Syllabus.

raise the presumption that whatever title he may have had was less than a fee, and terminated prior to the contract of purchase of Bowman & Griswold.

The rulings below were not in harmony with the views here presented, and the judgment must, therefore, be reversed, and the cause remanded.

Judgment reversed.

ELLIS KAUFMAN

υ.

EDGAR LOOMIS.

Filed at Ottawa May 19, 1884.

1. PLEDGE-sale under pledge-of the title-surplus funds. The owner of securities conveyed them, by a deed of assignment, in the nature of a deed of trust, to be held by the trustee as security for the payment of certain notes upon which the grantor was liable, and it was therein provided that if the grantor should fail to meet the payments on his notes the trustee might sell the securities so pledged, at either public or private sale, and such sale was made to two of the persons for whose protection the pledge was made: Held, the purchasers at the trustee's sale either acquired thereby the absolute ownership of the securities, freed from all trusts, to do with as they chose, or the sale vested the ownership in the purchasers as joint trustees, to be converted into money at their best price, to first pay off their own liability, and any surplus funds, after paying off all debts with which the trust was charged, would in equity belong to the grantor.

2. GUARANTY-release-failure to avail of proceeds of collaterals which are lost. A & B were indebted to a bank upon a note of $3000, and they were at the same time liable to the bank upon a note of $3500, given by them to C for his accommodation, and also upon another note for $1000, upon all of which D was liable as guarantor, and A & B owed the bank $2420 upon their own note, on which D was not liable. A & B and C desired an extension of the time of payment. To procure such time, C transferred to F, by a deed, certain securities, to secure, first, D, for carrying the $3500 note and guaranteeing the $3000 and $1000 notes; and second, to secure to the bank the payment of the $2420, and the surplus to C, or his assigns. The trustee sold the securities to D and the bank for $1500, after which an offer was made to the bank and D of $11,000 for the securities, but the bank

Statement of the case.

refused to sell at that price, and demanded $15,000, shortly after which the securities were rendered worthless by a decision of the Supreme Court: Held, that the bank, by refusing to sell the securities, having acted honestly in trying to get a better price, did not release the liability of D as guarantor of the $3000 note.

3. In a suit upon the guaranty of the payment of a note owned by a bank, the fact that the bank held, before the suit, an assignment through a trustee of a patent right, and some claims for damages for an alleged infringement of the patent, and was offered more for such patent and claims than enough to have paid the note, such assignment having been made by the principal debtor, and the patent and claims afterwards prove valueless from an adverse ruling of the courts, will not operate to discharge the guarantor, although he may have urged the bank to accept the offer for the patent. It was the duty of the bank, as a trustee, to obtain the largest sum that could be realized, and the making of a mistake, while acting in good faith, will not subject the bank to a loss.

APPEAL from the Appellate Court for the First District;heard in that court on appeal from the Superior Court of Cook county; the Hon. SIDNEY SMITH, Judge, presiding.

The evidence for the defence tends to show that on March 14, 1878, Loomis was liable as guarantor for the accommodation of Babcock & Ten Broeke, for $3000, and upon an accommodation note made by him for the accommodation of S. D. Cozzens, for $3500, and as accommodation guarantor for another debt of Babcock, guaranteed by Ten Broeke, of $1000,-in all amounting to about $7500. The $3000 note belonged to the International Bank, and Babcock & Ten Broeke owed the bank about $2420 upon their own note, with which Loomis had no connection. Neither Babcock & Ten Broeke nor Cozzens were prepared to pay their respective debts, and wanted the payment extended for six months. Loomis required, before he would consent to the extension, that the accrued interest should be all paid, and this was done. Lowenthal was the president and general manager of and for the bank, and he refused to consent to the extension of payment unless some additional security were given on the $2420 note. Cozzens claimed to own a patent, or an

Statement of the case.

