text:
    Henry D. Laughlin, Appellee, v. Chicago Railway Equipment Company and American Trust & Savings Bank, Trustee. On Appeal of Chicago Railway Equipment Company, Appellant.
    Gen. No. 17,943.
    1. Cobpobatiohs, § 387

      —when corporation is hound hy acts of its agents. A corporation cannot be held to be unaffected by the knowledge and fraudulent acts of a stockholder and director who is not only its treasurer and general manager but its accredited agent in the conduct of its business, by which a»ts a bondholder is deprived of payment for his bonds.
    2. Equity, § 76*—what constitutes laches. Held, that a bondholder was not guilty of laches or ratification in enforcing his claim for payment of bonds and for foreclosure against a corporation, although he had previously stated, through ignorance or deceit, that he was satisfied he had no claim against the Company.
    3. ■ Election of bemedies, § 7*—what constitutes. Where a bondholder sued an officer of a corporation for certain bonds, in a foreign State, held that such proceeding did not constitute an election of remedies depriving such bondholder of the benefit of the security for the bonds, and the alternative money judgment against the officer was not a bar to an action against the corporation for accounting or foreclosure.
    Appeal from the Circuit Court of Cook county; the Hon. Habby Higbme, Judge, presiding. Heard in this court at the October term, 1911.
    Affirmed.
    Opinion filed October 13, 1913.
    Musgrave, Oppenheim & Lee, for appellants, Chicago Railway Equipment Co.; Horace Kent Tenney, of counsel.
    Defrees, Buckingham, Ritter, Campbell & Eaton, for appellee; Randolph Laughlin, of counsel.

      See Illinois Notes Digest, Vols. XI to XIV, same topic and section number.

   Mr. Justice Brown

delivered the opinion of the court.

In Chicago Railway Equipment Co. v. National Hollow Brake Beam Co., 173 Ill. App. 595, we commented on the contributions to legal literature made by the warfare between the quondam friends and business associates, Edward B. Leigh and Henry D. Laughlin. The present appeal, and that numbered 17,831 in this court, (post, p. 280), which will be decided contemporaneously herewith, are additions to the score of causes arising therefrom which have been mooted in the Appellate and Supreme Courts of Illinois. In the opinion in the case alluded to we said that the underlying facts of the bitter controversy between the parties had often been set forth in the opinions to be found in the reports and that this rendered it unnecessary to repeat them in detail. The same may be said in the present case. We shall confine ourselves in this opinion as strictly as possible to the single incident of this continuous legal conflict which gives rise to this litigation.

December 8,1909, Henry D. Laughlin filed his bill in chancery in the Circuit Court of Cook county against the Chicago Railway Equipment Company and the American Trust and Savings Bank, in which he claimed to be the owner of one hundred and eighty-two bonds of five hundred dollars each, made and executed by the Chicago Railway Equipment Company as a part of six hundred such bonds, divided according to their due dates into series A, B, C, D, E, F, Gr, H, I, J, K, L and M. Among the further allegations of the bill were these:

The said six hundred bonds were secured by a deed of trust made and executed by the said Chicago Railway Equipment Company under date of June 29, 1898, to the American Trust and Savings Bank as Trustee. Said trust deed (which is made an exhibit to the bill) contains recitals of the negotiations between the Equipment Company and the complainant Laughlin (who is made a third party to the deed), leading to the execution of the bonds and the trust deed and showing the consideration therefor. The bonds were of date of July 1,1897, and bore interest at five per cent, per anrram from date to maturity and at seven per cent, thereafter. They were all payable to Henry D. Laughlin or bearer. The property conveyed in trust to secure them was certain real estate, some held in fee and some in leasehold, by the Equipment Company, certain machinery and implements, many letters patent of the United States and of Canada, and certain rights under patent applications, licenses or contracts. The series from A to L of the bonds described were all in any event due by their terms before the filing of the bill. Series M were on their face payable on or before July 1, 1910, but the trust deed contained the following provisions: “If default is made or suffered by said Chicago Railway Equipment Company in the payment of any one or more of said bonds or any one or more of said coupons ■ and such default shall continue for more than sixty days, then and in that event the whole of the principal represented by said bonds shall become immediately due and payable whether due according to the terms or tenor of the bonds or not, if so determined by the holder or holders of as many as one-third of the bonds then outstanding and unpaid, which may be accomplished by simply depositing the bonds with the trustee with written notice of the election of their holders to produce, immediately, maturity.

The right is reserved by said Chicago Railway Equipment Company to at any time pay off any one or more or all the 150 bonds comprising series K, L and M, and to that end it may deposit with the Trustee the amount of the bonds intended to be paid with the interest thereon to that date with interest for 30 days added, and may designate the numbers and series of the bonds to the payment of which the deposit is to be applied, and on receipt of the bonds the Trustee shall pay to their holder or holders the amount thereof with interest and shall cancel and return to the Company the bonds when paid. * * * The party of the first part * * * also covenants and agrees to pay off and discharge at maturity all of the bonds and interest coupons hereinbefore referred to and to do so at the Banking House of the Americati. Trust and Savings Bank in the City of Chicago.”

The condition of defeasance in the trust deed was that if the Equipment Company should promptly pay the bonds and coupons and keep the covenants of the trust deed and of a certain contract with Laughlin of the date of May 18, 1898, the conveyance should become null and void and the property conveyed by it should be released by the trustee at the cost of the Equipment Company. Otherwise the trust deed should remain in full force and effect and on the application of the legal holder or holders of as much as one-third of said bonds then still outstanding, it should be lawful for the trustee to take possession of all property conveyed, and to file and prosecute a foreclosure of the said mortgage trust deed, accounting as usual to the proper parties for the proceeds. The only other provision of the trust deed necessary to mention in connection with these allegations of the bill is the recital that the Equipment Company had executed and delivered the six hundred bonds to the American Trust and Savings Bank for the account of Henry D. Laughlin, but subject to the provisions of the contract between him pursuant to the terms of said contract.

The bill, after reciting the mortgage trust deed and referring to it as an exhibit, alleged the delivery of said bonds to the Trustee and the due recording of said trust deed and its delivery to and possession by the trustee. It then charged that the Equipment Company had defaulted on the covenants of the contract of May 1.8, 1898. in said trust deed mentioned, by reason of which default various sums had become due and payable to the complainant under the terms of the said trust deed; that of the one hundred eighty-two bonds of which the complainant was the owner, one hundred were of the series M, fifty of series K and thirty-two others, which the complainant was unable more precisely to identify, of the series from A to I, inclusive, and that the complainant had at all times remained and then was the owner of said bonds; that in January, 1899, he had performed all his obligations under the contract of May 18, 1898, and that thereupon the Equipment Company directed the Bank as trustee to release, surrender and turn over to him the bonds and coupons divested of any trust and of all restrictions as the sole and absolute property of him, the complainant, and that the said American Trust and Savings Bank did accordingly surrender and deliver said bonds and coupons to E. B. Leigh as the agent and fiduciary of the complainant; that no payment of the said bonds or coupons had ever been made and that principal and interest were in default by reason thereof; that although the series M bonds were expressed on their face to he payable on or before July 1, 1910, they might, in case of default continuing for more than sixty days, become due for such default if so determined by the holder or holders of one-third of the bonds then outstanding, which determination might be expressed by simply depositing the bonds with the trustee with written notice of the election of the holders to produce immediate maturity; that the bonds so delivered to Leigh as the agent of the complainant had been wrongfully withheld by said Leigh from him, the complainant, and that in consequence he had been unable, although the legal holder of more than one-third of the outstanding bonds, to deposit the same with the trustee or present them to the trustee for payment, but that he had notified the trustee of the fact of such wrongful detention and that as holder he elected to mature and produce the immediate maturity of all the bonds of series M; that he was unable to bring any of the bonds into court because of the wrongful detention aforesaid, but that so. far as he was able then to do so, he then elected to produce the immediate maturity of the M bonds. The bill further alleges, in connection with the statement concerning the unlawful detention by Leigh of the bonds belonging to the complainant, that Leigh had at some time gone through a pretense of payment of said bonds and induced the Trustee Bank to mark them paid, but that no valid payment or cancellation was ever made, but that Leigh withdrew from the moneys of the Equipment Company on deposit in the said Bank and wrongfully appropriated to his own use moneys aggregating substantially the amounts payable to the complainant on said bonds and coupons and pretended that the moneys so misappropriated constituted a payment of the bonds. The final allegation of the bill stated that the complainant had requested the American Trust & Savings Bank to prosecute a bill in equity to foreclose the mortgage trust deed, but that the said Bank refused to file or prosecute such a bill.

The prayer of the bill was for an answer, an accounting, a decree against the Equipment Company in favor of the complainant for whatever may be found due on such an accounting and, in default of payment, a decree of sale and foreclosure.

The Chicago Railway Equipment Company answered this bill January 3, 1910, denying generally that the complainant was entitled to any of the relief prayed in his bill, and asserting that under an obligation imposed on it by the contract heretofore mentioned of May 18, 1898, between the complainant and it, to pay off the bonds described therein last becoming due, in case its earnings reached a certain sum in any year, and under a right given to it by said contract' to anticipate the payment- of any of the K,LorM bonds by depositing with the trustee the amount of the bonds intended to be paid with interest, it paid to the American Trust & Savings Bank as Trustee the sum of $50,-465.75, for the purpose of paying series M of said bonds, and the said Bank as Trustee paid to the holder of said bonds the whole of said amount; also asserting that September 10, 1900, the complainant demanded that the Equipment Company should pay to the American Trust & Savings Bank as Trustee the principal and interest of fifty of series E bonds, and that on October 2, 1900, the defendant paid said Bank as trustee $25,-321.92 for the purpose of paying bonds one to fifty inclusive of series K; that the Bank paid the holders of said bonds the money and returned the bonds to the Equipment Company as cancelled; that November 7, 1900, the Equipment Company paid to the Bank as trustee the further sum of $25,547.95 for the purpose of paying bonds fifty-one to one hundred inclusive of series K, and that the Bank paid said money to the holders of the bonds and- delivered the bonds cancelled to the Equipment Company.

