in his bond to deliver over to his successor in office all money belonging to the county can only be met or discharged by making such delivery or payment, it is clear that the facts set up in the answer, and admitted to be true, constitute no defense. That the above rule is a correct one, governing in such cases, is established by the following authorities:" Citing State v. Powell, 67 Mo. 395, and the various decisions of the Supreme Court of the United States. "If on the other hand, under the rule laid down in the case of United States v. Thomas, 15 Wall. 337, defendant is to be regarded as a bailee and exempt from liability to pay when the loss is occasioned by the act of God or a public enemy, he would still be liable, under the facts stated in the answer, because they show that the loss was not occasioned in either of these ways. The tramps, thieves, and robbers, which it is alleged overrun Mississippi county, while they are enemies, to the peace and safety of the public and social order, they are not public enemies in the legal sense of these words. By enemies is to be understood public enemies, with whom the nation is itself at open war; and not merely robbers, thieves, and other private depredators however much they may be deemed, in a moral sense, at war with society. Losses therefore which are occasioned by robbery on the highway or by depredations of mobs, rioters, insurgents and other felons are not deemed losses by enemies within the meaning of the exception." 12 Fed Rep. 790.

The action of the District Court in sustaining the demurrer to the answer was correct.

The other positions taken by appellant relative to the time when the cause of action could be commenced are wholly untenable. Having admitted the defalcation and claimed the right to interpose the defense inserted in his answer, the State was not compelled to wait until the close of the appellant's term of office before commencing an action upon his bond.

The judgment of the District Court is affirmed. [Sce 40 Am. Rep. 675, as to meaning of "faithfully" in such bond. See State v. Chadwick, 10 Oregon, 465. -ED.]

FIRST NAT. BANK V. LOCK-STITCH FENCE Co.
CENT. BANK OF MASS. V. SAME.

A third party who places his name upon the back of a negotiable promissory note at the time of its execution by the maker, and before its delivery to the payee, will be liable as a joint maker, and the note itself, with the indorsement thereon, is prima facie evidence of such liability. The question being one of general commercial law, the decisions of the State courts are not necessarily controlling in a Federal court.

THESE

HESE were two suits upon promissory notes, one for $2,121, and the other for $1,123.59, both dated January 1, 1884, due twelve months after date, and payable to the order of Washburn & Moen Manufacturing Company, at the First National Bank of Joliet, Illinois. The plaintiff in each case is a banking corporation, organized under the laws of the United States, and located in Massachusetts. The defend. ants are citizens of Illinois, the defendant Lock-Stitch Fence Company being a corporation, having its principal office and place of business at Joliet. The declaration in each case contained a single count, in which the defendants were charged as joint makers of the

note set out in the declaration, and as such jointly liable to the plaintiffs thereon. To each declaration there was originally a plea of the general issue. Amended pleas were subsequently filed, in which it was averred that the defendants were not and never were jointly liable in respect to the several supposed causes of action in the declaration mentioned, or any or either of them, which pleas were duly verified.

It is provided by section 36 of the Practice Act of Illinois (chap. 110, Cothran's Annotated Ed., 1883, Rev. Stat. Ill.) that "in actions upon contracts, express or implied, against two or more defendants as partners or joint obligors or payors, whether so alleged or not, proof of the joint liability or partnership of the defendants ** * shall not, in the first instance, be required to entitle the plaintiff to judgment, unless such proof shall be rendered necessary by pleading in abatement, or unless the defendant shall file a plea in bar denying the partnership or joint liability, or the execution of the instrument sued upon, verified by affidavit." The notes in suit were executed and were payable in Illinois. On the face of each note appeared the signature of the defendant Lock-Stitch Fence Company, by L. E. Dillman, treasurer, as the maker thereof; and on the back of each were the following indorsements in the following order: L. E. Dillman, A. H. Shreffler, A. N. Kleinfelter, A. Dillman, Washburn & Moen Manufacturing Company, P. L. Moen, treasurer.

These cases came on for trial together, before the court and jury, and the plaintiff in each case, in the first instance, offered in evidence the notes sued on, with the indorsements thereon in the order stated. Objection was made to the introduction of the notes in evidence unless they should be supplemented by affirmative proof that the defendants were joint makers, it being contended by counsel for the defendants that the notes themselves were not to any extent evidence of joint makership. The court admitted the notes in evidence, but without then passing upon the question of their sufficiency as proof of the defendants' alleged joint liability. The plaintiff then called as a witness the defendant Andrew Dillman, by whom it was shown that January 1, 1884, all the defendant indorsers were stockholders of the LockStitch Fence Company; that the witness was president, that L. E. Dillman was treasurer, that A. H. Shreffier was vice-president, and that A. N. Kleinfelter was secretary of the company. The witness also testified that these parties held all the stock of the company, and constituted its officers at the time of the execution of the notes. This testimony was all objected to, and taken subject to the objection.

