Court Opinion

ID: 6973373
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:06:39.241009+00
Date Added: 2024-06-11T16:08:53.156362
License: Public Domain

Mr. Chief Justice Hand delivered the opinion of the court: The court admitted in evidence the bill but declined to admit in evidence the decree in the case commenced by the appellant against Freudenberg and Weiss, and the first contention of the appellant is that the court erred in declining to admit in evidence the decree in that case against the defendants. The defendants were not parties, either complainant or defendant, in that suit, and they had purchased said notes and trust deeds long before the suit was commenced. We think it therefore too plain for argument that the decree entered in that case did not bind them and that the court did not err in declining to admit the same in evidence. Bradley v. Luce, 99 Ill. 234; Gage v. Parker, 178 id. 455. The next contention is, that the defendants were not bona fid.e purchasers of said notes. We have read all the evidence in this record and find nothing therein which indicates to our minds, in the slightest degree, that either of the Pates or Cline, as alleged in the bill, was in any way engaged in a conspiracy with Weiss and Freudenberg, or either of them, to defraud the appellant out of her property. Freudenberg was a broker. He borrowed of Rebecca Pate, through her son, Willard H. Pate, $1600 upon the collateral note of the appellant, for one year, secured by the Jones note and trust deed. The collateral note was in legal form, and the collateral accompanying it so endorsed as to transfer title by delivery, and up to the amount of the $1600 note the Pates were .clearly bona fide purchasers of the Jones note and trust deed from Freudenberg. (Mayo v. Moore, 28 Ill. 428; Saylor v. Daniels, 37 id. 331.) Willard H. Pate and Rebecca Pate, however, had full notice, from the recitals contained in the $1600 collateral note, that the Jones note and trust deed were the property of the appellant, and while they had the right to presume, from the fact that William Freudenberg held the $1600 collateral note, duly executed, and the collateral so endorsed as to transfer title, in his possession, that Freudenberg had authority to make the $1600 loan and deposit the Jones note and trust deed to secure its payment, they had no right, from such possession, to presume that Freudenberg had the right to negotiate said Jones note and trust deed. In other words, Willard H. and Rebecca Pate were bound to take notice, from their knowledge of the fact that the note and trust deed belonged to the appellant, that the equity in said Jones note and trust deed, over and above said $1600 represented by the collateral note, was in the appellant, and when they made the purchase of the $2500 note from Freudenberg, to make the purchase valid they were bound to know he was acting with the authority of appellant and that Freudenberg had authority to malee such transfer. (Chicago Title and Trust Co. v. Brugger, 196 Ill. 96.) And as it clearly appears Freudenberg had no authority to use said Jones note and trust deed except as collateral to secure the payment of said $1600, we are of the opinion that Willard H. Pate and Rebecca Pate should be held to account to the appellant for the Jones note and trust deed, subject to the payment to them of the amount of said collateral note of $1600. It appears that Hubert S. Cline, who had been a mechanic in the employ of the fire department of the city of Chicago for many years, was informed by Willard H. Pate, who was secretary of the Woolf Clothing Company and whom he had known for some years, that Freudenberg had notes and trust deeds and other securities for sale; that Cline had about $2000 which he desired to invest, and sent Mrs. Cline to Freudenberg with a view to purchase some of said securities; that she .reported that she had seen in Freudenberg’s possession the Mueller $2000 note and trust deed. Shortly thereafter Mr. and Mrs. Cline went to look at the property covered by the trust deed, and finding it satisfactory, Mr. Cline instructed Mrs. Cline to go to Freudenberg’s office and purchase the Mueller $2000 note and trust deed, which she did within a short time. She paid therefor a certificate of deposit in one of the banks of Chicago for $1945 and $55 in cash, and received the $2000 note endorsed by appellant in blank, the trust deed, guarantee policy, etc. The only evidence as to any knowledge of the Clines that the appellant claimed any interest in the Mueller note and trust deed which they were purchasing is, Mrs. Cline testified that Freudenberg informed her, at the time she bought the note and trust deed, that an old lady,—a Miss Sill,—wanted to get all her money together and she was selling her paper. She says in one part of her testimony, she supposed that' Mr. Freudenberg was the owner of the note and trust deed and she was buying it from him, and in another part of her testimony, that she supposed she was buying it from Miss Sill. This transaction differs from the sale of the equity in the Jones note and trust deed to the Pates in this: that Freudenberg had the authority of the appellant, in writing, to sell the Mueller note and trust deed, while he had no authority to sell the Jones note and trust deed. The question whether Freudenberg was authorized to sell the Mueller note and trust deed at the time he sold them to Hubert S. Cline, through his wife, was a question of fact. The chancellor heard and saw the witnesses, and he held that appellant had authorized Freudenberg to sell said note and trust deed, and we can not disturb his finding upon that question of fact unless it appears from the evidence to be palpably wrong, which we do not think it does. Appellant admits she endorsed said note and delivered the note and trust deed to Freudenberg, and that she signed the letter of May 26, 1902, which authorized him to negotiate that note and trust deed. She could read and write and was a woman of ordinary intelligence, and her only excuse for having placed said letter and the Mueller note, endorsed in blank, and the trust deed, in Freudenberg’s hands is, that she was overreached by Weiss and Freudenberg. It is apparent that Weiss and Freudenberg, after they procured the funds of the appellant from the sale of her securities, converted such funds to their own use, but it is not clear from this record that the appellant did not consent that $1600 might be borrowed from the Pates upon her note, secured by the Jones note and trust deed, and that the Mueller note and trust deed might be sold by Freudenberg, and that she only took the position that she had not consented to said loan and sale after she knew that Weiss had absconded and the funds derived from the Pate loan and the sale of said Mueller note and trust deed had been embezzled by Weiss and Freudenberg, whom, she testified, she trusted up to the time that Weiss absconded; and the fact that Freudenberg stated to Mrs. Cline, at the time of the sale to her of the Mueller note and trust deed, that they belonged to an old lady who wanted to sell them and get all her money together, is not inconsistent with the view that Freudenberg had authority to make the sale of the Mueller note and trust deed; and if Freudenberg, at the time he made the sale to Cline of the Mueller note and trust deed, had authority from the appellant to make the sale, it is immaterial whether he at that time notified Mrs. Cline to whom the note and trust deed really belonged or not. It is also urged that by the copy of the lost memorandum introduced in evidence it appears that the appellant ratified the sale of the Jones note and trust deed and the sale of the Mueller note and trust deed. As we understand this record, the equity of the appellant in the Jones note and trust deed was not sold to the Pates until the 12th of August, 1902, and that Weiss had absconded long before that time. Therefore, if that memorandum should be treated as a ratification of the sale to Cline of the Mueller note and trust deed, it could not amount to a ratification of the sale of the Jones note and trust deed to the Pates, as the sale of the Jones note and trust deed took place after the execution of that paper and after Weiss had absconded, and the general rule is that a party will not be deemed to have ratified an unauthorized act of an agent unless he does so with full knowledge of all the facts, and there is no pretense in this record that the appellant knew of the sale to the Pates of the Jones note and trust deed until just before the trial of this suit. The judgment of the Appellate Court affirming the decree of the circuit court will be affirmed in all things except in so far as said decree dismissed the bill as to Willard H. Pate and Rebecca Pate, and as to them the decree of the circuit court dismissing the bill and the judgment of the Appellate Court affirming that part of the decree will be reversed, and the cause as to them will be remanded to the circuit court for further proceedings in accordance with the views expressed in this opinion. One-half of the costs at- • tending this appeal will be paid by the appellant and one-half by Willard H. Pate and Rebecca Pate. Reversed in part and remanded.