text:
    William P. Wheeler, by James B. Wheeler, appellee, v. City of LeRoy, appellant.
    Action for personal injury due to streets in an unsafe condition. Judgment for plaintiff. Appeal from the Circuit Court of McLean county; the Hon. Sain Welty, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed April 27, 1920.
    Leslie J. Owen and Stone & Dick, for appellant.
    Frank Gillespie, Costigan & Wollrab and W. R. Bach, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


source: Caselaw Access Project

author: Mr. Justice Waggoner

license: Public Domain

text:
    George Breck et al., trading as Vitaslide Company, appellants, v. Comet Automobile Company, appellee.
    Action to recover the purchase price of goods after delayed delivery. Judgment, for plaintiffs for nominal damages. Appeal from the Circuit Court of Macon county; the Hon. William K. Whitfield, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed with finding of facts on cross errors.
    Opinion filed April 27, 1920.
    Wiley & Morey, for appellants.
    Vail, Pogue & Allen, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


text:
    Eliza J. Kinney, appellee, v. Jacob Davis, appellant.
    Appeal from the Circuit Court of Cass county, from order denying a new trial; the Hon. Guy R. Williams, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed April 27, 1920.
    A., A. Leeper, for appellant.
    Bellatti, Bellatti & Moriarty, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


text:
    Lida Wells, appellee, v. George W. Pittman, appellant.
    Appeal to the circuit court from an order of the probate court appointing a conservator for a feeble-minded person. Judgment for plaintiff. Appeal from the Circuit Court of Piatt county; the Hon. George A. Sentel, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed.
    Opinion filed April 27, 1920.
    Herrick & Herrick, for appellant.
    F. M. Shonkwiler and E. J. Hawbaker, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


text:
    Arvesta F. Downs, appellant, v. John Henry Jansen, appellee.
    Assumpsit by landlord to recover for the hauling of corn which tenant was to give as rent. Judgment for defendant. Appeal from the Circuit Court of Logan county; the Hon. T. M. Harris, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed and remanded.
    Opinion filed April 27, 1920.
    Beach & Trapp, for appellant.
    McCormick & Murphy, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


text:
    Cleo Ray Hess, appellee, v. William B. Dillon, appellant.
    Trover to recover the value of wheat in a stack, plaintiff claiming an undivided interest. Judgment for plaintiff. Appeal from the County Court of Pike county; the Hon. Burr Swan, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed.
    Opinion filed April 27, 1920.

      W. E. Williams and A. Clay Williams, for appellant.
    William Mumford, Barry Mumford and L. T. Graham, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


text:
    August Gulbanaitis, appellee, v. Simon Lapinsky, appellant.
    Action to recover a post-office order given to defendant as security for a bond. Judgment for plaintiff. Appeal from the Circuit Court of Montgomery county; the Hon. Thomas M. Jett, Judge, presiding. Heard in this court at the October term¡ 1919.
    Affirmed.
    Opinion filed April 27, 1920.
    F. M. Ramey, for appellant.
    J. D. Wilson and Hill & Bullington, for appellee.
   Mr. Justice Waggoner

delivered, the opinion of the court.


text:
    William H. H. West, Jr., appellant, v. Ira E. Day, appellee.
    Bill for an accounting and settlement of partnership affairs. Bill dismissed. Appeal from the Circuit Court of Jersey county; the Hon. Frank W. Burton, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed April 27, 1920.
    S. R. Cunningham and Chapman & Du Hadway, for appellant.
    Sumner & Reardon, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


text:
    Elizabeth Spencer, executrix of the last will of William S. Spencer, deceased, appellee, v. Jacksonville Railway Company, appellant.
    Action for death through the operation of street ear at excessive speed. Judgment for plaintiff. Appeal from the Circuit' Court of Morgan county; the Hon. Norman L. Jones, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed and remanded.
    Opinion filed April 27, 1920.
    Bellatti, Bellatti & Moriarty, for appellant.
    William H. Hairgrove, Thomas D. Masters and Walter T. Day, for appellee.
   Mr. Justice Waggoner

delivered the opinion of the court.


author: Mr. Presiding Justice McSurely

text:
    Samuel Marks et al., Appellees, v. The Chicago Mortgage Corporation, Appellant.
    Gen. No. 25,599.
    1. Corporations, § 687

      —what is extent of power of foreign corporation to loan money. There is nothing in the Illinois statutes which inhibits a foreign corporation having power under its charter to loan money from .the business of loaning money in Illinois, where it exercises no greater or different powers with Illinois corporations of like character and subject to the same liabilities, restrictions and duties as such corporations.
    2. Corporations, § 344*—when parties to contract cannot assert that it is ultra vires. A contract which is ultra vires a corporation as not being within the powers conferred upon the corporation by the legislature, or within the object of its creation, is void, but where a contract is within its powers to make and within the scope of its franchise, neither party who has had the benefit of the contract can set up as a defense thereto that legal formalities were not complied with or that the power was improperly exercised.
    3. Corporations, § 689*—when loan cannot "be objected to as ultra vires. A loan lawfully made on real estate by foreign corporation with charter authority to make loans and doing business in Illinois under a certificate from the Secretary of State is not void as being ultra vires and the corporation is entitled to the lien created by its trust deed upon the debtor’s realty.
    4. Appeal and error, § 488

      —when objections to findings are not available on appeal. Where no objections were filed to the master’s finding as to the interest in the premises of one of the parties to a proceeding to establish a lien upon property by virtue of a trust deed, such interest cannot be questioned on appeal.
    Appeal from -the Circuit Court of Cook county; the Hon. M. W. Pinckney, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed and remanded with directions.
    Opinion filed April 12, 1920.
    M. W. Borders and Norman Gr. Collins, for appellant.
    Blum, Wolpsohn & Blum, for appellees.

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

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

   Mr. Presiding Justice McSurely

delivered the opinion of the court.

By this appeal the Chicago Mortgage Corporation, hereinafter called appellant, seeks the reversal of a decree finding that a trust deed and notes held by it are void and denying its prayer for a lien upon the real estate conveyed as security.

The original bill of complaint was filed by Samuel Marks, alleging that he was the holder of notes in the sum of $13,000, executed by Ida Rosenthal and se-. cured by her deed of trust dated November 24, 1913, conveying certain premises in Chicago, Cook county, Illinois. Complainant sought foreclosure, asserting the priority of the lien of his trust deed. Appellant answering, averred that on June 6, 1916, Ida Rosenthal, being indebted to appellant in the sum of $3,000, executed twenty principal promissory notes to the order of herself and by her indorsed, for $150 each, due one every month with interest at 6 per cent, secured by her trust deed of even date conveying the same premises described in complainant’s trust deed; that appellant was the owner and holder of these notes and the trust deed and it sought a lien upon said premises for the amount due, conceding the priority of the Samuel Marks trust deed.

Reference was had to a master who found complainant entitled to his lien and also that there was due upon the notes held by appellant $1,604.14, and by virtue of its trust deed appellant was entitled to a lien for this amount upon the premises in question second to that of the complainant, Marks, and superior to the rights and claims of all other parties.

The master also found that subsequently Ida Rosenthal married and became Mrs. Waldman and on June 12, 1917, was adjudged a bankrupt in the District Court of the United States, and on July 26, 1917, the trustee in bankruptcy under order of court sold all of his interest in the real estate as trustee of the estate of Ida Rosenthal Waldman, bankrupt, to Frank O. Heilman, one of the defendants, and delivered a deed to said premises to Heilman, who now claims the equity of redemption in and to the real estate being foreclosed; this sale was made “subject to the mortgages thereon. ’ ’

Exceptions to the master’s report were filed by Frank GK Heilman and his wife, Celia M. Heilman, appellees, attacking appellant’s lien, and upon hearing the chancellor sustained such exceptions upon the ground that appellant had no power to make the loan secured by the notes and trust deed in question and therefore they were void, and entered a decree denying the relief sought by appellant. It is contended this was error, and we are of the opinion this contention must be sustained and the decree in this respect should be reversed.

