text:
    David A. Gage et al. v. The City of Chicago.
    1. Sureties on official bond—Offer to show that deficit arose at preceding term: of office—Estoppel.—Where the official report of the city treasurer, made under oath, in pursuance of law, showed a balance of cash in his hands belonging to the city, at the commencement of his second term as treasurer, the sureties on his official bond for that term are estopped to deny that the amount as shown by such report was not in fact so held by him.
    2. Signing blank bond—Subsequent filling in of blank spaces— A material alteration.—The instrument signed by the sureties was a printed form of a bond, with blanks for inserting in the body the names of the sureties, amount of penalty, office to which the principal was elected and date of election, etc. These blanks were afterwards filled up by the city officials, without the knowledge or consent of the sureties. Held, that as to the ■sureties the bond was absolutely void. 1 •
    3. Notice to city that bond was signed in blank—Knowledge of city clerk.—The city clerk was, by the charter of incorporation, made the custodian of the official bonds, and the person to whom they should be delivered, and knowledge by him that the bond in suit was signed in blank, is notice to the city of that fact.

      4. Failure to file bond within required time — Vacation of office.—The statute requiring the city treasurer to take the oath of office and file his bond within fifteen days after his election, is mandatory, and a failure to file such bond within the required time is a vacation of such office, and reheves the sureties from liability on the bond.
    Error to the Circuit Court of Cook county; the Hon. John G. Rogers, Judge, presiding.
    Mr. Wirt Dexter, Messrs. Lawrence, Campbell & Lawrence, and Mr. John H. Jewett, for plaintiffs in error;
    contended that the liability of a surety is strictissimi juris, and cannot be extended by implication, and cited Miller v. Stewart, 9 Wheat. 680; Leggett et al. v. Humphreys, 21 How. 75; Smith v. United States, 2 Wall. 235; Stull v. Hance, 62 Ill. 52.
    The sureties should have been permitted to show that the deficit in fact occurred during the first term of Gage as treasurer: M’Dowell v. Burwell’s Adm’r, 4 Randolph, 317; Craddock v. Turner’s Admx. 6 Leigh, 116; Nolley et al. v. Calloway County Court, 11 Mo. 287; Myers v. United States, 1 McLean, 493; Farrar et al. v. United States, 5 Pet. 383; United States v. Boyd, 15 Pet. 206; Inhabitants of Rochester v. Randall et al. 105 Mass. 295; Bruce v. United States, 17 How. 437; United States v. Eckfor’ds Ex’rs, 1 How. 257; Patterson v. Inhabitants of Freehold, 38 N. J. 255; State v. Rhoades, 6 Nev. 352; Mumford et al. v. Overseers, etc. Nottoway, 2 Randolph, 213; County of Mahaska v. Ingalls, 16 Iowa, 85; Bessinger v. Dickerson, 20 Iowa, 261; Vivian v. Otis et al. 24 Wis. 518; Paw Paw v. Eggleston, 25 Mich. 36; Detroit v. Weber, 29 Mich. 24; Bissell v. Saxton et al. 66 N. Y. 55.
    It was proper for plaintiffs in error to show that the funds received and charged against the treasurer at the end of his first term, were actually loaned out for the account and benefit of the city, and such evidence was improperly excluded. If such was the fact, it is in the nature of an estoppel in pais; C., R. I. & P. R. R. Co. v. City of Joliet, 79 Ill. 25; City of Peoria v. Johnston, 56 Ill. 45; Goodwin v. City of Milwaukee, 24 Wis.; Peck v. Barr, 10 N. Y. 294; Lane v. Kennedy, 13 Ohio St. 42; Commonwealth v. Mittenberger, 7 Watts. 450; Easton et al. v. N. Y. & L. B. R. R. Co., 24 N. J. Eq. 50; Att’y Gen. v. Sheffield Gas Co. 3 De Gex, M. & Y. 312.
    Bonds, with the material parts left in blank, signed by the parties, are absolutely void: Ayer v. Harness, 1 Ham. O. 173; Gilbert v. Anthony, 1 Yerg 69; Wayne v. Governor, 1 Yerg. 149; Byrn v. McClanahan, 6 Gill. & J. 250; Parminter v. McDaniel, 1 Hill. 267; Boyd v. Boyd, 2 N. & McC. 125; United States v. Nelson, 2 Brock. 64; McKee v. Hicks, 2 Dev. 379; Borden v. Southerland, 70 N. C. 528; People v. Organ et al. 27 Ill. 27; Church v. Noble, 24 Ill. 291; Chase v. Palmer, 29 Ill. 306; Sans v. The People, 3 Gilm. 327; Bartlett v. Board of Supervisors, 59 Ill. 364; Ingraham et al. v. Edwards, 64 Ill. 526; Maus v. Worthing, 3 Scam. 26; Bragg v. Fessenden, 11 Ill. 544; Hanford v. McNair, 9 Wend. 55; Blood v. Goodrich, 9 Wend. 67; Clendaniel v. Hastings, 5 Har. 408; McNutt v. McMahon, 1 Head. 98; People v. Kneeland, 31 Cal. 288; Lovett et al. v. Adams et al. 3 Wend. 380; Smith et al. v. United States, 2 Wall. 219; Pawling v. United States, 4 Cranch. 219; Doane v. Eldridge et al. 16 Gray, 254.
