Drennan v. Bunn

• Decision Date: 28 March 1888
• Citation: 124 Ill. 175,16 N.E. 100
• Parties: DRENNAN v. BUNN.
• Court: Illinois Supreme Court

124 Ill. 175

16 N.E. 100

DRENNAN

v.BUNN.

Supreme Court of Illinois.

March 28, 1888.

Appeal from appellate court, Third district.

Tipton & Beaver, for appellant.

James S. Ewing, for appellee.

SCHOLFIELD, J.

R. C. Huskey and Eva J. Huskey, his wife, made and delivered to Thomas J. Bunn two promissory notes, one for the sum of $1,000, and the other for the sum of $800, each dated April 15, 1874, and payable April 15, 1880; and also 12 coupons, annexed to each note, for interest on the amounts of the respective notes at 10 per cent. per annum, payable semi-annually; and at the same time they executed and delivered to him a deed of trust to James H. Powell, as trustee, to secure the payment of the notes and coupons, on certain lands of which Eva J. was the owner, in Christian county. Eva J. died some time after the making and execution of these instruments. All of the coupons, except the last due upon each note, were paid as they matured; but, those coupons not having been paid, the trustee, being ignorant of the death of Eva J., advertised the property for sale pursuant to the power in the deed. Frank J. Drennan, seeing this advertisement, wrote to Thomas J. Bunn informing him of the death of Eva J., and proposing to buy the notes, etc., by paying the amount due. Bunn accepted his proposition, with the modification that he should pay the printer's costs of advertising, and sent him a statement of the amount due, thus:

+----------------------------------+
                ¦Five bonds,                ¦$1,800¦
                +---------------------------+------¦
                ¦Interest to April 15, 1880,¦150   ¦
                +---------------------------+------¦
                ¦                           ¦$1,950¦
                +----------------------------------+
                

