Chicago Dist. Elec. Generating Corp. v. Evans
Decision Date | 21 November 1946 |
Docket Number | 17495. |
Parties | CHICAGO DIST. ELECTRIC GENERATING CORPORATION v. EVANS. |
Court | Indiana Appellate Court |
Appeal from Lake Superior Court, No. 3, Fred A. Egan, Judge.
Action by Charles Evans, Jr., against Chicago District Electric Generating Corporation to recover on a bearer bond. From a judgment for plaintiff, the defendant appeals.
Judgment modified, and as so modified, affirmed.
Richard P. Tinkham and John F. Beckman, Jr. both of Hammond (Louis L. Dent, of Chicago, Ill., of counsel), for appellant.
Frank L. Greenwald, of Gary, and Eliot H. Evans of Chicago 6, Ill for appellee.
The appellee is the owner and holder of a bearer bond in the principal sum of $1,000 executed by the appellant as one of a series of similar bonds evidencing a total debt of $15,000,000 secured by a mortgage or trust deed to the Continental Illinois National Bank & Trust Company and Frank F. Taylor, trustees. Upon learning that the series of bonds, of which his was one, had been called for payment by the appellant he presented said bond to the said trustees who refused to pay the same. He thereupon brought this suit which is an action to recover on said bond, against the appellant as the maker thereof. In defense the appellant contends (1) that it has paid the bond sued on, and (2) that the appellee is not a holder thereof in due course because at the time he acquired said bond he had notice that it had been previously dishonored and that the title of the prior holder thereof was defective.
The case was tried to the court upon these issues and resulted in a general finding for the appellee upon which judgment was entered in due course. The appellant predicates error on the overruling of its motion for a new trial which charges (1) the decision of the court is not sustained by sufficient evidence, and (2) the decision of the court is contrary to law.
The transcript of the record presents no factual dispute. On the face of the bond in suit appears the following words: (Italics ours.)
The mortgage above referred to contains the following provisions:
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The bond in suit was originally issued to the Farmers Mutual Automobile Insurance Company of Madison, Wisconsin, who reported to the trustees, early in July, 1933, that it had been stolen and asked that payment thereof be stopped. A record of 'payment stopped' was made by the trustees and in 1936 a duplicate bond was issued to the American Bonding Company who presented an assignment of all interest therein from the Farmers Mutual Automobile Insurance Company, the original holder. This duplicate bond was issued pursuant to Article I, Section 13 of the mortgage as above set out and upon receipt of indemnity satisfactory to the trustee. It was identical to the original, including its serial number, but bore a secret mark so it could be distinguished therefrom. The entire issue was called for payment on January 9, 1939, and the trustees received from the appellant, some time prior thereto, a sufficient sum of money to pay the entire principal sum borrowed together with premium and interest to the call date. When this money was disbursed by the trustee the duplicate bond was paid upon presentation as the stolen original was still missing.
From July 2, 1933, to September 9, 1933, the appellee was in the investment securities business with offices at 11 South LaSalle Street, Chicago. Sometime during that period he bought the bond in suit from a man with whom he had never done any business previously--a 'fly-by-night broker'--whose name he never knew. The appellee, at the time, was doing considerable business with this type of broker who made a practice of buying tax anticipation warrants and other securities from school teachers and contractors who needed or wanted immediate cash. Before completing the transaction the appellee called a Chicago Bond house and learned that the market on the bond in controversy was '72 bid and 75 asked,' and thereupon bought it for cash at either 70 1/2 or 71 1/2.
On September 9, 1933, he borrowed $10,000 from one Simms McGuire on his promissory note and posted this bond with others as collateral security therefor. During the course of the years that followed he reduced this loan to $1,000 and in September, 1943, he learned for the first time that the bond in question had been called and he thereupon suggested to McGuire that he present it to the trustees for payment and use the money to pay the balance of his note. This McGuire did but the bond was returned to him unpaid with a letter from the Continental Illinois National Bank and Trust Company, one of the trustees, a part of which we quote as follows:
The appellee shortly thereafter paid the balance due on his note to McGuire and the bond was returned to him and is now in his possession.
In support of its claim of payment the appellee asserts that according to the express terms of the mortgage under which the bond sued upon was issued, the trustees were constituted the bondholders' agents and not the agents of the maker and mortgagor, so that the appellant, by paying to said trustees on redemption the principal amount of its loan in full together with the premium and interest to the call date, fully discharged its liability on the bond in suit.
Three principles of law, pertinent to the question, are definitely established in Indiana and in other jurisdictions to the extent that...
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