Appellees say that the appellant had no authority to transact within the State of Hlinois the business of loaning money and that it had no authority in law to make the loan to Ida Rosenthal, and therefore the trust deed and notes executed by her to evidence said loan are unenforceable and void. Appellant is a corporation organized under the laws of the State of Virginia on December 22, 1915, and under its charter has the power “to loan and advance money or to give credit to persons, firms, corporations and associations.” On March 25, 1916, it was duly licensed by the Secretary of the State of Illinois, ,to transact its business in Illinois. Section 67a of the Statute on Corporations, chapter 32, Hurd’s Rev. St. (J. & A. J[ 2525), provides: “That any corporation formed under the laws of any other state or country and authorized by its charter to invest or loan money, may invest or loan money in this State.” Section 1 (J. & A. ft 2418) of the ‘“Act concerning corporations”' reads in part: “That corporations may be formed in the manner provided by this act for any lawful purpose except banking, insurance, real estate brokerage, the operation of railroads, and the business of loaning money,” and the latter part of the second section of the act regulating the admission of foreign corporations to do business in Illinois, . 67c, eh. 32 (J. & A. If 2527), is as follows in part: “No corporation shall, by the certificate of the Secretary of State, be authorized to transact any business in the State for the transaction of which a corporation cannot be organized under the laws of this state, and no foreign corporation shall exercise any powers in this state not authorized by the provisions of its charter.” This latter provision is not limited to corporations formed under the general act concerning corporations which excepts the forming of corporations for the business of loaning money. The language has a broader scope. It excludes only those foreign corporations which undertake to transact a business rq. this State which cannot be incorporated under any of the laws of this State. Corporations formed for the business of loaning money are not unlawful, but are provided for under a number of statutes, such as the statutes relating to Banks, Building Loan and Homestead Associations, Pawners’ Societies and Wage Loan Corporations. In Calumet and C. Canal & Dock Co. v. Conkling, 273 Ill. 318, and Mercantile Trust Co. v. Kastor, 273 Ill. 339, the question was whether a corporation organized under the general incorporation laws could loan money. That is not the question here. We find nothing in the statutes which inhibits a foreign corporation from the business of loaning money in the State of Illinois.

In Stevens v. Pratt, 101 Ill., page 206, in an exhaustive opinion by Mr. Justice Scholfield, the subject of the rights of a foreign corporation to loan money in Illinois was considered at length. It was there held that no foreign corporation was excluded from doing this in this State, but that such corporation should be placed upon an equality with domestic Corporations to the extent that it should exercise no greater or different powers but be subject to the same regulations, restrictions and rules of law with corporations of like character organized under the laws of this State. The opinion says that in the Gleneral Incorporation Act the legislature was “providing for certain corporations, leaving others unprovided for, and so what they did not provide for is not affected by the legislation they enacted, whether we regard domestic or foreign corporations. The excepted corporations and foreign corporations of like character are simply unaffected by this law.” At the time of this opinion there seem to have been no statutes permitting a corporation not private to engage in the business of loaning money, but the opinion holds that such business was not contrary to public policy and might be permitted thereafter by the legislature. Since then such statutes, as above stated, have been passed.

We find nothing in our statutes which prohibits a foreign corporation having authority under its charter to engage in the business of lending money to engage in like business in this State exercising no greater or different powers with corporations of like character in this State and subject to the same liabilities, restrictions and duties.

A further consideration supporting appellant is. this: Counsel for appellees say that the statute relating to foreign corporations above quoted, 67a, does not purport to authorize a foreign corporation to engage in the business of lending money in tliis State but only to lend money in Illinois and to enforce its securities, and appellees concede that if appellant did not transact within this State the business of loaning money “but merely made a loan to Ida Bosenthal Waldman, such a loan would be clearly enforceable.” As we have said, appellant had power under its charter to loan money. In Calumet and C. Canal & Dock Co. v. Conkling, 273 Ill. 318, the distinction was stated “between cases where the corporation’s act was beyond its powers and where the act was within its powers but was improperly exercised.” In the first instance, the corporation, having no power, cannot make such a loan; in the second instance it has the power but exercises it improperly. As was said in Lurton v. Jacksonville Loan & Building Ass’n, 187 Ill. 141:

“The powers of a corporation are limited and delegated, and where a contract is ultra vires in the proper sense, as not being within the powers conferred upon the corporation by the legislature or within the object of its creation, the contract is void (citing authorities). But where the contract is one which the corporation has power to make and is within the scope of its franchise, neither party to the contract who has had the benefit of it can set up as a defense that legal formalities were not complied with or that the power was improperly exercised.”

With this distinction in mind, even conceding appellees’ construction of the foregoing statutes, it would not follow that they can question the right of appellant to recover upon its security; we would then have a "foreign corporation with charter authority to make loans lawfully loaning money upon real estate security in Illinois, and the certificate from the Secretary of State authorizing it to do business here could be considered as merely an improper formality. This would leave the security subject to the lien of appellant’s trust deed.

It is suggested that the appellees have no standing here as their interest in the premises is not made to appear by sufficient proof. However this may be, the master found their interest to be as above stated and no objections were filed to this finding.

Other points are suggested against the decree, but we prefer to rest our conclusion upon the reasons above indicated. The decree is therefore reversed and the cause is remanded with instructions to enter a decree in accordance with the recommendation of the report of the master in chancery.

Reversed and remanded with directions.

Mr. Justices Holdom: and Dever, concur.


text:
    Anna Baronski, Appellee, v. Mike Shust et al., on appeal of Schiff & Company State Bank, Appellant.
    Gen. No. 25,659.
    1. Municipal court of Chicago, § 10

      —what is nature of supplemental proceedings. The supplementary proceedings authorized by section 64 of the Municipal Act (J. & A. jf 338Í) are in the nature of a substitute for a creditor’s bill.
    2. ^Muntcipal court of Chicago, § 10*—how statute as to supplemental proceedings is construed. Section 64 of the Municipal Court Act (J. & A. 1f 3381), providing for supplementary proceedings is in derogation of the common law and is to be strictly construed.
    3. Municipal court of Chicago, § 10*—what money may be reached by supplemental proceedings. By analogy to the rule in garnishment proceedings, money belonging to one of several joint debtors cannot be,reached by a proceeding under Municipal Court Act, sec. 64 (J. & A. jf 3381), or be required to be paid over in satisfaction of a judgment against several joint debtors.
    . 4. Municipal court of Chicago, § 12*—what is effect of process in supplemental proceedings. The service of the summons in a supplementary proceeding under Municipal Court Act, sec. 64 (J. & A. If 3381), does not create a lien on property or money in his possession,-in the absence of any-order requiring him to retain the same pending disposition by the court.'
    5. Municipal court of Chicago, § 12*—what examination is contemplated in supplemental proceedings. The language being in the present tense of Municipal Court Act, sec. 64 (J. & A. If 3381), seems to contemplate an examination as to the money and property the third person has in his possession at the time of the examination.
    Appeal from the Municipal Court of Chicago; the Hon. Charms F. McKinley, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed.
    Opinion filed April 12, 1920.
    Egbert Edelson, for appellant; Hyman Polonsky, of counsel.

      Alanson C. Noble and Stanley S. Walkowiak, for appellee.

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

   Mr. Presiding Justice McSurely

delivered the opinion of the court.

By this appeal the Schiff & Company State Bank, appellant, seeks the reversal of an order entered in supplementary proceedings, section 64 of the‘Municipal Court Act (J. & A. ft 3381), requiring it to pay $151 to the bailiff of the Municipal Court to be applied in satisfaction of a judgment in favor of Anna Baronski, appellee, against defendants in the original suit, Mike Shust and Antonia Shust.

On February 13, 1919, Anna Baronski obtained a judgment against the two. defendants. She then prayed for a citation to issue against the judgment debtors, the appellant and other respondents, that they might be examined concerning any property “belonging to the said judgment debtors * * * or under their control, money or other property belonging to Mike Shust and Antonia Shust.” A citation summons was issued against the appellant bank which was served on February 21, 1919. On March 31 following, a witness for the bank testified that on the date of the service of the citation summons, the defendant Mike Shust had on deposit in the bank $163 and that between February 24 and March 31 the bank had paid out on checks drawn by Mike Shust all of said deposit except seventy-five cents! The court thereupon entered an order finding that at the time of the service of the citation writ the bank had in its possession $163 belonging to said judgment debtors, and ordered the bank to pay $151 in satisfaction of the original judgment.

We are of the opinion that this order was erroneously entered and must be reversed for the following reasons: We find no Supreme Court decision in this State construing the section of the Municipal Court Act providing for supplemental proceedings, but similar provisions contained in the codes of other States have been held to be in the nature of a substitute for a creditor’s bill. Butler v. Jaffray, 12 Ind. 504; Adams v. Hackett, 7 Cal. 187; Kellogg v. Coller, 47 Wis. 649. It has also been held that such proceedings being in derogation of the common law the statute must be strictly construed. In re Maltbie, 223 N. Y. 227, 119 N. E. 389; People v. Cohen, 163 Ill. App. 115; Arnold v. Hunt, 81 Ill. App. 430; Cronin v. Tatge, 281 Ill. 336.

