text:
    Federal Life Insurance Company, Appellant, v. J. E. Griffin et al., Appellees.
    Gen. No. 17,093.
    1. Corporations—when assignment of use of charter by promoter not consideration, for royalty contract. A promoter of an insurance company has no such ownership of or control over the charter of the proposed corporation, that an assignment of the right to use it is any consideration for a royalty contract, though on the subscription lists for stock it is specified that the promoter is the owner of the charter under which the company shall do business and that the board of directors is authorized to purchase the right to use the charter.
    2. Contracts—consideration. There is a consideration for a royalty contract between an insurance company and its promoter where the promoter gives therefor the use of his plans, method and system of selling insurance which from the large amount of business transacted, evidently proved valuable, though the use thereof was subsequently discontinued.
    3. Contracts—when not proved unconscionable. A royalty contract by a promoter with an insurance company is not proved unconscionable where the evidence as to the promoter’s royalties, amounting to about $10,000 a year is opinion evidence and does not show a “load” equal to that required to pay the royalties could not be successfully carried by the company.
    4. Contracts—when equity cannot compel cancellation. A court of equity is not authorized to compel cancellation of a contract otherwise valid, merely because one of the parties may sustain loss.
    5. Insurance—when fraud in securing royalty contract not shown. The fact that six stockholders owning but $10,000 out of the $125,000 of capital stock may not have been informed that certain plans were to be purchased from a promoter, such fact being known to all the other stockholders, is not sufficient to warrant a finding that there was any actual fraud by the promoter or his associates in securing a contract for certain royalties in return for the plans.
    6. Insurance—when constructive fraud in securing royalty contract. Though a promoter of an insurance company in his stock subscription lists specifies that the directors shall authorize the payment of certain royalties to him for the use of plans, the act of the promoter and of nine other directors to whom he had assigned part of the benefits of the proposed contract, in voting for the resolution authorizing the contract, is constructively fraudulent.
    7. Corporations—quorum. A director interested in the ratification of an agreement with the stockholders, cannot be counted to make a quorum when the question of ratification is taken up by the directors.
    8. Corporations—when resolution not legally adopted. Where a quorum of 15 directors is necessary, a resolution authorizing the ratification of an agreement with the stockholders is not legally adopted and a contract in pursuance thereof is unauthorized, where out of twenty-three directors present, ten are disqualified because of interest.
    9. Corporations—when contract voidable. A contract executed, in pursuance of a resolution not legally adopted because of the lack of a quorum, caused by the disqualification of certain directors because of interest, is not void, but voidable, and may be ratified by the stockholders.
    10. Contracts—when voidable. Actual or constructive fraud does not render a contract void, but merely voidable at the election of the party injured.
    11. Corporations—recovery of reasonable value of services. On a bill to cancel a contract made pursuant to a resolution of the directors of an insurance company authorizing the ratification of an agreement with the stockholders granting royalties on insurance business for the use of defendant’s plans, defendant is entitled to recover the reasonable value of the use of the plans not to exceed the contract price, whether the resolution and contract are voidable or void because of interest on the part of certain directors who voted therefor.
    12. Chancery—when defendant may be awarded reasonable value of services in absence of cross-bill. On a bill to annul a contract and to enjoin actions based thereon where it appears that the contract, made pursuant to resolutions of a board of directors authorizing ratification of an agreement with stockholders, is voidable because of interest on the part of certain directors who voted therefor, the court may without a cross-bill require the complainant to pay the reasonable value of the use of the defendant’s plans provided for by the contract either as relief incidental to the bill or as a condition of the relief.

      13. Contracts—relief on cancellation. Where a contract made pursuant to resolutions of corporate directors is voidable because of interest of certain directors therein, a finding on a bill to annul the contract that defendant is entitled to the contract price for the services rendered should be reversed in the absence of a showing that such price is the reasonable value thereof.
    Appeal from the Circuit Court of Cook County; the Hon Thomas G. Windes, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed in part and reversed in part and remanded with directions.
    Opinion filed October 3, 1912.
    Rehearing denied October 17, 1912.
    Charles A. Atkinson, Joseph P. Mahoney and Charles J. O’Connor, for appellant.
    Ganns, Peaks & Townley, for appellees.
   Mr. Justice Fitch

delivered the opinion of the court.

This is an appeal from a decree of the Circuit Court of Cook county, annulling a contract between appellant and the appellee, Griffin, and enjoining appellees from prosecuting suits at law based upon said contract, upon the condition that within sixty days from the date of the decree appellant shall pay into court for the use of appellees, the sum of $93,739.65.

