or claimed any interest in said $15,000 note or the stock accompanying it, nor did he know that Barker had transferred, pledged, or parted with the possession of the note or certificates of stock, nor did he have any notice that the bank nad or claimed possession of, or any right to or interest in, such note or certificates of stock, until after the maturity of said note. The bill then avers that on May 16, 1895, the bank began an action of assumpsit in the circuit court of Cook county against the complainant on the $15,000 note, to which he pleaded action non, and set up the guaranty on the Barker notes to McElwee & Carney as a defense to the amount of their face; that Hines has tendered the difference between his note to Barker and Barker's notes to McElwee & Carney (the sum of $217.93) to the bank, and demanded the return of the certificates of stock to himself; that on March 17, 1896, the bank served notice taat it would, on March 28, 1896, sell the stock at public sale; that the date of sale was afterwards postponed, by stipulation, to April 4, 1896. Then followed a prayer asking that the bank be enjoined from disposing of the certificates of stock pending the determination of this action, for an accounting, etc.

The separate answer of S. B. Barker, filed April 8, 1896, admitted the...