Court Opinion

ID: 6974446
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:08:29.694816+00
Date Added: 2024-06-11T16:08:55.484164
License: Public Domain

Mr. Justice Carter delivered the opinion of the court: The trust company contends that the language of the agreement made a part of the $5000 noté, pledging said Union Brewing Company note as collateral, indicates that it was held not only as security for the $5000 note, but also for the other four notes held by said trust company and signed by said Simmons, as heretofore set out in the statement, while counsel for plaintiff in error insist that said collateral could only be used to pay the $5000 note, and contend that the balance left from said $9472.32 note of the Union Brewing Company must be paid over to the trustee in bankruptcy of Kelley, individually and as surviving partner of Simmons. The intention of the parties, as shown by this agreement, must control. The terms of the contract under which the property is pledged may be such as to authorize it to be held for the satisfaction of other debts in existence at the time of the execution of the contract and also for future advances which may be made by the pledgor. (22 Am. & Eng. Ency. of Law,—2d ed.— p. 871; Colebrooke on Collateral Securities,—2d ed.— sec. 97.) “The rule in all these cases strictly applies, that the particular contract is to govern the rights of the" parties.” (Story on Bailments, sec. 304; Baldwin v. Bradley, 69 Ill. 32.) The contract is to be taken in the sense in which it was, in fact, understood by the parties. Street v. Chicago Wharfing and Storage Co. 157 Ill. 605 ; Whalen v. Stephens, 193 id. 121. All of the indebtedness herein mentioned as owing to the trust company by the People’s Savings Bank and George H. Simmons was created before the partnership agreement between Simmons and Kelley was entered into. The evidence shows that the officials of the trust company understood that Simmons was the only person interested in the People’s Savings Bank at the time the $5000 note was given, in September, 1905, and when it was renewed, in December, 1905. The record, it is true, shows that the trust company kept a separate account with the People’s Savings Bank and with George H. Simmons, but the fact that George H. Simmons was the sole owner of the People’s Savings Bank was evidently known to all the parties. A person may adopt and use, as indicative of his negotiable and other contracts, a business name or style entirely different from his own proper name, and when he, by himself or a general agent, enters into a negotiable or other contract under such adopted business name, he will be bound by such contract as effectually as though it had been entered into and executed under his own proper name and signature. “In such case the adopted. name is equivalent, in law, to the actual name of the party.” (i Daniel on Negotiable Instruments,'—4th ed.—p. 307; 1 Randolph on Commercial Paper, sec. 141.) ^As/ between Simmons and the trust company the pledge of the $9472.32 note for “any other liability or liabilities of ours in said bank, due or to become due, or that may be hereafter contracted,” was binding as to Simmons’ other indebtedness. (Buchanan v. International Bank, 78 Ill. 500; Walker v. Abt, 83 id. 226; Bartelott v. International Bank, 119 id. 259.) The mere fact that the pledge used the words “ours” and “them,” as applied to the People’s Savings Bank and George H. Simmons, does not, we think, change the situation as between Simmons and the trust company. Had any person dealt with the People’s Savings Bank between September 9 and December 15, 1905, believing it to be a corporation and been thereby deceived to his injury, a different question would be presented, and it might well be urged then that Simmons, as to such person or persons, would be estopped to deny the corporate character of the business. But there is no evidence in the record indicating any such state of facts. Kelley, when he went into the partnership on December 19, 1905, obtained his interest in the business subject to all the equities of the trust company then existing, and his trustee in bankruptcy took his title subject to all the liens, equities and burdens to which it was subject in Kelley. (Union Trust Co. v. Trumbull, 137 Ill. 146; Davis, Cory & Co. v. Chicago Dock Co. 129 id. 180; Hooven Co. v. Burdette, 153 id. 672.) Furthermore, at the time of taking the evidence in this case, Allen, the trustee of Kelley, testified that as trustee he “had made a final settlement with the depositors and other creditors” of said Kelley, individually and as surviving partner of the firm of Simmons & Kelley. The fact that the note of the Union Brewing Company which was pledged and deposited as collateral was renewed after Kelley entered into the partnership with Simmons does not in any way affect the rights or interests of the parties herein. The renewal was the substitution of a new note for the old note, and did not create a new debt in which Kelley had any interest as against the claims for which it was pledged. The trust company was “equally entitled to the benefit of the collateral security, as a means of obtaining payment of the note given in renewal, as in the case of the original evidence of indebtedness.” (Colebrooke on Collateral Securities,—2d ed.—sec. 14, p. 24; Fairbank v. Merchants’ Nat. Bank, 132 Ill. 120; 7 Cyc. 877; Selma Bridge Co. v. Harris, 132 Ala. 179; Jones on Pledges, sec. 358.) As we have said, Kelley only acquired an interest in the collateral note subject to the rights under the pledge agreement. It is also urged that the collateral note given in lieu of the original note was not endorsed. “The absence of endorsement is a merely technical objection, for the actual transfer for value passes the property in the paper substantially, and the endorsement is needed only to make that transfer formal.” (1 Parsons on Notes and Bills, p. 279.) When the transfer of the note is for a valuable consideration and the endorsement is omitted through mistake or fraud, a good title will pass, in equity, by mere delivery. (Hughes v. Nelson, 29 N. J. Eq. 547.) We do not think the failure to endorse this note affected in any way the equities in this case. The trust company was entitled to a decree for the payment of all its notes against Simmons out of the fund in court. As those debts exceed the amount of the fund pledged there would be no balance for the trustee in bankruptcy. The judgment of the Appellate- Court must therefore be affirmed. Judgment affirmed.