author: Mr. Presiding Justice Matchett

text:
    The DeLong Hook and Eye Company, Appellant, v. The Hump Hairpin Manufacturing Company, Appellee.
    Gen. No. 24,636.

      1. Trade-marks and trade names, § 26

      —what shown hy evidence on hill for unfair competition. On a bill for unfair competition seeking to enjoin defendant from the use of the word “Hump” in connection with the manufacture and sale of hairpins and similar, articles, evidence held to show that the words “Hump” and “See that hump,” which had for 27 years been used by complainant in connection with hooks and eyes manufactured by it, had become synonymous in the trade with complainant and their secondary meaning had come to indicate complainant’s goods, that the use of the word “Hump” by defendant in connection with its hairpins tends to deceive, that defendant and its predecessor knew of complainant’s use of those words when they began to use them and that such use by defendant was for the purpose of obtaining the benefit of complainant’s advertising.
    2. Trade-marks and trade names, § 26*—wvtaf is gist of suit for unfair competition. The gist of a suit for unfair competition is the selling or disposing of his own goods by defendant as those of complainant, to complainant’s damage.
    3. Jtjdgmient, § 428*—when defense of res adjudicata cannot he raised against hill to restrain unfair competition. A judgment of the District Court of Columbia on appeal from the commissioner of patents is interlocutory, consequently the defense of res adjudicata based on such a judgment cannot be raised against a bill, to restrain unfair competition, though the trade-mark involved is the same in both proceedings.
    4. Trade-marks and trade names, § '26*—when conduct constitutes unfair competition. If the conduct of one trader is such as to lead the public to believe that his goods are those of another trader, to the latter’s injury, such conduct constitutes unfair competition, irrespective of the registration of trade-marks by either of them.
    5. Trade-marks and trade names, § 21*—when right to protection against unfair competition is not lost hy expiration of patent. A trader’s right to protect himself against unfair competition through the use by others of words which have been so long applied to a patented article manufactured by him as- to have acquired a secondary meaning indicating his goods, is not lost by reason of the fact that the patent on such article has expired.
    6. Tbadk-mabks and trade names, § 22

      —extent to which arbitrary trade name may be protected. The right of one who has adopted an arbitrary trade name and applied it to a particular line of goods to protection against unfair competition in the use of such name is not limited to that particular line of goods, but he may also protect the use of the name to any extent necessary to protect the reputation of his goods which will include protection against the use of such name by a subsequent trader as applying to any one of the species of the general kind of goods manufactured and' sold by the first trader.
    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, 1918.
    Reversed and remanded with directions.
    Opinion filed December 31, 1919.
    Rehearing denied January 15, 1920.
    Rushmore, Bisbee & Stern and Moses, Rosenthal & Kennedy, for appellant; Charles E. Rushmore and George N. Hamlin, of counsel. '
    Judah, Willard, Wolf & Reichmann, for appellee.

      See Illinois Notes Digest, Vols, XI to XV, and Cumulative (tuarterly, same topic and section number.

      See Illinois Notes Digest, Vole, XI to XV, and Cumulative Quarterly, same topic and section number.

   Mr. Presiding Justice Matchett

delivered the opinion of the court.

The complainant, who is appellant here, appeals from a decree which dismissed its bill for want bf equity.

The bill was for unfair competition and its prayer was that the defendant, “be enjoined from putting up, delivering, selling, advertising or offering for sale hairpins or any other similar articles under the trade-mark, trade name or name ‘Hump,’ alone or in combination with other words, or in the corporate title of the defendant, or in any manner simulating the name ‘Hump’ * *

Certain material facts which seem to be uncontradicted are as follows: The complainant is a corporation, organized under the laws of Pennsylvania, having its place of business in Philadelphia, in that State. It is engaged in the business of the manufacture and sale of notions, and, in particular, the manufacture and sale of hooks and eyes and hairpins. It is the owner, by succession and assignment, of an invention made in 1889 by one Frank E. DeLong, for which letters patent were granted to said DeLong and others in that year. This patent has expired.

This invention is described in complainant’s bill as “An improvement in hooks or fasteners for garments, Consisting of a hook proper and a shank formed of substantially parallel bars and a curved spring tongue," having its free end forming a loop coincident with the bend of the hook, said tongue and loop being intermediate of said bars and having the central bar of the shank bent forward out of the plane of the other bars, forming what is called a ‘Hump’ acting as a spring to prevent accidental disengagement of the hook and eye members one from the other, and permitting of easy engagement of the hook with the eye, or of its disengagement therefrom by the wearer of the garment to'which the hook and eye are attached.”

These goods complainant and its predecessors and assigns have continually manufactured and sold since 1889. About the same time they adopted and have ever since adopted and used, as a trade-name or mark by which to distinguish said hooks and eyes from other kinds thereof, the words “Hump” and “See that Hump.” On April 19, 1892, these words were by the complainant or its predecessors duly registered as trade-marks, as applied to hooks and eyes, with the commissioner of patents. The phrase “See that Hump” as used by complainant was connected by a dotted line with the shank of the hook and eye. This was the first time this word “Hump” had been used in connection with notions of any kind. Complainant and its predecessors have ever since continued to use these words to designate hooks and eyes manufactured and sold by them, and complainant has expended and is now expending large sums of money in advertising the same, and by means thereof has acquired a large and profitable business in the United States and Canada, and including the State of Illinois. The words “Hump” and “See that Hump” have for 27 years been used by complainant in conjunction with the word “DeLong.” This combination of words appears on all the letterheads, invoices and billheads used in complainant’s business. While complainant has dealt in hairpins, it has not used these words “Hump” or “See that Hump” as a name therefor; nor attached these names to the package in which its said hairpins are sold. On the contrary, it has applied to its hairpins the names and trade-marks which have been registered by it, “DeLong,” “Diana,” “Cupid.” Complainant does not make or sell hairpins other than the conventional two-pronged kind.

The defendant corporation is the owner by assignment from its predecessors of letters patent for an improvement in hairpins issued to one Solomon G-oIdberg, December 29,1903. The essential characteristics of this hairpin are that it has three instead of the conventional two prongs, and one of these prongs has a bend or hump in it, evidently made upon the same mechanical principle as the hook, which was invented by complainant’s predecessors. On December 6, 1904, defendant’s predecessors in title registered as trademark, the words “Hump, It Locks the Locks,” as applied to hairpins. On April 16, 1907, a trade-mark as applied to hairpins, of the words, “Hump Hairpins, Lock the Locks,” and on June 3, 1913, a trade-mark for hairpins, consisting of a camel with a hairpin for its hump, and underneath the words, “Hump, registered by Hump Hairpin Company, * * * in the United States Patent Office.” It is also the owner of a patent for a machine used in the manufacture of the patented hairpin. The defendant was organized by G-oldberg in the State of West Virginia, November 12, 1914; the trade-marks above described have been transferred to it. It maintains an office in Chicago, Illinois, and is engaged in this State and throughout the 'United States in the sale of hairpins, using said trademarks in connection therewith.

In 1909, the complainant having learned for the first time of the application for this last named trade-mark, filed an opposition to the granting of it with the commissioner of patents, which was by him sustained. Defendant appealed to the Court of Appeals of the District of Columbia, and the opposition was overruled, and the registration of the trade-mark ordered. DeLong Hook & Eye Co. v. Hump Hairpin Co., 39 App. Dist. of Columbia 484. The court there said:

“The question on which the case turns in our opinion is vjhether hooks and eyes and hairpins are of the same descriptive properties. * * * It is not sufficient for the opponent to say that he believes he would be damaged. He must allege some facts showing an interest in the subject-matter from which the damage might be inferred. If he has not used the mark as a trade-mark upon goods of a like description, he can suffer no damage from its registration' by another. ’ ’ The court also expressed a doubt as to whether there was proof of sufficient use by defendant to entitle its mark to registration, but held that point was not before it on appeal. .The foregoing facts are undisputed in the record. There are certain other matters of fact which are in dispute.

It is alleged in the bill of complaint:

“That the sale of hairpins by the defendant, as hereinafter set out, under the designation ‘Hump Hairpin,’ both in the State of Illinois and elsewhere in the United States, and the offering for sale said hairpins under said designation, have deceived the trade and the public in said belief that the said hairpins so sold and offered for sale were manufactured by complainant, and possessed the qualities and characteristics for which complainant’s goods and complainant have become known, as aforesaid, and the continuance thereof is likely so to deceive the trade and the purchasing public.”