The answer further alleged that all of the moneys paid by it on account of said bonds were paid to the American Trust & Savings Bank as trustee as provided for in the trust deed, and that the Equipment Company was ignorant and had no knowledge of any of the holder or holders of said bonds, and that the bonds were negotiable instruments payable to bearer and transferable by delivery and the Bank fulfilled its duty and obligation by paying to the holder or holders of said bonds the amount thereof on presentation.

The answer also alleged that the complainant had knowledge as early as November, 1900, of the payments of the K, L, M, bonds,1 and in January, 1902, stated to the stockholders of the Equipment Company that he was satisfied that he had no claim against said Company and that he believed that the Equipment Company had the right, under its contract, to pay the money to the Bank on account of said bonds, and that thenceforth until the filing of the bill, Laughlin had made no claim against the Equipment Company on account of the payment of said bonds to the American Trust & Savings Bank as Trustee.

The American Trust & Savings Bank filed an answer to said bill, denying or disclaiming knowledge concerning practically each and all of the specific allegations of the bill, the more material affirmative averments of the answer being that “all bonds had been duly paid and cancelled and so marked by the Bank, said payments having been made to the holders of said bonds as presented to the Bank,” and “that when the moneys were deposited by the Equipment Company for the purpose of paying and redeeming the bonds, it applied any and all sums paid to it by the Equipment Company for such purpose to the payment of the bonds and paid to the holders of such bonds, from time to time, as and when the same were presented, all of the said money, and that all such bonds were, when they were paid, duly surrendered and marked cancelled by the Bank;” that the Bank at no time had any knowledge of the alleged ownership of any of the said bonds by Laughlin; that Laughlin in each instance well knew of all the terms and conditions under which the bonds were paid and cancelled, and that he had for many years had full knowledge of the cancellation and surrender of said bonds and the payment thereof in the manner in which the same were paid, and that as a stockholder of the Equipment Company he took part in its meetings and expressly agreed that the Equipment Company had paid all money necessary to redeem all of such bonds.

Beplications having been filed to these answers, the cause was on March 3, 1910, referred to a master in chancery to take proofs and report his conclusions of law and fact therein. January 3,1911, the master filed his report in said cause, attaching thereto the testimony taken and the other evidence introduced before him.

The master in his report finds that on January 28, 1899, Leigh went to the American Trust & Savings Bank, trustee, and received two hundred and seventy-two bonds of the Chicago Bailway Equipment Company, two hundred and seventy-two coupons (being one detached coupon from each of said bonds), and five certificates of stock in Laughlin’s name (for 24,798 shares in the aggregate) in the National Hollow Brake Beam Company, and signed the receipt for them “Henry D. Laughlin by E. B. Leigh.” Among the bonds thus receipted for by Leigh were one hundred bonds of series K, and the one hundred bonds of series M. He further finds:

“Subsequently to the receipt by E. B. Leigh of the aforesaid bonds mentioned in the foregoing receipt, the complainant, Henry D. Laughlin, demanded the bonds of E. B. Leigh and on July 17, 1900, Leigh refused to give up said bonds. The bonds remained in Leigh’s possession under an agreement between Leigh and Laughlin that Leigh would return the bonds upon election to retain his stock in the Beam Company, or that he would make ‘a pot and divide’ with Laughlin of the profit flowing to both from the ‘rent readjustment’ transaction. Leigh failed to carry out this agreement and so the bonds remained the property of Laughlin.”

The “rent readjustment transaction” mentioned by the master was partly evidenced by the contract of May 18, 1898. It is not necessary herein to describe it further. It is the source of some of the litigation heretofore alluded to and has been often before courts for consideration. The essential part of the above finding, so far as this cause is concerned, is that which asserts the bonds in question to have “remained the property of Laughlin.” We are relieved from any consideration of the accuracy of this finding, which is, however, one of the propositions on which this cause turns, because it is res adjudicata, so far as Leigh and those who for any reason stand in his shoes are concerned. When the bill in this cause was filed, the ownership of the bonds was in dispute between Leigh and Laughlin, and the Chicago Bailway Equipment Company in its answer sets up that although Laughlin had procured a decree against Leigh for the amount of the bonds in the Circuit Court of St. Louis, an appeal was pending in the Supreme Court of Missouri. Before the master’s report was made the appeal had been disposed of and the decree affirmed, and the master quotes further on in his report language of the Supreme Court of Missouri concerning the bonds in question here. The decision is to be found in 226 Mo. 620, and in the clearest possible terms adjudicates the bonds which are involved in the controversy here to have been, in January 28, 1899, and to have remained the property of Laughlin solely. It is not denied by the appellant that as against Leigh the title to these bonds in Laughlin is a settled and decided thing, but it is insisted that the Chicago Railway Equipment Company is- not affected by this, that the bonds were paid by it to the proper party to receive the money, namely, the Trustee Bank, and that what thereafter became of the money paid is a matter between Laughlin and the Bank, with which the Equipment Company has no concern.

Before proceeding with a consideration of the master’s report, confirmed and followed by the decree in this case, which as to the series M bonds (the only ones involved in this appeal) is entirely in favor of the appellee and grants the relief thereon prayed for in the bill, we may somewhat narrow the questions to be decided by stating a hypothetical case, differing from the one actually before us only by the elimination of those factors which will hereafter require discussion. If on January 18, 1898, Leigh had been the sole stockholder of the Equipment Company, and if, after receiving from the Bank as the agent of Laughlin, with its knowledge that he was merely the agent of Laughlin, the one hundred M bonds, he had immediately offered these one hundred bonds of series M to the Bank as security for his own note for $50,000, had secured and placed the $50,000 to the credit of the Equipment Company with the Bank, and then, immediately, as Treasurer of the Equipment Company, had drawn his check on the deposit for $50,000 and given it to the Bank, stating that the amount was in payment of the bonds, and if the Bank, receiving it as such payment, had marked the bonds “paid”, applied the amount thus ostensibly received on the collateral to the note of Leigh, and delivered the note to him personally and the cancelled bonds to him as treasurer of the Equipment Company, we take it that no reasonable contention could be made that as against Laughlin, the Equipment Company (which was really Leigh) had paid the bonds and taken from their owner, Laughlin, by this colorable transaction, the benefit of the mortgage conveyance contained in the trust deed. Whatever might or might not be the recourse of Laughlin against the Bank or Leigh, at his option, he could not thus be defrauded of his rights to the security, and unless circumstances of ratification or laches could be successfully set up by the Equipment Company, it would be without any defense to an action for foreclosure.

The differences between the hypothetical case we have supposed and the actual case we have before us may be thus summed up: (a) Leigh was not the sole stockholder of the Equipment Company in January, 1899, nor when the transactions hereinafter mentioned took place in 1900; BUT he was all the time one of its stockholders, a director of it, its treasurer and its general manager.

(b) Leigh did not immediately offer the one hundred M bonds to the Bank as collateral to his own note for $50,000. BUT he did so offer forty of them as security for his note of $20,000 on March 21, 1900, and the other sixty as security for his three notes aggregating $30,000 on April 12, 1900.

(c) He did not immediately place the $50,000 to the credit of the Equipment Company with the Bank; BUT he placed the $20,000 to the credit of the Equipment Company on March 22, 1900, the next day after receiving it, and the $30,000 on April 12,1900, the same day he received it.

(d) He did not immediately, as treasurer of the Equipment Company, draw his check on the account of the Equipment Company with the Bank to pay (ostensibly) the bonds of the Equipment Company; BUT on September 6, 1900, he did draw his check for $50,-465.75 for such payment.

(e) The Bank did not, on receiving the amount as such payment, directly apply it to the notes of Leigh; BUT it did on September 6, 1900, mark the bonds “paid”, and deliver to Leigh its check as Trustee for $50,465.75, who immediately deposited it in his personal account and gave the Bank his individual check for the same amount, on which payment his notes- for $50,000 were delivered to him as fully paid and the bonds delivered to the Equipment Company, which has since held them.

All the affirmative clauses of these propositions— (a), (b), (c), (d) and (e)—are found by the master and by the chancellor, and there is indeed no dispute about them. We think that if for the moment we postpone consideration of the differences (a) and (b) and assume that no proper distinction can be made between the supposititious case we have described and the actual one before us, because there were other stockholders and officers of the Equipment Company, or because more than a year intervened between the reception of the bonds from the Bank by Leigh as Laughlin’s agent and his pledging them with the Bank to secure his own notes, we must conclude that the differences noted ih (c), (d) and (e) are of no significance. The method of accounting' adopted in the actual case to bring about exactly the same result supposed in the hypothetical one is not material, nor are the few months interven-, ing between the placing by Leigh of the money secured by his loans to the credit of the Equipment Company and his drawing a check upon that account to pay his notes.

We turn our attention, therefore, to the differences noted under (b) and (a). We do not deem ourselves called on, in reviewing the decree herein brought before us, to consider the question of how far the rights or liabilities of the American Trust & Savings Bank may be changed, if at all, by the intervention of the-time mentioned in difference (b). A cross-bill filed by the Equipment Company against the American Trust & Savings Bank is apparently pending undisposed of, which may raise it with other questions concerning the liability of the Bank mooted in the arguments, but the assignments of error on the present decree, which attempt to do so, do not seem to us to demand attention. We may say, however, that there can be no doubt that in January, 1899, the Bank received full notice that the bonds delivered to Leigh belonged to Laughlin. And nothing was, in our opinion, presented in evidence in this cause which made erroneous the finding of the master, repeated in the decree-:

“Neither Leigh nor the Chicago Bailway Equipment Company is entitled to have the Bank considered as a third person, payment to whom would give immunity to the payor, and justification to the ultimate payee.”