This supplemental proceeding was' based upon a judgment against two joint judgment debtors. The record shows that the money upon deposit with appellant belonged to one of them. We hold that money belonging to one of several joint debtors cannot be reached in this proceeding or be required to be paid over in satisfaction of a judgment against several joint debtors. We base our opinion upon the rule in garnishment proceedings where the object is much the same as in this supplemental proceeding. It has been repeatedly held that in garnishment proceedings the owner of a joint judgment cannot reach a debt owed to one of the joint judgment debtors. Siegel, Cooper & Co. v. Schueck, 167 Ill. 522; Chicago & N. W. Ry. Co. v. Scott, 174 Ill. 413; Zembal v. Hasterlik, 80 Ill. App. 141.

This view is also supported by that part of section 64, Municipal Court Act) (J. & A. ft 3381) which provides that if the amount of money or the proceeds of such collection or sale shall exceed the amount due upon the judgment and costs, “the over-plus shall be paid to the said judgment debtor.” If the over-plus from the property of one judgment debtor should be paid to all of a number of judgment debtors, some of them would receive money to which they were not entitled, while an order to pay it to one would be inconsistent with an order that the fund disclosed be applied on the judgment against all.

In the statutes on - supplementary proceedings in some States it is specifically provided that property or money belonging to one of several joint debtors may be applied towards the satisfaction of a judgment against all of said joint debtors. There is no such provision in the statute of this State.

The better reasoning supports the conclusion that the service of the summons in a supplementary proceeding on a third party does not create a lien on property or money in his possession in the absence of any order requiring such party to retain the same, pending disposition by the court. In the Garnishment Act it is expressly provided that service of the summons or writ shall be a lien upon the funds then in the hand's of the garnishee. No such provision is in the act under consideration. The language of the act seems to contemplate an examination as to the money and property the third party has in his possession at the time of the examination. The words of the act touching this are in the present tense. Other States are not in accord on this point, but we are inclined to think the better reasoned opinions support this view. Among them are McConnell v. Wolcott, 70 Kan. 375, which contains a full discussion;. Voorhees v. Seymour, 26 Barb. (N. Y.) 569; Gregory v. Hewson, 1 Bond 277 (Fed. Ct. Southern Dist. Ohio).

Other points are presented as grounds for a reversal; the absence of comment thereon should not be construed as indicating our opinion upon their merits. The points above indicated are sufficient to require that the judgment of the Municipal Court against the Schiff & Company State Bank be reversed.

Reversed.

Mr. Justices Holdom and Dever concur.


author: • Mr. Justice Dever

text:
    Millers Mutual Casualty Company, Appellant, v. Insurance Exchange Building Corporation and Napoleon Picard, Appellees.
    Gen. No. 25,092.
    1. Landlord and tenant, § 427

      —what is nature of action for interference with right to sublet. An action brought by the lessee of premises to recover damages against the lessors in which the declaration alleges that defendants arbitrarily, wrongfully, etc., interfered with the right claimed by plaintiff to sublet the demised premises to a third person, is based upon the lease, whether viewed as an action on the contract or for a tort.
    2. Landlord and tenant, § 427*—what is nature of action for interference with right to sublet. Where a lease authorizes plaintiff to sublet the demised premises provided the proposed sublessee is in all respects satisfactory to the lessors, a declaration in an action by the lessee against the lessors which charges that defendants arbitrarily, wrongfully, wilfully and maliciously interfered with and obstructed the performance of a proposed contract for subleasing the premises between plaintiff and a proposed sublessee does not show facts amounting to an actionable tort where it appears from the face of the declaration that defendants’ wrongful act consisted only in their declaration to plaintiff that they would not permit him to sublet any part of the premises to the proposed lessee and i‘t appears from plaintiff’s declaration that defendants had a right to refuse their consent to a sublease.
    3. Property, § 24%*—right to acquire property. The right to acquire property resides in every man, and an unlawful interference with this right may constitute an actionable wrong.
    4. Landlord and tenant, § 427*—when refusal of subleasing does not constitute actionable wrong. The mere fact that one whom a lessor declines to accept as sublessee, under a clause in the lease authorizing £he lessee to sublet provided the proposed sublessee is satisfactory in all respects to .the lessor, is, at the time of such refusal, a tenant of the lessor does not show that such refusal was, as against the lessee, an actionable wrong.
    5. Action, § 7*—when malice does not give rise to cause of action. That one’s act was actuated by malice does not give rise to a cause of action against him if his conduct was not legally wrongful.

      6. Landlord and tenant, § 428*—7low provision of lease concerning subletting is construed. A provision in a lease that the lessee may sublet the demised premises or any part thereof provided the proposed sublessee is in all respects satisfactory to the lessor is not to be construed in the same manner as contracts for mechanical services and the like, but confers upon the lessor the right to refuse to accept a sublessee for any reason satisfactory to the lessor.
    7. Landlord and tenant, § 428*—how particular term as to subletting is construed. As employed in the provision of a lease authorizing the lessee to sublet, provided the sublessee is in all respects satisfactory to the lessor, the term- “satisfactory” does not mean what would satisfy the mind of a reasonable man.
    8. Landlord and tenant, § 428*—how provision of lease against subletting is construed. A covenant in a lease not to assign or sublet the premises is to be strictly construed.
    9. Landlord and tenant, £ 427*—what is effect of allegations as to' subleasing to “satisfactory” tenant. In an action by a lessee against a lessor to recover damages for defendant’s interference with a contract by plaintiff to sublet a part of the demised premises, the lease authorizing the lessee to sublet provided the proposed sublessee is in all respects satisfactory to the lessor, an allegation that the proposed sublessee will be satisfactory because he is at the time a tenant in the building does not amount to an allegation that such sublessee is satisfactory to the lessor.
    10. Landlord and tenant, § 427

      —when landlord is chargeable with agent’s refusal to permit subleasing. If, in refusing to permit a tenant to sublease, the one so refusing acted as agent of the lessor, his conduct, if wrongful,' is chargeable to his principal. '
    Appeal from the Superior Court of Cook county; the Hon. Martin M. Gridley, Judge, presiding. Heard in this court at the March term, 1919.
    Affirmed.
    Opinion filed April 12, 1920.
    Samuel A. Harper, for appellant.
    Pam & Hurd, for appellees; Burrell J. Cramer, of counsel.

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

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

   • Mr. Justice Dever

delivered the opinion of the court.

Plaintiff brought suit in the superior court for the recovery of damages against the defendants. The declaration consisted of two counts, the first of which alleged that the plaintiff was a tenant of defendants in the Insurance Exchange Building in Chicago under a written lease which provided among other things that the plaintiff might sublet the demised premises or any part thereof provided the proposed sublessee was. in all respects satisfactory to the lessor, the defendant.

It was further alleged in the declaration that the defendants

“Arbitrarily, wrongfully, wilfully and maliciously * * * interfered with and obstructed the performance of said contract * * * and prevented the plaintiff and said company from carrying out their contract, and * * * Refused to permit the plaintiff to deliver or said company to take over or accept said demised premises * * * in this that said defendants and each of them expressly declared and stated to the plaintiff that they would not permit plaintiff to sublet any- of plaintiff’s said office space at a profit to the plaintiff and would not permit plaintiff to sublet the same or any part thereof to any person whatever * * * by reason of which declarations and statements of the defendants, the said Bollins Burdick Hunter Company then and there refused to carry out its said agreement.”

A demurrer was filed to the declaration which was sustained by the trial judge and the plaintiff, electing to stand by its declaration, a judgment was entered in favor of the defendants. Plaintiff brings the case here by appeal for review.

For the plaintiff it is insisted that its right of action, as stated in the declaration, is not based upon the lease or any provision therein. We are unable to agree with this contention. It is charged in the declaration that the defendants arbitrarily, wrongfully, etc., interfered with the right claimed by the plaintiff to sublet the demised premises to Eollins Burdick Hunter Company. It is apparent that the plaintiff’s action grew out of the contract of letting between it and the building corporation and as a part of this contract the plaintiff had the right to sublet the demised premises only in the event that the proposed sublessee was in all respects satisfactory to the lessor. The relationship created by the lease between the parties thereto is that of landlord and tenant. It will not be contended that in the absence of such relationship the plaintiff would have any cause of-action against defendants. Whether the action brought by plaintiff be viewed as an action on the contract or for a tort it is perfectly clear that the plaintiff’s rights, whatever they may be held to be, grew out of the relationship created by the lease. If we accept the view of the plaintiff that the action is one in tort, the declaration becomes obnoxious to demurrer for the reason that the particular facts upon which the plaintiff predicates the alleged wrongdoing do not amount to an actionable tort. It is true that the declaration charges that the defendants acting arbitrarily, wrongfully, wilfully and maliciously interfered with and obstructed the performance of the contract, that is, the proposed contract between the plaintiff and the sublessee, but this wrongful conduct, as appears- from the face of the declaration, consists of an express declaration on the part of the defendants to the plaintiff, and not to the proposed sub-lessee, that the defendants would not permit plaintiff to sublet any part of plaintiff’s office to the Eollins Burdick Hunter Company, and it appears from the declaration that the defendant lessor had a right' to refuse to give consent to the subletting. This was a right reserved to the lessor in the lease.

