Court Opinion

ID: 8806015
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:47:47.961004+00
Date Added: 2024-06-11T17:04:06.057099
License: Public Domain

Mr. Justice Freeman delivered the opinion of the court. It is contended in behalf of the appellee bank inter alia that the certificates were assignable by indorsement and that such assignment vested the property in the bank as assignee under section 4, chapter 98 R. S. The material question, however, is whether the defendant bank took the certificates in good faith, without notice of complainants’ title. It is true as said in Olds v. Cummings, 31 Ill. p. 192, that “there are many cases in which the assignees have been protected against latent equities of third persons whose rights or even names do not appear on the face of the mortgage.” In the case at bar, however, the fact appears by the indorsement of Christian upon the certificates that he held them and indorsed them as “Trustee of Chicago Auburn Park Land Trust.” The indorsement upon which the bank accepted the certificates as collateral security for loans made to Christian and his' wife personally did not purport to be the personal indorsement of Christian. That indorsement did not indicate that Christian had or even claimed any personal interest in the certificates. According to the testimony of the president of the defendant bank the first loan was made on the representations, not of H. W. Christian, but of one James H. Christian, to the effect that the certificate was “a part of Harry’s profits.” Apparently the bank officials did not even interview H. W. Christian himself at all, much less appellants, before making the loan on his personal note. They seem to have entirely ignored the fact pointed out by the indorsement that Christian had no personal interest in the certificate but held it only as a trustee. The money was paid by check, not to H. W. Christian but to James H. Christian, without any conference apparently with the trustee H. W. Christian, who made the indorsement, and without any effort to inquire as to the interest of the land trust. When the other certificate was taken by the bank as collateral to Rockwell’s note no inquiry at all seems to have been made as to the ownership of the certificate or the right of Rockwell to use it as collateral to his own -note. Yet in each case, as we have said, the certificate showed upon its face and gave ample notice to the defendant bank by the indorsement that the Chicago Auburn Park Land Trust was the beneficial holder. Title & Trust Co. v. Brugger, 196 Ill. 96-98, is in point. It appears to be the contention of the defendant bank that while the alleged assignment to the bank would not deprive the city of Chicago, as maker of the certificates, of any defense it might have “against the original holders of these certificates,” that nevertheless the bank could deliberately disregard the rights of' the real owner, no matter how clear and explicit was the notice of such owner’s interest. We know of no principle of law supporting such contention. As a matter of fact in the case at bar it would be difficult to conceive of more direct notice of the title of the “Chicago Auburn Park Land Trust,” represented by complainants herein, than the indorsement under which the bank claims ownership. The claim that complainants are estopped from disputing the bank’s title or its power of disposition of the certificate, because it is said they had “clothed Harry W. Christian with all the usual indicia of ownership of the certificates,” has no force in view of what we have said above to the effect that by his own indorsement said Christian notified the bank that he held them only as trustee for the Land Trust. It is not contended that the certificates were negotiable instruments, and there is no room, we think, for reasonable controversy under the evidence as to the ownership of the land trust and the right of appellants thereto as trustees. By the terms of the trust agreement the trustees are given power to represent the shareholders “in all suits or legal proceedings;” and it is further provided “whether the trust be determined by lapse of time or otherwise” that the power of the trustees shall continue to enable them to prosecute and defend all suits pending at the time of such termination and “to do all other acts necessary or properly incidental” to winding up the trust. It is, we think, clear that this action to recover property of the trust for the benefit of the shareholders is necessary and properly inci-. dental to winding up the trust. We are unable to concur in the contention that complainants are guilty of laches in not commencing the suit within less than a year and eight months after the certificates were placed in- Christian’s hands for adjustment with the city. We are of opinion that the defendant bank was guilty- of negligence in failing to make due inquiry as to the rights of the land trust in view of the notice given it by the indorsement on the certificates. For the reasons indicated the decree of the Superior Court must be reversed and the cause remanded to that court with directions to enter a decree not inconsistent with the views above expressed. Reversed and remanded with directions.