Comstock v. Gage

Decision Date30 September 1878
PartiesCHARLES COMSTOCK et al.v.DAVID A. GAGE, for use, etc.
CourtIllinois Supreme Court

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county; the Hon. JOSEPH E. GARY, Judge, presiding.

This was an action brought in the name of David A. Gage, for the use of the city of Chicago, upon a bond to said Gage in the penal sum of $500,000, signed by Ira Holmes, Charles Comstock, James Kelley, J. A. Holmes, W. A. Butters, and William M. Tilden, who were all directors, and Ira Holmes also president, of the Manufacturers' National Bank of Chicago, and by one other person--Samuel J. Walker.

The date of the bond was January 9, 1872, and its condition as follows:

“The condition of this obligation is such, that whereas, the said David A. Gage, as treasurer of the city of Chicago, has, at the request of the above named obligors, or some of them, deposited with the Manufacturers' National Bank of Chicago certain moneys, the property of the city of Chicago, and is about or may deposit other sums of money, from time to time, as such treasurer, with said Manufacturers' National Bank of Chicago:

Now, therefore, if the said Manufacturers' National Bank of Chicago shall promptly, upon demand or presentation, pay all checks or drafts which may be made by the said David A. Gage, as such treasurer, or by any of his authorized clerks or agents, and shall, at all times, render to said David A. Gage full, just and true statements of his account with said Manufacturers' National Bank of Chicago, whenever required to do so by said Gage, then this obligation is to be void, otherwise to remain in full force and virtue.”

Gage was treasurer of the city of Chicago from December, 1869, to December, 1873,--two terms. He opened an account with the bank some time during the year 1871, upon the agreement that the bank should pay him four and one-half per cent interest upon his deposits. It did pay him at that rate up to September, 1873, when it closed business. At the time of the giving of the bond, Gage had $40,000 in the bank to his credit, as treasurer. The bank held about the same amount of his individual guarantees on paper, for which he afterwards gave his own notes. In December, 1872, Gage took up his own notes, giving in their place other securities, known as the Reed & Sherwin paper, amounting, substantially, to $40,000,--the first piece of the paper maturing in sixty or ninety days, and every six months thereafter until all was paid, $5000 matured. Holmes testified, that at the time the bond was given there was an arrangement that Gage would leave the $40,000 on hand as long as the bank would carry the paper for Gage, and, also, that when the Reed & Sherwin paper was taken by the bank, Gage agreed that the deposit should remain and be an off-set, so that the bank should be no money out.

Gage testified, that he told Holmes that the city would probably be having money, and that if Holmes would give him a bond (which he did about that time or after that time), Gage would keep an account with him, and very likely the average account would be $40,000,--perhaps sometimes more and sometimes less; and when the Reed & Sherwin notes were discounted, he told Holmes he had no doubt there would be an average account there of $40,000. There might be more and there might be less. That this was substantially all the arrangement upon the subject of keeping the permanent deposits there. No further deposit than the $40,000, at the date of the bond, appears to have been made, and that sum remained on deposit, intact, until June 30, 1873, when $25,000 was drawn out by Gage, by check. At that time Gage was indebted to the bank as guarantor upon the Reed & Sherwin paper, which was taken by the bank in December, 1872. The Reed & Sherwin notes have all since been paid. The other $15,000 of the deposit was never paid. A proper check for that amount was presented to the bank about January 1, 1874, and the president of the bank declined to pay the money, saying that the bank had suspended, and the check would not be paid.

