Elgin Nat. Bank v. Goecke

• Decision Date: 21 December 1920
• Docket Number: No. 12828.,12828.
• Citation: 129 N.E. 149,295 Ill. 403
• Parties: ELGIN NAT. BANK v. GOECKE et al.
• Court: Illinois Supreme Court

295 Ill. 403

129 N.E. 149

ELGIN NAT. BANK

v.GOECKE et al.

No. 12828.

Supreme Court of Illinois.

Dec. 21, 1920.

Error to Appellate Court, Second District, on Appeal from Circuit Court, Kane County; Mazzini Slusser, Judge.

Action by the Elgin National Bank against Frank A. Goecke, William Mair, and others. A judgment for plaintiff was affirmed by the Appellate Court for the Second District (213 Ill. App. 559), and defendants Mair and another bring error.

Affirmed.

J. C. Murphy, of Aurora, and Charles H. Fisher, of Elgin, for plaintiffs in error.

R. S. Egan and E. C. Tobin, both of Elgin, and John M. Raymond and John K. Newhall, both of Aurora, for defendant in error.

DUNCAN, J.

On September 18, 1911, Frank A. Goecke was manager and Henry Schmidt was president of the Elgin National Brewing Company. Goecke borrowed $3,000 from the ElginNational Bank and Schmidt guaranteed the note given by Goecke for the loan. The money was turned over to Goecke and by him placed in the First National Bank of Elgin and checked out to pay the indebtedness and operating expenses of the brewing company. This Goecke-Schmidt note has never been paid but has been renewed from time to time. The last renewal was made November 22, 1912, by the giving of a new note due in six months from that date. On September 30, 1912, the Elgin National Brewing Company executed two notes, payable on demand, to its own order-one for $3,000 and the other for $2,500. The latter note, although executed at the same time as the former, was dated October 30, 1912. Both notes were indorsed in blank by the brewing company and by Frank A. Goecke, William Mair, Arthur T. Rogers, Franz Walther, and A. C. Rathbun. Goecke was then acting as president of the brewing company and had the two notes executed, and they were to be used by the brewing company to pay sight drafts attached to bills of lading for two carloads of supplies for the brewery. The notes were not used for the purpose for which they were executed but were left with the brewing company's officers. They were accommodation paper, to be used by the brewing company for the purpose aforesaid; neither Mair nor Rogers having received anything for indorsing the notes. On December 10, 1912, Goecke instructed the bookkeeper for the brewing company to deliver said two notes to the Elgin National Bank. The $3,000 note was delivered to the bank and accepted by it as collateral security for the Goecke-Schmidt note for $3,000. The $2,500 note was delivered to the bank in payment of the following notes executed by the brewing company, to wit: Two notes aggregating $950 to Brammer Bros.; two notes aggregating $1,050 to Frank A. Goecke; and one note to J. C. Eckerley for $380-all of which had been purchased by the bank of the payees. These notes lacked about $30 of amounting to $2,500, and the remainder was paid in cash to the bookkeeper for the brewing company, and all the notes so paid were then canceled by the bank. The bank officers knew at the time they accepted the said two notes that they were accommodation notes and were indorsed without consideration by Mair and Rogers, but did not have knowledge that they were given for a restricted use or purpose, and there was nothing on the face of the notes to indicate any such restriction. Since the execution of said two notes the brewing company has failed and gone into the hands of a receiver. On presentment and demand to the brewing company for payment of the two notes the brewing company failed to pay the same and the notes were duly protested for nonpayment. Defendant in error, the Elgin National Bank, brought suit in the circuit court of Kane county against all five of the indorsers of the two notes. There was a default as to all the defendants except Mair and Rogers, who defendant the suit on various issues formed by the pleadings. The cause was submitted to the court without a jury and judgment was entered in favor of the bank for the sum of $7,157.65, being the amount of the notes with interest. On appeal to the Appellate Court for the Second District the judgment of the circuit court was affirmed. A writ of certiorari was granted, and the record has been brought to this court for review on errors assigned by Mair and Rogers.

One who has placed his signature upon a negotiable instrument otherwise than as maker, drawer, or acceptor is deemed to be an indorser, unless he has clearly indicated by appropriate words his intention to be bound in some other capacity. Hurd's Stat. 1917, c. 98, § 63, p. 2006. Where such person indorses such an instrument in blank before delivery, he is liable as an indorser, if he signs for the accommodation of the payee, to all parties subsequent to the payee. Id., § 64. Plaintiffs in error, as accommodation parties and indorsers of the notes...