delivered the following dissenting opinion;
The controversy in this case is between Thomas Brown, the owner of the premises in question, and Jacob Huber and Nicholas J. Mann, the holders of the notes and trust deeds, executed by Brown and his wife to Theodore H. Schintz, trustee. Defendants in error, Huber and Mann, are seeking to enforce their trust deeds against the premises, owned by Brown, for the amount of the checks, executed by Schintz to Brown on Friday, July 16, 1897, one of the checks having been for $1075.00 and the other for $125.00, aggregating$1200.00. Mann and Huber concede that they are only entitled to liens, if they are entitled to any at all under their trust deeds, for said sum of $1200.00 in the proportions in favor of Huber of |4, and in favor of Mann of together with interest and costs.
Substantially the only question, involved in the case, is whether said checks constituted a payment, or a passing of the consideration upon the building loan to the extent of $1200.00 from Schintz to Brown.
The checks in question were not executed by Huber and Mann, but by Theodore H. Schintz. Huber and Mann, however, are seeking to enforce the trust deeds in question against the property of Brown to the amount of the checks, so executed by Schintz. It follows that Huber and Mann are either seeking to enforce the trust deeds for Schintz who gave the checks, or that Schintz held money belonging to Huber and Mann, for which he gave the checks. The notes, executed by Brown, were payable to his own order and were sold by Schintz to Huber and Mann. The notes were dated April 26, 1897, and the checks were not given or dated until July 16, 1897. As the defendants in error, Huber and Mann, are seeking to enforce securities for checks given by Schintz, this case must be treated the same as though Schintz, and not either Hubert or Mann, is the party seeking relief.
It is conceded that Wheatman & Boulton, and Dwyer, the holders of the checks, received no money upon them from the Merchant’s Loan and Trust Company, the bank, upon which the checks were drawn; and yet it is contended that the defendants in error, Huber and Mann, must be regarded as having paid to Thomas Brown the amounts represented by the checks. When the checks were handed to Brown he endorsed them and delivered them to Mattice & Co., the contractors upon his building., Mattice & Co. endorsed the checks and delivered them to certain sub-contractors, who presented them for payment without succeeding in getting payment thereof.
The first legal proposition, advanced by defendants in error, is that the sub-contractors did not present the checks within a reasonable time, or within the time, within which the law requires them to be presented, and that, therefore, Thomas Brown, as endorser of the checks, was'released from his liability as such endorser. Undoubtedly, where all the parties to a check, and the bank upon which it is drawn, reside or are located in the same town or city, the payee or endorsee has until the close of banking hours the next day to present the check for payment, and if it is not so presented, the endorser is absolutely discharged. (Bickford v. First Nat. Bank, 42 Ill. 238; Strong v. King, 35 id. 9; Story on Promissory Notes, —7th ed. — sec. 495; Little v. Phenix Bank, 2 Hill, (N. Y.) 425; Merchants' Bank v. Spicer, 6 Wend. 443; Veazie Bank v. Winn, 40 Me. 60). The general doctrine is embodied in the following statement: “It is well settled that, where the person, receiving the check, and the banker, on whom it is drawn, are in the same place, in the absence of special circumstances it must be presented for payment the same day, or at least the day after it is received. * * * If presentment be not made within a reasonable time and notice of dishonor be given, the endorser is absolutely discharged.” (5 Am. & Eng. Ency. of Law, — 2d ed. — pp. 1042, 1045).
In the case at bar, the checks were received by Brown, and by the endorsees above named, upon Friday, July 16, 1897; but the holders of them did not present them upon the next day, to-wit, Saturday, July 17, 1897, but waited until Monday, July 19, 1897, and presented them upon the latter day. Payment was refused because the drawer, Schintz, had before the presentation of the checks by the holders thereof made an assignment"for the benefit of his creditors, and notice of such assignment had been communicated to the bank, upon which the checks were drawn. Under the authorities above referred to,, the holders of the checks were guilty of laches in not having presented them for payment during banking hours on Saturday, July 17, 1897. If they had been presented upon the latter day, they would have been paid. The effect of this laches may have been, as is contended by the defendants in error, to release Thomas Brown as endorser upon the checks.
