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of stock assigned as collateral to the note, is properly denied where the defendant has filed a plea of set-off.
5. APPEALS AND ERRORS—when an error in sustaining demurrer is harmless. Error in sustaining a demurrer to a replication to a plea of set-off is harmless, where the issue raised by the replication is otherwise presented and the plaintiff given the benefit thereof.
Barker v. Barth, 88 Ill. App. 23, affirmed.
WRIT OF ERROR to the Appellate Court for the First District;-heard in that court on writ of error to the Circuit Court of Cook county; the Hon. CHARLES G. NEELY, Judge, presiding.
This suit was brought up on writ of error from this court to the Appellate Court, which affirmed a judgment in the lower court in favor of Barth, the defendant in error, against Barker, the plaintiff in error, in an action of assumpsit for use of the Union National Bank of Chicago.
As early as May 29, 1893, Barker delivered a note without endorsement, and fifty shares of stock in the Edward Hines Lumber Company, among other endorsed notes, to the bank as collateral security for loans from the bank to Barker in excess of the note not endorsed. The note declared on, and the contract given with it at the same time, are as follows: "$5000.
CHICAGO, May 1, 1892. "On or before May 1, 1895, after date I promise to pay to the order of S. B. Barker five thousand dollars, payable at his office in Chicago. Value received, with interest at seven per cent per annum until paid.
L. L. BARTH." Written across the face of the note, in red ink: "This note is non-negotiable."
In the contract, among other things, Samuel B. Barker agrees to sell to L. L. Barth one hundred shares of stock of a corporation to be organized, for $10,000, and Barth agrees to purchase the stock at its par value, paid for with $3000 in cash and his non-negotiable note for $5000, and to deposit fifty shares of the stock with Samuel B. Barker as collateral security.
The note offered as set-off was obtained of McElwee & Carney, who endorsed it without recourse to L. L. Barth. It was given, with others, as payment for a bill of lumber bought of Perley Lowe & Co., of which McElwee & Carney were partners for the special transaction. as follows: "$4573.94.
1893. “June 16, 1893, after date we promise to pay to the order of McElwee & Carney forty-five hundred seventy-three 94/100 dollars, at the Union National Bank, Chicago, Illinois, with .... per cent interest after due, with attorney's fees and cost of collecting Value received.
S. B. BARKER & Co." The lumber for which this note was given was not all delivered. Some time after Barker had failed he asked that he be given credit for the shortage of the lumber on his general account with them, which was done. Barker failed May 29, 1893. Barth, who was then absent from Chicago, learned of it through the newspapers the following day, and on June 5 or 6, 1893, purchased the note used as set-off, paying therefor $750. Two hundred and fifty dollars was paid down and $500 within ten days afterwards. Carney testified that the note was transferred between June 1 and 6, 1893. On May 4, 1895, Barth received the following notice:
“UNION NATIONAL BANK, NORTH-EAST CORNER LASALLE AND ADAMS ST., CHICAGO.
AGO. } "Mr. L. L. Barth—Your note, order of S. B. Barker, for $5000, and interest, three years three days, seven per cent, $1052.92, total $6052.92, matures at this bank May 1 to 4, 1895.
AUGUST BLUME, Cashier. Certified check or currency required."
Barth testified that he received this notice some time after the 4th of May, 1895, and it was the first notice he had that the bank held the note, and that the last knowl. edge he had of the note prior to that, it was in the hands of Barker in his office, on March 25, 1893.
It was admitted that if Mr. Odell were there he would swear as follows concerning the note of Barth to Barker:
That this note was taken by Mr. Odell, as president of the Union National Bank, with other paper, the other paper being endorsed but this note not endorsed; that Mr. Odell did not notice it was not endorsed, and there was no agreement that it should not be endorsed and no agreement that it should be; that at the time Mr. Odell took the note sued on by the plaintiff, Mr. Odell, acting for the bank, took this note in question with a certificate for fifty shares of the capital stock of the Edward Hines Lumber Company, which certificate was collateral to this note in question, and that Mr. Odell, for this bank, took the note in question, with that certificate of stock, as collateral security for indebtedness then existing from Barker to the bank; that the indebtedness then existing exceeded in amount the amount of this note; that from as early as May 29, 1893, the note in question has been continuously in the possession of the bank or its attorneys; that the bank's attorneys had seen Barker repeatedly at different times since the filing of the special plea and after they knew this note was not endorsed, and that they had talks with him.