There is no allegation in the declaration that the defendants, or either of them, sought to prevent the proposed sublessee from entering into a contract with the plaintiff by any means other than the alleged statement made to the plaintiff that the defendants would not agree to a subletting of the premises. It may be admitted that the right to acquire property resides in every man and that an unlawful interference with this right may constitute an actionable wrong. Brennan v. United Hatters, 73 N. J. L. 729, 742. But as we read the declaration in the present case it cannot be said that the alleged conduct of the defendants was unlawful. Nor do we think that the plaintiff is aided by the allegations of the declaration that the proposed sublessee was at the time of the commission of the alleged wrong a tenant of the lessor. It does not follow as a matter of course from this fact that the owner of the building can be said to have acted wrongfully or unlawfully when it declined to accept the sublessee as a tenant of all or a part of the premises demised to the plaintiff. We are inclined to agree with the conclusion of the trial judge that the defendants upon any theory of the case were not required to consent to a subletting of the premises to the Bollings Burdick Hunter Company. The declaration alleges that the plaintiff was about to conclude a contract of letting with Bollins Burdick Hunter Company and thát such contract would have been consummated had it not been for the wrongful and malicious interference of the defendants, and this wrongful and malicious interference is shown by the declaration to be merely that the defendants declined to accept the proposed sublessee as a tenant of the premises. The declaration on its face does not allege an actionable wrong of any sort.

The cases cited by plaintiff are not in point as the facts alleged in the declaration show that the defendants did not unlawfully, by direct or indirect means, obstruct or interfere with any right legally vested in the plaintiff. Purington v. Hinchliff, 219 Ill. 159; May v. Wood, 172 Mass. 11.

The defendants acted within their rights as defined by the lease. They did not wilfully and wrongfully cause a breach of the proposed contract between the plaintiff and the sublessee. The case cannot be said to be one involving unlawful conduct on the part of an outside or third person, and even if the defendants in their conduct were actuated by malice, this fact would not give rise to a cause of action against them if their conduct was not legally wrongful. The cases relied upon by counsel for plaintiff do not aid us in solving the difficulty.

In the case of Goodrich v. Van Nortwick, 43 Ill. 445, a case involving an agreement for the purchase of a fanning mill, where a right was reserved to the buyer to return the mill within 30 days if it did not suit him, the Supreme Court said:

“If it did not suit appellee then he had the right to return the property, and he was by the terms of the contract to be sole judge of whether it suited him. That did not depend upon the opinion or judgment of other persons. It was a right he reserved by his contract, and having reserved the right, he could not be prevented from exercising it within the limited period.”

In the case of Union League Club v. Blymyer Ice Mach. Co., 204 Ill. 117, a case involving a contract for the sale of a machine, under the terms of which the purchaser was permitted to refuse to accept the machine in case it proved unsatisfactory to it, the evidence in the case showed that the purchaser used the machine for many months after the date when, under the terms of the contract, it could have rejected it. The Supreme Court in deciding the case said:

“But where the matter involved is not one of ‘taste, fancy or judgment, but of common experience, such as an ordinary job of mechanical work, or the quality of material, a different rule applies, and in such cases the law will say that what in reason ought to satisfy a contracting party, does satisfy him.’ ”

In the present case the lease provided that the lessor had the right to refuse to accept a tenant of a part of the demised premises if such proposed tenant was unsatisfactory to it. Contracts of this kind involved, in our judgment, more than the mere contractual relationship incurred in contracts for mechanical services and the like. Many considerations enter into the making of leases other than the rentó be paid for the use of demised premises; the personal character, reputation, reliability and responsibility, among other things, of proposed tenants are matters ordinarily taken into consideration by a lessor in the execution of a lease. It'is our opinion that the clause of the lease under consideration should be held to c(infer upon the lessor the right to refuse to accept a subtenant for any reason satisfactory to it.

It is insisted that the word “satisfactory” as used in the lease means what would satisfy the mind of a reasonable man. Our attention has not been directed to any case, involving facts similar to those alleged in the declaration, in support of this contention. We may agree with the contention that the covenant not to assign or sublet the premises is to be strictly construed against the lessor. Medinah Temple Co. v. Currey, 58 Ill. App. 433. But this would not authorize us to hold that the term as used in the lease should be given a meaning not intended by the parties thereto.

It is alleged in the declaration that Rollins Bur-dick Hunter Company was at all times and in all respects satisfactory to the lessor because, as it is alleged, the company was then and there the tenant of the owner of the building and occupied space therein. The allegation that the proposed sublessee would be a satisfactory tenant of a part of the premises demised to the plaintiff merely because such sub-lessee was a tenant in the building does not amount to a charge that the proposed sublessee was in fact satisfactory to the lessor. Indeed, for aught that appears in the declaration, the very fact that the lessor sustained the relationship of landlord to the proposed subtenant might furnish reasonable grounds for its refusal to extend the lessor’s contractual relationship with the proposed subtenant.

It is asserted that the defendant, Picard, being merely the agent of the lessor, cannot derive any advantage from the covenant against assignment or subletting. There is no merit in this contention. If Picard acted in the matter solely as the agent of the lessor, then his conduct, if wrongful, would be legally chargeable against his principal. If it can be said from the declaration that Picard had no interest in the premises in question, except as agent for the owner, it becomes apparent that he could not in his own right have interfered with any right to sublet bestowed upon the plaintiff by the lease. It is not alleged that Picard interfered in any way other than to inform the plaintiff that the defendants would not agree to the subletting. This statement on his part could, under the allegations of the declaration, only relate to his relationship to the property as agent of the lessor.

As stated, no case or authority has been called to our attention which directly decides the question involved, but it is our opinion that the declaration fails to set out a cause of action against the defendants.

The judgment of the superior court will therefore be affirmed.

Affirmed.

Mr. Presiding Justice McSurely and Mr. Justice Holdom concur.


author: Mr. Justice Holdom

text:
    Board of Education of the City of Chicago for use of Isidor Weil and Benjamin Weil, trading as Weil Brothers, Appellee, v. Chicago Bonding and Surety Company, Appellant.
    Gen. No. 25,116.
    1. Municipal court of Chicago, § 13

      —when facts in statement of claim are admitted. Under the rules of the municipal court of Chicago, facts alleged in plaintiff’s verified statement of claim which are not denied in defendant’s affidavit of merits, stand admitted.
    2. Trial, § 163*—when question of law arises. Where in an action to recover on a bond given to secure the performance of a contract brought by the obligee for the use of a firm which sold and supplied to the contractor materials used for the performance of the contract, there is no contest as to the facts but the defense rests upon the contention that under the bond there was no liability to the firm and that such firm, not being a party to the bond, has no right to maintain the action, the question involved is not one of fact but one of law.
    3. Municipal corporations, § 400*—when bond of contractor is for benefit of subcontractor. A bond given to a municipal corporation to secure the performance of a contract with it which prqvides that the obligor liable upon a breach of the covenant in the contract that the contractor shall be responsible for all liabilities incurred in the work for labor and materials and shall promptly pay all persons supplying it labor and materials for the work, is not for the protection of the municipal corporation only, but is for the protection and benefit of subcontractors, even though the statute does not require the municipality to take such a bond, and the subcontractors may sue on the bond without the consent of such municipal corporation.
    4. Municipal corporations, § 400*—when municipality may require bond from contractor. Though a municipal corporation is not required by statute to take a bond for the performance of a contract which secures the rights of persons furnishing labor and material under the contract, it may, in its discretion^ require such a provision, and its act in so doing is not ultra vires'.
    5. Municipal corporations, § 400*—who may enforce obligations of contractor’s bond. Where the condition in a bond given to secure the performance of a contract with a municipal corporation is that the principal obligor shall make prompt payment to all persons furnishing labor or materials for the prosecution of the work provided for in the contract, a subcontractor’s right of action upon such bond is not affected by the fact that the municipal corporation, is not liable to him, as the condition of the bond is in effect and by interpretation an undertaking to pay the parties furnishing labor and materials, and by operation of law is for their benefit and they may sue to enforce it.
    6. Municipal corporations, § 400*—when bond of contractor is supported by sufficient consideration. A bond to secure the performance of a contract with a municipal corporation which contains two promises—one to the corporation that the contractor shall perform the work as agreed, the other to laborers and materialmen to pay them for labor and material furnished the contractor under the contract—held to be supported by sufficient consideration as to both conditions.
    7. Municipal corporations, § 192*—what is effect of appropriation for school building. By appropriating money for the erection of a school building, the City Council of Chicago sufficiently concurs in the action of the Board of Education of Chicago in erecting such building.
    8. Municipal corporations, § 400*—what defenses are available-in action on bond. In an action by a subcontractor to recover on a bond given to secure the performance of a contract with the Board of Education of the City of Chicago for the erection of a school building, defendant cannot set up the defense in contradiction of the recitations of its contract of suretyship in suit, that the action of the Board of Education in erecting such building was not concurred in by the City Council of Chicago.
    9. Municipal court of Chicago, § 24

      —what matters may be reviewed on appeal. One cannot set up, on an appeal from a judgment of the municipal court of Chicago, a defense not raised in his affidavit of defense.
    Appeal from the Muncipal Court of Chicago; the Hon. Leo J. Doyle, Judge, presiding. Heard in this court at the March term, 1919.
    Affirmed.
    Opinion filed April 12, 1920.
    Sabath, Stafford & Sabath, for appellant; Charles B. 'Stafford' and Thomas M. Zasadil, Jr., of counsel.
    Culver, Andrews, King & Stitt, for appellee.