Drennan paid the printer's costs for advertising, and paid Bunn $1,950; and Bunn indorsed the notes thus: ‘For value received, I hereby assign the within bond and coupon to Frank P. Drennan, without recourse on me. August 12, 1880. THOMAS J. BUNN,’-and then delivered them to Drennan. Soon afterwards, Drennan commenced an action of ejectment on the trust deed, in the name of the trustee, to recover possession of the land, and also filed a bill to foreclose the trust deed, in the circuit court of Christian county. The defense of usury was interposed in both suits; and in the ejectment suit a tender was made of a balance admitted to be due after the deduction of all interest that had been paid, being $671. Drennan accepted the tender, and dismissed the ejectment suit. The foreclosure suit, however, was not dismissed, but was prosecuted to final decree, some time after the ejectment suit was dismissed. The court found that the notes or bonds were usurious, and that all interest was thereby forfeited, and that, after deducting all interest that had been paid, the complainant had been paid all that was due upon the bonds. Drennan then brought the present suit against Bunn, in the circuit court of McLean county, to recover the difference between the amount he actually received upon the bonds or notes, and the amount apparently due thereon when he purchased. The cause was tried before the court, without the intervention of a jury, by agreement of parties, and judgment was rendered for the defendant. Evidence was given, upon the trial, of the facts hereinbefore stated; and there was also evidence proving that the defendant had actual notice of the pendency of the foreclosure suit, in the Christian circuit court, of the defense of usury thereto that was interposed by Huskey; that he was requested to furnish evidence to meet the defense of usury; that his deposition was taken as a witness in the case, in reference to that question; and that he had notice of when the terms of the circuit court were held in Christrian county. Evidence was also given tending to show that Drennan notified Bunn that he thought he would be defeated in the foreclosure suit, and that, if he should be, he expected to sue Bunn upon a breach of implied warranty, to recover back what he had lost, and, in substance, that he therefore desired Bunn to take charge of the suit; but this was denied by Bunn in his testimony. The circuit court was requested to hold as follows, but held only the eighth and ninth, and refused the others: First, that the final decree of the circuit court of Christian county in the case of Frank P. Drennan v. R. C. Huskey et al., introduced in evidence in this case, is conclusive as to defendants in this cause, and fully establishes plaintiff's right to recover in this case; second, that the final decree of the circuit court of Christian county in the case of Frank P. Drennan v. R. C. Huskey et al., introduced in this case, establishes the question of usury in this cause, and is binding on defendant in this cause, and that it is not necessary to again prove the question of usury in this cause; third, that the final decree of the circuit court of Christian county in the case of Frank P. Drennan v. R. C. Huskey et al., introduced in evidence in this cause, together with the further proof that defendant, Bunn, in this cause, had notice of the pendency of said suit, and was requested to defend and disprove the defense of usury interposed in said cause, rendered said decree binding, and fully establishes the plaintiff's right to recover in this cause; fourth, that the final decree of the circuit court of Christian county in the case of Frank P. Drennan v. R. C. Huskey et al., in evidence in this cause, together with the further proof that said Bunn had notice of the pendency of said suit, and was requested to disprove and defend the defense of usury interposed in said cause, rendered said decree binding, and conclusive against the defendant in this cause, and fully establishes the plaintiff's right to recover in this cause; fifth, that the final decree of the circuit court of Christian county in the case of Frank P. Drennan v. R. C. Huskey et al., in evidence in this cause, together with the further proof that said Bunn, the defendant in this cause, had actual notice of the pendency of said suit, and did appear and testify as a witness in said cause, is binding on defendant in this cause; sixth, that the final decree of the circuit court of Christian county in the case of Frank P. Drennan v. R. C. Huskey et al., in evidence in this cause, together with the further proof that said Bunn, defendant, had actual knowledge of the pendency of said suit, and did appear and testity as a witness, is conclusive against the defendant in this cause as to each and every issue found by said decree; seventh, that the evidence introduced in this cause tending to show that the money secured by the bonds, coupons, and trust deed in this case, was the money of any person other than the payee named therein, is incompetent, for the reason that said evidence attempts to vary the terms of a written contract by parol; eighth, that the evidence tending to show that the defendant in this cause was not the owner of the bonds and coupons in evidence in this cause at the time he assigns the same to plaintiff is not competent, for the reason that the said evidence attempts to vary the terms of a written contract of assignment on said bonds by parol; ninth, that the defendant herein is estopped from denying that he was the owner of said bonds and coupons in evidence at the time of sale and assignment of the same to the plaintiff herein; tenth, that the defendant in this cause is estopped from denying that the money secured by the bonds and coupons and trust deed in evidence in this case was the money of him, the said defendant, The plaintiff appealed from this judgment of the circuit court to the appellate court of the Third district, and that court affirmed the judgment of the circuit court. The plaintiff then prosecuted the present appeal to this court. The circuit court, in effect, ruled, as a matter of law,-and that ruling is affirmed by the judgment of the appellate court,-that proof that appellee was notified of the pendency of the foreclosure suit, and of the defense of usury thereto interposed, and requests to rebut and disprove such defense, will not render the decree of foreclosure conclusive against appellee in this suit. Two questions for our consideration arise upon this ruling- First. Is the vendor of negotiable bonds or notes, in the absence of express representation, and who assigns them ‘without recourse,’ liable on an implied warranty for any deficiency between the amount apparently due upon the face of the instrument, and the amount legally collectible upon it? Second. If liable, is he concluded by the judgment between his vendee and the payor of the instrument, by reason of having been notified, in apt time, of the pendency of the suit, and of the defense of usury set up by the payor, although not expresslyrequested to take charge of the suit, and not notified that the vendee intends to hold him responsible for the result of the suit.

1. Daniel, in his work on Negotiable Instruments, (3d Ed. vol. 1, § 670,) says: ‘When the indorsement is without recourse, the indorser specially declines to assume any responsibility as a party to the bill or note; but, by the very act of transferring it, he engages that it is what it purports to be,-the valid obligation of those whose names are upon it.’ And he then proceeds to show that the holder may recover against the indorser ‘without recourse,’ where the note was invalid between the original parties because of the want or the illegalities of the consideration, as well as in certain other cases. See, also, to like effect, 1 Pars. Notes & B. 39. In Bank v. Smiley, 27 Me. 225, an overdue note was transferred with the indorsement, ‘Indorser not holden,’ and it was held the indorser was nevertheless liable to his vendee for any payment made on the note before the transfer, or any set-off existing against it of which the note gave no indication, and the vendor gave no information. In Challiss v. McCrum, 22 Kan. 157, a...