Keohane v. Smith

• Citation: 97 Ill. 156,1880 WL 10174
• Parties: CATHARINE E. KEOHANEv.CHARLES M. SMITH et al.
• Decision Date: 20 November 1880
• Court: Supreme Court of Illinois

97 Ill. 156

1880 WL 10174 (Ill.)

CATHARINE E. KEOHANE

v.CHARLES M. SMITH et al.

Supreme Court of Illinois.

Filed at Ottawa Nov. 20, 1880.

APPEAL from the Appellate Court for the First District;--heard in that court on appeal from the Superior Court of Cook county; the Hon. SAMUEL M. MOORE, Judge, presiding.

Messrs. GARDNER & SCHUYLER, for the appellant:

1. Payment of a negotiable promissory note to one not in possession of it, and who has no authority to receive payment, is no discharge of the note. Wheeler v. Guild, 20 Pick. 525; Baxter v. Little, 6 Met. 7; Davis v. Miller, 14 Gratt. 1; Coffman v. Bank Ky. 41 Miss. 212; Elgin v. Hill, 27 Cal. 373. 2. When the maker of a promissory note pays to the payee, without requiring the production of the note, or without any evidence that the payee still holds it, he pays at his peril, and such payment does not prejudice the rights of the holder of the note. See cases cited to last point, and Mayo v. Moore, 28 Ill. 428.

3. When a mortgage secures a negotiable promissory note, and the note is assigned before maturity to a bona fide endorsee, payment to the payee is not good. Reeves v. Scully, Walker's Chy. Rep. 248; Dutton v. Ives et al. 5 Mich. 515; Jones v. Smith, 22 Id. 360; Bank, etc. v. Anderson, 14 Iowa, 544; McClure v. Burris et al. 16 Id. 591; Roberts v. Halsted,9 Pa. State, 32.

Mr. JUSTICE SCOTT delivered the opinion of the Court:

This bill was brought by Catharine E. Keohane to foreclose a mortgage made by Peter Sullivan and wife to Eben F. Runyan, dated March 12, 1869, to secure a note for $2000, payable five years after date, to the order of E. F. Runyan, with interest after due at the rate of 10 per cent per annum. It seems the interest to maturity of the note was evidenced by coupons of $100 each, payable at intervals of six months. Complainant left with Runyan $4000 to be loaned for her, and shortly afterwards she received from him the Sullivan note as a loan of so much money, which was indorsed by Runyan, and the note and coupons, with the mortgage by which the same were secured, were delivered to complainant. The mortgage was on record in the proper office, but there was no assignment of it to complainant other than the equitable assignment that comes by the assignment of the note it secured.

On the 20th day of July, 1870, Sullivan made an arrangement with Charles M. Smith to borrow $3000, and secure the money on the same property embraced in his mortgage to Runyan. The money Sullivan was to get did not belong to Smith, but to Mrs. Mary A. Roset, for whom he was acting. Smith employed Norman C. Perkins to examine the abstract of title, and report in writing, which he did. His report showed the property was subject to the mortgage made by Sullivan to Runyan. That incumbrance Sullivan proposed to pay off out of the money he should receive from Smith. Accordingly a trust deed to Smith was made by Sullivan and his wife, on the property in question, to secure Sullivan's note or bond for $3000 to Mrs. Roset. Sullivan took $2000 of the money received from Smith with which to pay off the mortgage to Runyan. He says Perkins went with him to Runyan's office, and saw the money paid and the release delivered. Perkins does not recollect going to Runyan's office when the money was paid, but says, “Sullivan may be correct about that.” At all events, Perkins knew the money was to be and was paid to Runyan to discharge the mortgage, and by an additional note at the bottom of his examination he informed Smith the release had been filed. The release and the trust deed to Smith both appear to have been acknowledged on the 28th, and recorded on the 29th day of July, 1870. In September, 1875, Gerhard Foreman loaned Sullivan $1000, and took a trust deed on the same property embraced in the Runyan mortgage to secure the same. Both Smith and Foreman were made defendants to complainant's bill to foreclose the Sullivan mortgage, and the prayer of the bill was, that whatever equities they might have in the premises might be postponed to the superior equities of complainant. On the hearing the Superior Court decreed that the mortgage to Runyan is a valid and first lien on the property as against all the defendants, except Foreman. That decree was reversed by the Appellate Court, on Smith's appeal, and now complainant brings the case to this court on appeal.

Counsel for complainant make no question against the decree of the Superior Court giving priority to the trust deed to Foreman, so that only the equities between the parties owning the mortgage to Runyan and the trust deed to Smith remain to be considered.

The note of Sullivan to Runyan was a negotiable instrument, under our statute. It was for a definite sum, was payable absolutely on a day named, and was not dependent upon any contingency, either in regard to the event or the fund out of which...