Defendant, although stoutly maintaining it is wholly immaterial in view of the law applicable to the case, insists, nevertheless, that there is an entire absence of evidence tending to show that any purchaser has ever been misled into thinking that its, defendant’s, hairpins were made by complainant as alleged. The parties offered evidence in support of their respective contentions on this point. Many witnesses for complainant testified to facts, showing that individual purchasers of hairpins quite generally regarded the “Hump” hairpin of defendant as the product of complainant, and in many instances it was made to appear that retailers who would not be so easily deceived had given orders for defendant’s hairpins under the same impression. Sometimes these orders from prospective purchasers were sent to the complainant, and these orders are in evidence. The evidence for defendant tending to show want of deception was, with only one exception, given by witnesses who did not deal with the retail trade, and with all of them was purely negative in character. We think a preponderance of the evidence establishes that many of defendant’s hairpins were sold under circumstances which indicate a belief in the minds of the purchasers that the goods purchased were manufactured by complainant. Defendant says, however, that the use of the word “Hump” was not the moving cause of these purchases, but, on the contrary, these were brought about because of the peculiar construction and special merits of defendant’s pins. It is not denied that complainant’s name was well and favorably known in this line of trade for 27 years, and that a high reputation for its goods was established long prior to the time when defendant’s hairpins were put upon the market. Complainant’s name and the words “Hump” and “See that Hump” had been associated together in advertising, covering the whole country many years prior to defendant’s use of the same. It is a reasonable inference from these facts that sales were brought about by the belief of purchasers that complainant ■ made the goods. If such was not its effect why did defendant as a later trader use and why does it now tenaciously maintain its supposed legal right to use these words ?

We think it is established by a preponderance of the evidence that the words “Hump” and “See that Hump” which were originally applied by complainant to its hooks and eyes, have by-,long association with complainant’s name come to be considered in the notion trade as synonymous therewith, and in their secondary meaning have come to indicate goods of complainant’s manufacture, and that the use of said words by defendant tends to deceive as alleged.

The secohd disputed material question of fact is whether Goldberg, defendant’s predecessor in title, knew at the time he adopted the word “Hump” of its former use by complainant as applied to its products, and whether in adopting it, he did so with the intention of appropriating complainant’s reputation'and advertising. ,

So early as March 4, 191Q, the defendant had been notified by complainant not to use the word “Hump” as a part of its name, stating, ‘ ‘ Obviously it is unfair that this word should be used by you and your associates as a part of the name or title of the Hump Hairpin Company (which company you have stated is engaged in the manufacture and sale of hairpins), in view of the long and continued use of that word by my client and its predecessors in business in connection with and as a trade-mark for hooks and eyes manufactured and sold by them.” To this letter defendant replied by its counsel, in effect, that it would comply with the request only when compelled by the courts to do so.

Goldberg testified in this case, and stated positively that he did not have knowledge of the use of these words either in 1903 or 1904. It is contended that his evidence on this point is not credible. Certain established facts certainly indicate that his testimony is very improbable. That the essential mechanical principle of the DeLong hook and the Goldberg hairpin is the same is apparent from even a casual inspection. In the case of the hook, the bend or swelling of the central wire is called the “Hump.” In the case of the haii-pin the bend or swelling of the central wire is also called the “Hump.” The name was applied to the hook in 1891. The same name was applied to the hairpin in 1903, twelve years thereafter.

The name was new and novel when first used by complainant in 1891. It had become almost universally known in the notion trade prior to its adoption by Goldberg in 1903. During, at least, a part of the intervening years, Goldberg was in the collor-button business, presumably familiar with novelties in collar buttons. It is improbable that he would during that time remain entirely ignorant of such a widely advertised novelty in hooks and eyes. In all the advertising of complainant where the DeLong hook appeared, the bend or hump of the hook had been called to the attention of the public by the words “See that Hump,” with dotted lines extending from the phrase to the head of the hook.

Goldberg in 1906 and 1907 was president of a company dealing in roofing material. That company in connection with its advertising of its business adopted the phrase, “See that lap” in a designWn'dar to that used by complainant in advertising thevhiok. When complainant began to manufacture hairpins in 1894 it used in connection with its advertising thereof, the phrase “It is in the twist.” When at a later time Goldberg began to advertise his hairpin, he adopted in connection therewith the phrase ‘ ‘ It locks the locks. ’ ’ It is quite impossible for us to think that all these things came to pass without design. When pressed on his examination, Goldberg said his patent attorney gave the name “Hump” to his hairpin at the time when an application for a patent thereon was made. The testimony of this attorney was not taken, nor is any reason given for the failure to produce it. We are therefore left without explanation of how this thought of his mind came into being. It is highly improbable that the solicitor would have been in ignorance under all the circumstances of complainant’s invention and trade-marks.

We are satisfied, from a consideration of' all the testimony, that the fact of defendant’s and its predecessor’s knowledge of complainant’s use of these terms at the time it began to use the same is established by a preponderance of the evidence, and this, although the pourt, erroneously as we think, refused to allow G-oldberg to be cross-examined as to the similarity of the mechanical principle in complainant’s hook and defendant’s. hairpin.

If knowledge is conceded, as we have found it must be, then we think there can be only one explanation of defendant’s reason for appropriating the use of these words and that would be to appropriate to itself the benefits of complainant’s reputation and advertising.

It therefore becomes necessary to consider the law applicable to these facts. The bill is brought for unfair competition, and the gist of such a case is the selling or disposing of his own goods by one trader as those of another and to the damage of the latter. Such a suit is clearly distinguishable from a suit for an infringement of a trade-mark. If this were such a suit for infringement it would not lie, because complainant has never registered nor used these names in the trade, as applied to the product known as hairpins. But the law of unfair competition rests on a broader basis, continually widening, so as to reach every unfair method by which one trader seeks to purloin the trade, good-will or reputation of another trader.

The defendant contends that the decision of the Court of Appeals for the District of Columbia, which overruled complainant’s opposition to defendant’s trade-mark, is decisive of the issues here, and that by reason thereof the defense of res adjudicada is applicable. While this would be true as to similar proceedings before a commissioner of patents or on appeal from him (Blumenthal v. Bigbee, 33 App. Cas. D. C. 209), it is not true as to a suit for unfair competition. It was held in Frasch v. Moore, 211 U. S. 1, that judgments in appeals from the commissioner of patents to the District Court of Columbia were interlocutory and not final, and hence not reviewable by the United States Supreme Court under the Federal Statutes, vol. 9, p. 777, and in E. C. Atkins & Co. v. Moore, 212 U. S. 285, it was held that the same rule was applicable to appeals taken from the commissioner under the Trade-Mark Act. The proceedings there were, therefore, not judicial in their nature, and did not finally adjudicate any of the rights of complainant as claimed in its bill.

The defendant next contends that as it has a valid and exclusive trade-mark in the word “Hump” as applied to hairpins, which the complainant has not, it cannot be guilty of unfair competition by its rightful use of a valid and exclusive trade-mark which belongs to it. This is not the law as we understand the decided cases. Trade-mark rights are not necessarily involved in cases of unfair competition. Indeed, it has been questioned whether there is any property right in trade-marks. But, however this may be, if the conduct of a defendant is such as to probably lead the public to believe that the goods of the defendant are those of complainant to complainant’s injury, this is unfair competition, irrespective of the registration of trade-marks by either party. Dyment v. Lewis, 144 Iowa 138, 123 N. W. 244; Bates Mfg. Co. v. Bates Numbering Machine Co., 172 Fed. 895.

The defendant, however, contends that as the patent upon complainant’s hook and eye has expired, not only is the exclusive right to manufacture the article gone, but the name used to designate the patented article as well as the right to manufacture have passed to the public, and it says: “If appellant cannot prevent the use by others of the word ‘Hump’ or the words, ‘See that hump’ as applied to hooks and eyes made by others, it follows a priori that it cannot prevent defendant from using that word as applied to hairpins, and especially as the complainant never had a trademark thereon, as applied to hairpins.” In support of this contention we are cited to Singer Mfg. Co. v. June Mfg. Co., 163 U. S. 169; Warren Featherbone Co. v. American Featherbone Co., 141 Fed. 513; DeLong Hook & Eye Co. v. American Pin Co., 200 Fed. 66.

We do not think the cases cited sustain the doctrine contended for.

If the name under which the patented article was sold had become a generic one, as in the Featherbone Co. case cited, the rule contended for would apply,.although, even then, in order to prevent unfair competition, a court of equity would require the later trader to adopt affirmative measures to prevent the public from being deceived as to the origin of the goods thereby and a complainant injured. Singer Mfg. Co. v. Loog, L. R. 8 App. Cas. 15.

The main point, in this case is, we think, found in defendant’s further contention■ that there is not and cannot be in the very nature of things any competition between complainant and defendant as to defendant’s distinctive hairpins, because complainant never made or sold these hairpins and would have no right to do so. Therefore it is argued, though it be admitted that the use of these words by defendant in the sale of its hairpins would tend to induce the belief in the minds of a purchaser that they were made by complainant and not by the defendant, nevertheless, complainant cannot maintain its bill, since there cannot be unfair competition where there is no competition, and where, even if it be conceded that there is competition, there can, in the very nature of things, be no injury to the complainant. On this point the defendant relies upon the case of Borden Ice Cream Co. v. Borden’s Condensed Milk Co., 201 Fed. 510. That case was decided by the IT. S. Circuit Court of Appeals, Seventh Circuit, November 14, 1912, on appeal from the District Court of the United States for the Eastern Division of the Northern District of Illinois. The complainant in that case was incorporated in the State of New Jersey, May 31, 1899, for the purpose among others of purchasing and selling fresh milk and all products of milk. The word “Borden” in its corporate name was taken from the name of Grail Borden, who founded the business in the year 1857. It developed a large business in the State of Illinois and the City of Chicago and in disposing of its product used some 32 brands, each one of which either contained the name of Borden or was used in connection with the name “Borden’s Condensed Milk Company.” On most of these brands, trade-marks had been registered. The defendant incorporated under the name of Borden’s Ice Cream Company, May 25, 1911, and by its charter was authorized “to manufacture and sell ice cream, ices and similar products,” which products, however, were not manufactured or dealt in by the complainant. The name was adopted over the protest of the complainant. An injunction granted by the District Court was dissolved by the Court of Appeals, the court expressing the opinion that while it had been said that the universal test question in such cases was whether the public was likely to be deceived as to. the maker or seller of the goods, this was not the fundamental question; that such deception would naturally tend to injure the proprietor of a business by diverting his customers and depriving him of sales which he, otherwise, might have made, and this, rather than the protection of the public against imposition was the sound and true basis for the private remedy; that while it was morally wrong for a person to proclaim or intimate that his goods were manufactured by some other, this would not give rise to a private right of action, unless the property rights of that concern were interfered with. The court said:

“In the case now under our consideration, the old company (the appellee) never has manufactured what is known as commercial ice cream. The new company (the appellant) was incorporated for the sole purpose of manufacturing and putting on the market such an article * * *. There being no competition between appellants and appellee, we are confronted with the proposition that the appellee, in order to succeed on this appeal, has and can enforce a proprietory right to the name ‘Borden’, in any kind of business, to the exclusion of all the world. ”

TMs proposition the court refused to hold, citing George v. Smith, 52 Fed. 830. In the case of Aunt Jemima Mills Co. v. Rigney & Co., 234 Fed. 804, this same doctrine was approved by the District Court of the United States in an opinion filed July 26, 1916, where the complainant, a Missouri corporation, engaged in the manufacture and sale of flour and which had adopted the name of Aunt Jemima’s together with a fanciful picture of a colored woman as its trademark, endeavored to restrain the defendant, a New York corporation; engaged in the manufacture of 'syrups, rock candy, etc., from using a similar name and picture applied to pancake syrup. The court, upon the theory that pancake flour and syrup were not goods having the same descriptive properties, and that there would be no competition between them, and therefore no injury to the complainant, held complainant was not entitled to relief. The court said:

“It is apparent that there can be no direct competition in trade between flour and syrup, for their descriptive qualities are dissimilar. Although the question whether articles belong to competitive classes is a question of fact rather than of law, the reports are replete with the illustrations of the principle.”

Citing with many other cases Borden Ice Cream Co. v. Borden’s Condensed Milk Co., supra. But the Court of Appeals for the Second Circuit in an opinion filed December 11, 1917, reversed the judgment, saying:

“To use precisely the same mark as the defendants have done is, in our opinion, evidence of intention to make something out of it, either to get the benefit of complainant’s reputation or of its advertisement or to forestall the extension of its trade. There is no other conceivable reason why they should have appropriated this precise mark. * * *”

And with reference to the argument that there could be no unfair competition because the goods were not in competition with each other, the court said:

“* * * But we think that goods, though different, may be so related as to fall within the mischief which equity should prevent. * * * It will enable them to get the benefit of the complainant’s reputation and advertisement. These, we think, are property rights which should be protected in equity. * * * This is a wrong which equity will enjoin without reference to the character of the article, or to the question of competition or of prior occupation of the market in any particular territory. No one has the right to apply another’s name to his own goods.” Aunt Jemima Mills Co. v. Rigney & Co., 247 Fed. 407.

The court cites as authorities Florence Mfg. Co. v. J. C. Dowd & Co., 178 Fed. 73; British-American Tobacco Co. v. British-American Cigar Stores Co., 211 Fed. 933; Eastman Co. v. Kodak Cycle Co., 15 Reports Patent Cases 105; Dunlop Pneumatic Tyre Co. v. Dunlop Lubricant Co., 16 Reports Patent Cases 12; Valentine Meat Juice Co. v. Valentine Extract Co., 17 Reports Patent Cases 673; Dunlop Pneumatic Tyre Co. v. Dunlop-Truffault Cycle & Tube Mfg. Co., 12 Times Law Reports 434; Premier Cycle Co. v. Premier Tube Co., 12 Times Law Reports 481.

It would therefore appear that two courts of equal dignity have announced views which are diametrically opposed as to the law applicable to the case before us. Our own Supreme Court has not, so far as we are informed, had the question before it. We think the tendency of the later decisions is to sustain the contentions of 'the complainant. While it may be true as a general proposition that where there is no competition there cannot be unfair competition, we are inclined to think the decision in the Borden case, supra, takes a narrow view as to the fact of the existence of competition. One who has adopted an arbitrary trade name and applied the same to a particular line of goods, it would seem, on principle, ought to have the right of protection in the use of that name to any extent which might be necessary to protect the reputation of his goods, and we think that there would be injury such as a court of equity would give a remedy, for in the case of a subsequent trader who attempted to make use of that name as applied to any one of the species of the general kind of goods manufactured and sold by the first trader.-

In the present case it is not strictly true that there is no competition between complainant and defendant. Complainant is a general dealer in notions, and in particular, in addition to hooks and eyes, deals in hair-' pins. The defendant also deals, in hairpins, and while the hairpins are a different kind from those manufactured and sold by the complainant, these are nevertheless directly in competition. A sale of “Hump” hairpins, in the very nature of things, has a tendency to lessen the probability of the sale by complainant of the conventional hairpin in which it deals.

We cannot see an innocent motive for the defendant’s actions. The facts indicate with a clearness which cannot be misunderstood, that it was and is the intention of the defendant to -appropriate to its own use a portion of the good-will of complainant, in the obtaining of which, complainant has expended hundreds and thousands of dollars.

This would seem to be a case where the application of the maxim that equity will not allow a wrong without a remedy is peculiarly appropriate.

The decree of the Circuit Court will be reversed and the cause remanded with directions to enter a decree in conformity with the views expressed in this opinion.

Reversed and remanded with directions.


source: Caselaw Access Project

author: Mr. Justice Barnes

license: Public Domain

text:
    Kathryn R. Roberts, Executrix, Defendant in Error, v. Cat-Nak Manufacturing Company, Inc., Plaintiff in Error.
    Gen. No. 23,992.
    1. Corporations, § 48

      —when plaintiff not required to prove incorporation of defendant sued as corporation. Proof of incorporation need not be adduced by plaintiff suing in the Municipal Court of Chicago where the defendant, sued as a corporation, does not deny in its affidavit of defense that it is a corporation.
    2. Corporations—what is prima facie proof that defendant is not domestic corporation and not licensed to do business in State. Where, in an action in the Municipal Court of Chicago, a defendant sued as a nonresident corporation admits its incorporation by failing to deny it in its affidavit of defense and plaintiff proves that the records of the Secretary of State were searched and that such search revealed no record of defendant’s incorporation in the State nor of the issuance of a license to it to do business in the State, such evidence, taken in connection with defendant’s admission of incorporation, is prima facie proof that defendant is not a domestic corporation and is not licensed to do business in the State.
    ■ 3. Corporations, § 735*—when foreign corporation, carrying on interstate and intrastate business cannot maintain suit in domestic court in regard to intrastate business. While foreign corporations engaged in interstate commerce are not, as to such business, amenable to the provisions of the State statute regulating the admission of foreign corporations to do business in the State, they are amenable so far as they engage in intrastate business, and cannot maintain suit in regard thereto if they have failed to comply with the statute.

      4. Set-oep and recoupment, § 38

      —burden of proving claim under set-off. The burden. of proof is on the defendant to establish its claim under a set-off.
    5. Corporations—burden of proof when foreign corporation defendant whiah has not complied with State statute interposes set-off. Where, a foreign corporation defendant which has not complied with the State statute regulating the admission of foreign corporations seeks to interpose a set-off, the burden is on it to show that the items of its claim arose out of interstate commerce transactions simply, and where the evidence offered and received in support of the claim tends to show that the majority, if not all, of the items relate wholly to domestic commerce, the set-off is properly stricken.
    6. Corporations, § 745*—what is extent of right of recovery against foreign corporation which has not complied with State statute. In an action against a foreign corporation which has not complied with the statute regulating the admission of such corporations to do business in the State, expenditures knoVingly and wrongfully incurred by plaintiff to enable defendant to carry on its business in violation of such statute may be and are properly stricken from plaintiff’s claim and he may thereupon be allowed to recover on items expended with reference to defendant’s business . outside of the State.
    7. Appeal and error, § 1301*—what is presumption as to evidence considered by court trying case without jury. It is presumed on appeal that the court trying the case without a jury considered only the material evidence received.
    8. Appeal and error, § 1567*—when failure of trial court to mark propositions of law submitted to it is not ground for reversal. While proper practice requires that the trial court should mark the propositions of law submitted to it, its failure to do so is not ground for reversal where the evidence is sufficient to sustain its judgment under the law applicable thereto and the propositions relate to legal questions which the record shows the court otherwise ruled upon and no reversible error is found in such rulings.
    Error to the Municipal Court of Chicago; the Hon. John Richardson, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1919.
    Affirmed.
    Opinion filed December 31, 1919.
    Rehearing denied January 15, 1920.
    Frederick A. Bangs, for plaintiff in error; Bichard H. Colby, of counsel.
    William G-. Wise, for defendant in error.

