Bank of Antigo v. Union Trust Co.

• Decision Date: 31 March 1894
• Citation: 149 Ill. 343,36 N.E. 1029
• Parties: BANK OF ANTIGO v. UNION TRUST CO.
• Court: Illinois Supreme Court

149 Ill. 343

36 N.E. 1029

BANK OF ANTIGO

v.UNION TRUST CO.¹

Supreme Court of Illinois.

March 31, 1894.

Appeal from appellate court, first district.

Assumpsit by the Bank of Antigo against the Union Trust Company upon a check drawn on the defendant by A. Weed & Co. Defendant obtained judgment, which was affirmed by the appellate court. Plaintiff appeals. Affirmed.

Flower, Smith & Musgrave, for appellant.

Green, Willits & Robbins, for appellee.

On and prior to September 2, 1890, A. Weed & Co. were doing business at Ashland, Wis., and that day delivered their check for $3,000, drawn upon appellee bank, to appellant, and took up a note owned by appellee, then due, against Hoxie & Mellor, theretofore sent to appellant by appelleefor collection, and on which A. Weed & Co. were indorsers. The check was as follows: ‘Chicago, September 2d, 1890. The Union Trust Company: Pay to the order of Amos Baum, cashier, three thousand dollars. A. Weed & Co.’ The said Baum, cashier of appellant bank, accepted the check as so much cash, canceled the note, delivered it to A. Weed & Co., and remitted the amount, less $3 charges, to appellee by draft on appellant's correspondent, the Merchants' Bank of Chicago, which draft was duly paid, etc. The check was also sent to the Merchants' Bank of Chicago by appellant for collection, and presented to appellee for payment on September 4, 1890, and dishonored; whereupon due protest was made, etc. On August 25, 1890, upon certain representations made by A. Weed & Co., appellee was to, and did on September 3d following, discount for them $11,249.65 of Hoxie & Mellor paper, the same being three notes of $3,000, $3,000, and $5,430, respectively. On September 2d, A. Weed & Co. had to their credit on the books of appellee $809.25, and on that day and the following, prior to crediting their account with the proceeds of the discounted paper, had overdrawn their account to the amount of $5,760.57; so that, after deducting overdrafts, a balance was left to their credit on appellee's books, at the close of business on September 3d, of $5,489.08. On the evening of this day, appellee became aware of the failure of Hoxie & Mellor, and, at the opening of business on the morning of September 4th, charged back to A. Weed & Co. the $5,430 note, less discount ($85.65), and returned it to them with the following letter: ‘Chicago, September 4, 1890. Messrs. A. Weed & Co., Ashland, Wis.-Dear Sirs: Upon being informed yesterday that Messrs. Hoxie & Mellor had failed, we deducted the amount of the note of $5,430, less discount, $85.69,-$5,344.31,-from your account, and herewith return the note. Yours, respectfully, G. M. Wilson, Cashier,’-thus leaving a balance to the credit of A. Weed & Co. of $144.77 at the time of the presentation of the check for payment on that day. An action was brought by appellant against appellee on the check in the circuit court of Cook county, and resulted in verdict and judgment for appellee. On appeal to the appellate court, this judgment was affirmed, and plaintiff below prosecutes this further appeal.

SHOPE, J. (after stating the facts).

It is contended that the contract between appellee and Weed & Co. under which the three notes of Mellor & Hoxie were discounted was an entire contract, and that appellee had no right to rescind as to the $5,430 note, and retain the proceeds of the two $3,000 notes. It is true, as stated by counsel for appellee, that the general rule is that, when a party wishes to rescind an entire contract, he must rescind it in toto or not at all. Harzfeld v. Converse, 105 Ill. 534. But it is not to be overlooked that this is a rule of construction, based upon the intention of the parties to the contract, and not a rule of law controling that intention. 2 Pars. Cont. 521. Conceding that the discounting of the notes in question constituted a contract beteen appellee and Weed & Co., it does not appear from the record, nor is it claimed, that Weed & Co. have treated or sought to treat the contract as entire and indivisible. On the other hand, it does appear that the $5,430 note was returned to them by appellee, with a letter informing them that, having heard of the failure of Hoxie & Mellor, the makers of the notes, the amount thereof had been deducted from their account, etc. Weed & Co. on September 6, 1890, sent this note back to appellee, who, on the 8th, again returned it to Weed & Co., who, it seems, retained it. The letter of Weed & Co. of the 6th, or their purpose in returning the note, is not shown. Nor does it appear that they then or afterwards asserted or undertook to assert under the contract any right against appellee. In the absence of any proof to the contrary, it may, we think, be said that Weed & Co. by their silence have themselves elected to treat the contract as rescinded as to the $5,430 note. If A. Weed & Co. have acquiesced in the rescission of the contract as to the $5,430 note by appellee, it cannot be in the logic of things that appellant can succeed to any greater rights under the contract than A. Weed & Co., who, as we have seen, in the absence of countervailing proof on that question, have elected to acquiesce in the rescission. Appellant being under no constraint, in order to protect its own interests or rights, to pay the debt of A. Weed & Co. to appellee, but having, as will be seen, paid the same voluntarily, could not be subrogated to the rights of A. Weed & Co. in the premises. Hough v. Insurance Co., 57 Ill. 318;Young v. Morgan, 89 Ill. 199;Beaver v. Slanker, 94 Ill. 175.

But were the foregoing considerations not warranted by this record, we think, under the facts in this case, that the discounting of the notes constituted an apportionable contract. The record shows that in its letter of September 1, 1890 (in reply to one from A. Weed & Co. containing the proposition for discounting $15,000 of Hoxie-Mellor paper), appellee said that it could ‘use, say, $10,000 of the paper’ referred to ‘from September 1st to 4th,’ and that, under this arrangement, the three separate notes above mentioned were discounted by appellee. It is not contended that appellee had not the right, had the integrity of the notes at the time been questionable, to have refused to discount any or all of them. Each note constituted, in and of itself, a separate and independent contract, upon a distinct consideration, and the books of the bank show that they were discounted as separate and distinct entries. The rule as laid down by Mr. Parsons (volume 2, star p. 517) is: ‘If the part to be performed by one party consists of several distinctand separate items, and the price to be paid by the other is apportioned to each item to be performed, or is left to be implied by law, such a contract will generally be held to be severable.’ And Mr. Wharton (Cont. § 748) says: ‘When a consideration is divisible, and the price can be apportioned, then, if a distinct divisible portion of the consideration fails, the price paid for such portion can be recovered back;’ and that, ‘in cases * * * in which the consideration is divisible, the purchaser may elect to take what can be delivered to him, and in such case, if the purchase money has been paid, he can recover back the excess, or, if there has been no payment, defend pro tanto.’ See cases in notes. In Manufacturing Co. v. Wakefield, 121 Mass. 91, where the action was an account for certain India-rubber goods sold, and the price of each article, and discount from the gross sum, were stated in the account, the court, in passing upon the question of whether the contract was entire or divisible, said: ‘We do not deem this contract to have been an entire one. That a contract should be of that character, it is not sufficient merely that the subjects of purchase are included in the same instrument of conveyance. If but one consideration is paid...