    The paper, signed in blank by the sureties, and void when it left their hands, did not afterwards become a valid obligation against them: Smith v. Peoria County, 59 Ill. 412; Wild Cat Branch v. Ball et al. 45 Ind. 213; Ward et al. v. Churn, 18 Gratt. 801.
    Notice to the city clerk that the bond had been signed in blank, was notice to the city: Angell and Ames on Corporations, § 305; Dillon on Municipal Corporations, § 39; Danville Bridge Co. v. Pomeroy et al. 15 Pa. St. 151; Trenton Banking Co. v. Woodruff et al. 2 Green, 174; Custer v. Tompkins Co. Bank, 9 Pa. St. 27; Wing v. Harvey, 27 Eng. L. & Eq. 140; Porter v. Bank of Rutland, 19 Vt. 410; New Hope, etc. Co. v. Phœnix Bank, 3 N. Y. 156; Selden v. Del. & Hud. Canal Co, 29 N. Y. 634; Fulton Bank v. N. Y. & S. Canal Co. 4 Paige, 127; P. F. W. & C. R’y Co. v. Ruby, 38 Ind. 294; Great Western R’y Co. v. Wheeler, 20 Mich. 419; McEwen v. Montgomery Co. Ins. Co. 5 Dall, 101; Jackson v. Sharp, 9 Johns. 163; McCormick v. Bay City, 23 Mich. 457; Harrington v. School District, 30 Vt. 155; Hayden v. Trempla Co. 10 Mass. 397; Nichols v. Boston, 98 Mass. 39; Smith v. Board of Water Com’rs, 38 Conn. 208; Field v. The Mayor, 6 N. Y. 179; Hall v. City of Buffalo, 40 N. Y. 193.
    FTotice to the assistant corporation counsel of the defects in the execution of the bond, was notice to the city: Williams v. Tatnall, 29 Ill. 553: Allen v. McCalla, 25 Iowa, 464; Bierce v. Red Bluff Hotel Co. 31 Cal. 165.
    The statute declaring that a failure to file the bond within the time required, vacated the office and terminated all liability on the bond, is mandatory and demands strict compliance: Supervisors, etc. v. The People, 7 Hill, 511; Wheeler v. City of Chicago, 24 Ill. 107; Kane v. Footh, 70 Ill. 587; Pearse v. Morris, 2 A. & E. 96; Hurford v. City Omaha, 4 Neb. 351; Ross v. The People, 78 Ill. 375; People v. Percells, 3 Gilm. 59.
    The recital in the bond limits and controls its covenants: 2 Smith’s L. Cas. 707; Lord Arlington v. Merricke, 2 Saund. 411; Liverpool Waterworks Co. v. Alkinson, 6 East. 507; Mayor, etc. v. Horn, 2 Har. 195.
    The evidence offered on the motion for a new trial was of that positive character which entitles the party to a new trial: Crozier v. Cooper, 14 Ill. 139; Ritchey v. West, 23 Ill. 385; Cowan v. Smith, 35 Ill. 416.
    Mr. Joseph F. Bonifeld and Mr. Sidney Smith, for defendant in error;
    argued that if the blanks were filled before delivery, without notice to the city that the bond was signed in blank, it is a valid bond, and cited Bartlett v. Board of Education, 59 Ill. 364; Smith v. Board of Supervisors, 59 Ill. 412; Dair v. United States, 16 Wall. 1; Butler v. United States, 21 Wall. 272.
    The bond takes effect only from delivery and acceptance. It could only be accepted by the city council, and when accepted it was in a complete form: People v. Neeland et al. 31 Cal. 288; Burgess v. Lloyd, 7 Md. 178; Brown v. Murdock, 16 Md. 521; Stiles v. Probst, 69 Ill. 382; 2 Washburn on Real Prop. 607.
    Knowledge by the city clerk that the bond was signed in blank was not notice to the city of that fact: Parmenter v. McDaniel, 1 Hill (S. C.) 267; Paley on Agency, 266; Dillon on Municipal Cor. § 176, N. 2; 1 Story’s Eq. §408; Willis v. Valette, 47 Met. ( Ky.) 176; Gould v. Oliver, 2 Scott, 241; Bank of Pittsburgh v. Whitehead, 10 Watts, 397; Custer v. Tompkins Co. Bank, 9 Barr. 27; National Bank v. Norton, 1 Hill, 572.
    Signing the bond in blank and delivering to the principal, conferred upon him authority to fill the blanks, and deliver the bond thus perfected as a binding security: Freeman v. The People, 54 Ill. 153; Texira v. Evans, 1 Anstr. 228; Speaker v. United States, 9 Cranch, 28; Smith v. Crooker, 5 Mass. 538; United States v. Nelson et al. 2 Brock. 64; Drury v. Foster, 2 Wall. 24; Butler v. United States, 21 Wall, 272; Inhabitants of South Berwick v. Huntress, 53 Me. 89; State v. Pepper et al. 31 Ind. 76; McCormick v. Bay City, 23 Mich. 457; State v. Peck, 53 Me. 284; State v. Young et al. 23 Minn. 551; Wright v. Harris, 31 Iowa, 272; Wiley v. Moor, 17 Serg. & Raule, 438; Knapp v. Maltby, 13 Wend. 587; Kirwin’s case, 8 Cow. 118; Byers v. McClenahan, 6 Gill. & J. 250.