And certainly whatever knowledge Leigh had in January, 1899, of the ownership of the bonds of series M, he had in March, April and September, 1900. He was in possession of them at all times. He claimed indeed ownership of some or all of them, but the claim was, as has been stated, finally and decisively adjudicated absolutely unfounded, and he is now considered in law at least to have known it to be so. It is also true that whatever knowledge or notice of their ownership can be properly imputed to the Chicago Bailway Equipment Company, on account of Leigh’s relations to it, existed as fully in March, April and September, 1900, as in January, 1899.

We are thus brought to the difference between the hypothetical and the actual case stated in (a): ‘‘Leigh was not the sole stockholder of the Equipment Company in January, 1899, nor when the transactions hereinafter mentioned took place in 1900, but he was all the time one of its stockholders, a Director of it, its Treasurer and its General Manager.” The whole gist'of this case, as we view it, lies in the question whether this difference is material. Is the Chicago Equipment Company in a position in which it can successfully maintain that as an independent corporate entity it is a third party, unaffected by the knowledge which Leigh had of the ownership of the bonds and of the unwarranted and illegal use and manipulation which he was making of them? The counsel for the Equipment Company strenuously contend that it is; that it not only had the option, but was under the obligation to pay these bonds to the Bank as Trustee when it did so, and it and its presumably innocent stockholders, other than Leigh, should not be penalized or compelled to a double payment because its manager and treasurer used his position and the custody of the bonds for Laughlin to his own illegal and unwarranted advantage. The report of the master and the decree of the chancellor negative this contention. The master says: “The Chicago Railway Equipment Company received the cancelled bonds and knew that (first) Laughlin owned the bonds, and (second) that he had not been paid for them, and (third) that it was its intention that he, Laughlin, should not be paid for them. * * * Leigh as the Equipment Company and Leigh as a person drew some checks and caused some entries to be made on the books of the Equipment Company and on the books of himself, but he knew and he, acting as the Equipment Company knew, that Laughlin was not paid on his bonds, and he knew personally, and he acting as the Equipment Company knew, that it was their intention not to pay Laughlin; and they both knew, when the bonds purported .to be cancelled, that they had not been paid to the one to whom they belonged, Laughlin; they both knew and still know that Laughlin’s bonds have not been paid.”

The chancellor finds in his decree: “That all of said acts and transactions and all of said entries evidencing same were made or caused to be made by Leigh acting either as an individual or as an officer of the Equipment Company, and with the fraudulent- purpose and intent of depriving the complainant of all benefit of his bonds and of all payment thereon. * * * That at the time of said acts, transactions and entries, said Leigh knew and said Equipment Company acting by and through him as its officer knew that complainant was the true and legal owner and holder of said series M bonds, and that complainant had not been and was not paid on or for them, and that both said Leigh and said Equipment Company intended that complainant should not be thereby paid for or on them, but on the contrary should be deprived of all benefit of such payment; that the said knowledge and fraudulent intent of said Leigh with respect to the acts, transactions and entries aforesaid of and concerning said bonds was in equity also the knowledge and fraudulent intent of the Equipment Company acting by and through him as its officer in the premises.”

We are in accord with these findings. The theory of the independent entity of a corporation apart from that of its individual stockholders, and • its freedom from results of the fraudulent conduct of its officers have been in equity, as at law, carried far, but we do not think there is authority or reason for holding in this case that the Equipment Company (every action of which in this case was carried out at the dictation and through the direct agency of Leigh, who was not only its treasurer and general manager, but its apparently accredited agent in the conduct of its business and a vitally interested stockholder) can be held unaffected and unbound by his knowledge, his purposes, and his unwarranted and fraudulent action, especially since the contention is, as pointed out by the appellee in argument, not that the Company is liable because of Leigh’s actions, but in spite of them.

For this conclusion, if authority is needed it can.be found in such cases cited by the appellee as: First Nat. Bank of Monmouth v. Dunbar, 118 Ill. 625; Atlantic Cotton Mills v. Indian Orchard Mills, 147 Mass. 268; Loring v. Brodie, 134 Mass. 453; McCaskill Co. v. United States, 216 U. S. 504, and in many others.

Still another reason is thus stated in the decree for holding the Equipment Company unreleased by the pstensible payment of these bonds:

“That in and by said acts, transactions and entries no consideration whatever in fact moved from the Equipment Co. for or on account of or in payment of said bonds * *

It was practically the money which Leigh obtained from the Bank on his notes and placed to his credit on the books of the Equipment Company which paid the bonds. These payments to the Equipment Co. by Leigh were apparently voluntary, and under the circumstances of the whole transaction may be not unnaturally presumed to have been made for the purpose of so swelling the bank account of the Equipment Company that its check would be good for the $50,000 payment on September 6,1900, although it is true that the $20,000 payment was a return of money taken out a day or two before by Leigh for his personal purposes. He seems to have been the sole manager of the finances of the Company. But however this matter of consideration moving from the Equipment Company may be viewed, there is amply sufficient reason in the notice and knowledge of the rights of Laughlin and of the true relations of the parties, which must be attributed to it, to deprive it of any benefit of the actions and transactions of its treasurer ostensibly in its behalf.

There only remains for our consideration the defenses set up by the Equipment Company of ratification and of laches, which as presented by the appellant, although susceptible of distinction, to some extent run into each other. One incident, which it is maintained was ratification, is also argued to be laches in assertion of complainant’s claim. It consisted, as stated in the answer of the Equipment Co., as hereinbefore digested, of complainant’s statement to the stockholders of the Equipment Co. in January, 1902, that he was satisfied that he had no claim against the Company and believed that the Company had acted within its rights. The master finds in his report that “The evidence does not show that the statement of Laughlin made at the stockholders meeting on Janhary 14, 1902, was made save as the result of his ignorance or as the result of the misrepresentations of the said Equipment Company.” The decree makes no specific finding as to this statement, but contains the general finding that Laughlin had not been guilty of laches in asserting and enforcing his claim of foreclosure as to the bonds.

We have examined carefully all the testimony in the record on the subject of this statement of Laughlin, reported as made at the meeting in January, 1902, and must agree with the master, or at least cannot feel justified in overruling him and the chancellor in relation to this. There is certainly no clear evidence in it that Laughlin was then so acquainted with what had happened in March, April and September, 1900, as to make any statement of the kind attributed to him conclusive against him in a subsequent attack on what did so actually happen, as evidence either of laches or ratification.

But it is also said that Laughlin’s suing for the value of the bonds and receiving an alternative judgment for their value in Missouri in the very case which makes the ownership res adjudicata between Leigh and Laughlin, was a ratification of Leigh’s sale or pledging of them. The suit in Missouri is spoken of by the Circuit Court of St. Louis, in which it was brought, as “a suit for the bonds here.” The judgment order is that the defendant is accountable to plaintiff for the bonds involved (the one hundred M bonds among others), and contains this as the final finding: ‘£ and the Court doth find that the plaintiff is entitled to receive from the defendant said bonds or coupons or the value thereof, which the Court finds to be $119,413.73.” This was the judgment affirmed by the Supreme Court of Missouri in an opinion reported in 226 Mo. 620. That opinion shows in much detail the pleadings. The prayer of the bill in equity, which was the first of those pleadings, was for a judgment requiring Leigh to account and turn over to plaintiff “these bonds,’’ or to pay him the value thereof.

We do not think that "by this proceeding Laughlin made an election of remedies, which deprives him of the benefit of the security for the bonds, which the court adjudged to be his and ordered turned over to him, nor that the alternative money judgment against Leigh, unsatisfied, is any bar to the present action.

The master found, and the chancellor confirmed the finding, that there was no laches on the part of Laughlin in asserting his claim on the bonds or in attempting to enforce the trust deed. We think that this finding was warranted by the history of the litigation and the nature and terms of the bonds and security.

Complaint is made of the fees of the master included in the decree. We do not think it justified.

Our conclusion is that the decree of foreclosure as entered by the chancellor in the Circuit Court should be affirmed.

We are aware that in this opinion, extended although it is beyond the length to which we would wish to have confined it, we have not discussed many of the points in the cause emphasized by the appellant and debated by appellee, nor have we commented on or distinguished the numerous authorities cited in the course of the able and painstaking arguments by which the Court has been assisted. We have not, however, overlooked them in deliberating on the cause, but have endeavored to give to each its due weight and consideration.

The decree of the Circuit Court of Cook county is affirmed.

Affirmed.


source: Caselaw Access Project

author: Mr. Justice Brown

license: Public Domain

text:
    Henry D. Laughlin, Appellant, v. Chicago Railway Equipment Company and American Trust & Savings Bank, Appellees.
    Gen. No. 17,831.
    1. Bonds, § 21

      —when obligor takes as bona fide purchaser. Obligor of negotiable bonds receiving them as pledgee from an innocent purchaser for value before maturity has good title though he has knowledge of the irregularity of the transfer.
    2. Mortgages, § 499*—burden of proof. In an action to foreclose a trust deed given to secure certain bonds where the obligor claims title to the bonds through an innocent purchaser, the burden is not upon the obligor to prove that his transferor was an innocent purchaser for value before maturity.
    3. Mortgages, § 656*—when evidence supports decree. Decree dismissing a bill to foreclose a trust deed given to secure certain bonds and finding that obligor was not liable to complainant on such bonds, held supported by the evidence.
    4. Corporations, § 448*—power to loan money. Whether it is ultra vires for a corporation to loan money depends upon circumstances.
    Appeal from the Circuit Court of Cook county; the Hon. Harry Higbee, Judge, presiding. Heard in this court at the October term, 1911.
    Affirmed.
    Opinion filed October 13, 1913.
    Defress, Buckingham, Ritter, Campbell & Eaton and Randolph Laughlin, for appellant.
    Musgrave, Oppenheim & Lee, for appellees.

      See Illinois Notes Digest, Vois. XI to XIV, game topic ami section muulier.

   Mr. Justice Brown

delivered the opinion of the court.