interest in a patent, called "Tanner's car-brake patent," and to have a demand against certain railroad companies for violation of his rights in the use of the Tanner car-brake. Ten Broeke also claimed some equity in the patent, and perhaps in the claim against these railroad companies, and Cozzens held releases of these respective railroad companies, signed by James D. Mowry, trustee, and approved by Cozzens, from all liability for making and using the Tanner brake, ready to be delivered upon the payment of damages by such companies, respectively, such as might be agreed upon. It was accordingly arranged, by consent of all parties concerned, that the payment of the several debts should be extended six months, and Cozzens should deliver to Mr. Bisbee (who was the attorney of Loomis) the releases mentioned, and also make to Bisbee an assignment of all interest and claim against these railroad companies, for the use of the Tanner car-brake, in trust,-first, to secure Loomis for carrying the $3500 debt, and for guaranteeing, upon renewal, the $3000 note, and for guaranteeing the $1000 note; and second, to secure the International Bank the payment of the $2420 note. This was done, and the fact was recited in a deed of Cozzens, under seal, in which he authorized Bisbee, in default of payment of any or all of the above debts, to sell the assignment made by Cozzens to Bisbee, and also the releases, at public or private sale, without notice, and to apply the proceeds of the sale to the payment of the costs of making said sale and all reasonable attorney's fees to which said Bisbee may be entitled for doing the business in this. behalf, and also to the payment of the $3500 debt, and to the payment of the $3000 note guaranteed by said Loomis, and to the payment of the $1000 debt; and after the payment in full of such indebtedness, then the balance of the proceeds to be applied to the payment of the $2420 note, and the surplus, if any, to be returned to Cozzens, or his assignees.

Statement of the case.

The evidence also tends to show that all this indebtedness remaining unpaid after the lapse of six months, at the request of Loomis and Lowenthal, Mr. Bisbee advertised these releases and the assignment for sale, Loomis and Lowenthal paying for the advertisement, and at a public vendue the same were struck off to the bank and Loomis at the price of $1500. No money was paid to Bisbee in consummation of this. Neither the assignment of the patent right and claim, nor the releases, were ever delivered to either the bank or to Loomis, under this sale, but the same remained in the hands of Bisbee. The evidence also tends to prove that before the bidding at the sale it was agreed between Lowenthal, for the bank, and Loomis, that if the same were bought by them, out of the avails the notes for which Loomis was bound should be first paid, and then the $2420 note owned by the bank should be paid. Evidence was also given that Loomis had promised Ten Broeke that the surplus should go to Ten Broeke or Cozzens, or to both, but no evidence that the bank was a party to this promise, or that Lowenthal or any officer of the bank had any information about this promise by Loomis to Ten Broeke. The evidence also tended to prove that the questions whether this patent was valid or not, and whether the railroad companies had infringed the same, (on which the validity of the claim of Cozzens against the railroad companies depended,) had been, and still were, in litigation. The Circuit Court of the United States, in a test suit, had held the patent valid, and ruled that the brake used by the railroad companies was an infringement, and that judgment was before the Supreme Court of the United States for review, and the case had been argued before the Supreme Court, but was not yet decided, and it was generally thought the judgment of the Circuit Court would be affirmed. The evidence also tended to prove that in this state of affairs the representatives of the railroad companies approached Bisbee, for the purpose of buying the releases in his hands,

Statement of the case.

and offered to pay for the same the sum of $11,000. This offer was communicated by Bisbee to Loomis, and he consented that the offer be accepted. Bisbee urged it should be accepted, and that both Bisbee and Loomis notified Loewenthal of the offer, and asked him to consent that the offer be accepted, but that Lowenthal refused to consent to accept. $11,000, but told Bisbee to offer to sell at $15,000, and that for the reason that Lowenthal refused to consent to a sale for $11,000 the negotiation failed. The evidence also tends to show that soon afterwards the decision of the Supreme Court of the United States was rendered, holding, in one case, that the patent was void, and in another that the brake used by the railroad companies was not an infringement, and that by reason of these decisions the securities put into the hands of Bisbee by Cozzens became valueless.

This is an action brought by Kaufman, against Loomis, upon his guaranty upon the $3000 note given by Babcock & Ten Broeke to the International Bank, which had been assigned to Kaufman by the bank merely for collection. The bank and Loomis are the real parties in interest.

After the above evidence was given for the defence, the court was asked by the plaintiff to give the jury the following among other instructions, which the court refused to give,— that is:

"No. 1. The jury are instructed, as a matter of law, that the pretended patent right here brought in question, and the amount at one time offered by the Illinois Central Railroad Company and the Chicago, Burlington and Quincy Railroad Company, constitute no defence in this case, and you will entirely disregard all the evidence pertaining to same."

And plaintiff excepted to the ruling in refusing this instruction.

The court, at the request of the defendant, gave to the jury the following instruction: