The Peoria v. Bryan
| Decision Date | 31 December 1879 |
| Parties | THE PEORIA AND SPRINGFIELD RAILROAD COMPANY.v.WILLIAM F. BRYAN ET AL. |
| Court | United States Appellate Court of Illinois |
ERROR to the Circuit Court of Peoria county; the Hon. J. W. COCHRAN, Judge, presiding. Opinion filed January 7, 1880.
Mr. B. S. PRETTYMAN and Messrs. BLOOMFIELD & HUGHES, for plaintiff in error; that the assignee of commercial paper secured by mortgage, takes it subject to all defenses in a court of equity that exist between the maker and payee, cited Olds v. Cummings, 31 Ill. 189; Haskell v. Brown, 65 Ill. 29; Thompson v. Shoemaker, 68 Ill. 256; Bryant v. Vix, 83 Ill. 11; Sargent v. Howe, 21 Ill. 148; Kleeman v. Frisbie, 63 Ill. 482.
A defense at law could be interposed to these bonds, because they have never been transferred by indorsement: Peck v. Bligh, 37 Ill. 319; Garvin v. Wiswell, 83 Ill. 215; First Nat. Bank v. Strang, 72 Ill. 559; Smith v. Bridges, Breese, 18; Mayo v. Chenowith, Breese, 200; Sappington v. Pulliam, 3 Scam. 385; Walters v. Short, 5 Gilm. 252; Adams v. King, 16 Ill. 169.
The bonds were void for want of delivery to the payee: Edwards on Bills, 188; Chamberlain v. Hopps, 8 Vt. 94; Hunt v. Weir, 29 Ill. 83; Foy v. Blackstone, 31 Ill. 538; Ludwig v. McKee, 32 Ill. 28.
The bonds were detained by collusion, and fraudulently divided between T. and his partner: Chipman v. Tucker, 38 Wis. 43; Roberts v. McGrath, 38 Wis. 52; Roberts v. Wood, 38 Wis. 60.
Want or failure, in whole or in part, of consideration, may be set up as a defense to the bonds on a foreclosure: Wearse v. Pierce, 24 Pick. 141; Conwell v. Clifford, 45 Ind. 392; Smith v. Newton, 38 Ill. 230; Weaver v. Watson, 48 Ill. 125.
The present bondholders get no better rights than the parties from whom they received them: Schafer v. Reilly, 50 N. Y. 61; Mullison's Est. 68 Pa. St. 212; Craver v. Wilson, 14 Abb. Pr. 274; 1 Jones on Mortgages, § 612.
No indebtedness arose, because the contract was not completed: Finegan v. Engle, 8 Fla. 413; Boody v. Rutland R. R. Co. 24 Vt. 660; Cox v. W. P. R. R. Co. 44 Cal. 18.
T., as director of the railroad company could not waive any of its rights against T. G. & Co., of which he was a member, so as to estop the railroad company: Bank v. Norton, 1 Hill, 572; Salem Bank, v. G. Bank, 17 Mass. 1; Fulton Bank v. N. Y. & S. Canal Co. 4 Paige, 127; Boom v. City of Utica, 2 Barb. 104; Wright v. Ga. R. R. Co. 34 Ga. 330; Stewart v. Huntington, 11 Serg. and R. 267; Crump v. U. S. Mining Co. 7 Gratt. 352; Walworth v. F. L. & T. Co. 14 Wis. 325; Blen v. B. River Co. 20 Cal. 602; Farmers' Bank v. McKee, 2 Pa. St. 318; Bacon v. Miss. Ins. Co. 31 Miss. 116; Olney v. Chadsey, 7 R. I. 224; Brown v. Appleby, 1 Sandf. Ch. 158; McEvers v. Lawrence, Hoffman's Ch. 172; 1 Abb. Dig. Cor. 528.
A ratification of unauthorized acts of its officers can only be made by the corporation itself: State of Illinois v. Delafield, 8 Paige, 527; Jewett v. Alton, 7 N. H. 253; Reg. v. Overseers, etc. 40 E. L. & Eq. 145.
None of the acts of the company's officers constitute an estoppel: Bigelow on Estoppel, 480; Ball v. Hooten, 85 Ill. 159; Chandler v. White, 84 Ill. 435; St. J. Mfg. Co. v. Daggett, 84 Ill. 556; Wade v. Bunn, 84 Ill. 117.
Appointment of a receiver suspends corporate functions: High on Receivers, § 750; Gravestein's App. 49 Pa. St. 310.