      See Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, same topic and section number.

      See Illinois Notes Digest, Vole. XI to XV, and Cumulative Quarterly, same topic and section number.

   Mr. Justice Barnes

delivered the opinion of the court.

This was an attachment brought by Lewis C. Boberts, since deceased, against the Cat-Ñak Manufacturing Company, incorporated, on the ground of its being a nonresident of this State. Later said company was served with summons, and filed its affidavit of defense denying it was a nonresident or indebted to plaintiff. It did not, however, deny that it was a corporation, and, therefore, under a rule of the Municipal Court, admitted it was. Such admission rendered it unnecessary, of course, to adduce the proof of incorporation to which defendant objected as incompetent. Hence error assigned thereon need not be considered. But there was also proof of a search of the records of the Secretary of the State of Illinois and that such result revealed no record of defendant’s incorporation in this State or of the issuance of a license to it to do business in this State. Such evidence, taken in connection with the admission of defendant’s incorporation, was prima facie proof that defendant was not a domestic corporation nor licensed to do business in this State.

The case was tried -without a jury. After eliminating over $350 of plaintiff’s claim, the court assessed his damages at $456.07, consisting of expenditures, as shown by competent testimony, made by him for the benefit of said company at the request, express or implied, of its president and manager.

At the close of the evidence the court, on plaintiff’s motion, struck defendant’s set-off apparently on the ground that, as the proof showed that defendant was an unlicensed foreign corporation, it would not, under our statute regulating the' admission of foreign corporations to do business in this State, be permitted to assert its claim. True, as plaintiff in error states, foreign corporations engaged in interstate commerce are not amenable. to the provisions of such statute. (Lehigh Portland Cement Co. v. McLean, 245 Ill. 326.) But they are so far as they engage in intrastate transactions, on which they cannot maintain suit if they have failed to comply with such statute. (United Lead Co. v. J. W. Reedy Elevator Mfg. Co., 222 Ill. 199.)

The burden of proof, of course, was on defendant to establish its claim under the set-off (Russell, Burdsall & Ward, Inc. v. Excelsior Stove & Manufacturing Co., 120 Ill. App. 23, 31), and therefore to show that the items of which it consisted were merely such as arose out of interstate commerce transactions. But it is clear from the record that plaintiff in error was not only engaged in interstate commerce but was also transacting business in this State, and as both the evidence received and offered in support of the counterclaim tended to show that most, if not at all, of the items included therein relate wholly to domestic business, we think the counterclaim or set-off was properly stricken. In such a case under a similar statute the Wisconsin Supreme Court has held a foreign corporation cannot maintain a set-off. (Ashland Lumber Co. v. Detroit Salt Co., 114 Wis. 66; Rib Falls Lumber Co. v. Lesh & Mathews Lumber Co., 144 Wis. 362.)

But it is urged that plaintiff cannot recover because he was in pari delicto. His claim was for an amount exceeding $800. In assessing the damages the court eliminated those items which were apparently expenditures made by plaintiff for defendant company to enable it to carry on business in this State. The record indicates that plaintiff was in a position to know that the company was not licensed to do such business, and such expenditures were properly excluded from his claim, he having knowingly and wrongfully incurred them to carry on such business in violation of the statute. But the items not eliminated, upon which we think recovery was properly allowed, appear to relate to the company’s business transactions outside of the State.

Complaint is made against the court’s rulings on evidence and its failure to mark propositions of law submitted to it by defendant. As the trial was without a jury, the court presumably considered only the material evidence received. In its exclusion of evidence we find no reversible error.

It should have marked the propositions of law. But as the evidence is sufficient to sustain the court’s judgment under the law applicable thereto, and as such propositions relate to legal questions which the record shows the court has otherwise ruled upon, and we find no reversible error in such rulings, we would not be justified in reversing merely because the court failed to mark the propositions so submitted to it. (Chicago Union Traction Co. v. City of Chicago, 202 Ill. 576, 578.) The judgment will be affirmed.

Affirmed.


text:
    John Stelk, Individually and as Trustee, Complainant, v. Sophie, also known as Sophie Hoff, et al., Defendants. Emil W. Weber, Individually and as Successor in Trust (Cross Complainant), Appellee, v. John Stelk, Individually and as Trustee (Cross Defendant), Appellant.
    Gen. No. 24,951.
    1. Mortgages, § 657

      —who liable for costs on foreclosure as being unsuccessful party. On proceedings to foreclose a trust deed in which a cross-bill to foreclose another trust deed is filed, where the decree directs the sale of the property, giving priority to cross complainant’s lien, the owner of the property is the unsuccessful party and costs should be taxed against her.
    2. Mortgages, § 658*—construction of foreclosure decree as to costs. A decree in foreclosure which directs that, out of the proceeds of the sale, the master “shall retain his fees, disbursements and commissions, and see that all unpaid costs are paid to the persons entitled to receive the same,” and then directs the order of distribution, is to be construed as requiring that all costs be paid, including those advanced by a party whose lien was postponed to that of another party, before the proceeds are distributed among the lienholders.
    Appeal from the Circuit Court of Cook county; the Hon. Merritt IW. Pinckney, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1919.
    Reversed and remanded with directions.
    Opinion filed December 31, 1919.
    Q-. A. Buresh, for appellant.
    Matthew P. Brady, for appellee.

      See Illinois Notes Digest, Vois. XI to XV, and Cumulative Quarterly, same topic and section number.

   Mr. Justice Barnes

delivered the opinion of the court.

This appeal is from an order overruling exceptions to a master’s report of sale and distribution under a decree of foreclosure, and merely calls for construction of that part of the decree directing the master to make distribution, which reads;

“Out of the proceeds of sale he shall retain his fees, disbursements and commissions, and see that all unpaid costs are paid to the persons entitled to receive the same. ’ ’

Immediately following such direction are directions in the usual form to pay as far as the proceeds will reach, first, the amount found due to appellee Weber, the cross complainant, under his trust deed, and then the amount found due to appellant Stelk, the complainant, under his trust deed.

The owner of the property conveyed by the trust deeds was Sophie Hoff., The original bill was filed to foreclose appellant’s trust deed, and the cross-bill to foreclose appellee’s. The decree recognizes the equities of both so far as the right of each to foreclose is concerned, but gives priority of lien to appellee.

Out of the amount realized from the sale the master retained his fees, disbursements and commissions incident to the sale and subsequent proceedings, and paid the balance to appellee, which was just sufficient to. cover the amount found due to him, together with his appearance fee and the amount of his solicitor’s fees. The master further reported the amount due appellant and the sum of $317.50 for costs and master’s fees and expenses advanced by him on the reference. This amount is also embodied in the clerk’s bill of costs.

It is unquestioned that unless costs are otherwise apportioned under the discretionary power of the chancellor, they should be taxed against the unsuccessful party, who, in this "case, so far as the primary object of both bill and cross-bill is concerned, was Sophie Hoff, and the decree directed the sale of the property on her failure to pay both appellee and appellant the sums due them respectively, and, as the decree recites, “also the cost of this suit, including the master’s fees on the reference herein, which fees are taxed at the sum of $232, and stenographer’s fees which are hereby taxed at $60.” As we construe the decree it contemplated that if Sophie Hoff did not pay the taxed costs they should be paid out of the proceeds of sale before satisfying any part of the amount decreed to be paid to either appellee or appellant. While the decree might have been more specific and required that appellant and appellee should first be reimbursed for costs advanced by them respectively, yet we find nothing in the decree that justifies a different intent. It was said in Babcock v. Farwell, 199 Ill. App. 512:

“The costs decreed are costs in the cause, and while due primarily to the officers in wdiose favor the costs might in the first instance be taxed, still such costs, when advanced by the parties, are properly taxable as such, and the parties advancing the same are entitled to be reimbursed for such advances as costs due them in the cause.”

That language is appropriate to the case at bar. The provision of the decree calling for construction directs the master to see that all “unpaid costs” are paid “to the persons entitled to receive the same.” They have not been paid by the unsuccessful party, Sophie Hoff, against whom they are taxed, and if not paid by her, who, if not the person advancing them, was entitled to receive the same? The costs so advanced by appellant, namely, costs of publication and clerk’s, sheriff’s and master’s fees, were as necessary to the establishment of appellee’s as appellant’s claim.