The court found for the plaintiff and assessed the plaintiff's damages at $6750, and found upon the plea of set-off that the plaintiff was indebted to the defendant $5457. The difference between the two amounts, $1293, due the plaintiff, the defendant tendered in open court, which the plaintiff accepted, whereupon the court entered judgment for the plaintiff for costs. The declaration was as follows:
"On May 1, 1892, * * * said defendant executed his promissory note of that date, and delivered the same to said plaintiff, Samuel B. Barker, in and by which said note said defendant, by the name and style of L. L. Barth, promised to pay to the said Samuel B. Barker, by the name and style of S. B. Barker, the sum of five thousand dollars ($5000) on or before May 1, 1895, at the office of said plaintiff in Chicago, for value received, with interest
at the rate of seven per cent per annum, until paid; and thereupon said plaintiff, Samuel B. Barker, on the day aforesaid and after the execution and delivery to him of said note, assigned, transferred and delivered the same to said Union National Bank of Chicago for value received, by means whereof *
* said defendant * became liable to pay to said plaintiff the sum of money in the said note mentioned," etc.
To the declaration the defendant filed a plea of general issue, with affidavit of merits to the whole of plaintiff's demand. By leave of the court the defendant filed an additional plea, in which it is averred that as to $5100 of the plaintiff's claim defendant says that Barker, "before and at the time of the commencement of the suit, was and is indebted to him in the sum of $5100 upon Barker's note dated March 16, 1893, payable to the order of McElwee & Carney, for $4573.94, payable June 16, 1893, endorsed by McElwee & Carney and delivered to the defendant for value before the beginning of this suit; that this note is due and unpaid, and defendant is entitled to recover from Barker $5100 thereon, which he offers to set off against the plaintiff's damages.” A copy of the note was filed therewith.
The plaintiff filed replication to said plea as follows: “(1) That the defendant obtained the note described in his plea from McElwee & Carney after he had notice that his note described in the declaration, and on which suit was brought, had been assigned by Barker to the Union National Bank for value; (2) that the defendant obtained the note of Barker from McElwee & Carney after its maturity, and after his note, on which this suit was brought, had been assigned by Barker to the Union National Bank for value." The court below sustained the defendant's demurrer to these two replications.
By leave of court the plaintiff filed an additional count to its narr. After setting out the making and delivery of the $5000 note by Barth to Barker on May 1, 1892, it
avers: “And thereupon said plaintiff, Samuel B. Barker, to whom, etc., afterwards and before the payment of the said sum of money mentioned in said note, or any part thereof, and also before the time limited and appointed by the said note for the payment thereof, to-wit, on May 1, 1892, assigned, transferred and delivered the same to the Union National Bank of Chicago for value received, of which assignment, so made as aforesaid, said defendant afterwards, to-wit, on the same day and year and at the place aforesaid, had notice," etc. The defendant obtained a rule on plaintiff to file a copy of the instrument sued on in the additional count The record discloses that "statement filed by plaintiff November 30, 1896, that a copy of the instrument referred to in the additional count is annexed to the original declaration."
An order was entered in said cause that the plea of general issue stand to the additional count, and leave was given to the defendant to file additional pleas instanter. The defendant filed three additional pleas, to the first of which a demurrer was sustained. The second plea sets up that the note of Barker was endorsed and delivered by McElwee & Carney to the defendant for value, before maturity, and before he had any notice or knowledge of the assignment to the Union National Bank of the note sued on, and alleges that there is $5300 due on the note, and offers to set off that amount. The third plea sets up that the setoff is on the same note, and that the said note was endorsed and delivered by McElwee & Carney to the defendant on its date and before maturity, and also before the alleged assignment to the Union National Bank of the note described in the declaration, and before defendant had any notice of that assignment.
To the second and third pleas the plaintiff filed five replications, in substance as follows: (1) That before the defendant had received the note offered as set-off, the Union National Bank had taken from S. B. Barker, by due assignment and for valuable consideration, the note