Daniel v. First National Bank of Englewood , 159 Ill. App. 576 ( 1911 )

Mr. Presiding Justice Baker

delivered the opinion of the court.

The note of the Express Company of September 13, 1905, was surrendered to the maker when the new note of September 13, 1907, was given to the bank. The $20,000 note secured by trust deed was then in the possession of the bank and it could be pledged by the Express Company to the bank for one or many debts, liabilities or engagements, without a redelivery. The contract of pledge is express, and its provisions are contained in the note of September 13, 1907, and the' right of the parties depend on the contract of pledge thus made. The note of September 13, 1907, recites that the Express Company had deposited with the bank the note for $20,000 as collateral security for the payment of said note, “and for the payment of other liability or liabilities * * * of the undersigned (the maker) * * * to said payee.” It gives the bank the power to sell the collateral and to apply the proceeds thereof “to the payment of this note and other obligations above mentioned.” When the new collateral note was given the bank was and for nearly a year had been the owner of the Stratton notes, and the Express Company, through its president, knew that the bank was the owner of said notes. They were clearly liabilities of the Express Company, the maker of the collateral note to the bank, the payee. We think that the contract of pledge and the facts and circumstances surrounding the transaction show that the Express Company intended to pledge the $20,000 note as security for the amount due to the bank from the Express Company on the Stratton notes as well as for the amount due to the bank from the Express Company on dealings between the bank and the Express Company. We think that the case of Gillet v. Bank of America, 160 N. Y. 549, relied on by appellee, is to be distinguished from this case on the facts. In that case the bank after the pledge purchased a dishonored note of the pledgor, and it was held that such purchase was not a transaction in the ordinary course of the business of the bank and the bank was not entitled to retain the pledged property for the purpose of applying it on the note so purchased. In this case the bank was the holder of the Stratton notes when the $20,000 note was pledged to it by the Express Company. We think the County Court erred in ordering that $1,299, or any other sum, be paid to the assignee of the Express Company.

The order of the County Court will be reversed and the cause remanded with directions to enter an order or decree in accordance with the views herein expressed.

Reversed and remanded with directions.