It appears from the pleadings and proofs that the appellee, Griffin, in 1898 or 1899 conceived the idea that he had some new and original plans and methods for selling life insurance policies; that filled with this idea, he devoted much of his time and energy to the work of inducing others to invest their money in the organization of a life insurance company to be formed to carry out his ideas, plans and methods; that he succeeded in persuading fifty-five individuals, residing in Illinois and Wisconsin, to subscribe their names to a “preliminary” stock subscription for divers amounts, aggregating $176,000; that in this preliminary subscription list it was explicitly stated that the subscribers thereto “do severally subscribe to and agree to pay for the number of shares set opposite our respective names, of the par value of $100 each, of the capital stock of a company to be incorporated and organized under and by virtue of the laws of the State of Illinois relating to life insurance * * * upon the condition that the said company shall organize in accordance with the terms and conditions of the proposed charter of said company, a copy of which is hereto attached, and acquire from J. E. Griffin, of Chicago, his plans, method, tables, system and policies of insurance upon the basis set forth in the statement hereto attached in regard to said plans, method, tables, system and policies;” that attached to said subscription list was a draft of articles of incorporation of a life insurance company to be known as the Equitable Inheritance & Life Insurance Company, with its principal office in Chicago, having a capital stock of $125,000, and such powers as were authorized by the laws of Illinois, and also attached to said preliminary subscription list was an agreement reciting that J. E. Griffin “is the originator, author and owner of the plan, methods, policies, table and system, and the owner of the charter under and by which the said Equitable Inheritance & Life Insurance Company shall do an insurance business, and that the first board of directors or officers of said Company, immediately after election, shall acquire the right and authority, and shall carry the plans, method, system and policies of said Griffin into effect under said charter in such a manner as shall be deemed for the best interests of the policy holders and said company;” that said first board of directors is “authorized, requested and directed” to enter into a contract with said Griffin for the purchase from the latter of the right to use for “100 years and1 thereafter, during the life of said Company” the charter, plans, systems, etc., of said Griffin, and for the payment to said Griffin, his executors, administrators and assigns, or to whom he shall direct, of a “royalty for the use of his plans, systems,” etc., amounting to two dollars for every $1,000, or fraction thereof, of insurance that may lie written by the company during that time, and two dollars for every first renewal, and one dollar for each subsequent renewal thereof, such royalties to be payable quarterly, semiannually or annually, as may be agreed upon, and also to give to Griffin the exclusive right to sell insurance for said company within such five states as he may select, such agency to continue for twenty-five years, and as much longer as Griffin shall be able to write a reasonable amount of insurance; that in further consideration of the fact that Griffin “is the promoter and organizer” of said company, and “has devoted a great amount of time and energy in soliciting and obtaining applicants and applications for insurance in said company, and has expended large sums of money in and about procuring such applications * * * and in promoting the organization of said company;” said Griffin shall receive, immediately after organization, a sum or commission equal to 50 per cent, of the first year’s premium upon all applications procured by him or his associates prior to the date of the completed organization of the company; and, further, that the company, when organized, shall repay to Griffin all his legitimate expenses and moneys expended by him “in forming, and making complete the organization of said company, including the charter and all expenses or sums of money expended therefor or on account therefor;” that on January 24, 1900, Griffin issued a call for a first meeting of the subscribers, to take place on February 10, 1900; that thirty of the fifty-five subscribers attended said meeting in person; that at said meeting the appellant corporation was formally organized, the name being there changed to Federal Life Insurance Company; that thereupon, a new and second subscription to the capital stock of the Federal Life Insurance Company was prepared in the usual form of such stock subscriptions, and signed by those present at the meeting; that of those who had signed the preliminary subscription list, nine persons, whose subscriptions aggregated $51,500, did not respond to the call for said meeting, nor sign the second list, and of those who were present and signed the second list, seven reduced the amount of their first subscriptions to the extent, in all, of $21,500; that the remaining $103,000 of the subscriptions in the original list were again subscribed in the second list, and to make up the remainder of the $125,000 of capital stock, twelve persons whose names do not appear upon the preliminary subscription list signed the second subscription; that at said stockholders’ meeting a resolution was introduced and unanimously adopted, by the terms of which the board of directors was “authorized and directed to take all necessary action to perfect and complete the organization of this company * * * in accordance with all the terms and conditions of the preliminary subscription list to the capital stock of this company, relative to acquiring from J. E. Griffin, of Chicago, Illinois, his plan, system and policies of insurance, and all matters connected therewith, including the payment to said J. E. Griffin of all expenses incurred by him and his associates in and about the organization of this company”; that at said meeting articles of incorporation were adopted substantially in the same form as the draft of such articles attached to the preliminary subscription list, in which was an article providing that the corporate powers shall be vested in a board of directors, to consist of eighteen stockholders, which number may be increased at any stockholders’ meeting to not exceeding thirty-six, and that the board of.directors shall have power to determine, in its by-laws, the number of directors that shall constitute a quorum for the transaction of business; that at said stockholders’ meeting a resolution was adopted fixing the number of directors at thirty; that twenty-eight directors were then elected; that immediately following the stockholders’ meeting, a meeting of the directors was held, at which there were present, in person, twenty-three of the twenty-eight who had been elected directors; that the directors adopted a set of by-laws, among which was one providing that a majority of the members of the board shall constitute a quorum for the transaction of business; that a resolution was unanimously adopted by the directors then present, authorizing and directing the officers of the company “to take all necessary action to perfect and complete the organization * * * in accordance with all the terms and conditions of the preliminary subscription list to the capital stock of this company relative to acquiring from J. E. Griffin of Chicago, Illinois, his plan, system and policies of insurance and all matters connected therewith,” etc., following the identical form of the resolution previously adopted by the stockholders; that prior to said meeting of stockholders, Griffin had assigned to divers persons interests in his proposed contract with the proposed corporation, and of the twenty-three directors who voted for said resolution ten directors, including Griffin, were personally thus interested in the proposed contract and therefore interested in procuring the execution of the same, leaving but thirteen disinterested directors who voted for said resolution; that none of said disinterested directors was aware of the fact that Griffin had made such assignments, nor of the fact that nine of the directors present besides Griffin were interested with him in the proposed contract; that in pursuance of the resolutions thus adopted at both the stockholders’ and directors’ meetings, the president and secretary of the company, in June, 1900, executed a formal contract providing’ for the payment of “royalties,” as above stated, to Griffin for the use during the life of the company of his plans, methods and system of life insurance, and on other dates executed other contracts with Griffin, making him the exclusive agent of the corporation in a number of states of the union; that in pursuance of the same resolutions, the officers paid to Griffin over $8,000 for the preliminary expenses paid and incurred by him in procuring stock subscriptions and applications for insurance; that the corporation so organized began the business of selling life insurance policies; that for several years it used the methods proposed and taught by Griffin with one exception, with the result that during the first year of its corporate existence, through agencies organized by Griffin, it sold in excess of $2,000,000 of life insurance; that at the first annual meeting of stockholders following the organization, the president, in his report to the stockholders, stated that the company held “the world’s record for the largest volume of business ever written in its first year by any company now writing life insurance,” and the same statement, in substance, was printed and mailed to all its policy holders, with this addition: “The magnitude of the results secured cannot fail to challenge attention and commendation everywhere. These facts deservedly bring the Federal into conspicuous prominence throughout the insurance world. The results secured will be especially gratifying to the friends and policy holders of the Federal; ’ ’ that during the first year or two Griffin had the sole charge of the selling agencies of the company; that he procured a copyright upon one form of insurance policy, and that this policy was used by the appellant in writing a large amount of insurance; that he was the only person among the directors or stockholders who at that time had any expert knowledge of the principles or business of life insurance, and was the person upon whom the officers and directors relied for expert counsel and advice in conducting the business of the corporation; that after the lapse of several years, however, the directors and officers gradually changed their plan and methods of doing business and the form of their insurance policies, until few, if any, of the original plans, methods and policies were used at all; that prior to 1903 the officers of the company solicited and obtained from Griffin and his associates waivers of the royalties provided by the contract to be paid, and nothing has been paid at any time to Griffin or his associates for or on account of such royalties; that in 1903 Griffin made a demand upon the officers of the company for an account of such royalties, to which no attention was paid, and thereupon he caused an attorney to write to the company, making a formal demand for an accounting of all moneys due to Griffin; that the president sent a reply to the effect that he was directed by the executive committee of the board of directors to say “that this company denies any indebtedness of any kind or nature to Mr. Griffin;” that in July of the same year, Griffin wrote the company demanding a full statement “of my account, including the accumulations under royalty contract, etc.,” to which the president replied by quoting his previous letter to Griffin’s attorney, and adding: “The position of this company relative to the subject matter of your letter is as indicated in said letter to your attorney”; that following these letters, however, the company’s officers continued to request the several owners interested in the royalty contract to waive their claims for the time being, in view of the fact that the company had not been able to pay a dividend; that in the latter part of 1905 Griffin wrote another letter, making a formal demand for a sworn statement ‘ ‘ showing the business done by your company in the sale of insurance and of renewals thereof from the first day of June, 1900, to the first day of October, 1905,” and for “the immediate payment to me of the royalties accruing to me during the period above mentioned, in accordance with the terms of the contract executed between you and myself, dated June 1, 1900;” that upon the failure of the appellant company to respond to this demand Griffin brought two suits against appellant, one for $50,000 and the other for $20,000, for royalties alleged to have accrued under said contract; that in March, 1907, appellant filed this bill in the Circuit Court, reciting in substance, the facts regarding the organization of the company, the passage of the resolutions above mentioned, the execution of the royalty contract and the beginning of the suits by Griffin, alleging that the contract was void because it was not authorized by a disinterested majority of the board of directors, and because it was unconscionable, unreasonable and oppressive, and praying that said contract be cancelled and the prosecution of said suits be enjoined; that a temporary injunction was issued in accordance with the prayer of the bill, and that the chancellor, after hearing the evidence, found and adjudged that the contract was voidable, but that the defendants (who are the present owners of the various interests in the contract) are entitled to an accounting from the appellant, for the reason that the contract was not rescinded prior to the filing of the bill of complaint; then found that there was due to the defendants under said contract, with interest, $93,739.65, and thereupon adjudged and decreed that upon the payment within sixty days of that sum into court for the use of the defendants, and upon the surrender to Griffin of such of Ms plans, methods, tables and systems of insurance as had been ‘ ‘ delivered to and accepted by said complainant as a consideration” therefor, the contract should be cancelled, annulled and held for naught, and the defendants be perpetually enjoined from proceeding with the pending suits and from instituting or bringing any suits to enforce the contract, and that in the event of the failure of the complainant to perform the conditions thus imposed, “the contract shall be a valid and binding obligation upon complainant” and the injunctions theretofore issued be dissolved. The complainant appeals from said decree and assigns numerous errors.

The questions involved in the assignments of error may be briefly stated as follows: (1) Was there any consideration for the contract? (2) Was the contract so unreasonable or oppressive as to justify the interference of a court of equity? (3) Was there any fraud, actual or constructive, in procuring the execution of said contract, and was the contract void or voidable for that reason or because of the fact that ten of the directors were personally interested therein ? (4) If voidable only, and not void ab initio, did appellant ratify the contract by its subsequent conduct, or did appellant rescind or disaffirm it within a reasonable time? (5) Was the decree of the lower court erroneous in imposing conditions to the relief sought and thus granting relief, in effect, to the defendants without the filing of a cross-bill?

It is urged, strenuously and at great length, by appellant’s counsel, that appellant received no consideration whatever for the contract in question. We cannot agree with this contention. It may be conceded that Griffin had no such ownership of or control over the charter of the proposed corporation that an assignment to appellant of the “right to use the charter ” can be considered as any consideration for the royalty contract. But the contract also provides for the use by appellant of Griffin’s plans, method and system of selling life insurance. That the use of such plans, methods and system was of considerable value to appellant during the first years of its corporate existence must be apparent, we think, from the mere statement of the facts above recited; and the mere fact that the use of such plans, methods and system has since been discontinued by appellant does not, of itself, even tend to prove that such use was not of great value prior to the time it was so discontinued.

Nor can we agree with appellant’s contention, that the contract was unconscionable. While it is true that a great mass of evidence was introduced for the purpose of showing that no life insurance corporation could successfully compete with other like corporations if burdened with the payment of such royalties as are provided for by the contract in question, yet this evidence was all “opinion evidence,” based upon hypothetical questions involving a comparison of business methods of other corporations, the answers to which depend so much upon the personality of the officers and agents of such corporations, and their ability to* successfully conduct a life insurance business, as to leave the whole subject a matter of pure conjecture and speculation. We see nothing in such evidence sufficient to warrant us in finding as a fact that a “load” equal to that required to pay the royalties specified in the contract in question (about $10,000 a year) could not have been successfully carried and paid by the appellant corporation, if it had elected to approve the action of its board of directors. The burden of proof to establish that fact, if it be a fact, was upon the appellant, and we think it has failed to sustain that burden. In any event, we know of no principle which would authorize a court of equity to compel the cancellation of a contract merely because one of the parties thereto will possibly or probably sustain a loss, if the contract is otherwise valid.

