Mitchell v. Deeds

• Decision Date: 30 September 1867
• Citation: 95 Am.Dec. 621,1867 WL 5376,49 Ill. 416
• Parties: a1JAMES MITCHELL et al.v.THOMAS DEEDS.
• Court: Illinois Supreme Court

49 Ill. 416

1867 WL 5376 (Ill.)

95 Am.Dec. 621

a1JAMES MITCHELL et al.

v.THOMAS DEEDS.

Supreme Court of Illinois.

September Term, 1867.

OPINION TEXT STARTS HERE

WRIT OF ERROR to the Circuit Court of Jo Daviess county; the Hon. BENJAMIN R. SHELDON, Judge, presiding.

The opinion states the case.

Mr. THOMAS J. TURNER, for the appellants.

Mr. J. H. KNOWLTON, for the appellee.

Mr. JUSTICE WALKER delivered the opinion of the Court:

This was an action of assumpsit, brought by James Mitchell, Roderic Richardson, Holden Putnam and John Page, in the circuit court of Jo Daviess, against Thomas Deeds. The action was for the recovery of two promissory notes executed by defendant to the Racine & Mississippi Railroad Company, and endorsed to plaintiffs before their maturity. There were several defenses interposed, and on the trial in the court below, the jury found for the defendant. To reverse that judgment, the cause is brought to this court on error.

We will first determine whether this company had such an existence as authorized them to take these notes and to assign them. It is insisted, that the articles of consolidation executed by the two companies, having no seal attached, was void, and failed to produce the corporate body intended to have been organized by these articles.

An act of the general assembly, approved on the 14th day of February, 1857, more than one year after the articles of consolidation were executed, declares that the consolidation is ratified and confirmed. It will not be denied that the general assembly has the same power to confirm and validate an irregularly organized corporate body, as it has to bring into existence a new one. It must, therefore, he held that this company became legal by this act, if not so previous to that time.

It is, however, said, that the notes in controversy having been executed on the 9th of May, 1856, about nine months before this act was passed, were not affected by its provisions. This is no doubt true, but appellee admitted the existence of the body by giving them. It has been repeatedly held, that under a plea of nul tiel corporation, when an organization in fact and a user is shown, the existence of the body is proved. In this case, the proof shows an organization in fact, by the election of officers, who acted for the body, and that they used and enjoyed the franchises of a railroad company organized by the laws of the State, and not only so, but appellee fully admitted the existence of such a body, by executing to it the notes in question.

The 10th section of our statute regulating negotiable instruments, gives the defense of a failure of consideration, in whole or in part, or the want of a consideration, but saves the rights of bona fide holders by assignment before they fall due. It has been held, under this section, that when the want or failure of consideration is pleaded, it must be proved by the party who interposes the defense. Stacker v. Watson, 1 Scam. 207; Topper v. Snow, 20 Ill. 434. As a general rule, subject, it may be, to a few exceptions, the party who holds the affirmative of an issue, is held to its proof. It, then, devolved upon appellee to prove the averment, that appellants had notice of the defense set up, as they were purchasers of the notes by assignment before they became due. Even had it appeared there was a want of consideration, or that it had failed in whole or in part, still it was indispensable that it should have been proved that appellants had notice of the fact when they received them, to have constituted a defense. This issue, like all other affirmative issues, should be proved by a preponderance of evidence.

The notes were endorsed by Durand, the president of the company; and to establish his authority to make the assignment, appellants read in evidence two resolutions of the board of directors of the company. The first was adopted on the 28th of January, 1858, and authorizes the president and vice-president of the company to enter into such arrangements with the creditors of the company and the holders of its securities, for such relief as the circumstances and the necessity of the company might require, and to make such stipulations and agreements as they might deem proper and expedient. The other resolution was adopted on the 26th of October, 1859. It authorizes the president to pay off any debts owing by the company, in any securities or other property of the corporation, at such rate as he may deem advisable. This, so far as we can see, was the last action taken by the board in reference to conferring power to dispose of the securities of the company. By this latter resolution, Durand had ample power to sell these notes for the purpose of paying any portion of the indebtedness of the corporation, and there is no evidence in this record that they were sold for any other purpose. It was prior in date to the assignment; and the adoption of this resolution, by fair intendment, abrogated so much of the former one as was repugnant to its provisions, and invested the president with the sole power to act, and hence this last delegation of power must control.

A large number of instructions were asked by each party, on the trial below. A number of those asked by appellants were refused, and exceptions duly taken at the time. Of that number is the 11th, which is this:

“The jury are instructed that, though they should believe, from the evidence, that the instrument for consolidation between the Wisconsin Railroad Company, and the Rockton & Freeport Railroad Company had no seal attached; yet, that if they also believe, from the evidence, that said companies were authorized, under the laws of Wisconsin and Illinois, to consolidate; that it was the bona fide intention of the companies to consolidate conformably to such authority; that they believed they had so consolidated; that under said instrument of consolidation the said companies did in fact unite in...