The mere fact that appellee’s lien was prior to that of appellant’s furnishes no reason for satisfying appellee’s lien before payment of costs taxed nbt against appellant but against the owner of the property out of which the liens of both appellant and appellee were decreed to be satisfied. We find nothing either in the language of the decree quoted, or any part of it, that justifies a different construction. We think the master should have first paid all the costs including those advanced by appellant before satisfying the amount found due under the respective deeds, and we so construe the language above cited, either when taken alone or in connection with every other part of the decree. Accordingly the order sustaining the master’s report of distribution will be reversed with directions to proceed in conformity with the views expressed in tins opinion.

Reversed and remanded with directions.


author: Mr. Justice Gridley

text:
    Ruth Rising, by Jorgen P. Rising, Defendant in Error, v. John H. Ferris and Clark Amusement Company. John H. Ferris, Plaintiff in Error.
    Gen. No. 24,588.
    1. Words and phrases—“nonfeasance”; “misfeasance”; “malfeasance” Nonfeasance is the omission of an act which a person ought to do; misfeasance is the improper doing of an act which a person might lawfully do; malfeasance is the doing of an act which a person ought not to do at all.

      2. Principal and agent, § 149

      —duty of agent to third persons. An agent may, in some cases, owe a duty to third persons at the same time that he owes a duty to his principal.
    3. Principal and agent, § 149*—duty of agent to regard rights of others. The common duty to regard the rights of others is none the less binding upon a person because he happens at the time to be an agent.
    4. Principal and agent, § 173*—when president and general manager of lessee of theater is personally liable for personal injuries to third persons. The president and general manager of a lessee of a theater who has general control of the theater and its operation and makes, subleases and contracts for the use of the theater auditorium, is personally liable for personal injuries to a child, taking part in the rehearsal of a play for which the theater had been leased, through burns caused by her clothing being set afire by contact with a switchboard' not guarded as required by ordinance, of the condition of which defendant had knowledge.
    5. Principal and agent, § 173*—when president and general manager of lessee of theater is jointly liable loith principal for personal injuries to third person. The president and general manager of the lessee of a theater who has general control of the theater and its operation is jointly liable with his principal, the lessee company, for personal injuries received by one lawfully on the stage through coming in contact with an unguarded switchboard, of the condition of which such president knew.
    6. Negligence, § 47*—when unguarded switchboard on theater stage is proximate cause of burns received by child. In an action by a child to recover for burns received through her costume, which was decorated with tinsel, being set fire to by coming in contact with an unguarded switchboard at one side of the stage while she was taking part in a rehearsal for which the theater had been leased, the failure to guard the switchboard, and not the tinsel on her costume, was the proximate cause of her injury.
    Error to the Circuit Court of Cook county; the Hon. Charles M. Walker, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1919.
    Affirmed.
    Opinion filed December 31, 1919.
    Thomas E. D. Bradley and Edwin L. Waugh, for plaintiff in error.
    Henry N. Miller, for defendant in error.

      See Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, same topic and section number.

   Mr. Justice Gridley

delivered the opinion of the court.

This writ of error is sued out to reverse a judgment of $4,000, rendered after verdict by the Circuit Court of Cook county against John H. Ferris and Clark Amusement Company, a corporation, defendants, in an action on the case for personal injuries. Harold W. Bicker and Joseph Grein were made codefendants originally, but during the course of the trial plaintiff dismissed the suit as to them. In this court an order of severance has been entered and John H. Ferris given leave to prosecute the writ of error alone.

At the time of the accident the Clark Amusement Company held a lease of the building, known as the “Clark Theater” on North Clark street in the City of Chicago, and used it for moving picture shows and other entertainments. There was a stage at the east end of the "theater, about 30 by 50 feet, and at the north side of the stage there was a marble switchboard, about 6 feet high and 4 feet wide, the bottom of which was about one foot from the floor. On the switchboard there were about 20 switches made of brass with wooden handles. These switches were used for the purpose of turning on or off various electric lights, were uncovered and 'carried a current of about 220 volts, and there was no guard or railing around the switchboard. John H. Ferris was president and manager of the Clark Amusement Company. As manager he had general control of the theater and its operation, paid the help, and was there every day. He leased the use 'of the theater auditorium to any one that he saw fit. As stated by one of the employees of the theater: “Mr. Ferris directed me in my work. * * * He was my boss. * * * I listened to Mr. Ferris. There was no one else there who had anything to do with the operation of the theater so far as I know.” Joseph Grein, the original lessee, testified: “I ran the theater myself for a while, so I looked at the switchboard then. * * * I made no repairs. on the building from the time I subleased it. If any repairs were made they were made by the tenant and not by me. * * * At the time the lease was assigned to the Clark Amusement Company, there was a bar in front of that switchboard, and it sure was there while I was operating the theater.” The defendant Ferris testified: “Previous to the accident I did not do anything towards having a guardrail put around thó switchboard on the stage of the theater. * * ■ * I knew there was a switchboard on the stage. * * * The city inspector came to the theater about once a month and suggested things that should be done. He did riot suggest anything for this switchboard. There was no guardrail there when I went there.”

The accident happened on the afternoon of March 6, 1916. A few days before, several ladies called on the defendant Ferris and stated they desired to lease the theater for the purpose of giving a play in Which children would take part, and for certain prior rehearsals. Arrangements were made with Ferris and at the time of the accident a rehearsal for said play was in progress, and plaintiff, a girl of 11 years of age, and about 40 other children and some adults were on the stage. Plaintiff was wearing a white tarlatan dress trimmed with tinsel, and her hair was hanging down her back. She was standing near and with her back to the switchboard, and her clothing coming in contact therewith, suddenly there was a “burst of flame” and she became enveloped in flames. Her clothing and hair were burned and she suffered serious and permanent injuries. She had not been on the stage of the theater before and knew nothing about the switchboard. The defendant Ferris was present at the theater when the children and others arrived for the rehearsal, and was “in and about the building all of the afternoon,” part of the time being in the office, away from the stage.

The declaration consists of four counts. The gist of the first two counts is that the defendants managed and controlled the theater and building, that they had leased the theater to certain persons for the purpose of having certain rehearsals for an entertainment therein, or had permitted such persons to occupy the theater for such purpose, and that they negligently failed to have said switchboard protected by a guardrail or screen or other sufficient device so as to prevent persons rightfully upon the stage, under said lease or permission, from coming in contact therewith. The third and fourth counts declare upon a provision contained in the ordinances of the City of Chicago to the effect that “switchboards accessible from stage level must be protected by a standard guardrail to prevent contact with live metal parts of board,” and allege the negligent failure of the defendants to comply with said provision. The ordinance referred to was introduced in evidence by the plaintiff.

At the conclusion of plaintiff’s evidence, and again at the close of all the evidence, the defendant Ferris moved for a directed verdict in his favor but the motions were denied.

The main contention of counsel for Ferris is that the trial court erred in not directing a verdict in his favor, and for the reason that he, as manager and agent of the Clark .Amusement Company, is not liable for nonfeasance, but only for misfeasance, and that Ferris is not shown to have been guilty of misfeasance.

It is said in Bell v. Josselyn, 3 Gray (Mass.) 309, 311: “Nonfeasance is the omission of an act which a person ought to do; misfeasance is the improper doing of an act which a person might lawfully do; and malfeasance is the doing of an act which a person ought not to do at all.” In Story on Agency, sec. 308, it is said: “The agent is also personally liable to third persons for his own misfeasance and positive wrongs. But he is not in general (for there are exceptions) liable to third persons for his own nonfeasances or omissions of duty, in the course of his employment. His liability, in these latter cases, is solely to Ms principal; there being no privity between him and such third persons, but the privity exists only between him and his principal. ’ There are many similar statements in other textbooks and in some reported cases. Our investigation into the subject leads us to believe that such statements may be founded in part upon a dictum contained in the dissenting opinion of Lord Holt in the case of Lane v. Cotten, 12 Mod. 472, 488, wherein it is stated: “A servant or deputy, quatenus such, cannot be charged for neglect, but the principal only shall be charged for it; but for a misfeasance an action will lie against a servant or deputy, but not quatenus a deputy or servant, but as a wrongdoer. ’ ’ We think such statements are too broad in that they seemingly fail to recognize the fact that an agent may, in some cases, owe a duty to third persons at the same time that he owes a duty to his principal, and that the common duty to regard the rights of others is none the less binding upon a person because he happens to be at the time an agent. In Osborne v. Morgan, 130 Mass. 102, 103, it is stated by Gray, C. J.: “It is often said in the books, that an agent is responsible to tMrd persons for misfeasance only, and not for nonfeasance. And it is doubtless true that if an agent never does anytMng towards carrying out his contract with his principal, but wholly omits and neglects to do so, the principal is the only person who can maintain any action against him for the nonfeasance. But if the agent once actually undertakes and enters upon the execution of a particular work, it is his duty to use reasonable care in the manner of executing it, so as not to cause any injury to third persons which may be the natural consequence of his acts; and he cannot, by abandoning its execution midway and leaving things in a dangerous condition, exempt himself from liability to any person who suffers injury by reason of his having so left them without proper safeguards. This is not nonfeasance, or doing nothing; but it is misfeasance, doing improperly.” In an opimon delivered by Garnett, P. J. in this court (33 Ill. App. 503, 507) and adopted by the Supreme Court in Baird v. Shipman, 132 Ill. 16, it is said (p. 18):