    Failure of the treasurer to file his bond within fifteen days after the official declaration of his election, does not ipso facto vacate the office: People v. Brewster, 15 Ill. 492; People v. Cummings, 25 Ill. 325; Marbury v. Madison, 1 Cranch, 49; Rex v. Loxdale, 1 Burr, 447; Kerney v. Andrews, 2 Stockt. Ch. 70; State v. Churchill, 41 Mo. 41; People v. Holly, 12 Wend. 480; State v. County Court, 44 Mo. 230; State v. Porter et al. 7 Ind. 204; Giliden v. Towle, 11 Foster, 166; Hartford Ins. Co. v. Walsh, 54 Ill. 168; Speaker v. United States, 9 Cranch, 28; State v. Tower, 7 Rich. (Law) 216; Sprowle v. Lawrence, 33 Ala. 674; Green v. Wardwell, 17 Ill. 278; Shaw v. Havekluft, 21 Ill. 127; United States v. Maurice, 2 Brock, 96.
    Testimony offered by defendants to impeach the official reports of the treasurer, was properly excluded: Thompson v. Board of Trustees, 30 Ill. 99; United States v. Prescott, 3 How. 578; Inhabitants of Hancock v. Hazzard, 12 Cush. 112; Muzzy v. Shattuck, 1 Denio, 233; State v. Harper, 6 Ohio St. 607; Halbert v. State, 32 Ind. 125; Commonwealth v. McEachron, 33 N. J. 339; Overacre v. Garrett, 5 Lans. 156; Simpkins v. Cobb, 2 Bail. 60; Trimmiar v. Trail, 2 Bail. 480.
    The defendants are estopped to deny the truth of such reports: Hoyne v. Small, 22 Me. 14; Sheldon v. Payne, 3 Selden, 453; Townsend v. Olin, 5 Wend. 207; Matthews v. Dare, 20 Md. 248; Eastman v. Bennett, 6 Wis. 232; Board of Trustees v. Fennemore Cox 242; Cave v. Mills, 7 Hurlst. & N. 913; 3 Kents’ Com. 124; Rochester City Bank v. Elwood, 21 N. Y. 90; Belloni v. Freeman, 63 N. Y. 387; Gilbert v. Isham, 16 Conn. 525; Commissioners v. Mayrant, 2 Brev. 228; Seaver v. Young, 16 Vt. 658; Patterson’s appeal, 48 Pa. St. 345; Patterson v. Guardians, etc. Belford Union, 38 Eng. L. & Eq. 440; Evans v. Keeland, 9 Ala. 42; McCabe v. Ranay, 32 Ind. 309; Willis v. Gallagher, 46 Pa. St. 205; Bochnur v. Schuylkill Co. 46 Pa. St. 452; United States v. Girault, 11 How. 27; Pinkstaff v. The People, 59 Ill. 148; Morley v. Town of Metamora, 78 Ill. 394.
    A judgment against the principal for an official delinquency is conclusive against the surety, both as to the fact of default and its extent: Wiley v. Faulk, 6 Conn. 74; Hobbs v. Middleton, 1 J. J. Marshall, 186; Strovall v. Banks, 10 Wall. 583; Charles v. Hoskins, 14 Iowa, 471; Baker v. Preston et al. 1 Gilmer 235; State v. Grammar, 29 Ind. 530; Barrett v. Copeland, 18 Vt. 67.
    The treasurer should account for the interest on .the money received: Hughes v. The People, 82 Ill. 78.
    Even if the objection to interest items is well taken, this Court may make the proper deduction and enter judgment accordingly: Chicago v. Wheeler, 25 Ill. 478; Amended Practice Act of 1877, §§ 80, 81.
    The treasurer is not bound to keep in his hands the identical moneys received. He may choose his own mode of keeping it, and fully discharges his duty when he pays over the amount received to the person, and at the time appointed by law: New Providence v. McEachron, 33 N. J.; Hughes v. The People, 82 Ill. 78; Sims v. Bond, 5 Barn. & Ad. 338.
    The city could not give the treasurer authority to loan the funds: Dillon on Municipal Corporations,§55; Mix v. Ross, 57 Ill. 121; Brady v. New York, 20 How. Pr. 443; Farmers Loan & Trust Co. v. Cornell, 5 Barb. 649; Cowen v. Village of West Troy, 43 Barb. 48.
    Hor can it ratify acts of its officers done beyond the scope of their authority: Mayor, etc. v. Reynolds, 20 Md. 1; Hurlbert v. The State, 22 Ind. 125; Dillon on Municipal Corporations, § 447; The People v. Brown, 67 Ill. 435; Jones v. United States, 18 Wall; Board of Supervisors v. Otis et al. 62 N. Y. 88.
    If notice to the city would not have avoided the bond, there was no question of fact for the jury, and the court should have directed a verdict for the plaintiff: Gettins v. Scudder, 71 Ill. 86.
   Murphy, P. J.