On cross-examination of the witness, it was shown that the debt for which the notes were given was one owing by the Lock-Stich Fence Company to the payee of the notes. Upon the conclusion of the examination of this witness, the plaintiffs rested, and the defendauts then moved the court that the jury be instructed to render a verdict in their favor, on the ground that the defendants were not shown to have been joint makers of the notes. The court reserved its ruling ou this motion for the time being; and it appearing that the cases really involved no controverted issues of fact, but that their determination turned upon the view which the court should take of the legal principles invoked upon the question of liability, it was stipulated by the parties that the trial should proceed before the court, without the intervention of a jury, with the understanding that the defendants should have the same benefit of the motion for a peremptory instruction to the jury in their favor that they would have if a jury were still present. Certain of the defendants were thereupon called as witnesses, and testified that at the time these notes were given the

the instrument was indorsed by the payee, he would then be liable only as a second indorser, in the commercial sense. Says Mr. Justice Clifford, speaking for the court:

"Where the indorsement is in blank, if made before the payee, the liability must be either as an origiual promisor or guarantor; and parol proof is admissible to show whether the indorsement was made before the indorsement of the payee, and before the instrument was delivered to take effect, or after the payee had become the holder of the same; and if before, then the party so indorsing the note may be charged as an original promisor, but if after the payee became the holder, then such a party can only be held as guarantor, unless the terms of the indorsement show that he intended to be liable only as second indorser, in which event he is entitled to the privileges accorded to such an indorser by the commercial law."

Applying to the cases at bar the principles thus laid down, it cannot be doubted that prima facie the liability of the defendant indorsers on the notes in suit is that of original promisors; nor can it be successfully questioned, in the light of this adjudication, that the notes themselves, with the indorsements thereon, are evidence of such liability; for if the indorsements were made at the inception of the note, they are presumed to have been made for the same consideration and a part of the original contracts expressed by the notes. Good v. Martin, supra. Whether the liability of these parties on the notes is shown by the parol proof of the facts and circumstances which took place at the time of the transaction to be other than as above stated, will be considered in a subsequent part of this opinion.

But it was contended by counsel for the defendants, that as the notes in suit were executed and were made payable in this State, the law of the State, as established by the course of judicial decision here, must prevail in determining the character of the liability assumed by the defendant indorsers. This proposition was urged with much plausibility and force. That the question here involved is one of general commercial law must be admitted. The decisions in Illinois which have been cited are not founded upon any local statute, nor in my opinion, upon any such local usage as is alluded to in Swift v. Tyson, 16 Pet. 1. Nor does the determination of liability in the cases at bar rest upon an interpretation of any statute or consideration of any local usage. It involves simply the legal relation which certain parties bear to instruments of a commercial nature, the true interpretation and effect whereof are to be sought, not in the decisions of the local tribunals, but in the general principles and doctrines of commercial jurisprudence.

The case of Swift v. Tyson, supra, is so familiar that extended reference to it is unnecessary. It had been held for a series of years in New York, by the Supreme Court of that State, that a pre-existing debt was not a sufficient consideration to shut out the equities of the original parties in favor of the holders. But in Swift v. Tyson, which came up from New York, the Supreme Court of the United States held a contrary doctrine to that announced by the courts of the State upon the question of the right of a bona fide holder of a bill of exchange, who had taken it before maturity, in payment of a pre-existing debt, without notice of any equities between the original parties, to recover without regard to such equities.

In Oates v. National Bank, 100 U. S. 239, a commercial transaction was under consideration, which arose in Alabama. It was an action by a national bank, located in that State, against a citizen of the State, upon a promissory note there executed, and there made payable and negotiated. It was contended that the

decision of the Supreme Court of Alabama should be accepted as the law governing the rights of the parties. But in reply to that contention, the Supreme Court of the United States said:

"While the Federal courts must regard the laws of the several States, and their construction by the State courts (except when the Constitution, treaties, or statutes of the United States otherwise provide), as rules of decision in trials at common law in the courts of the United States, in cases where applicable, they are not bound by the decisions of those courts upon questions of general commercial law. Such is the established doctrine of this court, so frequently announced that we need only refer to a few of the leading cases bearing upon the subject. Swift v. Tyson, 16 Pet. 1; Carpenter v. Providence Ins. Co., id. 495; Watson v. Tarpley, 18 How. 517."