The most important question here involved is whether appellant has the right to disaffirm the action of its directors and officers upon the ground of fraud or illegality, and if it has that right, whether it may do so without returning the consideration it has received or its equivalent value. Appellant’s counsel urge that an affirmative answer must be given to both branches of this question. They contend that the contract was fraudulently obtained by a trustee who made use of his position as such to secure to himself an unlawful advantage over his cestuis que trust, and that a contract thus obtained is void ab initio, on grounds of public policy. It is conceded by appellees’ counsel that directors of a corporation are trustees for the stockholders; that in the performance of their duties, they must observe the utmost good faith; and that for this reason, the vote of a director upon any matter in which his personal interests conflict with those of the stockholders whom he is elected to represent, cannot be counted. But they contend that in this case there is no proof of any actual fraud or fraudulent intent on the part of Griffin, and that if his vote and the votes of his nine associates can be held to be constructively fraudulent, the contract is not void for that reason alone, but is, at most, voidable at the election of the corporation; and that one who elects to rescind or dis-affirm such a contract must return or offer to return the consideration received for the same. The chancellor adopted the latter view; and in this we agree with him, except as to the method apparently adopted by him to ascertain the value of the consideration so received.

We think there is nothing in the proofs submitted, except the single fact that ten interested directors of the twenty-three directors voted, and were counted as voting, in favor of the resolution authorizing the execution of the contract in question, that shows any fraud or fraudulent intent on the part of Griffin and his associates. All but twelve of the stockholders, and all of the directors, signed the preliminary contract of subscription and must therefore be held to have had full knowledge of the purpose and meaning of the resolution. Of the twelve new subscribers, the record shows that all but five or possibly six were represented at the stockholders ’ meeting by other stockholders who had such knowledge. Under such circumstances, we cannot hold that the fact that six stockholders, owning but $10,000 out of the $125,000 of capital stock, may not have been told, or otherwise informed of what was fully known to all the rest of the stockholders, is sufficient, .of itself, to warrant a finding that there was any actual fraud or fraudulent intent on the part of Griffin and his associates. We think, however, that the act of the ten interested directors in voting for the resolution adopted at the directors’ meeting, must be held to be constructively fraudulent. ‘' Constructive fraud is such as the law infers from the relationship of the parties or the circumstances by which they are surrounded, regardless of any actual dishonesty of purpose.” (14 A. & E. Encyc. of Law, 2nd Ed. 21.) “By constructive frauds are meant such acts or contracts as, although not originating in any evil design or contrivance to perpetuate a positive fraud or injury upon other persons, are yet, by their tendency * * * to violate public or private confidence * * * deemed equally reprehensible with positive fraud.” (1 Story Eq. Sec. 258.) Under the by-laws of appellant as above stated, a majority of the directors constituted a quorum for the transaction of business. The presence of fifteen directors was therefore necessary. Twenty-three were in fact present when the resolution was adopted, but ten of them were personally interested in the subject-matter of the resolution. An interested director cannot be counted for the purpose of making a quorum. Leary v. Interstate Nat. Bank, 63 S. W. 149; Curtin v. Salmon River Etc. Co., 130 Cal. 345; 3 Clark & Marshall on Private Corporations, Sec. 681. The moment, therefore, that the resolution came before the meeting for action, the quorum was broken, for there were only thirteen directors whose lack of personal interest entitled them to be counted as present. For the purpose of acting upon the matter of said resolution, the ten interested directors were as much disqualified as if they were absent from the meeting. The resolution, therefore, was never legally adopted, and the contract executed in pursuance thereof was unauthorized.

But it does not follow from this, that the contract was therefore absolutely void. In 3 Clark & Marshall on Private Corporations, Section 760, the author states that the rule in such cases is as follows: “All of the authorities agree that the majority of directors must be disinterested in respect to the matters voted upon, If one or more of them are personally interested in a contract or other transaction voted upon by the board, and less than a majority are disinterested, the corporation may set the transaction aside. Some of the courts go further than this, and hold that the transaction is not merely voidable at the option of the corporation, but that it is absolutely void. But by the weight of authority, it is merely voidable and may be ratified or acquiesced in by the stockholders and thereby rendered binding. ’ ’ The rule in Illinois in this respect is in accord with the weight of authority, as thus stated. Brown v. DeYoung, 167 Ill. 549; Adams v. Burke, 201 Ill. 395; Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 320; Higgins v. Lansingh, 154 Ill. 301; Beach v. Miller, 130 Ill. 162.

As stated above, the contract here involved was constructively fraudulent. The effect of fraud upon a contract, whether actual or constructive, is not to make the contract absolutely void, but merely to render it voidable, at the election of the party injured. Union Stock Yard & T. Co. v. Mallory, 157 Ill. 554.

It has also been held that where an officer of a corporation, with the knowledge but without the express ■authority of his corporation, enters into a contract beneficial to the corporation, but from which he also derives a personal benefit, as in a lease to the corporation of a building owned by him, the contract is not void, but if acquiesced in by the corporation, becomes a binding contract. L. N. A. & C. Ry. Co. v. Carson, 151 Ill. 444; Ashley Wire Co. v. Ills. Steel Co., 164 Ill. 149, 156; People v. Penn. Mut. L. Ins. Co., 126 Ill. App. 281.

But if it be conceded that the contract was void—a mere nullity for want of power on the part of the directors to make it—it does not follow that appellant may therefore be permitted to receive and keep the benefits of such contract without incurring any liability whatever to account to appellees therefor. In Brennan v. Gallagher, 199 Ill. 207, a former stockholder of a loan association surrendered his stock at maturity and settled with the association but deposited a portion of the amount received with the association under its contract to pay him interest for the use of his money. The association became insolvent, and in the distribution of its assets in equity, it was held that he was entitled to be paid the amount so deposited, with interest, since, even if the contract was ultra vires and therefore void, the corporation which had received the money could not be permitted to retain it without liability. The court there said (p. 211): “Simply because it undertook to do what it was not authorized to perform and upon such undertaking received money from appellee which it had no right to receive, does not exempt it from all liability but it is in duty boimd to refund what it has received, upon demand. The contract being only ultra vires, and not malum in se or malum prohibitum, and the corporation .having received money under it which in equity and good conscience belongs to appellee and which it ought to pay over to him, it is liable in an action for money had and received, with interest at the legal rate from demand made. Such an action would not enforce or even recognise the contract, but would disaffirm it.” (Italics .ours.)

The same reasoning, in effect, was used in a recent case (Voorhees v. Mason, 245 Ill. 256), where the facts were more nearly analogous to those of the present case. In that case a bill was filed on behalf of a corporation against six of its seven directors to require them to account and pay over to the corporation certain commissions alleged to have been received by them and unlawfully retained. It appeared from the evidence that the six directors were officers of the corporation and that as directors they had passed a resolution allowing such commissions to the secretary and the 'directors for making sales of stock and “income certificates.” The chancellor dismissed the bill for want of equity. The Supreme Court held that because the directors had “by their own votes fixed the value of their commissions,” the resolution thus adopted was “not conclusive upon the corporation,” and therefore that “the directors could not rightfully retain commissions for such sales by virtue of said resolution.” But the court further held as follows (p. 264):

“The services of the secretary and other officers of the corporation in making sales of stock and income certificates were of value to the corporation, and upon proof of the value of such sales, regardless of the resolution, they may rightfully be allowed compensation for making such sales,—that is, allowed such sum for such services as the same are reasonably worth, not to exceed the amount fixed by the resolution,—it being our view that the resolution having been passed for the express purpose to authorize the directors to sell the stock and income certificates and to receive commissions for such service, and that resolution having been adopted by the votes of the directors who were to benefit from its adoption, it was void, and that such directors could only recover what their services (their services in that behalf being outside of their duties as directors or- officers) were reasonably worth, but that they having made said sales while the resolution which had been passed by their own votes was unrescinded, they should be estopped to claim that they were entitled to receive more in the way of commissions for making said sales than the amount fixed by their own votes; that while the resolution was not binding upon the corporation, it was binding, by way of estoppel, upon the directors.”

Applying the same reasoning to the facts of this case, if the use of Griffin’s plans, methods and system of selling life insurance policies was of value to the corporation (and we have held that it was) then upon proof of the value of such use “regardless of the resolution,” appellees would equitably be entitled to recover such sum as the use aforesaid was reasonably worth not to exceed the amount fixed by the contract. And whether the contract be regarded as void or voidable we think that the reasonable value of the use of Griffin’s methods and policies is all that appellees ought in equity to receive under the facts of this case, and all that appellant ought in equity to be required to pay. We entertain no doubt as to the power of the court to require the appellant to pay such value to appellees without a cross-bill, either on the theory that such a requirement is merely incidental to the relief sought by the bill, or on the theory that it is imposed as a condition to the relief sought. On either theory a court of equity has the power to require the complainant to “do equity.” The chancellor, however, allowed the full amount of accrued royalties, with interest. If this amount be equal to the reasonable value of the use which appellant has made of Griffin’s plans and policies, there would be no error in the ruling. But we have been unable to find any evidence to that effect in the record before us. The case will therefore have to be reversed to permit the further taking of testimony on this sole point.

We have carefully considered the remaining questions regarding the alleged ratification and laches on the one hand and the alleged, disaffirmance on the other, and deem it sufficient merely to say that we’ think the findings of the chancellor in such respects are sustained by the evidence.

