Hanchett v. Buckley , 1888 Ill. App. LEXIS 492 ( 1888 )

Moran, P. J.

To establish its right to damages the plaintiff in error, The Ricker Rational Bank, introduced evidence tending to show that prior to Rovember 1, 1884, one Charles Goodman was indebted to said bank on a note for §2,000. indorsed by his brother, Morris Goodman, which note was due; that said Charles Goodman desired an extension of the loan, and through his brother negotiated with the bank to obtain it, and finally succeeded, by pledging a warehouse receipt for two bales of tobacco as collateral security for the payment of the note, and procuring the note to be indorsed by his brother.

The tobacco was purchased by Charles Goodman from Simon Auerbach & Company, and was delivered to him about the 1st of October, 1884, and was by him placed in the warehouse about Rovember 1, 1884, and the receipt, afterward pledged to the Ricker Rational Bank, for the two bales in controversy, was taken from the warehouse company and was delivered to the said bank prior to Rovember 5, 1884. The two bales of tobacco mentioned in the warehouse receipt were taken by the sheriff on the. replevin writ issued in the case in which appellees executed the bond sued on.

To sustain the defense, appellees introduced evidence tending to show that there was fraud in the obtaining of the tobacco from Auerbach & Company, in that when Charles Goodman purchased the same he knew he was insolvent, and bought the property with the intention not to pay for it. There wore some circumstances connected with the pledging of the warehouse receipt to appellant upon which appellees base a contention that the Ricker Rational Bank had notice of the alleged fraudulent purchase of the tobacco by said Goodman, and was not, therefore, a honafide holder of the warehouse receipts.

An inspection of the record leads to grave doubt as to whether there is any evidence to support such contention, but for the purpose of this review, treating this issue, as the trial court did, as one which required the evidence to be submitted to the jury, we are of opinion that such error was committed in the modification of instructions asked for the plaintiff afiid in giving instructions requested by the defendant, as requires tjiat the verdict be set aside and a new trial granted. The pledge of the warehouse receipts as collateral security to the note was in legal effect a sale to the bank of the tobacco called for by the receipts for a valuable consideration, and vested the legal title thereto in the bank (Chicago Dock Co. v. Foster et al., 48 Ill. 507), and appellant had the ownership in the same, unless appellee proved that the bank received the receipts with knowledge that the vendee, Goodman, had obtained the tobacco from the vendor by fraud. The bank being a T)ona fide purchaser for value, the burden was on appellees to show that it took with notice of the fraud in the original purchase. Easten v. Allen, 8 Allen, 10; Jewett v. Cook, 81 Ill. 266; Benjamin on Sales, Sec. 433; O. & M. R. R. Co. v. Kerr, 49 Ill. 458.

At the request of the appellees the court gave to the jury defendants’ instruction No. 6, as follows:

“ The court instructs the jury that before the Bicker National Bank can occupy any better position in regard to the property in question than the said Charles Goodman, it must appear from the evidence that the said Bicker National Bank obtained said property, either as security or owner, for a valuable consideration passing from the said Bicker National Bank to the said Charles Goodman at the time of obtaining the same; and also that it obtained said property from the said Goodman without any notice of the fraud by which he obtained the same.”

The instruction, while it does not in direct terms misstate the law, yet is necessarily misleading. It is so couched as to give the jury to understand that the burden was on appellants to show that it obtained the property without notice of the fraud. This placing the burden of proof as to notice of the fraud upon the wrong party is more directly done in the court’s modification of plaintiff’s second instruction, which, as given, is as follows, the modification by the court being inclosed in parenthesis:

il If the jury believe from the evidence that the two bales of tobacco in controversy were sold and delivered by Simon Auerbach & Company to Charles Goodman, and that they accepted their promissory note in payment for the same, and that afterward the said Goodman pledged the said two bales of tobacco to the Kicker National Bank at Quincy, Illinois, by the transfer and delivery to said bank of the warehouse receipts for the same, introduced in evidence, to secure the payment of his ionafide debt of two thousand dollars due to said bank (and that said bank received said warehouse receipts as collateral security for the payment of said sum of money in good faith without notice of any fraud in the purchase of the goods in question), and that said debt is wholly unpaid, then said bank, by said transfer and delivery of said warehouse receipts, acquired a special property in said two bales of tobacco, and are and were entitled to hold the same until said debt is fully paid, and the jury may find for the plaintiff and assess the damages at the value of the said two bales.53

It will be seen that, by the modification, the court made it a condition of the plaintiffs3 right to recover, that, in addition to all the other facts" contained in the instruction, it should appear that it took the warehouse receipts without notice of the fraud, whereas the law is that the plaintiff should recover on the other facts supposed in the instruction being found in its favor, unless it appeared from the evidence that it took the receipt with notice of the fraud. Jones v. Simpson, 116 U. S. 609; Montague v. Hanchett, 20 Ill. App. 222.

The same error appears in the modification of other of plaintiff’s instructions, but it is deemed sufficiently pointed out in what has been said, so that its repetition on another trial may be avoided, and the discussion of the other instructions in detail is not necessary.

The coxrrt permitted Morris Goodman, the brother of Charles Goodman, and who was an indorser on the note for which the warehouse receipts were held as security, to be asked on cross-examination, against, the objection of plaintiff, whether he was worth the amount of the note and whether the note was ever presented to him for payment. We think the testimony wholly immaterial and that it was error to admit it.

It is contended by appellees that, as the Bicker National Bank was not a party to the replevin suit, it i.- a stranger to the bond and is not, therefore, entitled to the benefit of a recovery upon it. The suit may be maintained by the sheriff who has the legal right of action for the use of any person he chooses. °

When the conditions of the replevin bond are broken, any person injured may sue in the name of the sheriff to his own use. Atkin v. Moore, 82 Ill. 240; Replevin Act, Secs. 10 and 25, Chap. 119, R. S.

It is further contended that plaintiffs could not have had a verdict, as there was no evidence introduced to show that a retorno habendo had been awarded on the dismissal of the replevin suit. It is alleged in the declaration that there was a judgment of retorno, and that is not denied by the plea, so that it stands admitted by the record. What is admitted by the pleadings need not he proved.

The judgment will be reversed for the errors pointed out, and the case remanded to the Superior Court.

Reversed and remanded.