“He” (the agent) “must have due regard to the rights and safety of third persons. He cannot, in all cases, find shelter behind his principal. If, in the course of .his agency, he is entrusted with the operation of a dangerous machine, to guard himself from personal liability he must use proper care in its management and supervision, so that others in the use of ordinary care will not suffer in life, limb or property. * * * It is not his contract with the principal which exposes him to or protects him from liability to third persons, but his common-law obligation to so use that which he controls as not to injure another. .That obligation is neither increased nor diminished by his entrance upon the duties of agency, nor can its breach be excused by the plea that his principal is chargeable. ’ ’

Mechem, in his work on Agency (2nd Ed., sec. 1474) says:

“The agent should be held responsible for injuries caused by the condition of premises in the possession or under the control of the agent where the condition is one for which he is responsible and the injury is such as he would be liable for if he were controlling the premises on his own account. * * * For similar reasons, the agent should be held responsible for injuries caused by his neglect to keep in repair premises under his control where he is charged by his principal with the duty to repair and has the necessary means, in any case in which he would be liable for the same injury if he were controlling the premises on his own account. * * * If the agent is not in control or has neither the duty nor the power to repair, the failure to repair cannot be regarded as. his act. But where these conditions are present it is difficult to see why it is not properly to be regarded as his act. It is, of course, in one sense a not-doing, a nonfeasance; but his act of control is a doing, a feasance, and his failure to properly control is a misfeasance, if any importance is to be attached to these terms. It would seem to need no argument to show that the mere not-doing of a particular act which is in itself but a mere incident in the larger act of doing, ought not to be regarded as such a nonfeasance as will excuse the agent within any proper meaning of that term. Not all the cases, it is true, are in harmony with the rules above laid down, but these rules are believed to be sound, and to be sustained by the weight of modern authority.”

In Baird v. Shipman, supra, the agents for a nonresident owner, with general power to lease the premises and to make repairs, were held liable for negligently permitting a stable door to so get out of repair that the same fell from its fastenings while an express-man was delivering a load of kindling in the barn for the tenant, and so injured him that he died the next day. The evidence disclosed that the agents knew of the insecure condition of the door when they leased the premises to said tenant. In the opinion of the court it is stated (132 Ill. 20):

“Appellants remained in control of the premises until the door fell upon the deceased. There was no interruption of the causal relation between them and the injured man. They were, in fact, for the time being, substituted in place of the owner, so far as the control ,and management of the property was concerned. * * * When appellants rented the premises to Mrs. Wheeler, in the dangerous condition shown by the evidence, they voluntarily set in motion an agency, which, in the ordinary and natural course of events, /would expose persons entering the barn to personal injury. Use of the barn for the purpose for which it was used when the deceased came to his death, was one of its ordinary and appropriate uses, and might, by ordinary foresight, have been anticipated.”

In Lough v. John Davis & Co., 30 Wash. 204, an agent, who had authority from the owner of a tenement house to rent and repair the premises and also had the full control and management thereof, and who had negligently permitted the railing of a veranda 15 feet from the ground to become rotten and unsafe, was held liable for the injuries to plaintiff occasioned by the railing giving way and her falling from the veranda to the ground. In Campbell v. Portland Sugar Co., 62 Me. 552, plaintiff was injured by falling through a hole in a wharf and the general agents of a corporation (owner) who had the care and control of the wharf were held liable, equally with the owner, for having negligently permitted the hole to remain. In Ellis v. McNaughton, 76 Mich. 237, 242, a husband had the sole control of the erection of a building upon a lot owned by his wife, as her agent, buying the materials and hiring the workmen. One of the workmen, contrary to orders,, removed a portion of'the sidewalk in front of the lot. The husband, after knowledge of the removal, failed to replace the walk and make it safe for travel thereon, in consequence of which failure plaintiff was injured, and the husband, as agent, was held liable. The court quotes from Mechem on Agency (1st Ed., see. 572) as follows:

“Misfeasance may involve, also, to some extent, the idea of not doing,—as where the agent, while engaged in the performance of his undertaking, does not do something which it was his duty to do under the circumstances, does not take that precaution, does not exercise that care, which a due regard for the rights of others requires. All this is not doing, but it is not the not doing of that which is imposed upon the agent merely by virtue of his relation, but of that which is imposed upon him by law as a responsible individual in common with all other members of society. It is the same not-doing which constitutes actionable negligence in any relation. ’ ’

(See also, Stiewel v. Borman, 63 Ark. 30, 39; Mayer v. Thompson-Hutchison Bldg. Co., 104 Ala. 611, 622; Carter v. Atlantic Coast Line R. Co., 84 S. C. 546, 550; Orcutt v. Century Bldg. Co., 201 Mo. 424, 447; Hagerty v. Montana Ore Purchasing Co., 38 Mont. 69, 76.)

Under the law, by the weight of modem authority, and under the peculiar facts of the present case, we are of the opinion that the defendant, Ferris, is liable for the injuries sustained by plaintiff. The evidence disclosed that he had general control of the theater and of its operation, that he made the leases or contracts for the use of the theater auditorium, that the unguarded switchboard was a dangerous mechanism to uninformed persons lawfully on the stage and in its immediate vicinity, and that he knew that the switchboard was in the position that it was. When, under the prior arrangements made, he allowed many children and others on the stage, on the afternoon in question, for the purpose of having a rehearsal for a play to be subsequently given, and on that stage there was a mechanism, dangerous because unguarded, he “voluntarily set in motion an agency, which, in the ordinary and natural course of events would expose persons,” unaware of the danger and lawfully on the stage, to personalinjury. By the use of ordinary foresight in placing a guard around the switchboard he could have avoided the accident. We think he was guilty of negligence which proximately caused the injuries to plaintiff.

And, under the weight of authority, he is jointly liable with the Clark Amusement Company, his principal. (2 Mechem on Agency, 2nd Ed., sec. 2011; Republic Iron & Steel Co. v. Lee, 227 Ill. 246, 253; Greenberg v. Whitcomb Lumber Co., 90 Wis. 225, 232; Southern Ry. Co. v. Grizzle, 124 Ga. 735, 739.)

It is also contended that the proximate cause of the injury was plaintiff’s wearing a dress trimmed with tinsel and not the failure to erect a guardrail around the switchboard. We do not think that the evidence supports this contention. Furthermore, the wearing of tinsel by children in plays in which they take part is common, and not ordinarily dangerous. The dangerous agency in this case was the unguarded switchboard.

It is further contended that the trial court erred in refusing certain instructions offered by the defendant Ferris. No useful purpose will be served in setting forth the instructions and commenting on the points made as to each. Suffice it to say that we have examined .the refused instructions and are of the opinion that, in view of the facts disclosed by the evidence and in view of the given instructions, no error was committed by the court which warrants a reversal of the judgment. No point is made that the verdict and judgment are excessive.

For the reasons indicated the judgment is affirmed.

Affirmed.


author: Mr. Justice Gridley Mr. Justice Barnes:

text:
    Albert K. Grafton, Appellee, v. North-American Transportation & Trading Company, Appellant.
    Gen. No. 24,834.
    1. Pleading, § 362

      —what is effect of sustaining motion to strike affidavit of defense. The sustaining of plaintiff’s motion to strike the affidavit of defense from the files is tantamount to ordering it stricken.
    2. Appeal and error, § 1236*—when failure of trial court to actually order striking of affidavit of defense is not ground for reversal. A defendant who, after plaintiff’s motion to strike the affidavit of defense has been sustained, elects to stand by the affidavit and prays an appeal, will not be heard to contend, as ground for reversal, that it nowhere appears in the order or elsewhere that the court actually ordered 'the affidavit stricken.
    3. Corporations, § 166*—when transferee of stock may recover dividends from corporation. A transferee of corporate stock may recover of the corporation dividends declared by it thereon subsequently to such transfer and at least 4 years after the transferor’s death which such corporation has appropriated and applied in liquidation of a debt due to it from the transferor.
    Appeal from the Municipal Court of Chicago; the Hon. Harry M. Fischer, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1919.
    Affirmed.
    Opinion filed December 31, 1919.
    Warren Pease, for appellant.
    Baker & Holder, for appellee; G-. Raymond Collins, of counsel.

      See Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, same topic and section number.

