Scholbe v. Schuchardt, 12606.

• Decision Date: 21 April 1920
• Docket Number: No. 12606.,12606.
• Citation: 127 N.E. 169,292 Ill. 529
• Parties: SCHOLBE v. SCHUCHARDT et al.
• Court: Illinois Supreme Court

292 Ill. 529

127 N.E. 169

SCHOLBE

v.SCHUCHARDT et al.

No. 12606.

Supreme Court of Illinois.

April 21, 1920.

Suit by M. A. Scholbe against Max Schuchardt and another. A judgment for defendant rendered by the municipal court was reversed by the Appellate Court and judgment rendered for plaintiff (212 Ill. App. 663), and defendants appeal.

Judgment of Appellate Court reversed, and judgment of municipal court affirmed.

Appeal from First Branch Appellate Court, First District, on Appeal from Municipal Court of Chicago; William N. Gemmill, Judge.

Charles E. Selleck, of Chicago, for appellants.

George M. Bagby, of Chicago (James C. Martin, of Chicago, of counsel), for appellee.

DUNCAN, J.

Judgment was rendered against appellee, M. A. Scholbe, in the municipal court of Chicago in a suit against appellants, Max Schuchardt and Frieda E. Schuchardt, his wife, on a promissory note signed by Max Schuchardt and indorsed by Frieda E. Schuchardt for $1,250, with 6 per cent. interest, payable on demand to the appellee and bearing date January 28, 1907. The note, when delivered, had the following marginal memorandum written on its face just below the signature of the maker: ‘This note is given to secure 5,000 shares of Regina stock.’ Previous to the entry of the judgment, the court overruled motions for a new trial, in arrest of judgment, and for judgment non obstante veredicto. On appeal the Appellate Court for the First District reversed the judgment and entered its judgmentin favor of appellee in the sum of $2,125 and costs upon the same facts found by the municipal court and a jury and granted a certificate of importance and this appeal.

Appellants filed an affidavit of defense, in which they set up, and on the trial established, the following facts in substance: Appellee purchased of appellant Max Schuchardt, as agent of the Regina Mining & Milling Company, a mining corporation, 5,000 shares of stock of that corporation at the price of 25 cents per share; the stock being treasury stock belonging to the corporation Schuchardt, as an inducement to appellee to purchase the stock, stated to him that the corporation was a bona fide one, actually formed to engage in the business of mining and smelting lead, zinc, and other metals. and that he believed and expected that it would earn and make profits in the business, and that if appellee would purchase and pay for said shares Schuchardt would agree and guarantee to repurchase from appellee the 5,000 shares of stock at the same aggregate price of $1,250 in case the corporation did not pay any dividend on the stock thereafter; Schuchardt to be released and absolved from such agreement and guaranty if at least one dividend on such stock should thereafter be paid by the corporation. Appellee accepted that offer and purchased and paid for the 5,000 shares upon said terms. Simultaneously with the delivery of the stock, Schuchardt signed and delivered to appellee the note, with the further agreement between them that if at any time thereafter any dividend was paid to appellee, or if no such dividend was ever paid and Schuchardt should thereafter repurchase or cause some one else to repurchase from appellee the 5,000 shares of stock for not less than $1,250, then in either of such contingencies appellee would cancel and surrender to Schuchardt the note, and all liability thereupon should cease and determine. The foregoing agreements and transactions constitute the sole and only consideration which moved or passed to either of appellants for the note, and neither of them received the $1,250, nor any part thereof, as commissions or otherwise; but the same was paid to the corporation for its stock, and the note, with the memorandum, was delivered to the appellee as the only written evidence of the agreement and guaranty of Schuchardt, and was indorsed by Frieda E. Schuchardt, his wife, for the same reasons and purposes aforesaid. It was further alleged and proved that two or more dividends, of 1 per cent. each, were paid on said shares to appellee in 1907 or shortly after the giving of the note; that the stock of the corporation greatly advanced in price, and advanced to more than 75 cents per share within two years or less after the date of the note; that Schuchardt, within two years after the agreement, offered to repurchase the 5,000 shares from appellee and pay him therefor $1,250 and 6 per cent. interest thereon from the date of the note; and that appellee refused to sell him the same at such price but on request promised to return to him the note; that thereafter he refused, and has continuously refused and neglected, to cancel or deliver the note to appellants in accordance with the terms of his agreement.

It is conceded by appellants that if the facts alleged in their affidavit of defense and proved on the trial by them do not, as a matter of law, constitute a legal defense to the note sued on, the judgment of the Appellate Court should be affirmed. There is no...