The decree of the Circuit Court, for the reasons given, will be affirmed in all respects except as to the amount therein required to be paid by the complainant; and as to that provision, the decree will be reversed and remanded with directions to take proofs as to the reasonable value of the use made by the appellant of the plans, methods, system, table and policies of J. E. Griffin from June, 1900 to March 19, 1907 (the date of the filing of the bill); and when found, to enter a decree requiring appellant to pay within sixty days thereafter the amount of such reasonable value with interest from July 11, 1903, the date of the letter from Griffin demanding payment of royalties, to the date of such decree, as a condition to the cancellation of the contract recited in the bill of complaint. Affirmed in part and reversed in part and remanded with directions.


source: Caselaw Access Project

author: Mr. Justice Fitch

license: Public Domain

text:
    Ossian Cameron, Appellee, v. Morris Barancik, Appellant.
    Gen. No. 17,105.

      Tout—maliciously inducing breach of contract. Where a claim for personal injury has been assigned to an attorney under a contract for a division of the amount recovered, with a stipulation that any money received by the injured person in settlement of such claim, should be held as agent for the attorney, an action for maliciously persuading such person to break the contract cannot be maintained against a personal injury adjuster who caused a settlement to be made where it does not appear that he induped, or persuaded, or attempted to persuade such person not to hold the money as agent for the attorney.
    Appeal from the Superior Court of Cook County; the Hon. J. C. McBride, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Reversed with finding of facts.
    Opinion filed October 3, 1912.
    Rehearing denied October 17, 1912.
    William R. Moss, for appellant.
    A. S. Lakey, for appellee.
   Mr. Justice Fitch

delivered the opinion of the court.

Appellee recovered from appellant a judgment for $500 in tort upon a declaration charging that appellant (defendant below) “wilfully and maliciously induced and persuaded” one Frank Rubish “to break his contract with the plaintiff herein for the purpose of injuring the plaintiff and depriving him of the benefits, interest and profits to which he was entitled under said contract.” From that judgment the defendant appeals.

The contract referred to was in writing and is set out in full in one count of the declaration. In substance, it provides that Frank Rubish, having been injured through the negligence of the Illinois Steel Company, has “made, constituted and appointed” Ossian Cameron his attorney, to bring suit for damages “or to compromise or adjust same in court or out of court;” that Rubish shall pay court costs and expenses, and pay Cameron as attorney’s fees, one-half of the amount recovered “by any-means;” to secure the same, Rubish assigns his “right, title and interest in and to said claim,” and to any money “paid in settlement of said claim,” to Cameron; and Rubish agrees to hold any money that he may receive on account of his claim “whether by settlement direct with me” or otherwise, “as the agent of said Cameron.”

The evidence tended to prove that Cameron, on behalf of Rubish, brought suit against the Illinois Steel Company for $15,000 damages; that he also opened negotiations for settlement, with the attorneys for the Steel Company and with one Young, who was a claim agent or “safety inspector” of that company, resulting in his receiving offers of settlement beginning at $900 and ending at $1,500, all of which offers were declined, and Cameron thereupon prepared his client’s case for trial. In the meantime, the appellant Barancik, whose business (he said) was “gents’ furnishings and settling cases,” approached Rubish, and as Rubish testified: “He tell me settle, want to settle. I tell him I got lawyer. I got my doctor, too—you settle him, $3,000 for myself and settle the doctor and settle the lawyer. Barancik and Young were present when I said that. They said I should not worry about anything, that they will settle the doctor and they will settle the lawyer, too.” The Steel Company then paid Rubish $3,000, who permitted Barancik to retain $200 for his services, and when the case was called for trial, it was dismissed on a stipulation signed by Rubish in person. Soon after receiving the $3,000 Rubish removed to Gary, Indiana, and has never paid anything to Cameron. Rubish testified: “I never paid my lawyer anything. Why should I pay him? Because they told me they will pay him.” There is no affirmative evidence that Cameron ever tried to collect anything from Rubish. Two other clients of Cameron, who had similar claims against the same Company, testified that Barancik told them that Cameron was “no good lawyer,” and that he, Barancik, would settle their cases for less “per cent” than Cameron would charge them.

Appellee’s counsel contend, upon the authority of London Guarantee and Accident Co. v. Horn, 206 Ill. 493, and Gibson v. Fidelity and Casualty Co., 232 Ill. 49, that the facts above stated bring this case within the principle that “a man who induces one of two parties to a contract to break it, intending thereby to injure the other or to obtain a benefit for himself, does the other an actionable wrong.” This is unquestionably the theory of the declaration. To this, appellant’s counsel replies that the principle invoked by appellee is subject to the qualification or exception recognized in the Horn case, supra, and in Doremus v. Hennessy, 176 Ill. 608, viz: that while “it is a violation of legal right to interfere with contractual relations recognized by law, if there he no sufficient justification for the interference,” yet lawful competition in trade or .business is such a justification; and that the facts here proved show nothing more than a case of “legitimate trade competition.” To put this contention in another form, the question thus raised is as follows: Is a personal injury claim adjuster a business competitor of a lawyer employed to prosecute personal injury cases? It would be interesting, and possibly instructive, to pursue this inquiry to a satisfactory conclusion; but as we have received no help from counsel in the solution of this problem, except such as may be afforded by the authorities above mentioned, we prefer to rest our decision of this case upon the more obvious ground that appellee has not made out a case under the principle he invokes, even if the exception be disregarded.

The gist of the charge in the declaration is that Barancik maliciously induced or persuaded Rubish to break his contract with Cameron. We find no evidence that Rubish broke his contract. The contract clearly reserved to Rubish the right to settle his claim, and provides that if he does settle he shall hold all moneys received in settlement as the agent of Cameron. There is no evidence tending to show that Barancik ever induced, persuaded, or attempted to induce or persuade Rubish not to so hold the money, or not to pay over to Cameron the whole or such part of it as he may have been entitled to under the terms of his contract. The contention that the act of Barancik in inducing Rubish to settle without the assistance or knowledge of Cameron amounts to the same thing, in effect, as procuring the discharge of Cameron, is manifestly and conclusively answered by the fact that the contract anticipates and provides for just such a contingency. Moreover, by the contract in question, Rub-' ish not only reserved the right to settle his claim, either directly or by “any other person, at his direction,” but if the contract could be construed as in any way preventing him from settling or compromising, it would be void in that respect, N. C. S. R. R. Co. v. Ackley, 171 Ill. 113. A cause of action based solely upon an alleged breach of that part of a contract prohibiting such a settlement, could not be maintained, whether such breach were maliciously induced or otherwise. A similar conclusion was reached, on similar facts, by another branch of this court, in Cameron v. Illinois Steel Co., 162 Ill. App. 461.

This being the second trial of this case, we think it should be reversed without remanding. The judgment of the Superior Court will therefore be reversed with a finding of facts.

Reversed,-.

Finding of facts, to be incorporated in the judgment of this court:

The court finds from the evidence that there is' no proof that Frank Rubish has broken his contract with appellee, Ossian Cameron, as alleged in the declaration, and that Morris Barancik is not guilty of wrongRubish to break said contract, as therein alleged.


text:
    Central Commercial Company, Appellee, v. The Lehon Company, Appellant.
    Gen. No. 17,121.
    1. Sales—evidence of warranty. Where a vendee alleges that an express warranty was made that a certain flux was as good as another brand and would do' the work equally as well, and the contradicted evidence offered by him shows that the agent for the flux in question stated it would do the work of saturation as well as such other brand and that the vendee purchased a car of such flux, on condition that.it was guaranteed to do the work as well as such brand, it is not “clearly manifest” that the parties intended an express warranty.
    2. Sales:—expression of opinion or “puffing” does not constitute. Mere matters of opinion between parties dealing upon equal terms or “puffing” a commodity do not constitute a warranty.
    3. Agency—authority of agent to warrant commodity sold. That an agent had authority to warrant that a certain flux was as good and would do the work as well as another named brand, is not established where the evidence merely establishes the fact of the agency.
    4. Agency—what authority implied from. The only authority that is implied from the mere fact of agency.to sell is to sell in the usual manner, and only in the usual manner in which goods or things of that sort are sold.
    5. Sales—implied warranty of fitness for purpose. In the bargain and sale of an existing ■ chattel there is no implied warranty of fitness for the purpose intended, in the absence of fraud.
    6. Sales—implied warranty of fitness for purpose. Where a manufacturer undertakes to supply an article for a special purpose, and the buyer has a full opportunity for inspection, there is no implied warranty of fitness for the purpose intended.
    7. Sales—implied warranty of fitness far purpose. There is no implied warranty of fitness for the purpose intended in the sale of an article by sample.

      Appeal from the Municipal Court of Chicago; the Hon. John H. Hume, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.
    Winston, Payne, Strawn & Shaw, for appellant; Edward W. Everett and J. Sidney Condit, of counsel.
    Elbridge Hanecy and William A. Rogan, for appellee.
   Mr. Justice Fitch

delivered the opinion of the court.

Appellee sued appellant for the price of certain roofing materials sold and delivered, and recovered a judgment for $1,791.20. Upon the trial before the court without a jury, appellant interposed a set-off, claiming damages in excess of appellee’s claim, for an alleged breach of warranty as to a part of the materials sold. The trial court disallowed the set-off and the only question raised by this appeal is as to the correctness of that finding.

