State Bank of East Moline v. Standaert

• Decision Date: 12 November 1948
• Docket Number: Gen. No. 10207.
• Citation: 335 Ill.App. 519,82 N.E.2d 393
• Parties: STATE BANK OF EAST MOLINE v. STANDAERT et al.
• Court: United States Appellate Court of Illinois

335 Ill.App. 519

82 N.E.2d 393

STATE BANK OF EAST MOLINE

v.STANDAERT et al.

Gen. No. 10207.

Appellate Court of Illinois, Second District.

Nov. 12, 1948.

Appeal from Circuit Court, Rock Island County; A. J. Scheineman, Judge.

Action by the State Bank of East Moline, a corporation, to recover on a note against Alfons Standaert and Lena Standaert, makers of the note, and Alois De Vos and Anna De Vos, indorsers on the note. Alois De Vos died prior to trial, and suit was dismissed as to him. From a judgment for the plaintiff, Anna De Vos appeals.

Judgment reversed.Andrew Kopp, of Moline, and Sherwood L. Costigan, of East Moline, for appellant.

Bell, Farrar & Scott, of Rock Island, and Shaw & Chamberlain, of Geneseo, for appellees.

BRISTOW, Justice.

In a proceeding instituted by the plaintiff, State Bank of East Moline, to recover payment on a note from the defendants Alfons and Lena Standaert, and Alois and Anna De Vos, makers and indorsers respectively, the Circuit Court of Rock Island County, in a trial without jury, entered a judgment in favor of the plaintiff, from which the defendant endorser, Anna De Vos, appeals. The co-indorser Alois De Vos died prior to the trial, and the suit was dismissed as to him.

The sole issue presented herein is whether the plaintiff bank gave the defendant indorser notice of dishonor as required under the terms of the Negotiable Instruments Law. (Ch. 98, § 110, Ill.Rev.Stats.1947).

From the record it appears that on February 28, 1920, defendants Alfons Standaert and Lena Standaert made and delivered their promissory note to the defendants Alois De Vos and Anna De Vos, in the amount of $6,737.50 at 6% interest, due 5 years after date, and payable at the office of the plaintiff bank. The note recited that it was secured by a real estate mortgage.

Before maturity the defendants Alois and Anna De Vos sold the note and mortgage to the plaintiff bank. The note was not paid, either a maturity on February 28, 1925, or during the ensuing years. Suit was instituted against the defendants in 1932, but the cause was stricken from the docket on May 28, 1941, for want of prosecution. Within a year thereafter, plaintiff commenced this proceeding.

At the trial the plaintiff bank contended that, when the note in controversy was not paid on the due date, note of its dishonor was sent to the defendant indorsers.

In support thereof plaintiff offered the testimony of Leota Baker, who was employed as teller-bookkeeper in 1925, and charged with the duty of attending to maturing notes. She stated that it was the unswerving custom of the bank to send to the parties, 10 days prior to the due date of a note, a notice describing the note and specifying its maturity date. If the note was not paid at maturity, this same form of notice with the added notation that it had not been paid by the maker, and that the indorser should make payment thereon, was mailed by the bank at the close of the day on which the note was due.

She further testified that she did not recall preparing or sending out the particular notice of dishonor to the defendant indorsers, Alois and Anna De Vos, on February 28, 1925, when the Standaerts failed to pay the obligation, but that during her 7 years of service to the bank she knew of no instance where the bank failed to give notice of dishonor. Nor did she know who was charged with the actual mailing of the notice on February 28, 1925. With reference thereto she stated that probably Emma Callewaert mailed it since the post office was on her way home, or perhaps even she, Leota Baker, posted the bank mail. However, B. H. Ryan, who was assistant cashier in 1925, admitted in his testimony that Emma Callewaert was not in the employ of the bank on February 28, 1925. He reiterated the custom of the bank respecting notices of dishonor, and explained that some of the records of the bank pertaining to such notices, including the records in the instant case, were destroyed after 10 years.

He further explained that in 1930 a foreclosure suit was instituted by the Moline State Trust & Savings Bank which held a first mortgage on the same premises which secured the note in controversy under a second mortgage, and, inasmuch as there were insufficient funds from the sale of the property to pay the second mortgage, plaintiff's security was lot. In that foreclosure proceeding defendant, Anna De Vos, had apparently testified respecting her signature on the note and the circumstances surrounding its sale to the plaintiff bank. However, at the trial of the instant case she denied participation therein.

The defendant, Anna De Vos, contends in this proceeding that she should not be charged with the payment of the note on the ground that she did not receive notice that the instrument had been dishonored, and therefore, under the Negotiable Instruments Law she was discharged. She maintains that she did not know that the note was not paid until suit was filed in 1932, some 7 years after the obligation was due. In fact, the plaintiff bank loaned her some $19,000 in 1928 and 1929 without any reference to the note in controversy, or her liability thereon.

On the basis of the foregoing evidence, the Circuit Court entered judgment in favor of plaintiff and against the defendants, Alfons and Lena Standaert, and Anna De Vos, with the accrued interest on the note over a period of 27 years, the amount due was in excess of $11,947.83, the sum specified in the complaint, and for which judgment was entered. The defendant, Anna De Vos, contends that this judgment is contrary to the evidence and to the law.

The Negotiable Instruments Law provides that when a negotiable instrument has been dishonored by non-payment, notice of dishonor must be given to the indorser, otherwise he is discharged. (Ch. 98, § 110, Ill.Rev.Stats.1947.) Such notice may be given by mail, and where it is duly addressed and deposited in a post office, the sender is deemed to have given due notice, notwithstanding any miscarriage in the mails. (Ch. 98, § 126, Ill.Rev.Stats.1947.)

This requirement of addressing and depositing the notice in the post office does not prescribe the precise testimony to be introduced in a cause, but rather sets forth the ultimate facts to be established by the evidence. In other words, to charge an indorser with the payment of a note, the plaintiff must establish that the notice of dishonor was addressed and actually mailed, (Vaughan v. Potter, 131 Ill.App. 334; Geneva Organ Co. v. Ambassador Theatres Corp., 249 Ill.App. 390) and these facts may be proven by direct or circumstantial evidence as any other fact in the case.

In the case at bar the only evidence of plaintiff's compliance with the statutory requirement of giving notice of dishonor to the indorser was the testimony of Leota Baker that it was the custom of the bank at the close of the business day on which a note was due and unpaid to send a notice to the parties describing the note and stating that it was not paid by the maker, and that the indorser should make payment thereon.

Although Leota Baker was charged with preparing these notices, she did not recall preparing or sending any particular notice of dishonor to the defendant, Anna De Vos, on February 28, 1925. Moreover, she did not know who was charged with posting the bank's mail on that date. She stated that perhaps Emma Callewaert did it, since the post office was on her way home, or perhaps even she, herself, posted the mail. Emma Callewaert, however, was not...