McPherson National Bank v. Velde

Opinion of tiie Court, Wall, J. On the 21st of February, 1891, B. S. Bonney, of McPherson, Kan., made and delivered bis promissory note to the appellees by which he promised to pay to them, by their linn name of “Pekin Plow Co.” the sum of 8381.72 on the 1st of' August following. Before maturity the appellee placed the following indorsement on the note: “ For value received * * * guarantee the payment of tiie within note at maturity. Pelriu Plow Co.,” and discounted the note with Teis, Omith «te Co., bankers of Pekin, Ill. These bankers then sent the note to the appellant bank with the foil* mg indorsement: “Pay W. H. Cottingham, cash, or ordoi for collection, and return.” On the 24th of August, isyf Teis, Smith & Co. received from appellant bank a draft for the amount of note and interest, less charges, one dollar. The letter inclosing the draft read as follows: “We enclose our draft, $395.97, in payment of coll. No. 8943, on Bonney, sent us July 22. This includes face and interest at 8 per cent, less our charges of $1.00. Don’t release chattel mortgage, as we still hold the note unpaid; by mistake our collection clerk left the coll, off the protest list, and it was not protested, but I think the security is ample to pay the obligation. I remain very resp’y, Elmer Williams, Cash’r.” Teis, Smith & Co. appropriated the proceeds of the draft, made no response to the letter and took no further action in regard to the matter. In August, 1892, the appellant bank brought the present action against the appellees to recover the amount of said note on said guaranty. The case was tried before the court without a jury, and judgment was rendered for the appellees. The indorsement by the appellees operated as an assignment as well as a guaranty. Heaton v. Hurlbert, 3 Scam. 489; Childs v. Davidson, 38 Ill. 437. • The guaranty was enforceable in favor of any legal holder of the note. The undertaking was absolute and unconditional. The indorsement by Teis, Smith & Co., to the appellant, was restrictive, and was for collection merely. The action of appellant and the statement in their letter, when assented to by tho acquiescence of'Teis, Smith & Co., amounted in effect to a purchase of the paper, and gave appellant all the rights of a general holder, including the right to enforce the guaranty., There can be no other meaning attached to the action of the parties. The restrictive indorsement may be treated as stricken out, and the appellant may be regarded as any other holder under an indorsement in blank. It was unnecessary to fill the blank, for the mere act of suing upon it by the holder shows his intention to treat the indorsement as made to himself. Daniel on Negotiable Inst., Sec. 1194-8; Palmer v. Marshall, 60 Ill. 290. The question is as to the effect of the transaction between Teis, Smith & Co. and the appellant. In our opinion the result was to invest the latter with all the rights of the former. If this is the correct view of the matter, the appellant was entitled to a recovery. The judgment will .be reversed and the cause remanded.