This appeal is from the same decree which was brought under the consideration of the Court in Number 17,943, {ante, p. 262,) in which an opinion has just been filed. That appeal was by the Chicago Railway Equipment Company; this is by Henry D. Laughlin. That one attacked the decree particularly so far as it related to the bonds of series M (which are described in said opinion); this one attacks it only so far as it deals with eight bonds of series K, which the master in his report, that was partially discussed in the opinion in 17,943, found were (like the bonds of series M) outstanding, unpaid, and the property of Laughlin and susceptible of foreclosure by him. This finding, however, the chancellor overruled.

The pleadings, as far as the bonds in controversy herein are concerned, are sufficiently stated in the opinion mentioned, but the master’s report and the court’s decree in relation to these eight bonds are not therein alluded to and are set forth here so far as material, in order that the issues raised by this appeal may clearly appear. Reference to the opinion in 17,943 will sufficiently elucidate that which might otherwise seem defective in the statement of this case.

The master says: “As to the 25 bonds of series K. These bonds Leigh received from the American Trust & Savings Bank on January 28, 1899, at which time he also received the above mentioned series M. bonds. The said series K bonds he evidently held until September 10, 1900, for as the coupons on them became due he deposited them to his credit. Laughlin on September 10, 1900, sent to the Chicago Railway Equipment Company a letter, which is as follows:”

(Here the master quotes at length a letter from Laughlin to the Equipment Co., requesting it to pay before October 1, 1900, fifty of the bonds of series K, but notifying the Company that he was the true owner of the other fifty bonds of series K, as well as of the one hundred bonds of series M (the bonds of series M had on September 20, 1913, already been ostensibly paid by the Equipment Company), and that no one had any authority from him or right in himself to collect them. The master then finds that on November 7, 1900 (which was after the payment of the fifty bonds, which Laughlin requested paid), the Equipment Company sent a letter to the American Trust & Savings Bank, inclosing a check for $25,547.95, drawn by the Chicago Railway Equipment Co. by E. B. Leigh, Treasurer, on the American Trust & Savings Bank, payable to American Trust & Savings Bank, Trustee, and countersigned by H. S. Burkhardt, the President of the Equipment Co., for the payment of the fifty series K bonds from fifty-one to one hundred, together with interest on the same from the last coupon date, July 1, 1900, to December 8, 1900. The letter concludes “Upon presentation of these bonds please pay and cancel the same and return the cancelled bonds to this Company. All in accordance with the terms of the Trust Deed of this Company to you dated June 29, 1898, and securing these bonds.”)

The master then proceeds: “Upon receipt of this check the American Trust & Savings Bank, Trust Department, executed a receipt. The voucher recites that the check of $25,547.95 was given on account of fifty series K bonds. The American Trust & Savings Bank then drew four checks, two in favor of other banks in Chicago, one in favor of the Chicago Railway Equipment Company for $4,088.50, and another in favor of the Chicago Railway Equipment Company for $76.86. The $4,000 of the check for $4,088.50 represented the principal of 8 series K bonds. Leigh testified that the 8 series K bonds were deposited with the Chicago Railway Equipment Company as collateral to the note of R. W. Grieves for $4,000; that he remembered the Chicago Railway Equipment Co. loaned Mr. Grieves some money; that he, Grieves, undoubtedly got those bonds from him (Leigh.) and gave them as collateral to his note. The evidence does not show that the balance of $25,000, that is, the other $21,000, being a part of the check for $25,547.95, went to either Leigh or the Chicago Railway Equipment Company. Inasmuch as the Chicago Railway Equipment Company knew when it received the 8 series K bonds from R. W. Grieves that those bonds belonged to Laughlin, it must now be held responsible to Laughlin for the amount of those bonds. It cannot be claimed that if Mr..R. W. Grieves was an innocent purchaser for value of said bonds from Leigh, that therefore the Chicago Railway Equipment Company could receive the bonds from Grieves and have them cancelled, when at the same time, the Chicago Railway Equipment Company knew that those bonds in Leigh’s possession were Laughlin’s bonds and that he, Leigh, had no right to transfer them to Grieves, and that in transferring them to Grieves he was guilty of a breach of trust. * # *

There is due the complainant, Henry Laughlin, from the defendant, the Chicago Railway Equipment Company, the following sums; * * *

8 series K Bonds $500 each................4,000.00. Int. at 5% from Jan. 28,1899, to July 1, 1910.2,284.40. Int. at 7% from July 1,1910, to Aug. 5,1910.. 19.40.
In conclusion, therefore, I recommend that a decree be entered in accordance with the prayer of the bill of complaint and the foregoing findings.”

To these findings regarding the eight bonds of series K the Chicago Railway Equipment Company filed objections, which were afterwards ordered to stand as exceptions before the chancellor as follows: * * Vi * * * * * *

Thirtieth: * * * For that the said Master, has erroneously found that Leigh held Series K bonds until Sept. 10, 1900. * , * * * * * * * *
Thirty-second: For that the said Master has erroneously found that the Chicago Railway Equipment Company knew when it received as pledgee eight (8) bonds of Series K from R. W. Grieves that such bonds belonged to Laughlin and that it must be held responsible to Laughlin for the amount of the bonds. *********
Forty-fifth: For that the said Master has erroneously found that the bonds remained the property of Laughlin after Leigh had disposed of the same to the American Trust and Savings Bank and R. W. Grieves. ******** *
Fifty-second: For that the said Master omitted to find that the Equipment Company is not indebted to the complainant on account of * * * Series K of said bonds.”

Laughlin filed objections to the master’s report, which contained no mention of the eight bonds here in question. His third objection to the report was that the master found the complainant was not entitled to a foreclosure of the trust for and on account of forty-two bonds of series K and coupons and interest thereon. This, with his other objections to the master’s report, were repeated by him as exceptions to the said report at the hearing before the court.

The decree of the chancellor, after said hearing, overruled all the exceptions of Laughlin and sustained the exceptions of the Equipment Company “in so far and in so far only as the same relate to certain 8 Series K bonds mentioned and referred to in the Master’s report,’’and overruled said exceptions “as to all other matters except only said eight Series K bonds,” and found that “as to all bonds referred to in the Bill of Complaint, other than 100 Series M bonds, and as to all relief prayed for in said bill as to such other bonds, the equities are with the defendant, Chicago Railway Equipment Company, and the complainant is entitled to no relief.” As to these eight K bonds it found specifically that on November 7, 1900,

“The Bank drew and delivered its certain checks as Trustee, among which was one in favor of the Equipment Company for Forty Hundred Eighty-eight and 50-100 Dollars. This check included Four Thousand Dollars which represented the principal of eight (8) Series K bonds then presented by the Equipment Company to the Bank for payment, and which were then by the Bank paid to the Equipment Company and marked ‘cancelled’; that these eight Series K Bonds had been transferred by Leigh to one B. W. Grieves some time prior to November 7, 1900, amd that said Grieves acquired the same in good faith without any knowledge or notice of Laughlin’s rights therein; that subsequently said Grieves borrowed Four Thousand Dollars ($4,000) from the Chicago Railway Equipment Company and gave as collateral security thereto said eight bonds of Series K and such bonds were held by the Chicago Railway Equipment Company as collateral to said indebtedness on the 7th day of November, 1900; that on November 7, 1900, a check of the Chicago Railway Equipment Company was drawn on the American Trust & Savings Bank for $25,547.95, payable to the order of American Trust & Savings Bank, Trustee, and signed on behalf of said Equipment Company by Leigh as Treasurer and countersigned by H. S. Burkhardt, President; that said check was delivered to the American Trust & Savings Bank as Trustee, with instructions to apply the same in payment of fifty of the Series K bonds, and upon presentation of the bonds to pay and cancel the same and return the canceled bonds to the Equipment Company in accordance with the terms of the Trust Deed dated June 29, 1898, securing said bonds; that the American Trust & Savings Bank received said check and executed a receipt to the Equipment Company therefor; that thereupon the Equipment Company took the eight bonds of series K held by it as pledgee of the said Grieves and presented the same to the Trustees for payment, and that the Trustee received the said eight Series K bonds and gave to the Equipment Company its check for the sum of Four Thousand and Eighty-eight Dollars and Fifty Cents ($4088.50), and thereupon the said Equipment Company applied the money so paid upon the Grieves note held by it and returned the same to Grieves as paid and cancelled.” From this decree Laughlin, as well as the Chicago Railway Equipment Company, appealed. As before stated, the appeal of the Equipment Company was because of the relief granted to the complainant on the one hundred bonds of series M. It has been disposed of by the decision of this court contemporaneously herewith. The appeal of Laughlin was because of the refusal of relief to him with reference to these eight bonds of series K. The assignments of error made by him in this court all relate to said eight bonds. We give them, inasmuch as stress is laid in the arguments on the attitude assumed by the parties to the master’s report and the decree as affecting their right to complain of parts of it. The first assignment is that the Circuit Court erred in sustaining, so far as the same were sustained, the exceptions of the Equipment Company numbered thirteen, forty-five, fifty, fifty-one and fifty-two. The second is that the court erred in accordingly modifying and failing to sustain the report of the master with reference to the eight K bonds. The third is that it erred in denying relief to the complainant and foreclosure as to the said eight bonds; the fourth, that it erred in decreeing that the Equipment Company is not liable to complainant on those bonds; and the fifth that it erred in dismissing complainant’s bill as to said eight bonds.

It is conceded by the appellee and is therefore the expressed opinion of both parties, that the master’s report placed his recommendation of relief to the complainant as to these eight bonds on an incorrect statement of the law. He said that even if Grieves was an innocent .purchaser for value of said bonds from Leigh, the Equipment Company’s knowledge that Leigh had no right to sell them would prevent that Company as the pledgee of Grieves from having a good title to them and their proceeds. This is unsound. The bonds were negotiable paper, and once having been in an innocent purchaser’s hands, with a right in him to collect them, those eight bonds passed to his pledgee for value, whatever notice or knowledge of irregularity in Leigh’s transfer of them it had.