It appears that on the 7th day of November, 1869, David A. Gage was duly elected treasurer ot the city of Chicago; that he duly qualified, gave the bond required by law, and entered upon and discharged the duties of such office for the period of two years; that on the 7th day of November, 1871, he was duly elected his own successor in said office; that the defendant, David A. Gage, made his official report to the comptroller; that on the 9th day of October, 1871, there was in his hands as treasurer, the sum of $645,749.48 cash. This sum being adopted as the basis of his future monthly reports required of him by law, adding to said sum his receipts of revenue thereafter tfrom all sources, and deducting all disbursements made by him on account of the city.

From these reports made monthly, under oath, by the acting treasurer, it appears that on the 16th day of December, 1873, the date of the expiration of his second term of office, there was in his hands, as treasurer of said city, the sum of $965,780.81. Of this sum Mr. Gage paid over to his successor in office, .the late Daniel O’Hara, the sum of $458,077.23, leaving a deficit in his hands, unaccounted for, of $507,703.58. To recover this balance so found to be due from the treasurer, this suit was instituted in the Circuit Court of Coolc County against said Gage and his sureties, on his official bond for the second term of his said office, which, upon a trial in the court below, resulted in a verdict and judgment against the plaintiffs in error, in favor of the city for the sum of $507,703.58, and costs. The record is brought to this court by writ of error, and a reversal of the judgment of the court below is urged upon several grounds, a part, of which only it will be necessary for us to consider, namely:

1st. That the court erred in not permitting the plaintiffs in error to introduce proof to the jury tending to show that the deficit above mentioned accrued and took place during the first term of office of said David A. Gage, and that the defalcation complained of was an accomplished fact before the bond sued on in this case was executed, and that therefore the sureties on the bond are not liable therefor.