Section 31, chap. 5, of the charter of the city of Chicago, and the amendment thereto, in force at the date of this bond, provided, in substance, that the city treasurer should keep safely the city money, without loaning or using the same (unless differently directed by ordinance or resolution of the common council), and if he should convert to his own use, in any way whatever, or should use, by way of investment or loan, with or without interest (unless differently directed by ordinance or resolution of the common council), any portion of the city money intrusted to him, every such act should be an embezzlement of the money so taken, converted, invested, used or loaned, and a felony; and all persons advising or participating, or being a party, are punishable by six months' imprisonment in the penitentiary, and a fine equal to the amount of the money embezzled. Sec. 17 of the same act, as amended, provided, that the treasurer might be required to keep any and all money in his hands, belonging to the city, in such bank or banks, or other place or places of general deposit, or in such place or places of deposit, in the manner and upon the conditions, and upon such rate of interest, or otherwise, as the common council might, from time to time, direct. This section further requires him to keep the money separate from his own, and not to use the same, directly or indirectly. Sec. 19 provides, that in case any money belonging to the city shall be directed, by the common council, to be deposited in any bank, it shall be its duty, before the deposit, to cause such bond or other security to be given to the city as the common council may approve. (Act Feb. 13, 1863, and amendments of March 29, 1869.)

The jury found a verdict for $18,000 against the signers of the bond, except two, Ira Holmes and Butters, discharged in bankruptcy. A motion by the defendants for a new trial was overruled, and a judgment entered upon the verdict. Three of the defendants, Comstock, Kelley and Tilden, take this appeal.

Messrs. HURD & NICHOLSON, Messrs. MCCAGG, CULVER & BUTLER, and Mr. GEO. F. COMSTOCK, for the appellants.

Messrs. MATTOCKS & MASON, and Messrs. MILLER & FROST, for the appellee.

Mr. JUSTICE SHELDON delivered the opinion of the Court:

The first point made by the appellants is, that there was no delivery of the bond. The only two material witnesses upon the trial were the defendant Ira Holmes, the president of the bank as well as a director, and Gage. William H. Adams was one of the directors of the bank, and the bond is signed by all the directors except Adams.

The testimony of Holmes is, that Gage required a bond to secure his deposit with the bank, and he, Holmes, said that he would give the names of all the directors of the bank and Samuel J. Walker, and Gage said that would be entirely satisfactory, and witness then got the signatures to the bond, and Gage got it from him under these circumstances:--that Gage came to him and asked for the bond, and witness stated to him that the bond was not complete and not ready for delivery to him,--that it lacked the signature of Adams; that Gage said he wanted to submit it to the finance committee, which was to meet that day; that witness gave him the bond to show to the finance committee, and he was to hand it back to witness, and Adams was to sign it, and it was to be delivered afterwards; that Gage did not bring it back, and witness never saw the bond afterwards until the trial, and never afterward had any conversation with Gage in regard to it.

Gage testifies that the proposal of Holmes was to give him a bond with all the directors upon it,--he does not recollect that Walker was to be upon it; that at the time he got the bond he thinks Holmes told him Adams' name was not on the bond, and witness told him the bond was satisfactory to him and does not remember of having said anything more about it at that or any other time, and then he took the bond; that Walker was supposed to be worth $1,000,000 at that time. This is the testimony which is relied upon as proof of the nondelivery of the bond. The possession of the bond by the appellee was prima facie evidence of its delivery. The acquiescence in the retention of the bond by Gage without afterward speaking to him upon the subject, is quite strong evidence, either that there was an unconditional delivery to Gage, or that if there was such a condition attached to the taking of the bond by Gage as testified to by Holmes, 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 the signers of the bond to be performed before they were willing the bond should be delivered and have effect as their bond.

The question of the delivery was one of fact for the jury, and there is no sufficient reason for disturbing their finding under the evidence.

It is next urged, that the court below erred in refusing to allow the appellants to show the condition on which they signed the bond. They offered to show on the trial that at the time they signed the bond, they did so upon the condition explained to Holmes, who had the custody of the bond at the time, that it should not be delivered until it was signed by Adams.

The court refused to admit the evidence, and exception was taken. There was no offer to show that this understanding between the defendants was made known to Gage. This precise question was decided by this court in the case of Smith v. Peoria County, 59 Ill. 412, where it was held to be no defence for a surety in a bond, that he signed it on condition that it should also be executed by another person as a co-surety, before it should be delivered, and that in violation of such condition the bond was delivered to the obligee without having been executed by such other person, it not appearing that the obligee had notice of the...

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