Burr v. Beckler

106 N.E. 206 (1914)

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Nature of the Case

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Facts

D was the wife of Charles H. Tobey. For a long time, Charles had been treasurer of the Painter-Tobey-Jones Company, and also a trustee of the estate of his grandmother, Emeline Ludington, and had the sole management and control of the trust estate for the benefit of himself and his father and near relatives. Charles wrote to D in Florida that he was overdrawn at the Painter-Tobey-Jones Company about $5000. This was a lie as Charles owed between $1400 and $1600. Charles told his wife that at the estate of which he was trustee a mortgage there was about the same as mortgaging to himself, and there would be no enforcement of the note because he controlled it. D signed the note but received no money or consideration for signing the note and trust deed. The property securing the note was her separate estate. Charles got the money and immediately gave $1500 to another woman. D eventually divorced Charles. It also turns out that Charles and Burr (P) were engaged together in business and sustained close confidential relations, and pretended that the note and trust deed were assigned to P after said demand, in consideration of a mortgage bond in the amount of $3000 and capital stock of Burr Bros. to the amount $2200; that no such bond or mortgage for the amount claimed, or for any amount, was ever conveyed to Charles either individually or as trustee of the estate of E.M. Ludington, nor was any stock assigned to him. P never gave any valuable consideration for the alleged assignment and had knowledge and notice of facts which upon inquiry would have brought to him knowledge of the defense to the note and trust deed. P sued D to collect on the note or the property securing it. D claimed that P was not a bona fide holder for value and that the note and trust deed were executed by D in the State of Florida and the deed was acknowledged and the note delivered there, and under the laws of Florida the note was void. The court agreed and dismissed P’s action. P appealed. The Appellate Court held that the note was accommodation paper, which, when made in one State to be used in another, is governed by the laws of the latter as to its validity. The court concluded that the note and trust deed were not invalid because made in Florida while the maker was temporarily in that State, and because the note was dated at Chicago, Illinois, and secured by real estate in this State. The court reversed. D appealed.