2d. That the bond sued on is not the bond of the defendant’s sureties, for the reason that when they affixed their signatures thereto, it was a mere printed blank without legal form or obligation, and that since that time it has been filled up in the form of a valid bond without their consent or approval, and with the knowledge of the city, and that therefore, the same is void, and that upon the issue formed upon the plea of “ non est factum” by them pleaded, they were legally entitled to a verdict and judgment; and 3d. That by the failure of said Gage to file his official bond within fifteen days after the canvass of the vote cast at the election, as required by law, the office of treasurer became vacant, and that his further service as such was by sufferance and without legal authority, and by the recitals in the bond the undertaking in terms is to be liable only for the time Mr. Gage, the principal obligor, should hold said office in virtue of the said election, and that therefore, all liability under the bond terminated. As to the first point raised, it is to be observed that, by the terms of the city charter in force at the time of service' of Mr. Gage, as treasurer, he was required, at the end of every month, and oftener if required,-.to “ render an account under oath showing the state of the treasury at the date of such account, and the balance of money in the treasury, and to accompany such account with a statement of all moneys received into the treasury, and on what account, together with all warrants received, and paid by him—which said warrants, with any and all other vouchers held by him, to be delivered over to the comptroller and filed with his said account in the comptroller’s office, upon every day of such settlement *«■*** * * * And annually in the month of April, before the election, and oftener if required; to report to the common council a full and detailed account of all receipts and expenditures during the preceding fiscal year, and the state of the treasury.” * . * * * * The charter required the treasurer to verify both his monthly and annual reports by his oath in writing, declaring that such statement, so far as he knows or has reason to believe, is a fair, accurate and full statement of the matters to which it relates, and of all moneys in his hands or which he or any one for him has received since his last official account was rendered, and that he has not directly or indirectly used, loaned, or invested, or converted to his own use, or suffered any one to unlawfully use, loan, or convert to their own use, any of the public moneys receivable or received by him, or subject to his warrant or control, but that he has acted diligently and without any collusion or fraud in the disbursement of the public money of said city, and that he has rendered a true and full account thereof in said statement.”

The charter also provided that, in case said statements or any of them shall be false, the person so making them shall be guilty of willful and corrupt perjury, and shall be punished accordingly.

Under the foregoing provision of the city charter, Mr. Gage, acting as treasurer, made his monthly statements from month to month, by which the balance above stated is clearly shown to be due to the city. And the question we have to decide is, whether, under the law, the defendant’s sureties in the court below had the right to impeach the reports so made by the defendant Gage, and show that they were not true, but that the money was not there in fact, but had been used and converted by Gage to his own use, during the first term of his office. The only witness offered for that purpose by the defendants in the court below, was the defendant Gage himself. Grave objections to the competency of his testimony exist,, which might not be to the testimony of other witnesses. We think it will be admitted that a man capable of committing the crime of “ willful and corrupt perjury,” once a month for twenty-four months, with painful regularity, must be possessed of unbounded assurance, as well as of a case scarcely less than desperate, to appear in open court and go upon the witness-stand, and offer himself as a witness, to thus establish the fact of his own felony. We think that on the plainest principle of public policy he should not be heard to discredit statements made by him under the solemnity of his official oath, and upon which the public at that time acted and relied so implicitly, as in this case it appears it did. But we choose to place our decision upon broader grounds than the mere incompetency of the witness offered, and place it upon principles of public policy, which require that not only the defendant Gage should be estopped by his reports of the amounts in his hands as treasurer at the commencement of his second term, but the sureties as well.

