221 Ill. 602 | Ill. | 1906
delivered the opinion of the court:
It is first insisted that the Appellate Court committed error in holding that where a party is about to receive a bill or note, and there are such suspicious circumstances accompanying the transaction or within the knowledge of the party as would induce a prudent man to inquire into the title of the holder or into the consideration of the paper, he is bound to make such inquiry, and if he neglects to do so he holds the bill or note subject to any equities which may exist between the previous parties. The above holding of the Appellate Court is based on the cases of Russell v. Hadduck, 3 Gilm. 233, and Sturges v. Metropolitan Nat. Bank, 49 Ill. 220, and is undoubtedly supported by these authorities. But since the holding in those cases the rule has been somewhat modified by the decisions of this court and is not sustained by courts generally throughout the country. The rule now is, that the endorsee or assignee of commercial paper who takes the same before maturity for a valuable consideration, without knowledge of any defects and in good faith, will be protected against the defenses of the maker, and mere suspicion of defect of title or the knowledge of circumstances calculated to excite suspicion in the mind of a prudent man, or even gross negligence on his part at the time of the transfer, will not defeat his title. In other words, the only thing which will defeat his title is bad faith on. his part, and the burden of proof is upon the person assailing his right to establish that fact by a preponderance of the evidence. (Matson v. Alley, 141 Ill. 284; Bemis v. Horner, 165 id. 347; Merritt v. Boyden, 191 id. 136; Murray v. Beckwith, 81 id. 43; Shreeves v. Allen, 79 id. 553.) However harsh this rule may, on first impression, seem to be, it is based upon the policy of the law which gives full faith and credit to commerical paper transfered before maturity, so that it may circulate, as far as possible, with all the conveniences of currency. We are of the opinion, therefore, that the Appellate Court improperly announced in its opinion, as the law of this State, the rule laid down in the earlier cases of Russell v. Hadduck, and of Sturges v. Metropolitan Nat. Bank, supra.
It does not follow, however, that the Appellate Court improperly affirmed the decree of the superior court. That must still depend upon whether the testimony produced upon the hearing under the correct rule justified the chancellor in finding that appellant was not a bona ñde holder of the paper. The contention of his counsel is, that the evidence fails to support the finding that he was not a bona ñde holder for value before maturity, or that he had notice of such facts as should charge him with knowledge of the fraud by which the draft was obtained. This was purely a question of fact, to be ascertained from all the evidence produced upon the hearing.
The record shows that for some time prior to the transaction Bradwell had been the attorney for the Chamberlain Transportation Company and was familiar with all its affairs, including its financial embarrassment. About thirty days before the wreck the vessels had been seized under orders of the United States District Court, and he had furnished bonds for their release. The steamer was conveyed to him, and he entered into a contract by which she was to tow the barges, he to receive one-third of the freight. To this extent, at least, he was jointly interested with Chamberlain and Blair, and was a party to the contract entered into with the various lumber companies for the transfer of cargoes of lumber to Chicago. Upon the date of the wreck he was notified of the accident and furnished money for both Chamberlain and Blair to go to Houghton. Within a few days Chamberlain returned with a draft for $2500 and delivered it to him. The terms under which the draft was delivered do not satisfactorily appear from the evidence. On the one hand it is claimed that he received it in payment of claims due him from the company, while on the other hand the testimony tends to show that he received it as a part of his share of the freight earned by the vessels, and also that it was merely put in his hands for the purpose of collection. Chamberlain, subsequent to the delivery, made an affidavit to the effect that it was given to appellant for collection and that he subsequently demanded its return, which was refused, appellant giving as his reason for such refusal that, he had a claim against the company, and intended to hold the draft for the payment of the claim as soon as it was collected. There is also some evidence in the record, though perhaps slight, tending to show that the selling of the cargo and collection of the money was a part of a plan or scheme arranged by Chamberlain and appellailt, appellant having full knowledge of all the details.
On the whole record we are not prepared to say that the superior court committed error in decreeing that appellant was not a bona fide holder of the draft for value, without notice. While the testimony is conflicting, we think it fairly preponderates in favor of the finding of the chancellor.
The judgment of the Appellate Court will accordingly be affirmed.
Judgment affirmed.