But the appellant Laughlin insists that although this statement of the law, based on the facts assumed hypothetically by the master to exist, is incorrect, the conclusion of the master that complainant is entitled to foreclosure is correct, because the facts as shown by the evidence are not as assumed by him, but different therefrom. He argues that the evidence should be considered as showing that the bonds remained from January 8,1899, to November 7,1900, in the possession of Leigh and that no innocent purchaser intervened between him and the Equipment Company before the latter presented them for payment on December 7, 1900.

It may be noted that the master does not find absolutely that Grieves was an innocent purchaser of the bonds in question, but makes it an assumption when stating his conclusion of law. He does, however, recite that “Leigh testified that Series K bonds were deposited with the Chicago Railway Equipment Company as collateral to the note of R. W. Grieves for $4,000; that he remembers the Chicago Railway Equipment Company loaned Mr. Grieves some money; that he, Grieves, undoubtedly got those bonds from him (Leigh) and gave them as collateral to his note,” and this recital, in the absence of any reference to any contradiction or doubt thrown on the testimony, may perhaps be held to imply a finding consistent with it, so far as it goes. The decree, however, is much more specific. The chancellor finds therein that these eight bonds “had been transferred by Leigh to one R. W. Grieves some time prior to November 7, 1900, and that said Grieves acquired the same in good faith without any knowledge or notice of Langhlin?s rights therein; that subsequently said Grieves borrowed four thousand dollars from the Chicago Railway Equipment Company and gave as collateral security thereto said eight bonds of series K, and such bonds were held by the Chicago Railway Equipment Company as collateral to said indebtedness on the 7th day of November, 1900.” It is manifest that if this finding of facts in the decree is so justified by the evidence that we should not disturb it, it follows that we should not disturb the conclusion of law that Langhlin has no right to a foreclosure of these particular bonds and that the decree should be affirmed in the present appeal.

Apart from the contention of the appellee that the finding of facts in question is so justified, it takes other positions in defense of the decree. It insists, first, that because the appellant did not by objection and exception to the master’s finding of facts (Ms conclusion of law being erroneously in appellant’s favor) challenge that finding before the court, he is now foreclosed from doing so.

In our view of the case it is not necessary for us to pass on this point on the assumption that the master’s findings of fact were identical with those subsequently made by the court. The argument undoubtedly would be stronger were that the case, but, as we have pointed out, the findings of fact by the court are much more specific and definite than those by the master. This deprives the point of any great force. We think the court’s findings must be viewed independently. Nor do we think that the assignments of error by appellant fail to call in question these findings. The third, fourth and fifth assignments at least sufficiently do so. Other considerations urged by the appellee in this case in support of this portion of the decree and in opposition to the remainder of it, we have disposed of in the other appeal mentioned. But we have carefully examined the evidence in the record concerning these eight bonds of series K, and conceding that it leaves very much to be desired in the way of definiteness and certainty, our conclusion nevertheless is that the findings of the decree as to the facts should not be disturbed by us. To say that the case made in support of them is “a mere guess which evaporates into thin air upon the application of the first test,” as counsel for appellant insists, is altogether too severe a characterization of it.

Leigh, on being interrogated on cross-examination and having his attention called not only to the account book entries in the books of the Equipment Company of the payment to the Equipment Company of the $4,088.20 check on Dec. 8, 1900,. but to the specific entries in relation to interests earned on Bills Receivable of $88.90, testified: “I have found, I think, an explanation of that, * * * Those bonds were deposited with the Chicago Railway Equipment Company as collateral to the note of Grieves for $4,000. * * * I remember now we loaned Mr. Grieves some money. He undoubtedly got those bonds from me and gave them as collateral to his note. When that was paid it was credited to bills receivable.”

There is indefiniteness in regard to the items from the various account books of the Equipment Company offered in evidence, which cannot be charged altogether to the witness, but for which, to an equal extent' at least, the cross-examining counsel was responsible. Thus, counsel say: “From page 388 of the same ledger under the account entitled ‘Interest earned,’ we offer the item reading as follows: ‘Date December 8, Folio 71. Descriptive, C. B. E. Co’s bonds. Credits $88.20.’ ” This item was the immediate occasion for the testimony of Leigh above noted. Apparently but not certainly referring to this same entry (although the .word “Grieves” does not appear in it, as it was thus read into the record),,counsel in the same connection asked Leigh, “Do you think this entry you have pointed out was made two different times—‘Grieves’ written in at one time and ‘ C. B. E. bonds ’ made at another time?” To which Leigh only replied that he did not make the entry. Even if the entry on page 388 of the ledger was not the one thus referred to as containing the notation, “Grieves,” the journal entry on page 128, which appellant’s counsel say “was the only entry on the books of the Equipment Company concerning any bond transaction of any kind or character between Grieves and the Equipment Company, ’ ’ could not have been the one referred to, because that Journal Entry, as it appears on page 320 of the record, does not contain “C. B. E. bonds.”

It is true that Leigh’s recollection and knowledge were shown by further cross-examination not to be independent, specific, or definite, but we think, on the record as it stands, the deductions made from it by the chancellor mnst stand too, so far as we are concerned. Undoubted as is our duty as well as our right to review the controverted questions of fact in an appeal in equity, something is nevertheless due the master’s report on such a question, approved and developed and made more specific by the chancellor. A presumption in its favor is to be overcome to justify reversal.

It is a question not without doubt in our mind whether the proposition so vigorously insisted on by the appellant is sound, that because the matter of ownership of these bonds originally is res judicata between Leigh and Laughlin and, therefore, inasmuch as the Equipment Company had all the notice and knowledge of the ownership which Leigh had, is also res judicata between that Company and Laughlin—the burden of proving that a transferee before maturity was an innocent purchaser for value falls upon the Equipment Company in this case. Undoubtedly where a transferee of negotiable paper, which has been obtained from the payor by fraud or from the payee by robbery, claims under it, that burden is on Mm, but this is a different case;—one where paper rightfully in the possession of the transferor is transferred by him, apparently under a contention made in good faith (although afterward judicially decided against him), that he had a right to do so. Ignorantia legis neminem excusat, but does that maxim require us to reverse the usual presumptions concerning the character in which a transferee from Leigh of these bonds before maturity, held them? That if Grieves held them and pledged them to the Equipment Company, it was before maturity, we tMrik is clear. The bonds were payable on their face on or before July 31, 1908, and wMle the Company had covenanted with Laughlin in the “Bent readjustment contract” to set apart a fund and avail itself of its option of prepayment in a certain contingency, this certainly did not, so far as a transferee was concerned, make them overdue in 1900, although the contingency had happened. On the other hand, the Equipment Company did avail itself of its option of payment “before” July 31,1908, and accelerate maturity by its letter of November 7, 1900, with its check for principal and interest to date and thirty days thereafter.

We do not, however, think it necessary for us to pass on the question of the burden of proof. Assuming that the appellant is right in his contention regarding it, we still do not feel ourselves justified in reversing the decree of the Circuit Court as to these eight bonds.

The point made by the appellant that the Equipment Company, if it loaned money to Grieves and took these bonds as collateral, was acting ultra vires is immaterial. It is not a matter, assuming it to be true, of which the appellant can take advantage. But a corporation may loan money in the natural course of. its business. Whether it is ultra vires or not depends on circumstances. None are disclosed here to throw any light on the matter.

The decree of the Circuit Court is again affirmed.

Affirmed.


text:
    N. S. Sherman, trading as N. S. Sherman Machine & Iron Works, Appellee, v. Kennicott Water Softener Company, Appellant.
    Gen. No. 17,904.
    (Not to be reported in full.)
    Appeal from the City Court of Chicago Heights; the Hon. Homes Abbott, Judge, presiding. Heard in this court at the October term, 1911.
    Affirmed.
    Opinion filed October 13, 1913.
    Statement of the Case.
    Action on contract by N. S. Sherman, doing business as N. S. Sherman Machine and Iron Works, against Kennicott Water Softener Company. From a judgment for four hundred and eighty dollars for plaintiff, defendant appeals.
    C. A. Hood, for appellant.
    Lindhout & Lihdhout, for appellee.

      Abstract of the Decision.
    Corporations, § 353

      —when corporation is hound hy acts of its agents. Where the evidence showed that an agent for a corporation managed all the business relating to the work and accepted the offer for the erection of a smoke stack for such corporation, it could not be contended that such agent had no power to contract in behalf of the corporation.

      See Illinois Notes Digest, Vols. XI to XIV, same topic and section number.

   Mr. Justice Brown

delivered the opinion of the court.


text:
    Harry B. O’Dell, Appellee, v. American Box Ball Company, Appellant.
    Gen. No. 17,924.
    (Not to be reported in full.)
    Abstract of the Decision.
    1. Principal and agent, § 240*—how authority of agent may he shown. The authority of an agent cannot be established by the words or declarations of the agent.
    Appeal from the County Court of Cook county; the Hon. John E. Hillskotter, Judge, presiding. Heard in this court at the October term, 1911.
    Reversed.
    Opinion filed October 13, 1913.
    Statement of the Case.
    Action hy Harry B. O’Dell against American Box Ball Company, on a contract. From a judgment for plaintiff for three hundred dollars, defendant appeals.
    E. C. Wood and Wm. Gillespie, for appellant.
    Herman Frank and Harry J. Lurie, for appellee.

      See Illinois Notes Digest, Vols. XI to XIV, same topic and section numbe

   Mr. Justice Brown

delivered the opinion of the court.

2. Principal and agent, § 97 —what is power of agent selling on commission. A selling agent on commission who takes orders and submits them to his principal has no implied authority to constitute other persons agents of the company, or to secure assistance for himself in selling and to add the commissions of such assistants to his own commissions and to the selling expense falling on the company.