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

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

   Mr. Justice Holdom

delivered the opinion of the court.

The Board of Education of the City of Chicago let a contract to the Hanley-Casey Mechanical Equipment Company, which provided that this company should furnish the material and do the plumbing and gas fitting work required in the erection of the Komensky school building. Among other conditions of the contract the company agreed to be responsible for all liabilities incurred for labor furnished or material used in the prosecution of the work and to promptly pay all persons supplying it with labor or materials in such prosecution. To secure the performance of this contract the bond in suit was given, which provided inter alia as follows:

“Now, if the said Hanley-Casey Mechanical Equipment Company, its successors or assigns, shall in all things stand to, abide by, and well and truly keep and perform the covenants, conditions and agreements mentioned and contained in said contract, including the guaranties set forth in said specifications, to be kept and performed by it on its part at the time or times, and in the manner and form specified in said contract, and including the covenant that the said corporation shall be responsible for all liabilities incurred in the prosecution of said work for labor and materials and shall promptly make payment to all persons supplying it labor and materials in the prosecution of the work provided for in said contract, then the above obligation to be void, otherwise to remain in full force and effect.”

Weil Brothers sold and supplied to the HanleyCasey Mechanical Equipment Company materials contemplated by the school board contract and which went into the Komensky school building.

On a trial before the court there was a finding and judgment in debt of $8,690 with damages assessed at $891.06, debt to be discharged on payment of damages.

The cause was tried upon a stipulation of facts and other proofs, the stipulation of facts reading as follows:

“It is hereby agreed and stipulated by and between the parties hereto, that the following are facts in the above entitled cause, and that formal proof thereof is waived.

“(1) That on the 27th day of December, 1915, the Hanley-Casey Mechanical Equipment Company, a corporation, of Chicago, Illinois, entered into a contract with the Board of Education of the City of Chicago, a municipal corporation, for doing the plumbing work upon the Komensky school building.

“(2) That there was attached to or accompanying said contract certain specifications relating to the work referred to and to be done under said contract.

“(3) Upon the same day and as a part of the same transaction, the said Hanley:Casey Mechanical Equipment Company, as principal, and the defendant, Chicago Bonding and Surety Company, as surety, entered into a certain written instrument, referred to in plaintiff’s statement of claim, with the said Board of Education of the City of Chicago, and delivered said instrument to said Board of Education of the City of Chicago. Said Chicago Bonding and Surety Company is an Ulinois corporation, qualified and authorized to execute bonds and to act as surety upon bonds of the general nature of the instrument hereinbefore mentioned, in the City of Chicago, Cook county, Ulinois.

“(4) It is further stipulated that formal proof of said contract, instrument and specifications shall not be required, but that >the originals thereof, now in the possession of said Board of Education of the City of Chicago, may be introduced in evidence, and withdrawn and returned to the Board of Education of the City of Chicago upon substituting therefor true and correct copies thereof.

“(5) It is further stipulated and agreed that this sq.it was brought by Isidor Weil and Benjamin Weil, partners, trading as Weil Brothers, in the name of the Board of Education of the City of Chicago, for the use of said Isidor Weil and Benjamin Weil, partners, trading as Weil Brothers, and it is further stipulated to be a fact, if the court considers the same material or relevant, that said Isidor Weil and Benjamin Weil, partners as aforesaid, did not prior to the institution of this suit malee any request to the Board of Education of the City of Chicago for permission to use the name of said Board of Education of the City of Chicago as nominal plaintiff in this suit; that no express permission was ever given by the Board of Education of the City of Chicago for the use of its name as the nominal plaintiff in this cause, neither did said Board of Education of the City of Chicago refuse to permit its name to be used as the nominal plaintiff in this cause, but that no affirmative action at any time was ever taken by said Board of Education of the City of Chicago with reference to the bringing of said suit, either by way of consent thereto, or by way of refusal, thereof.

“It is further stipulated by and between the parties, that no suit has ever been begun by Isidor Weil and Benjamin Weil, partners, trading as Weil Brothers, against the Board of Education of the City of Chicago, upon or in connection with the subject-matters involved in the claim of said Weil Brothers, involved in this case.

“It is further stipulated and agreed that the Board of Education of the City of Chicago, plaintiff, has made no assignment of any kind to Isidor Weil and Benjamin Weil, partners, trading as 'Weil Brothers, of any right, title or interest of said Board of Education as obligee designated in the instrument executed by the Chicago Bonding and Surety Company herein sued upon.

“(6) It is further stipulated that either of the parties hereto may introduce other and further evidence upon the hearing of this cause, which is not in conflict with the facts stipulated herein.

“(7) It is further stipulated that either of the parties hereto may object to the materiality and relevancy of the matters of fact set forth herein, it being the intention of the parties hereto merely to dispense with the requirement of strict proof as to the matters herein contained, and to save all rights of objection to each of said parties with reference to the relevancy or materiality of the matters of fact hereinabove set forth.”

In the verified statement of claim it is alleged that the Hanley-Casey Mechanical Equipment Company entered into the construction work on the Komensky school building provided in said contract to be done by it, and that Weil Brothers sold and supplied to that company materials in the prosecution of said work. The materials furnished are itemized and with prices attached made part of the statement.

None of these facts is denied in defendant’s affidavit of merits; therefore under the rules of the municipal court found in the record, being undenied, stand admitted. Nor is the execution of the bond in suit denied.

The defense really rests in the contention, that under said bond there was no liability on the part of defendant to Weil Brothers, and that they have no right to maintain this action, as they are not parties to the bond. We think that in this condition of the pleadings of the parties the real question is one not of fact but of law. We will therefore proceed upon the theory that the facts constituting the cause of action are not denied, but that the whole question of defendant’s liability is controlled by the decision of the one question as to whether the bond in suit was made for the benefit of subcontractors and material-men, so that Weil Brothers may enforce the condition of the bond in its favor for the amount due it for material, etc., furnished upon the structure which the principal in the bond contracted to erect for the Board of Education, the obligee therein.

We think this whole controversy so far from being debatable is settled in this court in Board of Educa tion v. Aetna Indemnity Co., 159 Ill. App. 319. The bond in that case was in the same form and of the same purport and effect and given for. a like purpose as was the bond in suit. It was in case supra contended, as it is here, that the bond was intended solely for protection of the Board of Education and not for the protection and benefit of materialmen and laborers. These questions were raised by the presentation of suitable propositions of law, which were refused by the trial court and such refusal was sustained on appeal. This court said in case supra: “To hold the bonds in question valid and binding is only to compel the obligors to do the thing they bound themselves .to do. The distinction between these cases and Spalding Lumber Co. v. Brown, 171 Ill. 487, and Searles v. City of Flora, 225 Ill. 167, is that in those cases the bonds contained no condition that the obligors should pay for labor or materials furnished to the contractors, and in these cases the bonds contain such conditions: ’ ’

The fact that the statute does not require the Board of Education to take a bond on letting a contract in the nature of the one in the case at bar does not relieve defendant from its contract obligation in this regard. The bond was made for the protection of subcontractors, and Weil Brothers, as subcontractors under the principal obligor, have the right, without the consent of the Board of Education, to maintain this action to recover the amount due it from the Hanley-Casey Company; the bond is available to subcontractors for that purpose, as it was entered into for their benefit and protection.

While the statute did not require the Board of Education to take such a bond, still it had the right to require such a bond in the exercise of its discretion for the protection of laborers and materialmen, and such act cannot be held to be ultra vires its power, even if the right of challenge upon this ground existed. Nor is it important to the right of action that the Board of Education was not liable to the subcontractor suing. The condition of the bond is that the principal obligor shall make prompt payment to all persons furnishing labor or materials in the prosecution of the work provided for in the contract. This is in effect and by interpretation an undertaking to pay the parties who furnished labor and material, and by operation of law such provision is for the benefit of such parties and they may maintain an action to enforce it.