Again in Railroad Co. v. National Bank, 102 U. S. 14, the question was whether the holder of negotiable paper transferred merely as collateral security for an antecedent debt-nothing more-is not a holder for value, within the rules of commercial law which protect such paper against the equities of prior parties. Mr. Justice Harlan, speaking for the court, in a very able opinion, admitted that if the principles announced in the highest court of the State of New York were to be applied to the case, a different conclusion would be reached from that announced in the opinion. The note in suit was executed and made payable in the State of New York, but the court reaffirmed the doctrine of Swift v. Tyson and Oates v. National Bank, and refused to follow the decisions of the State court. Upon the authority of these cases I must hold, that as the question in judgment is one of general commercial law, the decisions of the courts of the State upon it, though commanding, as they should, our attention and high respect, are not necessarily controlling here. Especially, is this so if Good v. Martin, supra, is to be considered, as I think it must be, an exposition of the law upon the question of the character of the liability presumptively assumed by the defendant indorsers when they placed their names on the back of the notes in suit. This act of the parties occurred at the inception of the notes and before their delivery to the payee. Their indorsements therefore must be presumed to have been made for the same consideration as that expressed in the notes and as part of the original contracts.

As we have seen, an affirmative admission was entered on the record, before the plaintiffs rested their case, that the defendant indorsers indorsed the notes prior to their delivery to the payee. But without such admission, the notes themselves, with the indorsements thereon in the order in which they appear, in connection with the presumption arising therefrom, afforded prima facie evidence of liability as original promisors within the doctrine of Good v. Martin. This was proof that satisfied the requirement of section 36 of the Practice Act before quoted, wherein it imposed upon the plaintiffs-as in such cases unoubtedly it does, when a verified plea denying joint liability is filed-the burden of showing the joint liability of the defendants.

It remains only to consider whether the extrinsic oral testimony tending to show the circumstances under which the defendant indorsers placed their names on the notes overcomes or changes the prima facie case made by the plaintiffs.

In Good v. Martin it was held that the interpretation of the contract in such case ought to be such as carries into effect the true intention of the parties. which may be made out by parol proof of the facts and circumstances which took place at the time of the transaction. The language of the opinion makes it somewhat doubtful whether the court meant to go

further than to hold that parol proof is admissible to show whether the indorsement of the third party was made before the indorsement of the payee, and before the instrument was delivered to take effect, or after the payee had become the holder of the same. Little doubt however arises of the meaning and effect of the transaction between the parties in the cases in hand, even if the testimony, orally given, is all admissible. The defendant indorsers represented all the stockholders and officers of the company which executed the notes. The notes were given on account of a debt owing from the company to the payee. They were duly executed by the maker, and then, before delivery, indorsed by the other defendants. Credit was thereby given the maker with the payee, and such was the intention of the parties. The relations of the indorsers to the company made them, in a certain sense, participants in the consideration of the notes. The president of the company testified that Mr. Washburn said when the note was executed, that as he did not know much about the corporation, and as the parties who afterward indorsed the notes owned all the stock, he desired them to become personally responsible on the notes. All this clearly adds to the prima facie case made by the notes themselves, cumulative and convincing proof of such a relation of the defendant indorsers to the notes as establishes their liability as copromisors, within even a restricted view of Good v. Martin. But it is contended that an intention is evinced to create only the liability of guarantors by the further testimony of the president of the company that in the conversation with Washburn the word guarantee" was used; that after he said that he required the defendant indorsers to become "personally responsible," he used the expression that the defendants "should guarantee the debt." The real relation of the parties in the transaction to the notes they indorsed cannot be modified or changed by a form of technical expression that may have been used at the time, so as to affect the character of their liability. They indorsed the notes in blank. No words of express guaranty were employed to qualify the indorsements. It is apparent that the only object of the indorsements was to create an additional personal responsibility and secure credit to the maker with the payee, and the defendants must be held charged with the legal liability fairly flowing from their acts.

46

Judgment will be entered against all the defendants as jointly liable upon the notes in suit.

[See Miller v. Ridgely, 31 Alb. L. J. 507, 509.-ED.]

GIFT-DEED-DELIVERY.

ILLINOIS SUPREME COURT, MAY 19, 1884.

CLINE V. JONES.

A father having previously made gifts of property to all of his children except a daughter, went before a justice of the peace and executed a deed of conveyance of a tract of land to her, and acknowledged the same, stating that it would make all his children equal; but he retained the deed in his possession, with no present intention it should take immediate effect, but to be operative only at his death, or on the daughter moving upon and occupying the property, which she never did. Held, that the deed never took effect, and that the land therein described passed to his heirs generally.