3. Principal and agent, § 242*—what evidence shows agent’s powers. Where a person, who had purchased a box ball alley through an agent, and who had been promised commissions for procuring other purchasers, wrote to the principal inquiring concerning the payment of money and received a letter stating that the agent was “all right in every respect,” and'also stating how the money might he paid, held that such letter could not be considered as an assertion that the agent was a general agent with power to bind the company for the promised commissions, but referred only to the money involved.

4. Evidence, § 185*—what constitutes admission. In an action for commissions for selling box ball alleys, where the question at issue was whether an agent was a general agent with power to bind his principal for the commissions, held that a statement of the treasurer of the company that the agent was a “general representative” was not, in view of other evidence, an admission of the agent’s powers, but rather a repudiation.

5. Principal and agent, § 239*—when letter is competent evidence of agent’s powers. In determining an agents’ powers, a letter written by the principal to another person concerning a similar transaction is incompetent.

6. Principal and agent, § 183*—when a principal may ratify an unauthorized act. A principal may ratify an unauthorized transaction of an agent in one case and not in another.


text:
    Adolph Block, Appellee, v. J. Mikola and G. Mikola, Appellants.
    Gen. No. 17,988.
    Judgments, § 106

      —when affidavit of merits is necessary. While the Practice Act of 1907, J. & A. 8592, provides for judgment as in case of a default if an affidavit of merits is not filed in response to an affidavit of plaintiff’s claim, the prior act contained a condition that the defendants should be residents of the county; and where a suit was commenced against nonresidents before the Act of 1907 went into effect and was called for trial while such act was in force, it was improper to deny a motion to file the affidavit of merits and enter a default.
    Appeal from the Superior Court of Cook county; the Hon. William H. McSubely. Judge, presiding. Heard in this court at the October term, 1911.
    Reversed and remanded.
    Opinion filed October 13, 1913.
    Statement by the Court. The appellee herein, Adolph Block, June 20, 1906, sued in the Superior Court of Cook county, Illinois, the appellants, J. Mi-kola and G-. Mikola, who were residents of New York, doing business there under the firm name of J. Mikola and Brother. The suit was based on the claim of Block for commissions on ladies’ waists sold by him for the defendants under agreement with them.
    The suit was begun by attachment on the ground of the nonresidence of the defendants within the State, and certain persons were served as garnishees. A declaration consisting of the common consolidated money counts was filed in the cause July 26th, 1906. Appended was an affidavit of an agent of the plaintiff that the demand of the plaintiff was for commissions on sales and that the amount due to the plaintiff from the defendants was $506.79. The defendants, August 6, 1906, filed a plea of the general issue, but did not then or at any time file an affidavit of merits. The defendants, September 20, 1906, filed a bond under the statute to release the garnishees.
    Under orders of the court, a bill of particulars was filed by the plaintiff April 20,1910, and a more specific one, May 19, 1910. February 9, 191.1, the cause was called for trial and a jury impaneled and sworn.
    To quote from the transcript of the record: “Thereupon the plaintiff, by his attorney, enters herein his motion for the Court to instruct the jury to find the issues for the plaintiff for failure of the defendants to file affidavit of merits herein, and now on this day it is ordered that the defendants’ motion for leave to file affidavit of merits herein instanter, be and is hereby overruled and denied, to which the defendants except and the Court * * * instructs the jury to find the issues for the plaintiff. * * *”
    The instruction thus given also included a direction to assess the plaintiff’s damages at $506.79.
    'The jury having returned a verdict in accordance with the instruction, the court, April 8, 1911, after denying a new trial and a motion in arrest, entered judgment on the same for $506.79 and costs, from which the defendants appealed to this court. They have assigned for error the peremptory instruction in favor of the plaintiff and the denial of the defendant’s motion for leave to file an affidavit of merits.
    Hoyne, O’Connor & Irwin, for appellants.
    No appearance for appellee.

      See Illinois Notes Digest, Vols. XI to XIV, same topic and section number.

   Mr. Justice Brown

delivered the opinion of the court.

This judgment must be reversed and the cause remanded to the Superior Court.

By the Practice Act as it existed before July 1,1907, when the Act of June 3, 1907, entitled “An Act in relation to practice and procedure in courts of record,” went into effect, the plaintiff, who had filed an affidavit of claim in a contract suit was entitled to judgment as in case of default on account of the absence of a defendant’s affidavit of merits, only when the defendant was a resident of the county in which the suit was brought.

The defendants in this cause were not residents of Cook county nor of Illinois, and when this suit was brought, and when the declaration and plea were respectively filed, no affidavit of merits on their part was necessary to prevent a default. The unverified plea was sufficient for that purpose.

The Act of June 3, 1907, (J. & A. ft 8592), re-enacted the provision for judgment as in case of a default if an affidavit of merits was not filed in response to an affidavit of plaintiff’s claim, omitting the condition that the defendants must be residents of the county.

The Act of June 3, 1907, also expressly repealed the former Practice Act and the various amendments thereto.

When the cause was called for trial and the motion, made for a judgment as by default because of the absence of an affidavit of merits, the later act was in force.

But it is unnecessary for us to decide whether it was so far retroactive as to apply to suits begun before it went into effect. We hold that either it was inapplicable, and that no affidavit of merits was necessary to prevent the default, or that the motion of defendants for leave to file such an affidavit, which was certainly not necessary when their plea was filed, should have been allowed.

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

Reversed and remanded.


text:
    Ida Knudson, Guardian, Appellant, v. Wacker & Birk Brewing and Malting Company, Appellee.
    Gen. No. 18,017.
    (Not to be reported in full.)
    Appeal from the Superior Court of Cook county; the Hon. Charles A. McDonald, Judge, presiding. Heard in this court at the October term, 1911.
    Affirmed.
    Opinion filed October 13, 1913.
    Statement of the Case.
    Action by Ida Knudson as guardian of Charles Burnett Knudson, minor, against Wacker & Birk Brewing and Malting Company for personal injuries sustained by such minor. From a judgment of nil capiat and for costs against the plaintiff, such plaintiff appeals.

      Abstract of the Decision.
    1. Trial, § 270

      —what are requisites of special interrogatories. A special finding of a jury must be unanimous.
    2. Appeal and error, § 1521*—when error in submitting special interrogatory is harmless. The submission of a special interrogatory is not ground for reversal where the plaintiff is not injured and no miscarriage of justice results.
    3. Appeal and error, § 572*—when exceptions are necessary. Technical error in instructions is not available to a plaintiff who appeals, where exceptions to the giving of such instructions are not preserved in the record, and this rule is not abrogated by section 81 of the Practice Act of 1907; J. & A. 8618.
    4. Roads and bridges, § 239*—what is evidence of contributory negligence. Where a boy, about ten years of age, jumped upon a street car while it was in motiofi, and was knocked from the running board by a team standing in the street, receiving injuries, it was proper to introduce in evidence an ordinance prohibiting the act of jumping on cars while in motion.
    5. Roads and bridges, § 241*—when instruction as to contributory negligence is misleading. Where a boy was injured by being knocked from the running board of a street car by a wagon or team standing in the street, an instruction stating that the question, whether such boy had paid his fare or intended to pay his fare was immaterial, was misleading, it appearing that the boy was engaged in “flipping” cars, i. e., jumping on or off street cars while in motion, an act which was forbidden by the city ordinances.
    6. Evidence, § 457*-—when evidence given at a former trial is proper. Admission of questions and answers made by plaintiff’s witnesses at a former trial or mistrial, held harmless, since such evidence was proper if variant; and if its existence was not admitted by the witnesses, and if the evidence was identical, or its giving was admitted, the error in admitting it could not have prejudiced the jury.
    7. Torts, § 17*—what evidence may be shown as to release of a tort feasor. Where a boy was injured by being knocked from the running board of a street car by a team standing in a street, the admission of court proceedings leading up to an agreement not to sue the traction company for the injury, on payment of a certain sum of money, was proper because of the effect of such a release of one tort feasor on the rights of a codefendant.

      Lavern W. Thompson, for appellant.
    Miller, Gorham & Wales and W. G. Shockey, for appellee.

      See Illinois Notes Digest, Vols. XI to XIV, same topic and section number.

   Mr. Justice Brown

delivered the opinion of the court.

8. Evidence, § 339*—when a written instrument may he varied hy parol evidence. The rule that the written evidence of a contract may not be varied or contradicted by parol is applied only between the parties to the instrument.

9. Appeal and errob, § 1622*—when error in admission of evidence may he cured. Where a boy was injured by being knocked from a street car by a team standing in the street, the admission in evidence, in an action against the owner of the team, of court records showing an agreement hy the boy’s guardian not to sue the street car company on the payment of a certain sum of money, it being argued that such release was not binding on the minor, was not prejudicial error, since an instruction was given which stated that if the injury was partly due to the negligence of the street car company the jury should apply the amount received by the plaintiff in reduction of the amount, if any, which the plaintiff would otherwise have been entitled to recover.


text:
    Merchants Loan & Trust Company et al., Defendants in Error, v. City of Chicago, Plaintiff in Error.
    Gen. No. 19,416.
    1. Municipal corporations, § 810