The bond is dual in its nature; it contains two promises-—one to the Board of Education that the contractor shall perform the work as agreed; the other to the laborers and materialmen to pay them for labor and material they might perform or furnish to the contractor. The consideration is sufficient to support both conditions.

Defendant contends that the contract of the Board of Education with the Hanley-Casey Company for the construction of the school building is a nullity because made without the concurrence of the Chicago City Council. There are two answers to this contention : The City Council appropriated the money with which to erect the building—which of itself was a sufficient concurrence in the action of the Board; and, second, defendant cannot make such an attack collaterally for the reason that if it were allowed so to do it would be contradictory of the recitations and provisions of its contract of suretyship in suit; furthermore, such defense is not raised by defendant in its affidavit of defense.

There is no reversible error in this record, and the judgment of the municipal court is affirmed.

Affirmed.

Mr. Presiding Justice McSurely and Mr. Justice Deter concur.


text:
    Frank Osborn et al., Appellants, v. Corn Exchange National Bank of Chicago, Appellee.
    Gen. No. 25,406.
    Banks and banking, § 146

      —when bank is not liable for forged cheeks or indorsements. The conduct of plaintiffs in exercising no supervision over their employee to whom they have intrusted the handling of their hanking matters, not examining the hank accounts, statements, checks or vouchers returned to them monthly by defendant bank, but leaving these matters to the employee, in signing, without question, checks presented to them by the employee for signature, held to prevent recovery by them against the bank for money paid out by the bank on checks signed by plaintiffs, but indorsements on which were forged by the employee, it appearing that by any attention on their part to their bank balances and returned checks plaintiffs could have learned of such forgeries, and that they made no examination of defendant’s monthly statements, the latter being accompanied by a request that examination be made and differences reported and stating that the account would be considered correct if no error should be reported in 10 days, and it also appearing that plaintiffs knew such employee was living in a manner not warranted by his salary.
    Appeal from the Circuit Court of Cook county; the Hon. Samuel C. Stough, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed April 12, 1920.
    Ninian H. Welch and William J. Lacey, for appellants.
    Gardner, Foote, Burns & Morrow, for appellee ; William A. Morrow and Walter M. Fowler, of counsel.

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

   Mr. Justice Holdom

delivered the opinion of the court.

This is an appeal from a judgment of nil capiat entered upon the verdict of a jury.

Plaintiffs had in their employ a rascal named John W. DeLisle, who forged indorsements to many checks during a series of years, amounting, as plaintiffs claim to $19,212.25, which defendant paid out of plaintiffs’ funds to their credit in its bank, and which amount plaintiffs seek in this suit to recover from defendant.

Plaintiffs were insurance brokers in Chicago for about 19 years, writing marine insurance principally. They were general agents for the Union Marine Insurance Company of Liverpool, the Firemen’s Fund Insurance Company of San Francisco, the Columbia Insurance Company of Jersey City, the Mannheim Insurance Company of Mannheim, Germany, the Phoenix Insurance Company and the Nord-Deutsche Insurance Company, and were officers and stockholders in the Federal Union Insurance Company, an Illinois corporation, whose business was transacted in plaintiffs’ office. Plaintiffs’ books and those of the latter company were kept separately and the business transactions of the other companies and of plaintiffs were, carried on the latters’ books, but the bank accounts of each were separately kept. Plaintiffs did all their banking business with defendánt, as did the Federal Insurance Company, and plaintiffs as agents for the other companies kept separate accounts in defendant’s bank.

DeLisle was in the employ of plaintiffs from the fall of 1908 continuously until January, 1915. He did clerical work at first, being gradually advanced to head bookkeeper, as such bookkeeper keeping the books of the Federal Union Insurance Company as well as those of plaintiffs. It was among other things his duty to deposit checks to the different accounts for which such checks were intended. Checks coming by mail were delivered at the office and DeLisle placed rubber stamps on the reverse of such checks, making them payable to defendant bank under the proper name. DeLisle also, when he was working, made all of plaintiffs’ bank deposits. He had no authority to indorse the name of the Federal Union Insurance Company on its checks other than by rubber stamp. He checked up all monthly statements received from the bank showing balances of plaintiffs and the Federal Union Insurance Company, drew checks of plaintiffs and the Federal Union Insurance Company, which he procured to be signed by different officers, drew all checks which were payable to all the different companies represented by plaintiffs as general agents, and also other checks of plaintiffs payable to other parties. In presenting checks to be signed he would sometimes present a bill or invoice showing what the payments were for; at other times he presented nothing but the checks for signature.

The deposits of plaintiffs in the defendant bank amounted to hundreds of thousands of dollars each year. It seems that all the checks drawn by plaintiffs and the Federal Union Insurance Company on the defendant and paid by it were, when returned to plaintiffs and the insurance company with monthly statements showing checks received and paid and balance due plaintiffs and the insurance company, examined only by DeLisle. The following are examples of the system by which DeLisle perpetrated his forgeries. On July 18, 1911, DeLisle drew a check for $49 on plaintiffs’ check book, payable to Federal Union Insurance Company, had the same properly signed and then forged the indorsement of the insurance company by writing its name thereon and signing the name “T. L. Osborn,” received the money and converted the same to his own use. July 22, 1911, he drew a check for $195.50 in exactly the same manner, forging the name of the payee and procuring payment of the check, converting the same to his own use. In a similar manner about 200 checks were drawn by DeLisle from the funds of plaintiffs in favor of the Federal Union Insurance Company, totalling $19,212.25, upon which DeLisle forged the indorsement of the insurance company, secured payment of the checks and converted the whole thereof to his own use. At the time these checks were drawn there was nothing due from plaintiffs to the Federal Union Insurance Company. They were all drawn by DeLisle and were all properly signed. Everything was regular except the indorsements, which were forged. DeLisle took the precaution of burning all but six of these numerous checks of forged indorsements, after which they were returned to plaintiffs by the defendant bank. DeLisle caused some of the checks to be cashed by third parties. He had an account with the Edgewater State Bank and its predecessor, in which he deposited many of the checks on which he had forged the names of the payees. None of the plaintiffs ever saw any of the forged checks after they were paid by the bank. DeLisle had no authority to indorse the name of the Federal Union Insurance Company by T. L. Osborn, Treasurer. After plaintiffs discovered these forgeries they realized about $1,800 from certain personal property which DeLisle owned, which is the sum total of plaintiffs’ reimbursement for DeLisle’s forgeries.

There is no dispute that the aforesaid indorsements were forged and that the bank paid the money out on such forged indorsements. It also appears that the defendant bank furnished plaintiffs a monthly statement of their account with the bank, together with all checks paid during the month, all deposits made and the balance due plaintiffs at the end of each month. There were no entries made in plaintiffs’ books by DeLisle to correspond with the forged checks; he forced balances by inaccurate footings. January 27, 1915, after plaintiffs discovered the forgeries, they demanded of the defendant bank payment of the total amount of the forged checks cashed by it, amounting to $19,212.25. Plaintiffs discovered the forgeries about Christmas, 1914, and on January 8, 1915, after such discovery, one of the checks was paid by the defendant through the clearing house. The only notice received by defendant regarding this particular check was the demand made January 27 for the payment of the total amount of the forgeries.

Plaintiffs’ theory of their right to recover rests in their contention that the relation between them and the bank was that of debtor and creditor; that the bank could only discharge its obligation to plaintiffs by repayment to them or upon their order of deposits made by plaintiffs; that this relation made it the duty of the bank to determine the genuineness of the indorsements on all checks and that any payment without such determination by it was made at its peril; that plaintiffs might rely upon the examination made by the bank; that the law did not require plaintiffs to examine the monthly statements and returned vouchers for the purpose of detecting forged indorsements, but that that duty rested upon the defendant bank.

On the other hand, defendant places its defense on the contentions that the law required plaintiffs to exercise ordinary care in the conduct of their business and in the handling of their bank account, and that such ordinary care required them to make some examination of their monthly statements, checks and returned vouchers, not for any specific purpose, but to determine whether the account was correctly kept, and to report to the bank any error which such examination might disclose; and that if plaintiffs had made any examination whatever of their books with the monthly statements and vouchers the forgeries would have been immediately discovered, and that their failure in this regard was negligence which made a continuance of such forgeries possible. It further contends that plaintiffs’ failure to give immediate notice of the forgeries after discovering them was such a breach of their duty as to bar recovery; that the fact that plaintiffs took DeLisle’s property and exacted from hi^ a promise to make good the shortage, deprived the bank of any chance of redress against DeLisle; that in so doing they elected their- remedy against DeLisle, ratified his forgeries, and waived all right of action against the bank.

