Matson v. Alley

Mr. Justice Scholfield delivered the opinion of the Court: The controversy here is, whether certain promissory notes, purporting to be executed by the Superior Nickel Works, a corporation, to Louis Ellickson, and by him assigned, before-maturity, to A. T. Bliss, and by Bliss assigned, after maturity, to Winfield N. Alley, are legal charges against the assets of the corporation in the hands of its receiver. The lower courts-adjudged that they were, and decreed their payment by the-receiver. Appellants contend that they are not, because the president and secretary of the corporation, who assumed to-execute the notes, had no authority to thereby bind the corporation, and because, also, they were executed without any valid consideration, and Alley being an assignee after maturity, took the notes subject to these defenses. The notes purport to contain, each, a power of attorney to-confess judgment for the amount due thereon, but since there-is no attempt to do any act under and by virtue of these-powers, it is unnecessary to consider that feature of the notes. It is not denied that notes may be executed lawfully by the president and secretary of a corporation, when they are executed in good faith, to secure indebtedness of the corporation lawfully incurred in the course of its business, and we are-therefore under no necessity to cite authorities to show that-this is the law; and although Alley is an assignee after maturity, his assignor, Bliss, was an assignee before maturity,, and Alley is entitled to stand in the place of Bliss, and no defense can be urged by the corporation, as against Alley, which it could not. have urged against Bliss had he remained the-owner of the notes and sought to enforce their collection. (Woodworth v. Huntoon, 40 Ill. 131. See, also, Randolph on Commercial Paper, sec. 673, and authorities cited in note.) It only remains, then, to determine whether the defenses here urged would be good as against the rights of Bliss, were he, instead of Alley, attempting to enforce payment of these notes, in this proceeding. In Comstock et al. v. Hannah, 76 Ill. 531, we cited with; approval the following: “The party who takes it (commercial paper) before due, for a'valuable consideration, without knowledge of any defects of title, and in good faith, holds it by a title valid against the world. Suspicion of defect of title, or-the knowledge of circumstances which would excite such suspicion in the mind of a prudent man, or gross negligence on the part of the taker, at the time of the transfer, will not defeat his title,—that result can only be produced by bad faith, on his part. The burden of proof lies on the person who assails the right claimed by the party in possession.” We followed this ruling in Shreeves v. Allen, 79 Ill. 553, and Murray v. Beckwith, 81 id. 43. The evidence here fails to show bad faith in Bliss in obtaining the assignment of these notes, but expressly proves-the contrary. The utmost that can be said in that .respect is, that he might, by inquiry, have ascertained the consideration for which the notes were given. But this only proves that in failing to make such inquiry he was negligent, and, under what is quoted supra, is insufficient to affect him with notice. The only evidence upon the question is the testimony of Bliss, himself. He testified that he received the notes from Ellickson “two or three days or a week” after their execution, in payment for indebtedness by Ellickson to himself, for professional services as an- attorney-at-law; that he did not know .that the notes were in existence until Ellickson gave them to him, and that he subsequently gave the notes to Alley in payment of a debt which he owed Alley. He admits that he had -been acting for the corporation and Ellickson as their attorney-at-law since the beginning of this suit, and that he did some work for them in that capacity before that time. There is mot a particle of evidence in the abstract that he had actual knowledge of the consideration of these notes, or of the circumstances under which they were executed, at the time that they were assigned to him, and we can not infer that he had such knowledge merely because he may have had an opportunity, by the exercise of diligence, to have obtained it. We find no error in the judgment of the Appellate Court. It is therefore affirmed. Judgment affirmed.