PPEAL from the Circuit Court of Sangamon county.

N. M. Broadwell and Gross & Zane, for appellants. McGuire & Salzenstein, for the appellee Matilda

Jones.

Patton & Hamilton, for appellee Mrs. Sayles.

SHELDON, J. This was a bill filed by William Cline and others against Matilda Jones and others for partition of certain lands described in the bill derived from a common ancestor, John Cline. Matilda Jones filed her answer denying that complainants were entitled to partition of a certain three-acre tract of the lands, claiming sole ownership thereof in herself by virtue of a deed of conveyance of the same made to her by John Cline on the 19th day of February, 1879. Replication was filed, proofs taken, and the court found the defendant Matilda Jones acquired title to said tract by virtue of such deed, and the complainants appealed.

The proofs show that John Cline, the ancestor of all the parties to this suit, died intestate February 7, 1882, at an advanced age. He had at various periods in his life given to all of his children except Mrs. Jones (some eight or nine in number) money and property to a considerable amount. To none had he given less than $1,000; to some as much as $6,000 to $8,000. To Mrs. Jones alone, up to the time of the alleged making of the deed in question, he had never given any thing. On February 18, 1879, John Cline went alone before a justice of the peace, and had drawn up, and he signed and acknowledged, a warranty deed of this three-acre tract to Mrs. Jones, the deed reciting it was made in consideration of filial love and affection, and $1, and the property it conveyed being worth about $700 or $800. At the time, the grantor told the justice that he had given all his other children land, but none to Mrs. Jones, and he felt he ought to give her this land. The grantor took the deed away, and ever after retained it in his possession till his death, it being found after that time among his papers. He also kept possession of the land, received the rents from it, and paid the taxes on it until his death. After he had thus signed and acknowledged the deed, he told different persons that he had made it; that he had made all his children equal; that the land would be Mrs. Jones' at his death; and to Mrs. Jones and her husband he said several times he had fixed it so that the land would be hers at his death, but that if she would move on it and live there it should then be hers. This she never did. She expressed her gratification to her father for what he had done. The question which is made upon the deed is as to its delivery.

In Bryan v. Wash, 2 Gilm. 557, it was said a delivery is essential to the validity of every deed, and that 'any thing which clearly manifests the intention of the grantor and the person to whom it is delivered, that the deed shall presently become operative and effectual, that the grantor loses all control over it, and that by it the grantee is to become possessed of the estate, constitutes a sufficient delivery. The very essence of the delivery is the intention of the party."

There is no doubt that the law makes stronger presumptions in favor of the delivery of deeds in case of voluntary settlements than in ordinary cases of bargain and sale, as has been frequently recognized by this court. Bryan v. Wash, supra; Reed v. Douthit, 62 Ill. 348; Walker v. Walker, 42 id. 311. And we think the authorities establish that an instrument may be good as a voluntary settlement though it be retained by the grantor in his possession until his death. Souverbye v. Arden, 1 Johus. Ch. 240. Bunn v. Winthrop, id. 329; Scrugham v. Wood, 15 Wend. 545; Perry Trusts, § 103, and our own cases above cited, and Otis v. Beckwith, 49 Ill. 121. Yet the cases in this respect are generally attended with the qualification that there be no circumstances, besides the mere fact of retaining the instrument, to show that the executing party did not intend it to operate immediately, or to denote an intention contrary to that appearing upon the face of the deed. Thus, in Souverbye v. Arden, Chancellor Kent says: "A voluntary settlement, fairly

made, is always binding in equity upon the grantor, unless there be clear and decisive proof that he never parted or intended to part with the possession of the deed; and even if he retains it the weight of authority is decidedly in favor of its validity, unless there be other circumstances besides the mere fact of his retaining it to show that it was not intended to be absolute." And in Bunn v. Winthrop: "The instrument is good as a voluntary settlement, though retained by the grantor in his possession until his death. There was no act of his, either at the time or subsequent to the execution of the deed, which denoted an intention contrary to that appearing upon the face of the deed." And in Scrugham v. Wood there is this quotation, from Garnons v. Knight, 5 Barn. & Cres. 671: "Where a party to an instrument seals it, and declares in the presence of a witness that he delivers it as his deed, but keeps it in his own possession, and there is nothing to qualify that or to show that the executing party did not intend it to operate immediately, except the keeping the deed in his hands, it is a valid and effectual deed; and delivery to the party who is to take by the deed, or to any person for his use, is not essential."