   Mr. Justice Gridley

delivered the opinion of the court.

It is sought by this appeal to reverse a judgment for $675 entered by the Municipal Court of Chicago against the defendant.

It is alleged in substance in plaintiff’s statement of claim, filed June 19, 1917, that his claim is for dividends and distributions due upon 50 shares of the capital stock of the defendant company, evidenced by certificate No. B-1308, executed and delivered on October 4, 1901, to one John J. Healy, and by said Healy assigned and transferred on March 1, 1907, to one Sara W. de Sallmard, and by said de Sallmard assigned and transferred on October 6,1915, to the plaintiff; that the defendant duly declared four dividends aggregating the sum of $13.50 per share,—the first-in January, 1913, and the last in November, 1915,— and that it failed and refused to pay the amounts of said dividends or any part thereof to said de Sallmard ; that on June 14,1916, said de Sallmard assigned and transferred to plaintiff all right, title and interest in and to said dividends and the moneys due and payable upon said shares, accruing subsequent' to March 1, 1907, and up to and including October 6, 1915, of which assignment the defendant had notice; and that in consideration thereof the defendant promised to pay plaintiff the said sum of $13.50 per share, but has refused so to do, to the damage of plaintiff in the sum of $675.

The defendant filed its affidavit of merits to plaintiff’s claim, but plaintiff’s motion to strike the same from the files was sustained and the same was stricken. Subsequently the defendant filed an amended affidavit of merits, by its assistant secretary and agent, in which it is alleged that “so far as affiant’s books and records disclose,” said certificate B-1308 was issued to said Healy on October 4,1901, and was not presented to be canceled and a new certificate issued until March 30, 1916, although “it” did have notice on December 15, 1915, that said certificate was held by plaintiff and that he desired to have the certificate canceled and a new one issued; that prior to that time from March 1, 1907, ‘ ‘ affiant ’ ’ had no knowledge of any transfer of said certificate by said Healy, nor does “it” now have any knowledge of the alleged transfer of said certificate by said Healy to said de Sallmard, or of the alleged transfer of said certificate by said de Sallmard on October 6, 1915, to plaintiff, “except that said canceled certificate purports to bear said alleged assignments”; that since “affiant” had notice on December 15, 1915, that plaintiff held said certificate, “one dividend or distribution, and only one, has been declared” by defendant, and that “has been paid” to plaintiff; that prior to that time certain distributions or dividends have been made to the stockholders of defendant, as alleged in plaintiff’s statement of claim, amounting in all to $13.50 per share, or $675 for the 50 shares; that said Healy “died during the year 1908,” being at the time of his death indebted to defendant in the sum of $969.04; that “when the various dividends or distributions above set forth were made, said defendant, as it has a legal right to do, appropriated and applied said dividends and distributions on account of said indebtedness of said John J. Healy to the defendant, so that there is now still due and owing to defendant from said John J. Healy, or his estate, the sum of $294.04, and defendant is not indebted to plaintiff in any sum”; and that said appropriation and application “was made by defendant in good faith” and “based upon the books and records” of defendant, showing that at the time of said appropriation and application said Healy was still the owner of the stock in question.

Subsequently the trial court entered an order in part as follows: “Now comes the plaintiff and moves the court to strike the amended affidavit of merits from the files, and the court sustains said motion, and the defendant herein elects to stand by the same, and it appearing to the court that the plaintiff has filed * * * an affidavit, * * * and that defendant is in default for want of an affidavit of merits or defense in this cause it is * * * ordered * * * that judgment be entered herein against said defendant by default for want of such affidavit of merits.” The order further discloses that the court assessed plaintiff’s damages at the sum of $675, and on such default and assessment of damages entered the judgment appealed from.

It is first contended that the judgment should be reversed because, although it appears from the above order that the trial court sustained plaintiff’s motion to strike the amended affidavit of merits from the files, it nowhere appears in said order, or elsewhere, that the court actually ordered said affidavit stricken. We do not think there is any merit in the contention. When the court sustained plaintiff’s motion to strike said affidavit from the files that was tantamount to ordering the same stricken. Furthermore, it is evident from the order that defendant at the time understood Said affidavit had been ordered stricken, because it appears that he elected to stand by said affidavit, and at once prayed this appeal.

It is next contended that the trial court erred in sustaining the motion to strike defendant’s affidavit of merits from the files, for the reason that said affidavit discloses a good defense upon the merits to plaintiff’s claim. Counsel’s argument is that, Healy or his estate being indebted to the defendant corporation at the times of the declaration of the several dividends, the defendant was legally authorized to apply the amount of said dividends in liquidation pro tanto of said indebtedness, it having done so without notice that plaintiff had any interest in the stock in question.

Thompson in his work on Corporations (vol. 2, sec. 2133) says:

“As the dividend when declared becomes so much money owing by the corporation to the shareholder, if the shareholder is at the time indebted to the corporation, the latter has, on principle, a right to apply the dividend in liquidation of the debt. In other words, it has the same right of set-off that any other creditor has. But this right of set-off rests upon a mutuality of indebtedness; and hence where the shares have been assigned, although not on the books of the company, prior to the declaration of the dividend, the corporation has no right of set-off as against the assignee, who becomes the equitable owner, provided it has knowledge of the assignment prior to the declaration of the dividend.” (Citing Gemmell v. Davis, 75 Md. 546; see also, American Nat. Bank v. Nashville Warehouse Elevator Co. [Tenn.], 36 S. W. Rep. 960.)

Cook in his work on Corporations (vol. 2, 6th Ed., sec. 526) says:

“It is accordingly held that a corporation may lawfully retain dividends, and apply them to the payment of a debt due to it from the stockholder, since in an action, by the stockholder to enforce payment of his dividends the corporation may plead the debt by way of set-off. But dividends declared after the death of the stockholder are not subject to a lien for his debts.” (Citing Brent’s Ex’rs v. Bank of Washington, 2 Cranch C. C. 517; Merchants’ Bank v. Shouse, 102 Pa. St. 488.)

Under the law and under the facts as disclosed in defendant’s affidavit of merits, we do not think that said affidavit stated a good defense to plaintiff’s claim, and it is our opinion that the same was properly stricken from the files. It is admitted that on October 4, 1901, a certificate for 50 shares of stock was issued to Healy. It is not denied that on March 1,1907, Healy assigned said certificate and stock to de Sallmard,' and that the latter, on October 6, 1915, assigned the same to plaintiff. It is further admitted that tbe four dividends in question were declared by the defendant corporation at the times stated (after Healy had assigned and transferred his said stock) and that the aggregate sum thereof, for said 50 shares, amounted to $675; and it is not denied that prior to the beginning of the suit de Sallmard had assigned and transferred to plaintiff all her right, title and interest in any moneys due her upon any of said dividends. The said affidavit of merits was made by the assistant secretary and agent of defendant. It further appears therefrom that “so far as affiant’s books and records disclose,” the Healy certificate was not presented to defendant company for cancellation and the issuance of a new certificate until March 30, 1916, and that “affiant,” from March 1, 1907 (the date Healy assigned the stock to de Salknard), and prior to December 15, 1915, had ho knowledge of any transfer by Healy of his said 'certificate and stock. This does not show that the defendant company had no knowledge of said transfer prior to the date of the declaration of the first of the four dividends in January, 1913. Furthermore, it appears from said affidavit that Healy “died during the year 1908,” which was about a year after he had assigned said certificate and stock to de Sallmard and at least 4 years before the first of said four dividends was declared. Defendant had no right to appropriate the amount of said dividends in liquidation of an indebtedness of Healy, who had long since departed this life.

The judgment of the Municipal Court is affirmed.

Affirmed.