While it may be true, however, that Thomas Brown, as endorser upon the checks, was released from liability as such endorser in case suit or suits had been brought against him upon the checks, it is not true that, on account of such delay in the presentation of the checks and on account of the refusal of the bank to pay the same, Schintz, the drawer of the checks, was released from his liability to the holders thereof. “Although there is no ■difference in the degree of diligence required in the case of bills of exchange and checks, yet they differ in respect to the legal consequences of negligence and delay in presentment, for in the case of checks the drawer is not discharged by the delay or negligence in presentment unless he has suffered loss thereby, as by the failure of the bank, and then he is only discharged pro tanto.” (5 Am. & Eng. Ency. of Law, — 2d ed. — p. 1044; Bickford v. First Nat. Bank, supra; Story on Promissory Notes, — 7th ed.— sec. 492; Stevens v. Park, 73 Ill. 387; Strong v. King, supra).
Story in his work on Promissory Notes, (2d ed. sec. 492) says: “In case of a check the drawer is treated as in some sort the principal debtor, and he is not discharged by any laches of the holder in not making due presentment thereof, or in not giving him notice of the dishonor, unless he has suffered some loss or injury thereby, and then only pro tanto.”
In Stevens v. Park, supra, we said: “The only question discussed in the present case is, was the burden on the holder of the bank check of showing that no damage had accrued to the drawer by his omission to give notice of the non-payment of the check? * * * As between the holder and the drawer, a demand at any time before suit brought, is sufficient, unless it appears that the drawee has failed, or the drawer has, in some other manner, sustained injury by the delay.”
In the case at bar, Schintz, the drawer of the checks, suffered no injury by the delay in the presentation of the checks. Indeed, it was his own fault that the checks, when presented to the bank upon which they were drawn, were not paid, because he made an assignment for the benefit of his creditors, and thereby performed the act which led to the refusal of payment by the bank. (Laclede Bank v. Schuler, 120 U. S. 511). Therefore, it may be true, as is contended by counsel for defendants in error, that Schintz is still liable as drawer of these checks to the holders thereof, notwithstanding the delay in their presentation for payment. Defendants in error contend that in some way they are still liable to pay these checks because Schintz is liable. They reason that, because Schintz or they themselves may at some time be sued upon the checks as drawers thereof, and be compelled to pay the same, therefore they are entitled to foreclose their trust deeds to the extent of the amounts for which the checks were drawn, upon the theory that such checks were payments of so much money upon the building loan to Thomas Brown. Whatever force, if any, there might be in this contention under other circumstances, it has no force under the facts of this case, as shown by the record.
It appears that, upon the taking of the testimony before the master, the checks were introduced in evidence, and surrendered, and filed as exhibits, and left with the master, and returned into court, and are now in the custody of the court and beyond the control of the holders thereof. In view of this fact, Schintz, the drawer of the checks, cannot hereafter be held liable for the' amount of them.
In Heartt v. Rhodes, 66 Ill. 351, where the holder of an accommodation note accepted from the payee, for whose accommodation the same was executed, a check on a bank for the balance due thereon, and surrendered the same, it was held that, in the absence of proof to the contrary, it would be presumed the check was taken as a means to procure the money to pay the note, and not as an absolute payment, and in that case we said (p. 353): “Objection is made that a recovery by the plaintiff was permitted, while he retained the check of Dickson, upon which he may collect the amount a second time. We do not consider such to be the fact. The check was produced in court, and there left, where it has since remained among the files of the court. The plaintiff’s deposition was taken in the case, to which he annexed the chéck, which was returned into court with the deposition, and remains there as a part of it. The production of the check was in nowise essential to the making out of the plaintiff’s case, and we may consider that it was annexed to, and returned with, the deposition, for the purpose of being surrendered or canceled. It, to be sure, was not formally canceled, but we must regard it as virtually so. It is neither in the plaintiff’s possession nor power, but in the custody of the court, and cannot be withdrawn by the plaintiff, unless by leave of the court. Such leave should not be granted; and it is to be presumed the court will not permit plaintiff to withdraw the check.”
It is well settled that thé mere giving of a negotiable note or its endorsement to a third person does not extinguish the original cause of action, if the payee can show that the note has been lost, or can produce it on the Trial to be canceled. If a note or bill is lost, or can be produced on the trial for cancellation, a recovery can be had on the original consideration. (Miller v. Lumsden, 16 Ill. 161; Stevens v. Bradley, 22 id. 244; Heartt v. Rhodes, supra; McConnell v. Stettinius, 2 Gilm. 707; Rayburn v. Day, 27 Ill. 46).
It is also well settled that, where a check is taken in payment of a note or other debt, it will not be regarded as an absolute payment, unless there is a special agreement to that effect. (Heartt v. Rhodes, supra; Rayburn v. Day, supra; Bailey v. Pardridge, 134 Ill. 188; VanCourt v. Bushnell, 21 id. 624; Paddock v. Stout, 121 id. 571; Jackson v. Bailey, 12 id. 159).