It appears from the evidence that in 1907, appellant was engaged in manufacturing felt roofing and appellee was in the business of selling rosin, asphalt and other roofing materials. The latter had in its employ as a salesman, one Wright, who had previously been employed in a like capacity by the Standard Asphalt & Rubber Company, a Kansas corporation. While with the Kansas company, Wright had made sales to appellant of an asphaltic composition known as “Sarco,” manufactured by that company, and appellant had been using the same, in combination with rosin, wax tailings and asphaltum, to make a “saturating” fluid with which its felt roofing was impregnated. Appellant’s process of manufacturing roofing was as follows: A strip of wool felt was placed for a minute or two in a tank containing the “saturating” compound and was then forced between steam-heated rollers, which dried the felt and pressed out the surplus fluid. The saturated felt then received a coating composed of “candle tar pitch” and asphaltum; and when partially cooled, it was sprinkled with powdered soapstone to prevent sticking and then made into rolls for shipment. The saturating and coating compounds were “trade secrets,” each manufacturer having his own formulae. Appellant’s general manager, Lehon, testified that in the manufacture of some kinds of roofing light oil can be used, while in other kinds it cannot be used; that “we use a coating in our roofing which will not admit of light oil, * * * because free oils would come through the coating; * * * if there is a light oil in the saturation and it comes through the coating, it eats up the soapstone, the whole mass will stick together and it becomes worthless.”

Appellant’s witnesses testified that early in June, 1907, Wright called upon Lehon and said that he had left the employ of the Standard Company, and was employed by appellee, who had acquired asphalt lands in Kansas, and he could sell a flux similar to ‘ ‘ Sarco ’ ’ at a lower price than appellant had been paying for that material; that Lehon told Wright to submit a sample and he would take the matter under advisement; that a week or ten days later Wright submitted a sample in a can; that Lehon and his superintendent, Sullivan, examined the sample; that Sullivan then said: “Wright, I am afraid of this flux; it has too much oil in it;” that an argument ensued between Wright and Sullivan during which Wright said that “he knew what appellant was using Sarco for, and this was the same type of material, coming from the same place and would do the work of saturation just as well as Sarco;” that “it was every bit as good, and will do the work just as well as the other;” also that he had a car load of it in transit, and “to get even with the Standard, who hadn’t treated him right, he would make a price of $19 a ton;” that appellant was then paying $23 a ton for Sarco; that Lehon then said: “If it is as good as Sarco, and will do the work equally as well, I will take a car;” that appellee thereupon by letter acknowledged receipt of an order “for one car load of heavy asphalt flux as per sample submitted;” and soon after shipped a car load containing 119 barrels, to appellant, billing it as “asphalt oil;” that appellant used about half of the car load at once and without further examination, in the manufacture of roofing, using it in the same manner and in the same proportions as Sarco had been used, and shipped the product to its customers, but was obliged to take back most of it because it had become sticky and worthless, causing a loss to appellant of $5,800; that the remaining half of the car load was returned to appellee, who credited the price thereof on appellant’s account; that chemical analysis subsequently made showed that the material delivered, while but slightly different from the sample submitted, was about one-third petroleum oil and that Sarco contained no such oil.

On behalf of appellee, Wright testified that when he solicited Lehon and Sullivan to buy his product, nothing was said about “Sarco,” or “Kansas flux;” that he merely submitted a sample and told them the price would be $22 a ton; that Lehon then said he could not afford to pay $22 a ton, but would give $19 a ton for it; that Wright submitted this offer to appellee, who accepted it with the qualification that the empty barrels should be returned; that Wright then told Lehon to make a thorough test of it, and if they did not want to keep it, he would take it back. He also testified that all the material delivered was the “same as sample.” He also denied that he had said that his material came from Kansas, or that he “had a car load in transit;” that, in fact, the material sold was made by appellee, under his direction, in Chicago, and at the time he submitted the sample, only about one-third of a car load had been manufactured.

An attempt was made by appellant to show that Wright was familiar with its methods of manufacturing roofing and knew its compounding formulae. Wright denied this, however, and we think appellant’s theory, in this respect, was not sustained by a preponderance of the evidence.

Appellee also produced several witnesses, roofing manufacturers, who testified that they had successfully used the same product, taken from the barrels returned by appellant; that in their opinion, the “sticky” condition complained of by appellant, was due to the use of pitch in appellant’s coating compound, and that the trouble was caused by the manner of using the flux, and not to any defect or unsuitableness in the material supplied.

Upon this evidence, appellant’s counsel contend (1) that the alleged statement of Wright to the effect that his material was “a Kansas flux, as good as Sarco, and would do the work equally as well,” was an express warranty; (2) that a sales-agent has implied authority to bind his principal by such a warranty; and (3) that there was also an implied warranty that the material supplied was reasonably fit for the purpose to which Wright knew it was to be applied. We are of the opinion that none of these contentions is sound.

In Adams v. Johnson, 15 Ill. 345, it was claimed that a representation by a vendor, in selling a patented shingle machine, that it “would manufacture shingles without checking or splitting them,” was an express warranty. The court held that this statement was not a warranty, but was a mere expression of opinion as to the quality or character of the article sold. The court there said (p. 346):

“Should every expression of opinion upon the sale of an article be held to create a warranty, proof would not be wanting in almost every instance of the sale of chattels to establish a warranty; for but few articles are sold where the vendor does not praise his wares, and such encomiums are generally understood by purchasers as they are intended by the sellers. Where a warranty is intended, something more than this is done, and the intention of the parties is clearly manifest to that effect.”

We do not think it is “clearly manifest” from the evidence in this case that Wright intended by anything he is alleged to have said, to warrant that Ms material would accomplish the same results as Sarco when used in the same manner as Sarco. Apparently Wright only knew that Sarco was used as part of a saturating compound; and in one version of the conversation, Lehon testified that Wright said that Ms product would “do the work of saturation as well as Sarco.” Lehon also testified that appellant’s coating compound “would not admit of the use of light oil;” but he did not tell this to Wright, and there is no evidence tending to show that Wright knew that fact. Nor does it appear that Lehon or Sullivan inferred, or could reasonably infer, from anything Wright is alleged to have said, that Wright intended to assert as a fact, from any knowledge or past experience, that Ms product had ever been used, or could be used, in all respects as a substitute for Sarco. On the contrary, the only reasonable inference is that Wright was “puffing” his own commodity, and, in the argument, gave his opinion as to what it would or might do. It is true that Lehon testified that he then said to Wright' “If you will guarantee it will do the work as well as Sarco, I will buy a car;” but the other two of appellant’s witnesses who were present, do not include the words italicized in their version of the conversation.

In Roberts v. Applegate, 153 Ill. 210, in discussing an alleged warranty in the sale of a horse, the court said, quoting from the case of Kenner v. Harding 85 Ill. 264:

“In determining whether there was in fact a warranty, the decisive test is, whether the vendor assumes to assert a fact of which the buyer is ignorant, or merely states an opinion or judgment upon a matter of which the vendor has no special knowledge, and on which the buyer may be expected, also, to have an opinion, and to exercise his judgment. In the former case there is a warranty; in the latter, not. (Benjamin on Sales, 454).”

■The same rule is given on Mechem on Sales, Sec. 1243, where it is further stated that the question whether the seller in such cases assumes to state a fact or merely his opinion is a question for the jury to decide, if the facts are disputed.

In Fuchs & Lang Co. v. Kittredge, 242 Ill. 88, the trial court refused to hold, as a proposition of law, that “if the plaintiff, through his agent, made a distinct assertion of the kind or quality of the machine * * * which he knew or should have known to be untrue, with a view of inducing the defendant to enter into the contract, and the defendant relied upon that assertion and believed it to be true and by reason thereof did execute the contract, then the defendant had the right to reject the machine.” In affirming the action of the lower court, the Supreme Court said, (p. 95):

“The false representation which can be made the basis of an action or the recission of a contract, where there is no relation of confidence, must be of a material fact. Matters of opinion between parties dealing upon equal terms, though falsely stated, are not relieved against. Exaggeration in the commendation of articles offered for sale will not avoid a contract. * * * Under this proposition, if appellant’s agent had asserted that its machine was superior in quality to the one appellant had been using—essentially a matter of opinion—and it had turned out to be false, the contract would have been avoided. The proposition was not a correct statement of the law.”