In the State v. Graunmer, 29 Indiana, 531, the court says: “The act of February 18, 1859, relating to township business, provides that the township trustee shall annually, on the last Saturday in February, settle with and audit the accounts of supervisors of roads in his township, and shall, within five days thereafter, make to the board of county commissioners a complete report of the receipts and expenditures of his township during the preceding year, which report shall clearly exhibit the amount received and expended on account of township, road, school and other purposes,' as well as the proper balances remaining on hand, and he shall, within ten days thereafter, record at length a copy of such report in the township record, and publish the same by posting up a certified copy thereof at the place or places of holding elections.”

The bond in suit was executed with reference to the matters set forth in this report.

“ The sureties had the means of knowing the state of the account thus made a matter of record. They assumed their liability in view of it. The question now is—Ought these sureties to be allowed to prove that these reports are false? The only knowledge the public could have as to the balance remaining on hand, was derived from this source. The fact that the money was on hand at the time, and not wrongfully converted, as against Graunmer and his sureties, ought to be conclusively settled by this report; any other ruling would open the door to great frauds on the public. In this case Graumer was first elected in April, 1863, and continued in office until after the April election, 1867, a period of four years. ' By placing the defalcation in' the first year his sureties for 1866 would be protected, and the Statute of Limitations would shield the sureties on the first bond. It is true that the sureties of a public officer in the absence of special agreement, are only liable for a defalcation of their principal during the term of office covered by the bond, but what shall be received as proof of such defalcation is quite another question.”

The court in the same case refers approvingly to the case of Baker, Treasurer, etc. v. Preston, Gilm. (Va.) 235. There are numerous adjudged cases to the same effect, both in England and the other States of this country. But we think that our own Supreme Court, in the cases of Pinkstaff et al. v. The People, 59 Ill. 148, and Morley v. Metamora, 78 Ill. 394, has clearly settled the law the same way in this State. In the light of these authorities, we think there was no error in excluding all testimony tending to impeach the truthfulness of the reports of the defendant Gage, by which the amount claimed by the city is shown to have been in his hands at the time of the expiration of his term of office.

As to the second point, it is urged by counsel for the plaintiffs in error that the verdict and judgment in the court below should have been in their favor, on the issue formed on the plea of “ non estfactum,” pleaded by the sureties. This plea directly raises the question of the execution of the bond sued on. The bond being signed by the sureties in blank, and subsequently filled up by the officers of the city, without their knowledge or consent, it is insisted that as to them it is void in law, and not their bond; it having been altered or changed in a material respect after such signing, it ceased to be the bond signed by them. The following is a copy of the bond' as it now appears, the printed words of the same as it was when signed being in Roman, and the words inserted thereafter to fill up the blanks being in italics:

“ Official Bond.

Know all men by these presents, that. we, Devoid A. Gage, William F. Tucker, Albert Crosby, John B. Sherman, James H. Me Yicker, John A. Bice, Nathaniel P. Wilder and George W. Gage, of the county of Cook and State of Illinois, and held and firmly bound unto the city of Chicago, in the penal sum of one million dollars, lawful money of the United States, for the payment of which sum of money, well and truly to be made, we bind ourselves, our heirs, executors and administrators, jointly and severally, firmly by these presents.

Sealed with our seals, and dated this eleventh day of December, A.D. 1877.

The condition of the above obligation is such, that whereas the above bounden David A. Gage was on the seventh, day of ' November, 1877, elected to the office of treasurer in and for the city of Chicago, to hold said office for the period of two years, and until his successor shall be duly elected and qualified, or until said office shall be otherwise legally vacated.

¡Now, therefore, If the said David A. Gage shall well and faithfully perform and discharge the duties of said office as and required by law, and the orders and ordinances of said city of Chicago, and shall account for and pay over all moneys received by him as such treasurer, in accordance with law, and in accordance with orders or ordinances heretofore passed or hereafter to be passed by the common council of said city, in conformity with law, and deliver all books, papers, and all other property belonging to said city, to his successor in office, then this obligation to be void, otherwise to be and remain, in full force and effect.

One Dollar Rev. Stamp. -~ Dee. 11, 1871. ~. D.A.Gage.

David A. Gage. [seal.]

Wm. F. Tucker. [seal.]

Albert Crosby. [seal.]

Johk B. Shermak. [seal.]

J. H. McVicker. [seal.]

Johk A. ¡Rice. [seal.]

¡NT. P. Wilder. [seal.]

Geo. W. Gage. [seal.] ”

“ Signed, sealed and delivered in presence of

City Clerk.”

