delivered the opinion of the court.
Plaintiff brought suit on four bonds secured by a trust deed, and upon trial by court had judgment for $2,090, from which defendant appeals.
The bonds contained language referring to the trust deed and the question presented is whether this language, in connection with certain limitations expressed in the trust deed, bars plaintiff from pursuing an action at law on the bonds. This language in the bonds is as follows:
“Said trust deed and this bond, as well as all the other bonds aforesaid, are to be taken and considered together as parts of one and the same contract.
“Both principal and interest bear interest after maturity thereof at the rate of seven per cent (7%) per annum, and are payable in the manner described in the Trust Deed. ....
“For a description of the mortgaged property and the nature and extent of the security, reference is made to said trust deed, to all of the provisions of which this bond and each coupon hereto attached are subject, with the same effect as if said trust deed were herein fully.set forth.”
The language of the trust deed said to bar an action at law by the holder of the bonds is as follows:
“Every holder of any of the bonds hereby secured (including pledgees) accepts the same subject to the express understanding and agreement that every right of action, whether at law or in equity, upon or under this Indenture, is vested exclusively in the Trustee, and under no circumstances shall the holder of any bond or coupon, or any number of combination of such holders, have any right to institute any action at law upon any bond or bonds or any coupon or coupons, or otherwise, or any suit or proceeding in equity or otherwise, except in case of refusal on the part of the Trustee to perform any duty imposed upon it by this Indenture after request in writing by the holder or holders of at least twenty-five per cent (25%) in amount of said bonds as aforesaid, and such refusal of the Trustee shall continue for sixty (60) days after such demand as aforesaid. No action at law or in equity shall be brought by, or on behalf of, the holder or holders of any bonds or coupons, whether or not the same be past due, except by the Trustee or by the requisite number of bondholders acting in concert under the provisions of this Section for the benefit of all bondholders. In the event that pursuant to the terms hereof holders of at least twenty-five per cent (25%) or more in amount of said bonds shall have joined in exercising the right to act in lieu of the Trustee, then none of the remaining bondholders shall have any right to -institute any legal proceedings of the same or a similar character for the same default of the Mortgagor.”
While some earlier cases hold that under similar circumstances the holder of the bond has deprived himself of any right of action at law thereon (Boley v. Lake Street Elevated R. Co., 64 Ill. App. 305; Belleville Sav. Bank v. Southern Coal & Mining Co., 173 Ill. App. 250), the later cases hold otherwise. In the recent case of Sturgis Nat. Bank v. Harris Trust & Savings Bank, 351 Ill. 465, the court quoted with approval from Thorp v. Mindeman, 123 Wis. 149: “While the two instruments will be construed together where-ever the question as to the nature of the actual transaction becomes material, this does not mean that the mortgage becomes incorporated into the note. . . . The holder of the note may discard the mortgage entirely and sue and recover on his note, and the fact that a mortgage had been given with the note, containing all manner of agreements relating simply to the preservation of the security, would cut no figure.” In this case the Supreme Court affirmed the Appellate Court, 266 Ill. App. 199, where we said: “Such bonds should be construed most favorably to the purchasing public. Words and statements contained therein should not be twisted or distorted from their obvious meaning, especially when to do so would result in loss to many innocent purchasers and in serious confusion in the commercial world.” Other cases to the same effect are Pflueger v. Broadway Trust & Savings Bank, 351 Ill. 170; Romberg v. Interstate Independent Telephone & Telegraph Co., 200 Ill. App. 509; Schatzkis v. Rosenwald & Weil, 267 Ill. App. 169; Balch v. English, 261 Ill. App. 29; Gauss v. Simon, 268 Ill. App. 196.
We do not concede that a limitation on the right to sue is not inconsistent with the negotiability of a promissory note. But if this were true, such words of limitation are absent from the instant note. The words claimed to be a limitation on the right to sue are those referring to the trust deed, and, as was said in Enoch v. Brandon, 249 N. Y. 263, such words mean that only by turning to the mortgage would the holder discover the precise nature of the lien. “He would see that the bonds to be issued were not only upon the credit of the corporation, but upon the faith of some collateral mortgage. To it he must go if further knowledge as to this security is desired.”
Our conclusion is controlled by the decisions in the above cited cases, and the judgment is therefore affirmed.
Affirmed.
Hatchett, P. J., and O’Connor, J., concur.