But if it be conceded that the language used by Wright at the time of the sale amounted to a warranty that the material sold could be successfully used as a substitute in all respects for Sarco in the manufacture of appellant’s roofing, it does not appear from the evidence that Wright had authority to bind appellee by such a warranty. The only evidence claimed by appellant’s counsel as tending to show such authority consists in the admitted fact that Wright had authority from appellee to sell its wares, and the evidence of one witness that it was customary in the trade, as to goods sold by sample, to give a warranty of uniformity and that the goods delivered should be equal to the sample. The warranty claimed to have been given by Wright was'not one merely of uniformity and that the goods should be equal to the sample but was much broader. The only authority that is implied from the mere fact of agency is “to sell in the usual manner, and only in the usual manner in which goods or things of that sort are sold.” Ide v. Brody, 156 Ill. App. 479. “The general rule is, as to all contracts including sales, that the agent is authorized to do whatever is usual to carry out the object of his agency, and it is a question for the jury to determine what is usual. ’ ’ (Benjamin on Sales, Sec. 624). We think the only authority Wright had, under the evidence, was to warrant the goods delivered to be equal to the sample. The analysis of the goods delivered, made by a chemist employed by appellant, fails to show any material difference between the sample and the goods delivered; and it is not claimed—nor do we think it could be successfully claimed—that the slight difference found by the chemist was the cause of the trouble for which damages were claimed.

As to the claim of an implied warranty of fitness for the purpose intended, the rule is that in the bargain and sale of an existing chattel there is no such implied warranty, in the absence of fraud. Telluride Power Co. v. Crane Co., 208 Ill. 218. It is undoubtedly the law, as stated by appellant’s counsel, that where a manufacturer undertakes to supply an article for a special purpose, which purpose is communicated to the seller, and the buyer, without having an opportunity to inspect the article, orders it in reliance on the seller’s skill, judgment and experience, and not on his own judgment, a warranty of fitness for the purpose specified will be implied. But where full opportunity of inspection is given, the rule thus stated has no application. Horwich v. Western Brewery Co., 95 Ill. App. 162; Rockford Wholesale Grocery Co. v. Stevenson, 65 Ill. App. 609; Carleton v. Jenks, 80 Fed. Rep. 937, 26 C. C. A. 265; Telluride Power Co. v. Crane, supra, 35 Cyc. 410. Nor can there be any implied warranty of fitness where the sale is made by sample, though in such case there is an implied warranty that the goods delivered shall be equal to the sample in kind and quality (35 Cyc. 405).

The judgment of the Municipal Court will be affirmed.

Affirmed.


text:
    Adamne Haaga, Defendant in Error, v. Austro-Americana Line, Plaintiff in Error.
    Gen. No. 18,754.
    1. Carriers—authority of agent to receive baggage. Where an immigrant suing for loss of baggage claims that the baggage was taken from her hotel in a foreign port by a representative of the steamship company, who gave no check or receipt, that the baggage was in fact shown to be placed on board the steamship is sufficient prima facie to prove delivery to an authorized agent.
    2. Carriers—loss of baggage. The mere fact a passenger who delivers baggage to a carrier does not receive a check or other receipt for the same is unimportant, where the evidence shows that the carrier actually received the baggage in its possession.
    3. Carriers—admission as to amount of loss. An admission as to value of lost baggage made by an immigrant to a steamship company, upon a printed blank and signed by mark only, will not as a matter of law, be given more weight than the immigrant’s positive statement as to the actual value given on the trial.
    Error to the Municipal Court of Chicago; the Hon. Freeman K. Blake, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.

      Guthman & Rothschild, for plaintiff in error; Frank H. Bicek, of counsel.
    Louis Brandes, for defendant in error.
   Mr. Justice Fitch

delivered the opinion of the court.

The Municipal Court entered a judgment against plaintiff in error for $103.05, in favor of defendant in error, for the value of baggage alleged to have been received by plaintiff in error and lost in transit. Plaintiff in error operates a line of trans-Atlantic steamships. In May, 1908, defendant in error emigrated from Austria. When she arrived in Triest, the steamship company sent her to a hotel, and the next morning a representative of the steamship company came to the hotel and took her baggage (consisting of wearing apparel and some personal belongings wrapped in a bale) to the docks. She testified that after she boarded the steamer she saw her baggage upon the steamer, and that a man wearing the uniform of the agents of the steamship company told her the bundle was too large, to which she made nó reply. Upon her arrival in New York the baggage was missing, and upon a diligent seafich by the plaintiff in error and its agents, no trace of the property could be found. Defendant in error was not given any baggage check or other identification receipt.

It is contended that there was no proof that the person who took the baggage from the hotel in Triest was an authorized agent of the steamship company. We think the absence of proof to that effect is not controlling for the reason that the baggage was in fact shown to have been placed on board the steamship, which is, in our opinion, sufficient prima facie to prove delivery to the authorized agents of the plaintiff in error. The mere fact that a passenger who delivers baggage to a carrier does not receive a check or other receipt for the same is unimportant, where the evidence shows that the carrier actually received the baggage of such passenger into its possession. “As to personal baggage of the passenger, delivered to and taken possession of by the carrier, the liability of the latter is that of a common carrier of goods” (6 Cyc. 662). “The giving of a check or receipt is a mere matter of convenience, and the time when the carrier’s liability commences will not depend upon the issuance of such receipt or check, but upon the actual acceptance of the baggage for transportation” (Id. 670). These principles are sustained in the following cases: Camden & Amboy R. R. Co. v. Belknap, 21 Wendell, 354; Hickox v. Naugatuck R. R. Co., 31 Conn. 281; Waldron v. C. & N. W. R. R. Co., 1 Dak. 351; L. S. & M. S. R. R. Co. v. Foster, 104 Ind. 293.

A point is also made by plaintiff in error that the evidence does not warrant so large a verdict as $103.05. That value was sworn to by the plaintiff below and is only questioned here on account of an alleged admission that at the time she made claim to the steamship company for the loss of her baggage the value was stated by her at $40. It was, however, shown that this statement was made upon a printed blank used by the agents of the plaintiff in error in such cases, and was signed by the plaintiff below by mark only. We cannot say, as a matter of law, that such an alleged admission should be given more weight than her positive statement as to the actual value. The trial judge saw and heard her testimony, and was better able to determine this question than we are.

The judgment of the Municipal Court will be affirmed.

Affirmed.


author: Mr. Justice McSurely

text:
    Delta Bag Company, Defendant in Error, v. Frederick Leyland & Company, Ltd., Plaintiff in Error.
    Gen. No. 16,648.
    1. Carriers—limitation of liability. Where a bill of lading limits the liability of a carrier, the assent of the shipper to the terms must be shown before they will be binding upon him.
    2. Carriers—what law governs as to right to limit liability. In an action in Illinois for damages to goods while in transit between Liverpool and Louisiana, the Illinois law must control as to the right of a carrier to limit its liability by the terms of the bill of lading.
    3. Carriers—act of God. Where a steamship company is negligent in stowing bags near coal, and sea water coming into the vessel washes coal dust into the bags, it cannot claim that the damage was caused by an act of God.
    4. Limitations—accrual of action in foreign state. R. S. Ch. 8, Sec. 20, as to limitations when a cause of action has arisen out of the state, applies only where both parties reside out of the state at the time the action accrues, and continue to be nonresidents until the limitation laws of the foreign state have run.
    5. Carriers—limitations. Where goods are damaged while in transit between Liverpool and Louisiana, and limitations have run under the Louisiana statute, a resident of Illinois is entitled to maintain the action at a time within the limitation of the Illinois statute, and R. S. Ch. 83, Sec. 20, as to limitations, when a cause of action arises out of the state, has no application.
    6. Carriers—when shipper need not make affidavit of ownership. Where a shipper sues a steamship company for damage to goods in transit and the evidence shows he is the owner of the goods, Sec. 18, of the Practice Act, requiring the assignee of a chose in action to state by sworn pleading or affidavit, that he is the owner, and how he acquired title, has no application.
    7. Depositions—when objection to exhibits should be made. Objections to exhibits should be made, before trial by motion, to suppress such - part of the deposition as relates to the exhibits; it is too late to object after trial.
    Error to the Municipal Court of Chicago; the Hon. Wm. N. Cottrell, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.
    Rehearing denied October 21, 1912.

      Francis J. Noonan and Thomas W. Brown, for plaintiff in error.
    Silber, Isaacs, Silber & Woley, for defendant in error; Frederick D. Silber and James D. Woley, of counsel.
   Mr. Justice McSurely

delivered the opinion of the court.

Frederick Leyland & Company, hereinafter called the defendant, is seeking a reversal of a judgment against it for $503.25, obtained by the Delta Bag Company, hereinafter called the plaintiff, for damages to a shipment of fifty bales of bags while in transit between Liverpool, England, and New Orleans, Louisiana, on a steamship belonging to the defendant.

It is urged by the defendant that the plaintiff did not "comply with section 18 of the Practice Act, which requires the assignee of a chose in action to state by sworn pleading or affidavit that he is the owner, and how he acquired title. This is not a case of an assignment of a chose in action. The trial court found that the bags in question belonged to the plaintiff, which finding was justified by the evidence.

The objection to certain of plaintiff’s exhibits should have been made before trial, by motion to suppress such parts of the deposition as related to these exhibits. It is too late to object after trial. I. C. R. R. Co. v. Foulks, 191 Ill. 57; Dunbar v. Gregg, 44 Ill. App. 527.