“Approved,

187

O. K. M. ¡F. T.”

Endorsement: “ Document ¡No. 102. Official bond of David A. Gage, City Treasurer. Approved by the common council, January 8, 1872, O. T. Hotchkiss, Clerk. Presented to the Mayor for his approval, Jaffy 10,' 1872; O. T. Hotchkiss, Clerk. Approved Jzn’y 10,1872; Joseph Medill, Mayor. Recorded, Book 2, page 31, Official Bonds.”

It will thus be seen, that after the bond was signed by the sureties, not only was the names of the sureties inserted in the penal part of the bond, but the penalty itself of “ one million dollars,” was inserted,' and also the date and the office to which •the principal obligor had been elected, and the time he was to serve. It is insisted by the defendants in error that the sureties, by signing this bond in blank, and placing it in the hands of Mr. Gage to be by him used as an official bond, thereby constituted him their agent for the purpose of filling up these material parts of the same, and that upon the doctrine of agency he had the legal right to fill, or cause to be filled, the blank necessary to make the bond a legal binding obligation against the defendant’s sureties. This position we think is not sustained by the authorities, and that the law is clearly settled in this State the other way, and that as to all parties who had notice of such signing, or were in possession of such facts and circumstances as would put a reasonable and prudent person on inquiry, the bond is void absolutely as to the sureties. Without going further than our own Supreme Court, we think we shall find the doctrine of this State fully declared in jhe case of the People v. Organ et al. 27 Ill. 29.

That was a case where the principal obligor presented a bond to the authorities for approval, signed in blank, the penalty only being blank, but which was then and there inserted by the principal obligor, as in this case, and the court held that as to him it was binding. That he being present and consenting, it amounted to a re-delivery by him, but not as to the sureties. The court says: “ But the question is still presented, whether the filling the blank with the amount of the perialty after the sureties had executed it, without their knowledge or consent, rendered it void as to them. Cases may no doubt be found which hold that filling a blank promissory note under seal with the amount agreed upon does not release the indorser; and that such is the case with commercial paper generally is certainly the rule. After a deed has been executed it may be avoided by erasure, interlineation, or other alteration in a material part, or by an intentional breaking or defacing of the seal by the obligee. A deed, to be binding, must be in writing, signed, sealed and delivered by the parties. It has been held that a paper signed and sealed in blank, with verbal authority to fill the blank, which is afterwards done, is void as to the parties so signing and sealing, unless they after-wards deliver, or acknowledge, or adopt it. Gilbert v. Anthony, 1 Yerg. 69; Wayne v. Govener, 16, 149; Myers v. McCanahan, 6 Gill. & John. 250; Parmenter v. McDaniel, 1 Hill, 267; Boyde v. Boyde, 2 N. & M. 125; United States v. Nelson, 2 Brock. 64; Ayers v. Harness, 1 Harr. 368; McKee v. Hicks, 2 Dev. 379. It is believed these decisions fully accord with the rule announced by the British courts. And it is for the plain reason, that after, the blank has been filled up the deed ceases to be that which the parties executed. It is then of a different tenor, and is another instrument as much as if it was executed in a penalty for one sum and was changed to a different and larger snrn; and without consent, re-delivery, or subsequent ratification, no one would suppose that such an alteration could be made without releasing the sureties.”

In Bartlett et al. v. Board of Education, 59 Ill. 364, the same court says that “ It has been generally held that where a party signs a bond in blank, and the obligee fills it, or knows that it had been filled without the assent of the obligor, the instrument is void and cannot be enforced, and such is the doctrine of this court.”

In that case, holding the bond to be valid on the grounds of estoppel, the obligor having received it in good faith, and without notice that any of the blanks had been filled after the sureties signed it.

In Smith v. The Board of Supervisors, at 412 of the same volume, the court held the same doctrine.