It was error to order a sale of the railroad on credit, without redemption: Rev. Stat. 1874, 623; Farrell v. Parler, 50 Ill. 274; Wolf v. Hogden, 24 Ill. 525; Karnes v. Lloyd, 52 Ill. 113.
It was error to strike the cross-bill from the files: Higgins v. Curtiss, 82 Ill. 28; Jones v. Smith, 14 Ill. 229; McConnell v. Hodson, 2 Gilm. 640; Ballard v. Underhill, 3 Scam. 453; Hill's Chancery, 175.
Messrs. HOPKINS & MORRON, Mr. L. W. JAMES and Mr. WILLIAM F. BRYAN, for defendants in error, against the right to interpose defenses to the bonds in the hands of an assignee, cited 1 Daniell on Negotiable Instruments, § 834; 2 Jones on Mortgages § 1485; Carpenter v. Logan, 16 Wall. 271; Endicott v. Supervisors, 16 Wall. 458; Taylor v. Perry, 6 Allen, 86; Pierce v. Force, 47 Me. 507; Reeves v. Smiley, Walker's Chancery, 248; _________ v. Grayville, 2 Mich. 387; Bloomer v. Henderson, 8 Mich. 395; Fisher v. Otis, 3 Chand. 83; Martin v. McCullom, 4 Chand. 153; Croft v. Bunster, 9 Wis. 503; Cornell v. Hutchins, 11 Wis. 353.
The railroad company has contracted itself out of its right to set up equities: Green's Brice on Ultra Vires, 163; McElrath v. P. & S. R. R. Co. 55 Pa. St. 206; Sappington v. Pulliam, 3 Scam. 386; Rumball v. Met. Bank, 20 Eng. R. 194; Crouch v. Credit Foncier, 6 Eng. R. 107; Johnson v. Stark Co. 24 Ill. 85; City of Pekin v. Reynolds, 31 Ill. 530; Jones v. Nellis, 41 Ill. 482; Garvin v. Wiswell, 83 Ill. 215; Smith v. Johnson, Breese, 18; Mercer Co. v. Hackett, 1 Wall. 83; Gelpecke v. Dubuque, 1 Wall. 206; Mussey v. Lardner, 2 Wall. 205; White v. V. & M. R. R. Co. 21 How. 577; Commonwealth v. Pittsburg, 34 Pa. St. 519; Commonwealth v. Allegheny Co. 37 Pa. St. 237; 2 Parsons on Notes, 33; Storey on Prom. Notes, § 43; 1 Daniell on Negotiable Instruments, § 99; Illinois v. Delafield, 8 Paige, 527; Bank of Rome v. Rome, 19 N. Y. 30; Brainerd v. N. Y. & N. H. R. R. Co. 25 N. Y. 496; Andrews v. Pond, 13 Pet. 65; Bell v. Bruen, 1 How. 169.
Being payable to the holder or bearer, the payee of the bonds is any person who comes into lawful possession of them: 1 Parsons on Bills, 30; 1 Daniell on Negotiable Instruments, § 99; Story on Prom. Notes, § 43.
Having been negotiated in the ordinary course of business, without notice, the bonds are unaffected by any irregularities in their delivery: Jones v. Nellis, 41 Ill. 482; Shipley v. Carroll, 45 Ill. 285; Clark v. Johnson, 54 Ill. 296; Garvin v. Wiswell, 83 Ill. 515; Murray v. Lardner, 2 Wall. 110; Stanton v. A. & C. R. R. Co. 2 Woods, 523; 1 Daniell on Negotiable Instruments, § 769; 2 Parsons on Notes, 42.
The burden of proof is upon defendant to show that plaintiffs are not bona fide holders of the bonds: Swift v. Tyson, 161 Conn. 1; Murray v. Lardner, 2 Wall. 110; 2 Daniell on Negotiable Instruments, § 1503; 1 Parsons on Notes, 255.
The assignee of a note secured by mortgage takes the latter subject only to the same defenses as the instrument, to secure which it was made, is subject: 1 Jones on Mortgages, § 834; 1 Hilliard on Mortgages, 171: Carpenter v. Longan, 16 Wall. 275; Mercer county v. Hackett, 1 Wall. 83; City of Elizabeth v. Force, Monthly Jur. Dec. 1878; Cushman v. Stone, 69 Ill. 516.