The defendant also claims that the damage to the bags was caused by an act of God. The evidence showed that the bags were stowed in the steamship near coal, and that they were damaged by sea water and coal dust. Apparently the sea water, coming into the vessel, washed the coal dust into the bags. To this effect was the finding of the trial court, which also found that it was negligence to stow the bags so near to the coal. The rule is as stated in Am. & Eng. Ency. of Law, Vol. 1, p. 595: “Where the negligence of the carrier concurs with an act of God in producing a loss, the carrier is not exempt from liability by showing that the immediate cause of the damage was the act of God; or, as it has been expressed, ‘where the loss is caused-by the act of God, if the negligence of the carrier mingles with it as an active and co-operative cause he is still responsible.’ A carrier by water is not excused from liability from loss by an act of God operating upon an unseaworthy vessel, nor would it avail him to show that the same loss might have occurred had the vessel been staunch and sound.” Also, “When the fact of loss or damage to goods has been established, the burden of proof rests upon the carrier to show that the loss or damage was occasioned by an act of God.” To the same effect are Schwarz v. Adsit, 91 Ill. App. 576; Wald v. P. C. C. & St. L. R. R. Co., 162 Ill. 545; Sandy v. Lake St. El. R. R. Co., 235 Ill. 194, and many other cases. It follows, therefore, that the defendant, being guilty of negligence, cannot plead exemption from liability because of an act of God.

As to the point that the plaintiff is bound by the terms of the bill of lading, limiting the defendant’s liability and imposing obligations and conditions upon the plaintiff, it is sufficient to say that by Chapter 27 of Illinois Revised Statutes, it is unlawful for a common carrier “to limit his common law liability safely to deliver such property at the place to which the same is to be transported, by any stipulation or limitation expressed in the receipt given for such property.” The Illinois law must control on this point. There is no evidence that the shipper assented to the terms of the bill of lading, which assent must be shown before they are binding upon him. (Coats v. C. R. I. & P. Ry. Co., 239 Ill. 154; Adams Express Co. v. Haynes, 42 Ill. 89; Adams Express Co. v. Stettaners, 61 Ill. 184.)

There is no question as to the amount of damage, as this was agreed upon by stipulation.

It is further urged that the action was harred in Louisiana at the time it was brought here, and being so barred there was barred here, under section 20 of the Limitation Act. Section 20 of chapter 83, Illinois Statutes, provides that “when a cause of action has arisen in a state or territory out of this state, or in a foreign country, and, by the laws thereof, an action thereon cannot be maintained by reason of the lapse of time, an action thereon shall not be maintained in this state.” Under the Louisiana statute such an action is barred in one year. The action was commenced about two years and eight months after the vessel "arrived at New Orleans, and therefore within the five year limitation of the Illinois statute. The defendant was a resident of Illinois at the time the action arose, and continued to reside in this state until and during the time of trial. Section 20 in our opinion is not applicable. It applies only where both parties reside out of the state at the time the action accrues and continue to be non-residents until the limitation laws of the foreign state have run. This view is supported by Davis v. Munie, 235 Ill. 620, in which the case of Hyman v. Bayne, 83 Ill. 256, cited by plaintiff, is distinguished. The cases cited by plaintiff’s counsel are cases where the defendant was a nonresident of this state when the action arose, which fact distinguishes them from the case at bar. In McGuigan v. Rolfe, 80 Ill. App. 256 (259), the court said: “The construction of section 20 as given in Hyman v. McVeigh must then be limited and confined to causes where not only both parties resided out of this state when the action accrued, but both parties continued to reside out of the state and ‘so remained until an action was barred in and by the laws of the foreign state where the domicile existed.”

The case of Hyman v. McVeigh referred to is in a table of unreported cases, but is printed in Chicago Legal News, Vol. 10, p. 157, which is referred to in Wooley v. Yarnell, 142 Ill. 442, and also in Humphrey v. Cole, 14 Ill. App. 56. In Hyman v. McVeigh, the Supreme Court, construing section 20, used the following language:

“The words, ‘When a cause of action has arisen/ as they occur in the statute of limitations, should be construed as meaning, when jurisdiction exists in the courts of a state to adjudicate between the parties upon the particular cause of action if properly invoked; or, in , other words, when the plaintiff has the right to sue the defendant in the courts of a state upon the particular cause of action, without regard to the place where the cause of action had its origin.”

The defendant being a resident of Illinois, the plaintiff was entitled to bring this action against it at a time within the limitation of the Illinois statute.

Other points have been suggested, which we have considered and do not believe tenable.

Finding no error in the findings of fact and rulings upon propositions of law made by the trial court, the judgment will be affirmed.

Affirmed.


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    Mary Nettlehorst, Defendant in Error, v. F. S. Mordaunt, Plaintiff in Error.
    Gen. No. 16,703.

      Damages—not excessive. A verdict for six hundred dollars reduced by remittitur to four hundred dollars is not excessive, where a plaintiff, bitten upon both arms by a dog, suffered great pain and nervous shock and will retain permanent scars.
    Error to the Municipal Court of Chicago; the Hon. Edwin K. Walker, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.

      Percival Steele, for plaintiff in error.
    Foreman, Levin & Robertson, for defendant in error.
   Mr. Justice McSurely

delivered the opinion of the court.

Mary Nettlehorst, hereinafter called the plaintiff, recovered a judgment against F. S. Mordaunt, hereinafter called the defendant, for injuries received by being bitten by a dog belonging to the defendant.

It would serve no useful purpose to relate the circumstances of the affair. It is sufficient to say that the verdict finding the defendant guilty, was justified by the evidence.

We do not agree with counsel for defendant in his contention that the trial court committed error in its rulings upon evidence, or that the conduct of opposing counsel constituted prejudicial error.

The verdict of the jury was for $600, which under the direction'of the trial court was remitted to $400.

The plaintiff was bitten upon both arms and will retain permanent scars. She suffered great pain and a nervous shock. We cannot say that the amount of the judgment is excessive.

Therefore the judgment will be affirmed.

Affirmed.


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    Louis A. Traznik, Defendant in Error, v. Hannah & Hogg, Plaintiff in Error.
    Gen. No. 16,719.

      Innkeepers—when guest must give notice property is of special value. “75 to 100 jewelry designs” in a satchel is property of “special and unusual value” within the Innkeepers Act of 1909. Sec. 3, limiting hotel keepers’ liability to §50 for loss of baggage checked by a guest, unless the guest give notice that the property is of “special and unusual value.”
    Error to the Municipal Court of Chicago; the Hon. Sheridan F. Fry, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed on remittitur.
    Opinion filed October 3, 1912.
    Mayer, Meyer, Austrian & Platt, for plaintiff in error.
    Ernest G. Kusswurm, for defendant in error.
   Mr. Justice McSurely

delivered the opinion of the court.

Louis A. Traznik, hereinafter called plaintiff, recovered a judgment for $100 against Hannah & Hogg, a corporation, hereinafter called defendant, for the value of a hand satchel and its contents, left with the clerk of a hotel belonging to defendant, whose guest plaintiff was. The satchel was not returned to plaintiff, and apparently was lost. At the time it was left with the clerk nothing was said as to its contents, nor was there anything about it to indicate its character or the value of its contents. Plaintiff’s bill of particulars placed the value of the satchel and contents at $167.40. One of the items was “75 to 100 jewelry designs, value about $150.”

The defendant relied for its defense upon section 3 of the Inn Keepers’ Act of 1909 (Hurd’s R. S. 1909, Chap. 71), which provides in substance that where a guest checks baggage with a hotel proprietor,- and it shall be lost, the proprietor shall not be liable for valises, etc., in excess of $50, “unless such loss or injury shall have occurred through the negligence of -such hotel proprietor, or by his servants or employes in such hotel: provided, that before such guest shall deliver to such hotel proprietor, or his employes, any trunk, valise, traveling case or other receptacle containing property or effects of special or unusual value for safe keeping or for any purpose, he shall notify such hotel proprietor to that effect, and acquaint such hotel proprietor with the approximate value thereof, and upon his failure so to do, such hotel proprietor shall not he liable to such guest for the loss of or damage to, such contents of such trunk, valise, traveling case or receptacle.”

A reasonable construction of this statute is that where the guest does not notify the hotel proprietor of any contents of a satchel which have special or unusual value, the proprietor shall not be liable to such guest for any loss of the contents in excess of $50. The item, “75 to 100.jewelry designs” clearly comes.within the description of property “of special or unusual value.”

We find no evidence to support the finding that the defendant was guilty of negligence.

If plaintiff files within ten days a remittitur of $50 the judgment will be affirmed; otherwise it will be reversed and the cause remanded.

Affirmed on remittitur; otherwise reversed and remanded.

Remittitur filed and judgment affirmed Oct. 3rd, 1912.


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    Oscar F. Mueller, Plaintiff in Error, v. George N. Smith, Defendant in Error.
    Gen. No. 16,740.

      Partnership—when partner unable to perform, is not liable to co-partner. An insurance solicitor received money from a person to buy issued shares of stock in his company, at $15 a share, stating that he would sell them at $25 a share and divide the profits. The president of the company forbade the transaction, so long as there was any treasury stock to be sold. The solicitor returned the purchase money and was sued for the profits that would have been made. Held, there was' no legal guaranty of profits and that at most the transaction was a joint enterprise, in which one of the partners was unable through no fault of his, to carry out the transaction.
    Error to the Municipal Court of Chicago; the Hon. Frank Crowe, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.
    Goldzier, Rodgers & Froehlich, for plaintiff in error.
    No appearance for defendant in error.
   Mr. Justice McSurely

delivered the opinion of the court.