At the foot of the monthly statements rendered by defendant to plaintiffs was the following notice: “Please report any difference in this statement to the auditor. * * # Please examine at once. If no error is reported within 10 days the account will be considered correct.” DeLisle’s forgeries extended from 1911 to 1915. During this time his salary was $120 a month. To the knowledge of plaintiffs, DeLisle owned during that time three automobiles, the first one costing $600, the second $1,100 and the third $1,600. Two of the Osborns were on a footing of social friendship with DeLisle, at times visiting at his residence, and they also knew that he owned an automobile which he drove daily, T. L. Osborn at times riding with DeLisle in his car. DeLisle was a man of family, having a wife and three children. Unlike the average culprit of this character, he did not gamble or speculate, but his ill-gotten gains were dissipated in high living. Clair Osborn for a time lived in DeLisle’s family, as DeLisle testified to help out with the family expenses, and must have known that on the meager salary DeLisle was receiving he could not support his family in a lavish manner and indulge in the luxury of an automobile. That DeLisle had anything more than his salary with which to pay his expenses is, to say the least, rather doubtful, although there is some reference to a “lump sum” received from a relative, but no suggestion regarding the amount.

It is evident that plaintiffs had the utmost confidence in the integrity of their bookkeeper DeLisle; they trusted him implicitly, and kept no oversight of any kind over him or his accounts. They never during the period covered by his peculations examined the bank account, statements, checks or vouchers returned by defendant monthly to them. They left all these matters in DeLisle’s hands. The forged checks he regularly destroyed without plaintiffs’ knowledge by burning them . each month they were returned. They signed such checks as DeLisle presented to them without question, and all checks, indorsements on which DeLisle forged, were presented by him to one of the plaintiffs and unhesitatingly and without question signed. At no time when these checks were signed was there any money due from plaintiffs to the Federal "Union Insurance Company, and this plaintiffs knew,"or in the exercise of any sort of diligence could have known. That plaintiffs were negligent in all these matters there is no room for discussion or divergence of opinion; they were flagrantly so.

The question for our solution is: Will the law saddle the loss in this case upon defendant, who was guileless of negligence in the challenged transactions, or compel the plaintiffs, whose negligent conduct gave their bookkeeper, DeLisle, unrestrained opportunity to commit the forgeries complained off It cannot be gainsaid that defendant furnished plaintiffs every opportunity during all the time covered by the forgeries to discover and arrest them, by rendering to plaintiffs monthly statements of the condition ol; their bank account, returning each time all vouchers, including the checks which bore the forged indorsement.

We are of the opinion that the negligence of plaintiffs attributable to their conduct as above recited is an effectual barrier to recovery in this action. Merchants’ Nat. Bank of Peoria v. Nichols & Shepard Co., 223 Ill. 41; Morgan v. U. S. Mortgage & Trust Co., 208 N. Y. 218; Leather Manufacturers’ Nat. Bank v. Morgan, 117 U. S. 96; California Vegetable Union v. Crocker Nat. Bank, 37 Cal. App. 743, 174 Pac. 920.

It clearly appears from the proofs that had either of the plaintiffs given any attention whatever to the returned checks or to the state of their balances with the defendant bank, they would have known that DeLisle was forging the name of the Federal Union Insurance Company to checks, cashing them and converting the money thus received to his own use. Nor can it be denied that defendant in rendering monthly statements with vouchers, checks, etc., to plaintiffs, showing the state of their accounts and all the transactions of the preceding month, acted according to the usual custom of bankers in Chicago. In California Vegetable Union v. Crocker Nat. Bank, supra, the court, under like circumstances, said:

“Where a party to a stated account, who is under a duty from the usages of business or otherwise, to examine it within a reasonable time after having an opportunity to do so, and give timely notice of his objections thereto, neglects altogether to make such examination himself, or to have it made, in good faith, by another for him, by reason of which negligence the other party, relying upon the account as having been acquiesced in or approved, has failed to take steps for his protection which he could and would have taken had such notice been given, the depositor is estopped by his conduct to question the conclusiveness of the account stated which arises out of the presentation to him of the account and his failure to examine it and detect the frauds contained theréin, and give the bank notice thereof in order that it may protect itself against future frauds of a similar character.”

In Morgcm v. U. S. Mortgage & Trust Co., supra, the legal principle in issue here was approvingly applied and clearly stated as follows;

“Primarily a bank may pay and charge to its depositor only such sums as are duly authorized by the latter, and of course a forged check is not authority for such payment. It is, however, permitted to a bank to escape liability for repayment of amounts paid out on forged checks by establishing that the depositor has been guilty of negligence which contributed to such payments, and that it has been free from any negligence. A depositor who sends his passbook to be written up and receives it back with his paid checks as vouchers, is bound under certain circumstances to examine the passbook and vouchers, and report to the bank without unreasonable delay any errors which may be discovered.”

The facts in the Morgcm case were quite similar to those in the case at bar, as thus stated in the opinion:

“The trustee of an estate had a deposit account with a bank, and checks drawn thereon were signed by a rubber stamp imprinting the name of the estate, authenticated by the actual signature of either trustee. The trustees had a clerk, who was their agent in dealing with the bank. He made deposits, filled out the body of the checks, and obtained from, the bank the passbook and vouchers and accompanying check list whenever the account was balanced. During a period of about a year he forged a number of checks aggregating a large sum, and employed in his forgeries the rubber stamp, with the simulated signature of one of the trustees in authentication thereof. Whenever the account was balanced the clerk withdrew from the vouchers and destroyed the checks forged by him and also the check list, and after as long a delay as convenient delivered the passbook and the genuine vouchers to the trustees, who knew that the passbook was balanced frequently and returned with the paid checks as vouchers and with a detailed list thereof. The trustees also had a journal and ledger account, * * # upon the stubs of which were entered the genuine checks presented to and paid by the bank. The trustee who examined the passbook and vouchers never asked for the check list, which he knew was returned with the vouchers, and which would have shown the payment of the forged checks. He did not examine the balances shown by the passbook which were struck after the payment of the forged checks, but contented himself with a comparison of the genuine checks with the check book and with the books of the estate, which comparison disclosed no signs of the forgeries. The bank also paid interest on the account, and an - examination of the passbook would have shown that the amount of interest credited thereon was much less than that on the books of the estate and less than "would have appeared except for the payment of the forged checks. ’ ’

The Court of Appeals held that the depositors by their own negligence in failing to properly examine their passbook and vouchers contributed to the payment of the forged checks, and hence the plaintiff could not recover from the bank the amount so paid. This case overruled Weisser v. Denison, 10 N. Y. 68.

In Myers v. Southwestern Nat. Bank, 193 Pa. St. 1, it was held, in conformity with the views of the United States Supreme Court and of the Court of Appeals of the State of New York in the case above cited, and other cases upholding the same doctrine, that if the plaintiff’s duty to the bank had been performed at the proper time, the fact would have appeared that the bank had charged the plaintiff on. his bank book with the payment of two items for which no vouchers appeared among the checks handed to him by the clerk, and that no objection having been made at the time of the presentation of the statements by the bank, the latter had the right to assume that everything was correct, including the two checks purporting to have been forged; that the silence of the plaintiff was tantamount to a declaration to that effect; and that in afterwards honoring checks signed by the same person, the bank had a right to consider the fact that these signatures had been at least tacitly recognized by the plaintiff as genuine.

The forgeries of DeLisle were successfully carried out by reason of the failure of plaintiffs to make any objection to the monthly statements rendered to them. Furthermore, there is an additional reason for the application of this principle, arising from the fact that the statements and returned vouchers and checks were accompanied by the written request on the part of the bank, “Please report any difference in this statement to the auditor. * * * Please examine at once. If no error is reported within 10 days the account will be considered correct.” The repeated failure of plaintiffs to heed this request justifies the application of the foregoing principles. In Merchants Nat. Bank of Peoria v. Nichols & Shepard Co., supra, it was held that a bank which has been guilty of no negligence may hold a depositor responsible for damages caused by want of ordinary care, under all the circumstances of a particular case.

The proofs demonstrate that the defendant bank was not guilty of any negligence in the premises, but that the losses by DeLisle’s forgeries were occasioned by the negligence of plaintiffs in the manner herein-before detailed.

Errors in the instructions, if any, were not prejudicial to plaintiffs’ rights.

For the foregoing reasons the judgment of the circuit court is affirmed.

Affirmed.