Mr. Lewin, in his work on Trusts, in treating of the formalities required to create a trust, on page 123, remarks: "A wide distinction exists between testamentary dispositions and declarations of trust. The former are ambulatory until the death of the testator, but the latter take effect, if at all, at the time of the execution.' And on page 124, top, he quotes this observation of Buller, J., in Habergham v. Vincent, 2 Ves. Jr. 230: "A deed must take place upon its execution or not at all. It is not necessary for a deed to convey an immediate interest in possession, but it must take place as passing the interest to be conveyed at the execution; but a will is quite the reverse, and can only operate after death." The author then proceeds: "We may therefore safely assume as an established rule that if the intended disposition be of a testamentary character, and not to take effect in the testator's life-time but ambulatory until his death, such disposition is inoperative unless it be declared in writing in strict conformity with the statute enactments regulating devises and bequests."

In the case in hand there is that which denotes an intention contrary to that appearing upon the face of the deed, which shows that the deed was not intended to be absolute - that the grantor in it did not intend it to operate immediately and that is his declarations that the land was to be Mrs. Jones' at his death, but that if she would go and live upon it, it should be hers then, and the other circumstances corroborative of such intention. The deed by its purport was absolute, conveying the grantor's entire interest, to operate immediately. But the evidence shows the deed was not intended to be absolute, but to be qualified in its effect; that it was not intended to convey the grantor's whole interest, but that he meant to have a life estate unless the grantee should move upon the land, which she never did; that the deed was not intended to operate presently, but only upon the grantor's death, or going upon the land to reside. The evidence shows the distinct intention not to create a present estate in the grantee. As then there was never any actual delivery of the deed, but the grantor ever kept it in his own possession, and as it never was his intention that the deed should presently take effect and become operative according to its terms, there was no delivery of the instrument as the deed of the grantor, and it was not valid as a deed. As Mrs. Jones never moved on the land, this made the deed one to take effect at the grantor's death, which was a disposition of property of a testamentary character,

and invalid because not in compliance with the statute of wills.

In Byars v. Spencer, 101 Ill. 429, it was held that to constitute a sufficient delivery of a deed there must be a clear manifestation of the intention of the grantor that the deed shall at once become operative to pass the title, and that the grantor shall lose all control over it. That was a case of a father having executed a deed for land to his two minor children, and never actually delivering it, but retaining it in his possession until his death. There could be no doubt from the evidence there, that it was in accordance with the intention of the father that if he should die without having made any other disposition of the land it should go to these two children. It is true there was there the evidence, additional to what appears in this case, of intention against the immediate operation of the deed in the offer to sell the land. But the evidence shows that was not for the grantor's own benefit, but for the children's, in order to give them the proceeds. There was the same evidence of purpose to benefit the grantees there as here, and the same intention appearing that the deed should not have present operation, as here, only that it was stronger in degree in the last respect there than here. Yet because of the intention shown that the deed should not operate presently as a deed, it was held, after the father's death, he not having sold the land, that there had been no delivery of the deed, and that it was invalid, and the land should go to the heirs in general.

An instructive case, as bearing upon the present by way of analogy is that of Basket v. Hassell, 107 U. S. 602; S. C., 48 Am. Rep. 506, which involved the ques tion of what constituted delivery of a gift mortis causa. There one Chaney, being the holder of a certificate of deposit given by a bank in his favor, during his last sickness, and in apprehension of death, wrote on the back thereof the following indorsement:

"Pay to Martin Basket, of Henderson, Ky.— no one else; then not till my death. My life seems to be uncertain. I may live through this spell. Then I will attend to myself.

"H. M. CHANEY."

Chaney then delivered the certificate to Basket, and died without recovering from that sickness. The certificate was payable on demand. It was held by the court that it was unquestionable that a delivery of the certificate to the donee with an indorsement in blank, or a special indorsement to the donee, or without indorsement, would have transferred the whole title and interest of the donor in the fund represented by it, and might have been valid as a donatio mortis causa, but that the indorsement which accompanied the delivery qualified it, and limited the authority of the donee in the collection of the money, so as to forbid its payment until the donor's death; that the property in the fund did not presently pass, but remained in the donor, and the donee was excluded from its possession and control during the life of the donor; that that qualification of the right which would have belonged to the donee if he had become the present owner of the fund, established that there was no delivery of possession according to the terms of the instrument, and that as the gift was to take effect only upon the death of the donor, it was not a present executed gift mortis causa, but a testamentary disposition, and invalid, not being in compliance with the statute of wills.

In Olney v. Howe, 89 11. 556, there was an instrument in writing, under seal, selling and transferring certain personal property to be given to and taken by the transferee immediately upon the death of the one executing the instrument. It was there said: "The