This comes before us on a writ of error, whereby Oscar F. Mueller, the plaintiff, seeks to have reversed a finding and judgment for George N. Smith, the defendant.

Mueller gave Smith $375, with which Smith was to purchase twenty-five shares of stock of the Northern Life Insurance Company. A receipt was given, which is as folloys:

“Chicago, Ill., Aug. 10, 1909.
“Received of O. F. Mueller, his check for $375.00 for 25 shares of the Capital Stock of the Northern Life Ins. Co., said stock to be sold to net Mr. Mueller $20.00 per share, or $500.00 for the 25 shares.
“(Signed) Geo. N. Smith.
“Sale to be made by Aug. 25, 1909.
“G. N. S.”

Smith’s statement of the transaction is that he was a solicitor for the Northern Life Insurance Company, in which Mueller was a stockholder; that he had an option on some private stock of the company that could be purchased for $15 a share, and as he was selling the treasury stock at $25 per share, he suggested to Mueller that he furnish the money for twenty-five shares of stock at the price of $15 per share, or $375 for the twenty,-five shares, and that he, Smith, would sell the same for $25 a share and divide the profit of $10 a share between them; that is, Mueller would take $5 per share and Smith would take $5 per share of the profit. Mueller asked how soon the stock could be sold, and Smith told him that he ought to be able to sell it within a very few days. Mueller said this arrangement was satisfactory and that he would “come in” with Smith. Mueller thereupon gave Smith his check for $375, and Smith wrote out and handed him the receipt above set forth.

Mueller’s statement is that Smith told him that if he would let him have $375 he knew where he could buy twenty-five shares of stock at $15 a share, and that he could almost immediately sell these shares for $25 a share, ‘ ‘ and that we would then divide the profit between us.”

Smith was forbidden by his employer, through its president, to sell any private stock as long as there was any treasury stock to be sold, and thereupon Smith returned the money, with interest, to Mueller. Mueller brought suit for the difference between the amount of money returned and the amount it was expected the stock could be sold for: that is, for his share of the expected profits.

It is manifest that there was no guaranty of profits on which Smith would be liable. At most the transaction was a joint enterprise, in which one of the partners was unable, through no fault of his, to carry out the plan of the partnership. Consequently there-were no profits to be divided between them.

The finding and judgment of the trial court were right, and will be affirmed.

Affirmed.


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    Charles D. Parker, Defendant in Error, v. Brown & Bigelow, Plaintiff in Error.
    Gen. No. 16,757.
    1. Master and servant—abandonment of contract. A travelling salesman is not justified in abandoning his contract of employment upon the ground that another salesman made sales in his territory, where the invasion of his territory was without authority the employer offered to pay him the commission, and the salesman continued to work for some time without complaint and did not set up the incident until at the trial, it further appearing that he had given as his only reason for leaving a desire to make more money.
    2. Master and servant—compensation. Where a contract, employing a travelling salesman for a year, provides that a part of his commission shall be payable monthly and the balance at the expiration of the year, the salesman on wrongfully abandoning his employment does not forfeit all his commissions and is entitled to the amount that was payable monthly.
    Error to the Municipal Court of Chicago; the Hon. Charles N. Goodnow, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Reversed and remanded.
    Opinion filed October 3, 1912.
    Wells & Blakeley, for plaintiff in error.
    No appearance for defendant in error.
   Mr. Justice McSurely

delivered the opinion of the court.

Charles D. Parker, hereinafter called plaintiff, recovered a judgment against Brown & Bigelow, a corporation hereinafter called defendant, for $448.45, upon a trial by the court. This writ of error is sued out by the defendant to reverse this judgment.

Plaintiff was a traveling salesman for the defendant, and this suit is for commissions claimed to be due under a written contract of employment. The defendant claims that the contract was for an entire year, and as plaintiff left its service within four months after the year began and without its consent, he was entitled to nothing for the work he had performed. It is conceded that plaintiff left the service of defendant May 1, 1909, although his contract of employment called for his services for the entire year, ending January 1, 1910. Upon the trial he endeavored to justify his abandonment of the contract upon the ground that one Carden made certain sales in his territory in February, 1909, the commissions upon which amounted to $10.75. We gather from the record that the trial court found that this fact was a sufficient justification for plaintiff’s action in withdrawing from the employment with defendant. The evidence shows that Carden made this sale without the knowledge of defendant and, in fact, in violation of orders. As soon as defendant’s attention was called to the matter it wrote to plaintiff, stating that Carden had taken it upon himself to go into his territory, although he had been ordered not to do so. The letter further stated, “Relative to your commissions on this order, I will do anything you want, either give you the same commissions you would get on it * * * or if you desire I will cancel the order and let you reinstate it. I had no intention of letting Carden encroach on your territory.” Plaintiff never made any claim that he was leaving on account of this incident until the trial. The evidence shows that he continued to work for defendant without complaint for some time after he knew of the sales by Carden. Both by letters and in a personal interview with one of the officers of the corporation, he gave as his only reason for leaving the company a desire to earn more money, and expressed his satisfaction with the treatment he had received from the company, saying it was not because of any personal grievance which induced him to leave it.

There was evidence introduced by plaintiff in an attempt to show that defendant had violated the contract in the employment of one Pressey as a salesman in the city of Chicago for the year 1909, but the evidence fails to show that the City of Chicago was included in plaintiff’s territory. In view of these facts, we must conclude that any alleged breach of the contract by defendant was not sufficient to justify the conduct of plaintiff in leaving the service of the defendant. The real reason for his leaving is clearly shown to have been his desire to better himself in another employment.

However, we do not agree with counsel that such a breach of the contract by plaintiff deprives him of his earnings during the time he worked under the contract. The provisions of the contract with reference to payment are as follows:

“An amount equal to 75 per cent, of the full commissions on business accepted shall be paid to the salesman at the close of. each month, or as soon thereafter as daily reports for the full month’s work have been received.

“Providing said salesman shall have fulfilled the conditions specified in the above contract, then the remaining commissions on this contract shall be due and payable on March 1, 1910, or as soon thereafter as the goods are paid for.”

By these provisions, 75 per cent, of the commissions for each month’s work were due and payable to plaintiff at the close of the month, and the remaining 25 per cent, was to be held by defendant until March 1 of the following year, and then paid to plaintiff, provided there had been no breach of the contract by him. In other words, the parties, by their contract, have agreed upon the amount of damages accruing to defendant in the event of a breach by plaintiff.

For the reason above indicated the judgment is reversed and the cause remanded.

Reversed cmd remanded.


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    Dora Mindelsohn, Defendant in Error, v. The Modern Protective Association, Plaintiff in Error.
    Gen. No. 16,802.
    Appeals and errors—abstract. Where, a plaintiff in error files an abstract of record, printed in smaller type than that required by the rule of the Appellate Court, the judgment will be affirmed.
    Error to the Municipal Court of Chicago; the Hon. Max Eberhardt, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.
    Clyde O. Garmire and James N. Tilton, for plaintiff in error.
    David R. Levy and Douglas C. Gregg, for defendant in error.
   Mr. Justice McSurely

delivered the opinion of the court.

' The judgment in this cause must be affirmed because of the failure of plaintiff in error to file a sufficient abstract of record. Buie 19 of Buies of Practice of the Appellate Court, First District, requires abstracts of record to be printed with “small pica type.” The abstract filed herein is printed with “long primer type,”' a smaller type than “small pica” type. The necessity for requiring abstracts and briefs to be printed with a type which can be read without eye strain is too obvious for comment. Therefore, the judgment is affirmed.

In addition, we may say that from an examination of the record herein we are of the opinion that even if plaintiff in error had complied with the above rule, the judgment should nevertheless be affirmed.

Affirmed.


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    Dora Mindelsohn, Defendant in Error, v. The Modern Protective Association, Plaintiff in Error.
    Gen. No. 16,803.
    Appeals and errors—abstract. Where a plaintiff in error files an abstract of record printed in smaller type than that required by the rule of the Appellate Court, the judgment will be affirmed.
    Error to the Municipal Court of Chicago; the Hon. Max Eberhardt, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed October 3, 1912.
    Clyde O. Garmire and James N. Tilton, for plaintiff in error.
    David R. Levy and Douglas C. Gregg, for defendant in error.
   Mr. Justice McSurely

delivered the opinion of the court.

As in case No. 16,802, decided at this term of court, ante, p. 51 the judgment in this cause must be affirmed for the reason that plaintiff in error has the abstract of record printed with a smaller type than the type required by Rule 19, Appellate Court, First District.

Therefore, for want of a sufficient abstract of record, the judgment is affirmed.

In addition, we may say that from an examination of the record herein, we are of the opinion that even if plaintiff in error had complied with the above rule, the judgment should nevertheless be affirmed.

Affirmed.