Story in his work on Promissory Notes (7th ed. sec. 104) says: “In general, by our law, unless otherwise specially agreed, the .taking of a promissory note for a pre-existing debt, or a contemporaneous consideration, is treated prima fade as a conditional payment only, that is, as payment only if it is duly paid at maturity.”
There is no pretense, that any agreement existed between Schintz or Huber and Mann on the one side, and Thomas Brown on the other, that the checks given to the latter should be regarded as an actual payment of so much of the §3200.00 agreed to be advanced to him as a building-loan, without reference to whether the checks when presented should be paid or not. There being no such agreement, it will be presumed that each of the checks, as was said in Heartt v. Rhodes, supra, “was taken but as the means whereby to procure the money for payment of the” expected loan to the extent of §1200.00. In the absence of an express agreement that the checks should be regarded as a payment of §1200.00 on the loan, there was no payment, inasmuch as the bank refused to honor the checks when they were presented.
In some of the cases already referred to, the facts showed that a check had been given in payment of a note, and it was held that, when the check.was surrendered, an action for recovery might be had upon the original note. (Heartt v. Rhodes, supra). In other caseá, the facts showed that an account existed by one of the parties against the other for goods sold to the latter, and the note was given for the amount of the goods so sold, and it was there held that, in case of a surrender of the note, an action might be had upon the original account, for goods sold. But, in the case at bar, no antecedent debt existed between Huber or Mann and Schintz on the-one side and Thomas Brown on the other. Although notes for $3200.00 were executed, yet there was no consideration for such notes, except so far as money might be advanced to erect the building, and no money was ever-advanced, nor anything that called for money, except the two dishonored checks, above described. The checks being surrendered and canceled, there is no prior or precedent obligation existing. In other words, there was no-indebtedness existing between the parties except such as was represented by the checks themselves, and, therefore, when the checks were surrendered, as was done in-this case, there was no obligation of any kind remaining as against the defendants in error, Huber and Mann. In view of these considerations, it certainly is unjust to, allow these defendants in error to foreclose these trust deeds against Thomas Brown to the extent of $1200.00. It is an attempt to get something for nothing. Brown received nothing from defendants in error or from Schintz. except two worthless checks, which, being surrendered, can never be the foundation of any cause of action. Defendants in error are seeking to sell the property of the-plaintiff in error, Brown, under two encumbrances, which have no consideration whatever as between Brown and defendants in error.
It is claimed, however, on the part of defendants in. error, that Brown owed his contractor and his sub-contractors for materials furnished to go into his building- and for work and labor done upon his building; and that, when he endorsed and passed over the checks to the contractor and sub-contractors, his debt to them was thereby paid. It is argued, therefore, that inasmuch as he has, paid the contractor or the sub-contractors with these checks, defendants in error have the right to enforce the-mortgage against this property to the extent of $1200.00.. The right so to enforce these encumbrances does not necessarily result from the fact that Brown endorsed the checks’ and turned them over to the contractor or subcontractors, or from the fact that the delay in presenting the checks releases him as an endorser thereof. The checks being surrendered and in the custody of the court, as has already been stated, no action can be brought upon them against Brown ■ as endorser. But his indebtedness to the parties, who furnished material for his building and did work thereon, still remains. The surrender of the checks, while it released his liability as endorser, did not release his liability upon his original undertaking with the contractor or sub-contractors. It is true, that the court below held that the sub-contractors had no lien upon the premises, upon the ground that their suits were prematurely brought, and that their contracts were not such as the law requires in order to create a lien. But there is no reason, so far as I can see, why Brown may not be liable to these parties in an action, brought within the time prescribed by the Statute of Limitations, to recover for the value of the materials furnished for him and for the value of the work done for him. If he is sued upon the original indebtedness by these parties and a recovery is -had against him, and if defendants in error are allowed to enforce these encumbrances against him to the extent of the amount of these checks, then he will be required to pay the same indebtedness twice. In such case, he will have paid the contractor or sub-contractors upon his original indebtedness to them, but he will have received nothing on the building loan from the defendants in error to reimburse him for the indebtedness so paid.
In any view that can be taken of this case, the decree of the circuit court and the judgment of the Appellate Court are erroneous, and the enforcement of these encumbrances to the extent named, and under the circumstances herein indicated, is a great injustice.