      —when water certificates are due. Where water certificates and the ordinance under which they were issued provide for a refund of the amount advanced by citizens for the cost of service pipes when a revenue of ten cents per foot per annum is being derived from such pipes, such certificates are due when the evidence shows such revenue from permanent improvements; and if the certificates and ordinances should require a “permanent” annual revenue of ten cents, the certificates would still be due, since the word “permanent” must he given a relative and practical meaning.
    2. Municipal corporations, § 1151*—when defenses to collection of water certificates must he pleaded and proved.' Where a city, acting within its charter powers, borrows and uses money for the extension of its water supply system, and issues water certificates to the citizens who lend the money, agreeing to repay the amount borrowed when a certain revenue is being derived, such city must plead, and has the burden of proving, in an action for repayment of the money borrowed, any defense based on the illegality or irregularity of the loan.
    3. Municipal corporations, § 1155*—when authority of signers of municipal water certificate must be shown. In an action on a water certificate, providing for the repayment or money borrowed which purports to have been executed by a city, and is authorized, it is not necessary to show the authority of the signers of the certificate, unless its execution is denied by a verified plea.
    4. Interest, § 46*—how computed. Where a water certificate issued by a city provides for repayment of the amount borrowed, whenever a proper survey shows that a certain revenue is being derived, without interest if refunded within two years from date but with interest if not so refunded within two years, it cannot be contended that interest should only be allowed after two years from the date of the survey establishing the required revenue.
    5. Municipal corporations, § 1154*—when city is liable for interest. A municipal corporation is liable for interest where water certificates issued by it expressly provide for such interest.
    Error to the Circuit Court of Cook county; the Hon. Dean Erankun, Judge, presiding. Heard in this court at the October term, 1913.
    Affirmed.
    Opinion filed October 13, 1913.
    Statement by the Court. The defendant in error, the Merchants Loan and Trust Company, February 13, 1913, in the Circuit Court of Cook county procured as executor of the last will of Lambert Tree a judgment for $4,908.96 against the City of Chicago. To reverse this judgment this writ of error has been sued out of this court by the City of Chicago.
    The judgment was based on the following instrument in writing declared on and proved in a suit in assumpsit in the Circuit Court, tried there by the judge sitting without a jury:
    ‘ ‘ City of Chicago,
    Department of Public Works,
    Bureau of Engineering.
    Duly 25,1895.
    It is hereby certified that Lambert Tree has advanced the sum of Twenty Seven Hundred and Sixty One and 73-100 dollars for the purpose of laying 985 feet 8 inch and 1348 feet 6 inch Water Pipe in South 40 Ave., from Adams Street to Van Burén St. and in West Jackson Street from South 40th Ave. to Hamlin Ave., which amount will he refunded to him without interest if so refunded within two years from the date hereof, but with interest at the rate of five per cent, per annum from and after the expiration of said two years if not so refunded within said two years, from any money belonging to the Water Tax Fund - in the City Treasury not otherwise appropriated, whenever upon a proper survey it is shown that a revenue from frontage water rates of ten (10) cents per lineal front foot per annum is being derived from said pipe.
    By order of the Commissioner,
    James J. Graham,
    Asst. Secretary.
    $2,761.73 L. B. Jackson, City Engineer. ”
    The declaration alleged that in the lifetime of said Tree and on the date of this instrument he paid and advanced to the City of Chicago $2,761.73 for the purpose mentioned in the certificate and the City of Chicago thereupon issued to him, through its duly authorized agent, the said certificate which is set forth in haee verba in the declaration, together with its alleged legal effect of a promise by the said City according to its terms.
    It is further alleged in said declaration that a proper and legal survey, as provided for and required in said certificate, was made in 1909 and in 1910, but that said surveys showed that a revenue from frontage water rates of ten cents per lineal foot per annum was not being derived from said pipe, but that thereafter in 1912 another proper and legal survey was made and said survey showed that a revenue from frontage water rates largely in excess of ten cents per lineal foot for each lineal front foot of said water pipe per annum was being derived from said water pipe so laid in said streets. It is also alleged that at the time of filing the declaration there was such a revenue largely in excess of ten cents for each lineal foot per annum, and that there was in the city treasury sufficient money belonging to the water tax fund, and composing a surplus of net income from the water rates which had not been otherwise appropriated or pledged, to pay to the plaintiff the principal and interest due to it as executor on said certificate. The executorship of the plaintiff and a demand on the defendant for $2,761.73 with interest at five per cent, from July 25,1897 (two years from the date of the certificate), together with a refusal by the City of such demand, are also duly alleged and the common money counts are added.
    A demurrer to the special count in the declaration was filed and overruled and the defendant then filed the general issue.
    On the trial the certificate was offered and received in evidence and the plaintiff supplemented the proof as follows:
    It presented .the testimony of the chief water assessor of the City of Chicago, who swore that he was chief of the department having in charge the making of surveys to ascertain the revenue that is being derived from frontage water rates, and showed by him and the written memorandum of a “Survey” on file in the department, that the annual revenue from the pipes mentioned in the certificate had on June 29, 1912 (about six months before this suit was begun) reached thirteen per cent, from permanent improvements on the streets involved.
    It also proved that the persons purporting to sign the certificate as “assistant secretary” of the department of public works and as city engineer occupied in the administration of the city government of Chicago the positions mentioned at the date of the certificate. Further it proved that the certificate sued on had been continuously in the hands of Lambert Tree from the date of its issuance to his death and in the hands of his executor since; that at said date of issuance eight other similar certificates for various amounts, similarly signed and relating to the same general subdivision, had been issued to Tree; that, six of them, amounting to a sum between thirteen and fourteen thousand dollars, had been paid with interest in each case at five per cent, from July 25,1897, to the date of payment; that this certificate sued on, after the survey mentioned had been made at the request of a representative of the Tree estate, was presented in July, 1912, by said representative to the commissioners of public works of the City of Chicago and to other officers of the City, and that said representative was informed by the Commissioner of public works that the principal would be “vouchered” and paid, but no interest, and that this determination was the result of an opinion rendered by the corporation counsel. No other objection was made by said commissioner to the payment.
    Proof was also offered by the plaintiff that the representative of the Tree estate making the demand was informed by the comptroller of the City that there was over a million dollars in the proper fund from which this certificate was payable. It was admitted in open court that the city council had passed an appropriation ordinance in which a certain amount had been appropriated to pay, during the current municipal year, water pipe extension certificates and interest and a formal stipulation was made that there was in the water tax fund in the city treasury sufficient money “to pay all claims against that fund in existence at the time of bringing the suit and all lawful claims against it during the current municipal year.” It was also admitted on the record that up to 1912 from May 16,1892 (the date of an ordinance hereinafter mentioned) it was the custom of the City of Chicago to pay water pipe extension certificates like the one sued on with interest at five per cent, from two years after date on those issued before 1905, and at three and one-half per cent, on those issued after 1905; this distinction being made in consequence of ordinances hereinafter mentioned. The further evidence offered in the cause consisted of ordinances of the City of Chicago passed by the city council at various dates between November 2,1891, and the beginning of the suit. The first, passed November 2, 1891, is as follows:
    “Be it ordained, etc. Sec. I. .That from and after the passage of this ordinance (except where water pipe is in course of construction and now on the ground) and until the further order of this council, the commissioner of public works shall extend the water main only where the owners of property or persons desiring such extension shall advance and pay into the City Treasury a sum of money equal to the entire cost thereof, said money to be repaid to the person or persons so advancing the same when from the surplus of the net income from the water rates not otherwise appropriated or pledged there is in the City Treasury sufficient money therefor and when the City Comptroller shall so certify.”
    The next ordinance was passed on May 16, 1892. It is in full as follows:
    “An ordinance Providing for the Laying of Water Mains. Whereas there is an urgent demand from every section of the city for street improvements and whereas it will be impossible to proceed with any of the streets now under assessment until proper provision is made for the extension of water mains; and whereas, this council has recently authorized the issuance of water certificates amounting to $1,000,000, the proceeds of which were to be used in extending and improving the water system; and whereas, it is of the utmost importance that no part of the proceeds of said certificates be used except for the extension of water mains in localities where the actual number of residents will warrant the outlay from a business standpoint ; and whereas in the past it has been the practice to pass ordinances for street improvements in uninhabited subdivisions, which said ordinances were promptly repealed when the water pipe was laid; now therefore:
    Be it ordained by the city council of the city of Chicago ; Sec. 1. That whenever an ordinance is hereafter passed by this council for the filling, grading, curbing and paving of any street, it shall be the duty of the commissioner of public works to ascertain whether the street or streets on which said improvement is ordered contains a sufficient number of houses to pay a revenue to the City of ten (10) cents per lineal foot for every foot of water pipe laid on said street or streets, when, if such be the case, he shall at once proceed under the ordinance to lay the necessary water mains. If upon such examination it is ascertained that a revenue of ten (10) cents per lineal foot cannot be derived, the owners of property abutting on said street or streets shall be required to advance the money necessary to cover the cost of all pipe laid on every such street or streets, which said cost shall include the purchase, delivery and laying; provided that where water pipe is now on the ground the same shall be laid underground.
    Sec. 2. The moneys advanced by owners of property for the laying of water mains as provided in Section 1 shall be returned by the City from moneys not otherwise appropriated whenever upon a proper survey it is shown that a revenue of ten (10) cents per lineal foot is being derived therefrom; provided that if the money so advanced is not paid back within two years that interest at the rate of 5 per cent, per annum shall be allowed after the expiration of two years until paid.
    Sec. 3. All ordinances or parts of ordinances in conflict herewith are repealed.
    Sec. 4. This ordinance to be in force and take effect from and after its passage.”
    July 25, 1892, there was passed another ordinance by the council, which provided that in the case any special assessment for the purpose of laying or extending any water main should be collected by the City of Chicago, the holder of the receipt therefor should be repaid said sum from the surplus of the net income from the water rates when the water rates derived from the laying of said main should equal ten (10) cents per lineal foot in the block where the property assessed is situated.
    In the Revised Code of Chicago of 1897, section 16169 reads: “The commissioner of public works may; extend water mains where the owners of the property or persons desiring such extensions shall advance and pay into the city treasury a sum of money equal to the entire cost thereof; and whenever upon a proper survey it is shown that a permanent annual revenue of ten cents per lineal foot is being derived from said water mains, then said money so advanced as aforesaid shall be repaid to the person or persons so advancing the same. Provided, however, if the money so advanced is not paid back within two years, interest at the rate of five per cent, per annum shall be allowed after the expiration of said two years until paid.”
    Sections 1670 and 1671 concerning water mains were also introduced in evidence, but need not be recited here.
    In the Chicago Code of 1905, section 1669 of the Eevised Code of 1897 is repeated as section 1906, with the substitution, however, in the proviso of “interest at the rate of three and one-half per cent, per annum” for “interest at the rate of five per cent, per annum.” Section 2128 of the Chicago Code of 1911, also introduced in evidence, is identical with section 1906 of the Code of 1905.
    William H. Sexton, for plaintiff in error; Nicholas Michels, of counsel.
    Musgrave, Oppenheim & Lee, for defendants in error; Johrt H. S. Lee, of counsel.

