South Side State Bank v. Fox River Distilling Co., 194 Ill. App. 655 (1915)

Oct. 5, 1915 · Illinois Appellate Court · Gen. No. 20,054

194 Ill. App. 655

South Side State Bank, Defendant in Error, v. Fox River Distilling Company, Plaintiff in Error.

Gen. No. 20,054.

(Not to he reported in full.)

Error to the Municipal Court of Chicago; the Hon. Joseph S. La Buy. Judge, presiding.

Heard in the Branch Appellate Court at the March term, 1914.

Reversed with finding of fact.

Opinion filed October 5, 1915.

Statement of the Case.

Action by the South Side State Bank, a corporation, against the Fox River Distilling Company, a corporation, defendant, in the Municipal Court of Chicago, to recover on a promissory note given by the Lavigne Company to M. F. Curtis, indorsed by defendant and discounted by plaintiff.

Abstract of the Decision.

1. Corporations, § 454 ^* —when signature that of corporation. An indorsement of commercial paper in the name of a corporation by its president is prima facie the signature of the corporation.

2. Bills and notes, § 249 ^* —when holder charged with notice that indorser is corporation. Where commercial paper when presented for discount bears an indorsement which prima facie is the signature of a corporation, the indorsee for discount is charged with notice that the indorser is a corporation.

3. Bills and notes, § 249 ^* —when holder charged xoith notice of accommodation indorsement. Where commercial paper, both when presented for discount and when discounted, is in the possession of the maker or payee, the indorser fpr discount is charged with notice that an indorsement not appearing thereon when presented for discount but appearing when discounted “was for accommodation only, especially where there is evidence that such indorsement was procured for the express purpose of inducing the acceptance of such paper for discount.

The evidence shows that the Lavigne Company purchased property of said Curtis, giving him the note in question as part of the purchase-money; that Harry Lavigne, its president, met Curtis at plaintiff’s bank and had an interview with its president as to discounting the note; that the latter required an indorser, and thereupon Lavigne went to the president of the defendant company, who indorsed the note in the name of the corporation by himself as president. The indorsement appeared above that of Curtis. In that form Lavigne returned it to the hank shortly afterwards and the latter discounted the note.

To reverse a judgment for plaintiff for $103.90, defendant prosecutes this writ of error.

Isadore S. Blumenthal, for plaintiff in error; Maurice Alschuler, of counsel.

Lyman M. Paine, for defendant in error.

* Sce Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, game topic and section number.

* See Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, same topic and section number.

Mr. Justice Barnes

delivered the opinion of the court.

4. Corporations, § 457 ^* —when holder of note on which corporation accommodation indorser charged with notice. A hank accepting for discount commercial paper bearing the indorsement of a commercial corporation, under circumstances charging such discounting bank with notice that such indorsement was for accommodation merely, is also charged with notice that such indorsement of such corporation is ultra vires as being an act not within the scope of the ordinary business of such corporation.