Mr. Justice Barnes:

While the affidavit of defense might be more precise, I think it may reasonably be construed to show that defendant had no notice of the assignment of the stock until after it applied the dividends thereon to the Healy debt. But I think the affidavit was properly stricken because it did not state further that defendant had no knowledge of Healy’s death at the time they were applied. Otherwise I think it would sufficiently state a legal defense.


text:
    Julia Masten, Plaintiff in Error, v. J. A. Cousins, Defendant in Error.
    Gen. No. 24,942.
    1. Automobiles and garages, § 3

      —When question of negligent driving of automobile is for jury. In an action by one to recover for personal injuries received in an accident to defendant’s automobile in which plaintiff was riding at the time as defendant’s guest, where plaintiff’s evidence discloses that, at the time of the accident, defendant was driving the car on a public highway at about 40 miles an hour against plaintiff’s repeated protests at driving at such speed, it is for the jury to determine whether defendant was guilty of negligence in so doing. j
    2. Automobiles and garages, § 3*—when doctrine of res ipsa loquitur applies in action for injuries to guest in automobile. The doctrine of res ipsa loquitur applies where it appears that plaintiff, a guest in defendant’s automobile, was thrown therefrom and injured by reason of the car leaving the road and running into aj tree as defendant was driving it on a public highway at a speed of about 40 miles an hour. |
    3. Automobiles and garages, § 3*—when evidence in action for injuries to guest in automobile makes out prima facie case of negligence. In an action to recover for personal injuries received through defendant’s automobile, in which plaintiff was defendant’s guest, leaying the road and running into a tree, throwing plaintiff out, under a count alleging negligence in driving the car on the highway at a greater speed than was reasonable and proper and so as to endanger life, limb and property, in violation of the statute, evidence disclosing that the accident occurred on a public highway and the car was being driven at about 40 miles an hour, makes out "a prima facie case of defendant’s negligence, by virtue of the provisions of Hurd’s Rev. St. 1917, ch. 121, secs. 269j, 269q (J. & A. Htf 10010, 10017).
    4. ' Automobiles and garages, § 3*—when evidence in action for injuries to guest in automobile does not show contributory negligence. In an action to recover for personal injuries received through defendant’s car, in which plaintiff was his guest, leaving the road, as defendant was driving it, and striking a tree, throwing defendant out, evidence that the car was being driven at 40 miles an hour on a public highway and that immediately before the accident plaintiff had several times asked defendant not to go so fast and had threatened to leave the car unless he slowed down, field not to show that she was guilty of contributory negligence.
    Error to the Superior Court of Cook county; the Hon. Joseph H. Fitch, Judge, presiding. Heard in the Branch Appellate Court at the' March term, 1919.
    Reversed and remanded.
    Opinion filed December 31, 1919.
    C. Helmer Johnsou, for plaintiff in error; James D. Power, of counsel.
    Miller, Gorham & Wales, for defendant in error.

      See Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, same topic and section number.

   Mr. Justice Gridley

delivered the opinion of the court.

The plaintiff in the trial court seeks by this writ of error to reverse a judgment entered by the Superior Court of Cook county in favor of the defendant in an action for damages for personal injuries received by plaintiff in an automobile accident. At the close of plaintiff’s evidence the court instructed the jury to return a verdict finding the defendant not guilty, which they did, and the judgment followed. The contention here made by counsel for plaintiff is that the trial court erred in so instructing the jury.

Plaintiff’s declaration consists of three counts. In all of them it is averred that defendant owned the automobile and on August 12, 1916, was driving the same upon a public highway, known as the “Aurora Road,” about 3 miles west of the town of Naperville, in the county of Kane and State of Illinois, and that plaintiff, at defendant’s request and invitation, was riding with defendant in the automobile and was at all times exercising ordinary care for her own safety. The first count charges that the defendant so negligently drove, operated and controlled the automobile upon and along said public highway that plaintiff was thrown from the automobile upon the ground there with great force and violence and received serious injuries. The second count charges that the defendant wrongfully and negligently drove, operated and controlled the automobile upon and along said public highway at the place aforesaid at a speed greater than was reasonable and proper having regard to the traffic and the use of the way and so as to endanger life and limb or injure the property of any person, contrary to the statute of the State of Illinois, and that by reason of defendant’s said negligence the automobile left the beaten path and collided with a tree, and plaintiff" was thrown from the automobile and received serious injuries, and that said public highway at the place of the happening of the accident was outside the limits of an incorporated city, town or village in said county and State. The third count charged that defendant was guilty of wilful and wanton negligence in driving the automobile.

The only witness in regard to the happening of the accident was the plaintiff. She testified* in substance that she, her husband and defendant wére friends and that prior to the accident she had been accustomed to go riding as defendant’s guest with him in his automobile; that subsequent to the accident defendant treated her as her physician for her injuries and that after she was able to go out she frequently went riding with him as before; that on the evening of August 11, 1916, she, her husband and defendant being together at Biverview Park, her husband announced his intention of being in Aurora, Illinois, on the following day and of returning to Chicago on a 7:30 p. m. train; that thereupon defendant suggested that he Would drive plaintiff to Aurora, meet plaintiff’s husband there, and drive all back to Chicago in the evening; that it was arranged that if plaintiff and defendant did not arrive in Aurora before 7:30 p. m., plaintiff’s husband would not" wait longer but would take said 7:30 p. m. train to Chicago;, that about 4 o’clock in the afternoon of August 12, plaintiff met defendant by appointment in the downtown district of Chicago and they started in the automobile for Aurora, plaintiff being seated on the front seat beside defendant; and that at Maywood certain delays occurred which defendant later undertook to make up by driving fast.

Plaintiff further testified on direct examination:

“I asked him not to drive so fast. He slowed down, and * * * in a little while he said : ‘We certainly will not make that train,’ and I said: ‘Bather than be hurt, or anybody hurt, I would rather not make it.’ He speeded up, and when we got on this road—a country road, up in the center and down on the sides—the car seemed to be jumping around. In my opinion it was going 40 miles an hour just before the accident. The speedometer registered that. Before the accident I asked him not to drive so fast: ‘Please do not drive so fast, and if you continue driving so fast I will have to get out.’ We drove, I don’t know how long, at the same speed, and the car left the road and turned into a tree. I remember a crash, and after I came to,— I don’t know how long that was after,—I was lying in the ditch, about ten feet from the car. * * * I must have been temporarily unconscious. I raised myself up, and I heard Dr. Cousins calling for help.”

On cross-examination, she further testified:

“I believe we got on the wrong road going out.of Maywood. We came back a short distance. * * * I think I started to ask him not to go so fast in May-wood. * * * He was then going about 35 miles per hour. * * * The second time I asked him not to drive so fast was when we got on that road. * * * I think it was between Naperville and Aurora. * * * It was a crushed stone road. It was hard. It was out in the country. I asked him three or four times not to go so fast. * * * I told him if he didn’t stop I would get out. * * * I don’t remember what he said. He was busy taking care of the car. I think he slowed down a little bit the last time. I didn’t have a chance to do anything. * * * When you asked me to tell you how long it was between the last time I asked him not to go so fast and the happening of the accident I said ten minutes. I misunderstood you. Between the first time and the happening of the accident was about ten minutes, and the next time we were about at Naperville. * * I think the accident happened right after the last request, probably a minute. * * * Just before the accident, I was reading this direction card and watching the speedometer. * * * We had a clear road. It was dry.”

Plaintiff’s testimony further disclosed that as a result of the accident she received serious and permanent injuries, that she suffered much pain and later on some nervousness, that she was treated in two hospitals, and that she did not return to her work as a professional singer until the winter of 1917-18.

In Berry on Automobiles (2nd Ed.), sec. 334, it is stated:

‘ ‘ The operator of an automobile who invites another to ride with him is bound to exercise reasonable care for the safety of his guest, and if by his negligence the guest is injured, the latter being in the exercise of due care, he is liable in damages therefor.” (See also, Fitzjarrell v. Boyd, 123 Md. 497; Patnode v. Foote, 153 N. Y. App. Div. 494, 138 N. Y. Supp. 221; Beard v. Klusmeier, 158 Ky. 153; Perkins v. Galloway, 194 Ala. 265.)

We are of the opinion that the trial court erred in instructing the jury at the close-of plaintiff’s evidence to find the defendant not guilty. We think that under the facts disclosed by plaintiff’s testimony it was for the jury to determine whether the defendant, in driving the automobile on said public highway at the speed he did against the repeated protests of plaintiff, was guilty of negligence. The charge of negligence in the first count was general and .we think that as to that count and under the facts and circumstances disclosed the doctrine of res ipsa loquitur applies. It is said in Feldman v. Chicago Rys. Co., 289 Ill. 25, 34, 19 N. C. C. A. 279: “The doctrine of res ipsa loquitur may be stated thus: When a thing which has caused an injury is shown to be under the management of the party charged with negligence and the accident is such as in the ordinary course of things will not happen if those who have such management use proper care, the accident itself affords reasonable evidence, in the absence of an explanation by the parties charged, that it arose from the want of proper care. * * * The rule is that negligence is never presumed, but that the circumstances surrounding the case where the maxim of res ipsa loquitur applies, amount to evidence from which the facts of negligence may be found; that is, in a case within the maxim of res ipsa loquitur, proof of circumstances of such case and of the injury constitutes a prima facie case of negligence, and will justify a verdict unless such prima facie case is overcome by proof showing that the party charged is not at fault. ’ ’ Furthermore, we think that under the second count the testimony of the plaintiff made out a prima facie case of negligence on the part of the defendant, under and by virtue of the provisions of sections 269j and 269q of chapter 121 of the Statutes of this State (Hurd’s Rev. St. 1917, J. & A. fffí 10010, 10017). Her testimony disclosed that the accident happened on a public highway, out in the country, between Naperville and Aurora, and that just before the accident defendant was driving the automobile at a speed of 40 miles per hour (in excess of 25 miles per hour), and that suddenly the automobile left the road and turned into a tree and there was a crash.

Counsel for defendant here argue that plaintiff’s testimony clearly shows that she was guilty of such contributory negligence as bars a recovery. We do not think so.

The judgment of the Superior Court is reversed and the cause is remanded.

Reversed and remanded.