The same is true of railroad bonds and mortgages: Palmer v. Forbes, 23 Ill. 301; McElrath v. P. & S. R. R. Co. 55 Pa. St. 306; 2 Story's Eq. Jur. § 1047; Galveston R. R. v. Cowdrey, 11 Wall. 477; Perry on Trusts, § 749.
A railroad bondholder, if denied his remedy upon his deed of trust, is without recourse; he cannot levy an execution upon the railroad: Pennock v. Coe, 23 How. 117; Ammanet v. N. A. & P. T. Co. 13 Serg. & R. 212; Susquehanna Co. v. Bonham, 9 Watts & S. 27; Janus v. R. & G. P. R. Co. 8 Mich. 91; 2 Redfield on Railways, 553.
If the bonds got into circulation and reached the hands of innocent holders by the fault or negligence of the railroad company, there is still a valid delivery and the loss must fall upon the corporation whose negligence caused it: Shipley v. Carroll, 45 Ill. 285; Jones v. Nellis, 41 Ill. 482; Harvey v. Smith, 55 Ill. 224; Yocum v. Smith, 63 Ill. 321; Clark v. Johnson, 54 Ill. 296; Garvin v. Wiswell, 83 Ill. 215; Murray v. Lardner, 2 Wall. 110; 2 Parsons on Contracts, 42.
Corporations, like individuals, cannot defeat claims their own conduct has superinduced: Supervisors v. Schenck, 5 Wall. 772; Galveston R. R. Co. v. Cowdrey, 11 Wall. 476; Zabriskie v. C. C. & C. R. R. Co. 23 How. 400; 2 Black, 722; 1 Daniell on Negotiable Instruments, § 859.
It was the duty of the corporation to use all reasonable effort to protect purchasers from investing in securities claimed to have been fraudulently issued; 3 Cent. Law Jour. 24; Bigelow on Estoppel, 501; Kneeland v. Gilman, 24 Wis. 49; Town v. Parkersburg R. R. Co. 17 Am. Rep. 545; President, etc., Gloucester Bank v. Salem Bank, 17 Mass. 45; Higgins v. Ferguson, 14 Ill. 269.
The railroad company is estopped by recitals in the bonds: Johnson v. County of Stark, 24 Ill. 85; President, etc. Keithsburg v. Frick, 34 Ill. 405; Supervisors, Mercer Co. v. Hubbard, 45 Ill. 139; Rumbell v. Met. Bank, 20 Moak, 280; State of Ohio v. Van Horn, 7 Ohio St. 327; Cook v. Tullis, 18 Wall. 332; Hoyt v. Thompson, 19 N. Y. 218; Trundy v. Farrar, 32 Me. 225; Supervisors v. Schenck, 5 Wall. 782; Com'rs Knox Co. v. Aspinwall, 21 How. 545; Peterson v. Mayo, 17 N. Y. 453; Bank v. Dandridge, 12 Wheat. 70; 4 Otto, 202; 1 Daniell on Negotiable Instruments, 316.
The authority of an agent to bind a corporation need not be shown by a resolution, but may be implied from facts and circumstances: Angell & Ames on Corporations, 281; Kneeland v. Gilman, 24 Wis. 49; Argentine v. San Francisco, 16 Cal. 255; Hooker v. Bank of Rochester, 30 N. Y. 84; Howe v. Keeler, 27 Conn. 538; Town v. Parkersburg R. R. Co. 17 Am. Rep. 546; Hart v. Stone, 30 Conn. 94.
There was no error in the decree that the railroad should be sold on credit without redemption: Rev. Stat. 203; 1 Jones on Mortgages § 7; Warner v. Helm 1 Gilm. 220; Johnson v. Donnell 15 Ill. 97; Homer v. Zimmerman 45 Ill. 14; Sheldon v. Patterson, 55 Ill. 507; Wilson v. Geisler, 19 Ill. 49; Vansant v. Allmon 213 Ill. 30; Edgerton v. Young, 43 Ill. 464.
The laws of Illinois existing at the time of the execution of the deed of trust entered into and became a part of the contract: Bronson v. Kinzie, 1 How. 311; McCracken v. Hayward, 2 How. 412; Constitution, Art. 2, § 14.
Railroad turnpikes, etc., are not subject to seizure and sale on execution at law, unless made so by statutes: Stewart v. Jones, 40 Mo. 140; Youngman v. E. & W. R. R. Co. 65 Pa. St. 278; Ammanet v. President, etc., 13...
To continue reading
Request your trial