Mr. Presiding Justice McSurely and Mr. Justice Dever concur.


text:
    Laurence M. Jeger and Alfred Klingelhoefer, trading as Jeger & Klingelhoefer, Appellees, v. Julius Kessler & Company, Appellant.
    Gen. No. 25,556.
    1. Attorney and client, § 81

      —what constitutes negligence. It is negligent for an attorney-at-law to take, in an action which he is prosecuting, a verbal agreement from an admittedly unreliable practitioner.
    2. Attorney and client, § 127*—when compensation allowed attorney ■ is excessive. In an action by attorneys-at-law to recover for legal services rendered in regard to the collection of notes aggregating $145.47, of which plaintiffs secured a settlement for $60, evidence examined and held to show that a verdict and judgment for plaintiffs for $875 were contrary to the greater weight of the evidence.
    3. Instructions, § 81*—when instruction is erroneous. An instruction which singles out evidence favorable to one party and ignores the evidence most favorable to the other is vicious, especially where it fails to state that the evidence singled out may be considered in connection with all of the other facts and circumstances in evidence, or to indicate that there is any countervailing evidence on the subject.
    4. Instructions, § 131*—when instruction is erroneous as ignoring fact. In an action by attorneys-at-law to recover for professional services, it is error to instruct the jury that they may disregard plaintiffs’ act in sending defendant a statement of their charges and that plaintiffs were not bound by such act, without including in such instruction any reference to plaintiffs’ tetter accompanying the statement, as the effect of the account and the letter was a question of law for the court.
    5. Attorney and client, § 134*—what evidence is admissible in action for compensation. In an action by attorneys-at-law to recover fees for services rendered, the letter accompanying plaintiffs’ statement rendered defendant for a smaller amount before bringing such action is material evidence not to be withheld from the jury’s consideration.
    Appeal from the Municipal Court of Chicago; the Hon. Arnold Heap, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed and remanded.
    Opinion filed April 12, 1920.

      Mayer, Meyer, Austrian & Platt, for appellant.
    Hartley L. Beplogle and Beuel H. Grünewald, for appellees.

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

   Mr. Justice Holdom

delivered the opinion of the court.

In an action for attorneys’ fees for services rendered defendant by plaintiffs in Milwaukee, Wisconsin, involving the collection of notes aggregating $145.47, in which plaintiffs procured a settlement for $60, there was a verdict and judgment for $875.

The naked statement of these few facts shocks the moral sense. It is such conduct upon the part of unethical lawyers which tends to bring the profession of the law into disrepute with good people.

Plaintiffs, in a manner realizing that they were attempting an extortion, sought to excuse it on the ground that vital principles were involved in the case, and that it was these principles that the lawyers sought to establish in the collection suit.

In the first place, there was nothing of much moment on principle involved; secondly, it cannot be gainsaid that plaintiffs in the litigation utterly failed to establish any principle important or unimportant, but very tamely settled the claim for the trifling sum of $60, They rendered no service except of the most common and ordinary character. ' Nothing was done or attained which could not have been as well accomplished by an ordinary junior clerk in any well-regulated law office. Moreover, defendant’s attitude before suit against Batsch, the debtor, indicated that the collection was nothing out of the ordinary and that defendant did not want to have the matter made expensive. It wrote to plaintiffs inter alia: “We wish to say, however, that the goods were sold to Mr. Batsch at a very close margin, and unless there are certain assurances that the judgment which we know you can obtain against Mr. Ratseh without a doubt, can also be readily collected, and the matter can be disposed of within a comparatively short time, it certainly would not pay us to get a judgment or engage in a litigation that would tie up the goods beyond a time that would be reasonable.”

Plaintiffs were likewise, among other things, negligent in the handling of the matter. In the suit they confessedly took a verbal agreement from an admittedly unreliable practitioner in Milwaukee, who repudiated it when plaintiffs attempted to make it effective, causing them considerable trouble and time to rectify.

The malevolence of plaintiffs in making in this suit a demand for extortionate fees is accentuated by a letter written to defendant after the matter had ended, in which they say: “Relative to our services in the matter of yourselves vs. Charles Ratseh, we wish to state that the services as per statement rendered based on the most reasonable charges we have ever made in this office run between $550 and $600. In view of all the circumstances in this case, however, we have decided to reduce the bill to $300, less the $4.17 credit on the disbursements, leaving a balance due us of. $295.83, for which amount we shall be pleased to receive your check.”

This was an account rendered with full knowledge of all the facts, and while it is reasonable by comparison with the present demand, an ordinary business man might be excused from not only not immediately paying it, but in objecting to it.

Plaintiffs at one time had a glimmer as to ethical conditions, for nearly a year, prior to sending the foregoing account for $295.83 they wrote defendant: “We may also state that in view of the small amount involved, we could not possibly expect you to compensate us for all the actual services rendered in the cause, but we also feel, having started this matter for you, it is up to us to continue it, even though we do so at a loss of time and services.” This sounds like the utterance of a lawyer with a conscience attuned to a desire to do what under the circumstances ivas reasonable and right.

The verdict and judgment are clearly contrary to the greater weight of the evidence, as a reading of it demonstrates.

The court erroneously gave the two following instructions to the jury:

“The court instructs the jury that if they believe, from the evidence, at the time of the initial employment of the plaintiffs, they were informed by the agent oí the defendant that the amount at issue was not only, or chiefly, the mere money value of the promissory notes placed in their hands for collection, such fact may properly be taken into consideration by the jury in determining the nature and extent of the services which it was proper for the plaintiffs to render thereafter, and also in determining the value and compensation for such services to be fixed by the jury by their verdict in this cause.

“The court instructs the jury that if they believe, from the evidence, that the plaintiffs, in the course of their employment by the defendant, had reason to believe, and did believe, that it was the Avish of the defendant, by the litigation to be conducted by the plaintiffs against the person Ratsch, mentioned in the evidence, not merely to collect from said Ratsch a certain amount' of money, but also to establish and obtain legal sanction from the courts of Wisconsin for the methods of business conducted by it, including the form of warehouse receipts used by it; and also that it was the opinion of the defendant that a competitor, or competitors, were attempting to interfere maliciously Avith the business of the defendant in the vicinity of said Ratsch, and preventing its gaining new business by false and improper representations, and that it was the desire of the defendants to rebuke such competitive interference through the services of the plaintiffs by the litigation to be conducted by them, it is proper for the jury to consider such fact, or facts, if they believe them to be established by a preponderance of the evidence in this case, in arriving at their verdict and in fixing the amount of the compensation which plaintiff can properly claim in this cause.”

The first of these instructions is vicious in singling out evidence favorable to plaintiffs and in ignoring the evidence most favorable to defendant. As said in Evans v. George, 80 Ill. 51:

“It directed their attention only to facts favorable to defendants, and left out of view all that tended to illustrate plaintiff’s theory of the case. It is the duty of the jury to consider all the facts, and when the court assumes to direct their attention to the facts, it should refer them to all the facts, so as. to present the ease fairly for both parties. Otherwise, the jury ■ might understand the facts stated in the instructions are the only ones necessary, to be considered in deliberating on their verdict.” Turner v. Lord & Thomas, 124 Ill. App. 117; Wickes v. Walden, 228 Ill. 56.

The vice in the instruction was not only repeated in the next one, but in aggravated and enlarged form. Nor were the jury told in either of these instructions that the evidence regarding the alleged principle at stake might be considered with all of the other facts and circumstances in evidence, nor did they indicate that there was any countervailing evidence on the subject.

■The three instructions which the court gave regarding plaintiffs’ rendering a statement of charges in the ease, in which the jury were instructed that it was at liberty to disregard that incident, and that plaintiffs were not bound by their action in that regard, but might, if the evidence warranted, recover more, were erroneous. These instructions did not include any reference to the letter which plaintiffs had written defendant, and for reasons already assigned these instructions in thus selecting but one phase of this incident, and that most favorable to plaintiffs, was erroneous. The account so rendered and the letter accompanying it presented a question of law for determination by the court as to its effect. The remarks of the court in Turner v. Lord & Thomas, 124 Ill. App. 117, are pertinent to these three faulty instructions, where the court said:

“This instruction also singles out the letter referred to, practically tells the jury that they may ignore the other evidence, and implies that it is of no importance whether Turner was or was not acting for the Alliance in making the purchase.”

We quite agree that these three instructions in effect told the jury that they might ignore the letter of plaintiffs which was in evidence. This letter wias material evidence and it should not have been withheld from the consideration of the jury. Slack v. Harris, 200 Ill. 96.

Counsel have presented most excellent and enlightening arguments on every conceivable phase of the case—labor worthy of a better cause. While we have failed to dispose of all the numerous questions thus presented, what we have already discussed effectually disposes of the controlling features of the case.

As the judgment of the municipal court is unjust, it is reversed and the cause is remanded for a new trial.

Reversed and remanded.

Mr. Presiding Justice McSurelt concurs in the conclusions, and Mr. Justice Dever concurs.