      See Illinois Notes Digest, Vols, XI to XIV? same topic and section number.

   Mr. Justice Brown

delivered the opinion of the court.

The attack in this court upon the judgment of the Circuit Court in this cause is twofold. It is insisted, first, that the evidence below failed to show any liability of the City on the certificate sued on, because of the lack of necessary elements to fix a municipal liability, and, secondly, that the court gave a wrong construction to the certificate and to the ordinance under which it was apparently issued, in holding that interest should be computed on the amount of the certificate from two years after its date instead of holding, as maintained by the City, that interest should be computed only from two years after the “survey,” the results of which showed the certificate to be due. The objections made to the sufficiency of the proof of the liability are again divided. Some are made against the admissibility of the certificate in evidence and against its competency, when supplemented only by that which appears in the record, to prove a liability against the City at any time, and others against the adequacy of the evidence tending to prove the instrument due according to its terms.

The objection last mentioned is concerned with the evidence introduced by the plaintiff that “upon a proper survey it was shown that a revenue from frontage water rates of ten cents per lineal foot per annum was being derived from said pipe.”

We think the evidence was sufficient. It is true that the ordinances constituting section 1669 of the Code of 1897, section 1906 of the Code of 1905 and section 2128 of the Code of 1911 make it the condition of repayment that a proper survey shall show that a permanent annual revenue of ten cents per lineal foot is being derived from the mains, but neither the instrument itself nor the ordinance of May 16, 1892, under which it may be presumed to have been issued, contains the word “permanent.” The condition of repayment in each is a showing that a revenue of ten cents “is being derived.”

But .if the word “permanent” were in both instrument and ordinance, we do not see that it would alter the case. There is no way of assuring absolute “permanence” in this world and the term must be given a relative and practical meaning. The memorandum of “survey” from the files of the City in connection with the testimony of Byrne, the chief water assessor of Chicago, showed that a revenue of more than ten cents per foot was derived from permanent improvements. The certificate was plainly due, therefore, according to its terms.

As to all other objections to the finding that the City was liable on the certificate produced in evidence, it seems to us sufficient to say that there is no sufficient pleading by the City under which they can be considered. Where, as in this case, the receipt of the money, its borrowing, that is, by the City from the holder of the certificate, was within the City’s charter powers, the burden is upon the City to prove any defense, if any such defense exists, based on the illegality or irregularity of the loan which its formal written admission acknowledged and promises to repay. And not only is the burden on the city to prove such a defense, but it must plead it. City of Chicago v. Peck, 196 Ill. 260.

That the borrowing and using of the money mentioned in the certificate for the extension of its water supply system was within the charter powers of the City is not explicitly, at least, denied by it. There can be no reasonable doubt of it in view of the various statutory provisions of Illinois concerning the construction and maintenance of water works by municipalities.

Nor are the pleadings in any such condition that it is open to the defendant to contend that the certificate shows no obligation of the City because the authority of the signers of the certificate containing the admission of the loan and the promise to repay is not shown extraneously. The certificate, by all proper canons of interpretation, purports to be issued as the act of the City of Chicago, its admission and promise combined, and what the Supreme Court, speaking through Mr. Justice Vickers, said of a contract in Schuyler County v. Missouri Bridge & Iron Co., 256 Ill. 348, is in point:

“The execution of this contract was not denied by a verified plea, and appellant was therefore in no position to question the authority of the agents who signed it, on the trial. This rule applies to a municipal corporation as well as to an individual, and where an instrument purports to have been executed by a municipal corporation, if -it is such an instrument as the municipality could, under any circumstances, issue, and its execution is not denied by a verified plea, then it is not necessary to prove the authority of the agent who signed the same on behalf of such municipality.”

It is not necessary, in our view, to consider whether, under any form of pleadings, the defendant would have been allowed to attempt to show such want of authority on the part of its officers or to urge any other of the objections made to the validity of the certificate, after placing its refusal to pay it before litigation solely on the allegation that the interest demanded was not within the terms of the instrument; but it may be noted in passing that expressions of the Supreme Court of Illinois in this same case of Schuyler County v. Missouri Bridge & Iron Co., supra, and in Gibson v. Brown, 214 Ill. 330, and of the Supreme Court of the United States in Ohio & M. R. Co. v. McCarthy 96 U. S. 258, certainly seem to deny any right to do so.

For the contention that interest on the certificate in question should be allowed only after two years from the date of the survey establishing the “ten cent revenue,” we see no tenable basis. The language of the ordinance and of the certificate alike seems to us plain and unambiguous, and the construction put on it by the court below is that which the City for many years placed on it. The money on the certificate is not to be repaid by the City until a survey has shown the required revenue. If that showing and repayment are within two years from the date of the certificate, the repayment shall be without interest; if more than two years from that date, interest shall be allowed from the expiration of the two years to the date of repayment.

It is not material in this controversy that a municipal corporation in Illinois is not, except by express agreement, liable for interest on money not unlawfully received and held, because here the agreement is express. Nor if it were true would it be material, in face of the definite action of the city council, that it would be more just to the City that the interest should begin to run on these advances only from a date two years subsequent to the survey. Emphasis seems to be given to this argument by counsel for the City, but it is beside the question. However, the injustice of the actual provision is not apparent to us. If the required revenue should accrue within one year of the advances, the City, if the survey and the money were not demanded until the expiration of the two years, would have the use of the money for more than a year without interest. If the revenue was not shown for three years, the City would pay interest for a year, perhaps, on an investment which was at most only partially remunerative to it, but the council may be presumed to have thought that the gains to the City would on the whole equal the loss in the arrangement thus provided, and there is no evidence that it does not. As interest rates on the City’s ordinary obligations have declined, the council has provided for a less rate on these special loans.

The judgment of the Circuit Court of Cook county is affirmed.

Affirmed.


author: Mr. Justice Smith

text:
    Frank J. Shead, trading as Shead Lumber Association, Defendant in Error, v. Louisiana Lumber Company, Plaintiff in Error.
    Gen. No. 17,751.
    1. Beokebs, § 3

      —when license not required. As to interstate commerce transactions, an ordinance of the city of Chicago making it unlawful for brokers to conduct a brokerage business without a license is of no force and effect.
    2. Beokebs, § 93*—questions of fact. In an action for commissions, whether the broker abandoned the effort to make a sale, or whether he was the procuring cause or whether he represented the purchaser are questions of fact.
    3. New tbial, § 117*—order. Court should not enter a pro forma order overruling a motion for a new trial.
    Error to the Municipal Court of Chicago; the Hon. Hosea W. Wells, Judge, presiding. Heard in this court at the October term, 1911.
    Affirmed.
    Opinion filed October 13, 1913.
    Eastman & White, for plaintiff in error; Ralph R. Hawxhurst, of counsel.
    H. J. Toner & V. I. Ohbenstein, for defendant in error.

      See Illinois Notes Digest, Vols. XI to XIV, same topic and section number.

   Mr. Justice Smith

delivered the opinion of the court.

The plaintiff, here the defendant in error, brought an action of the fourth class in the Municipal Court of Chicago against the defendant, here the plaintiff in error, to recover certain commissions alleged to be due from the defendant to the plaintiff, as a broker in the sale of certain lumber to the Chicago, Rock Island and Pacific Railroad Company. The case was heard by the court without a jury and a finding was entered for the plaintiff on the issues and his damages assessed at $347.65 and judgment entered therefor.

The defendant in its brief states:

“There is no dispute in this record as to the fact that a certain sale of lumber was made by the defendant Company to the Bock Island Bailroad Company, nor is there any dispute as to the amount the plaintiff was entitled to recover if he is entitled to recover at all. The contention of the defendant is that the plaintiff is not entitled to recover, being a broker without a license, as hereinafter shown, and further, that the plaintiff is not entitled to recover because he did not perform the services of a broker in such a manner as would entitle him to compensation under the law of this State.”

The plaintiff was a lumber broker in Chicago. The defendant was a Missouri corporation with its principal office at St. Louis, Mo. The Bock Island Bail-road Company purchased from the defendant nearly 700,000 feet of lumber to be shipped to Arkansas. The plaintiff was authorized by the defendant to get the order from the Bock Island Company for said lumber, and there followed negotiations and correspondence between all the parties in reference thereto. Whether the plaintiff abandoned the effort to make said sale, whether the plaintiff was the procuring cause of the sale and whether the plaintiff represented the Bock Island Company were questions of fact, and on a review of the evidence we are not disposed to disturb the findings of the court thereon as being clearly and manifestly against the weight of the evidence.

The contention that the plaintiff is not entitled to recover on the ground that he had no broker’s license, as required by an ordinance of the city of Chicago, cannot be sustained. The transaction in question was one of interstate commerce. As to interstate commerce transactions the said ordinance of the city of Chicago, making it unlawful for brokers to conduct a brokerage business without obtaining a license as therein provided is of no force or effect. Welton v. Missouri 91 U. S. 275; McCall v. California, 136 U. S. 104; Brennan v. Titusville, 153 U. S. 289; Stockard v. Morgan, 185 U. S. 27; Stratford v. City of Montgomery, 110 Ala. 619.

The plaintiff’s conduct in the transaction being lawful and not in violation of the said ordinance, we are of the opinion that its provisions can be of no avail to the defendant in this action.

The defendant suggests that the trial court should not enter a pro forma order overruling a motion fora new trial. We concur in the suggestion. But there is no pro forma order overruling the motion for a new trial in this record.

The judgment is affirmed.

Affirmed.