Whilst it is true that the decisions of the courts of the different States of this country are in conflict on this question, and that there are to be found numerous decisions to the contrary by courts of the highest respectability, they have but the force of precedents; whilst the determination of the question by our own Supreme Court has the force of authority with this court, and we think that whatever may be the view of the courts of other States, the law in this State is clearly settled. Ingraham et al. v. Edwards, 64 Ill. 526, and authorities there cited; Chase v. Palmer, 29 Ill. 306; Sans v. The People, 3 Gilm. 326. It is disclosed by this record that some time in November, 1871, about the 15th, Mr. Robert Clark, Mr. Gage’s son-in-law, at the instance of said Gage, took this bond, then blank and without any writing upon it except the signature of Mr. Gage, and went to the Union Stock Yards to secure the names of Mr. Tucker and Mr. Sherman as sureties. That upon meeting Mr. Tucker, he made known to him his business, and requested him to sign the bond, and procure Mr. Sherman to do so. Mr. Tucker inquired of him (Clark) what was to be the amount of that bond, and who was going to sign it?” That Clark replied that the amount had not been fixed, but that he, Tucker, could find out the amount which was yet to be fixed, and also the names there should be on it when he qualified. “ That he would have to go down and qualify to the bond.” Mr. Tucker signed it under these circumstances, and proceeded to procure Mr. Sherman to do so. Upon presenting it to Mr. Sherman, he, Sherman, inquired what was to be the penalty of the bond. When Mr. Tucker informed him of the representations made by Clark, Mr. Sherman said he would not sign it at all if the penalty was to be over $250,000, and not then unless the co-securities were satisfactory to him. But whether he would stand on the bond as security or not, he would reserve until he “ went down to acknowledge the bond,” as above stated. Under these circumstances he signed the blank bond. He and Tucker both testify that they were never called upon to, and never did acknowledge the bond, or see it again until on the trial of the cause in the court below, and never authorized any one to fill up the bond, and that they had never ratified or approved of the bond since it was so filled up. These facts are undisputed in the case.

By an application of the principles of the law, as held by our own Supreme Court to these facts, it is manifest that the bond is void absolutely as to the defendant’s sureties.

But it is insisted by counsel for defendants in error, that the sureties on this bond must be held liable upon the grounds of estoppel. IJpon the principle that when one of two innocent parties must suffer in consequence of the fraudulent act of a third, that one of the former must bear the loss, who by his negligent act has enabled the third party to commit the fraud, and that the sureties by signing the blank as they did, and permitting said Gage to have possession of it with their signatures upon it, enabled him to fill up the blanks and present it in complete form to the city, and thus practice a fraud upon it by reason of their negligent act in thus signing the bond in blank, and insist that Gage made such use of the bond, and that the city, without any notice of these antecedent infirmities in its execution, accepted the same, and that therefore the sureties are now estopped to set up this defense. This raises the important question of whether the city did have notice at or before the time of accepting the bond of the facts in respect to the execution thereof.

By Section 25, Chap. 2, of the city charter, in force at the time this bond was delivered, it was provided that: “All city officers who are required by the provisions of this act, or by any legal ordinance passed by the common council, to give bonds for the faithful performance of their official duty, shall file their bonds with the city clerk within fifteen days after their election or appointment, and he shall record them "when approved, in a book kept for that purpose.” When bonds are not filed with the city clerk within fifteen days after the votes shall have been officially canvassed, or after the appointment shall have been made, the person so in default shall be deemed to have refused said office, and the same shall be filled by appointment as in other cases.”

“ If in any case any official bond so filed shall not be approved, the officer filing the same shall file a new and satisfactory bond within fifteen days after such disapproval, and in case of a failure so to do he shall be deemed to have refused said office, and the same shall be filled as above provided.”

By this section it will be seen that the city clerk is made the receiving officer or agent of the city, to receive and hold all official bonds of city officers, and the General Assembly, by providing this particular mode of receiving a delivery of official bonds, excludes all others.

It follows, then, that the only way a valid delivery of such bond could be made under the law, was to deliver it to the city clerk, which is for all legal purposes a delivery to the city.

It will be admitted that the delivery is as necessary to its binding obligation as the signing of the bond itself. If, then, the city clerk is the sole and only agent competent in law to receive a delivery of this bond, made so by the city charter as above quoted, it is not perceived on what legal principle it can be said he is not an agent of the city to receive notice of any fact affecting the bond, which, as we have seen, must of legal necessity be delivered to him in order to give it validity as a legal obligation.

We think it a well-established rule of law, that notice to an agent in the transaction for which he is employed, is notice to the principal, and that the rule applies with equal force to a corporation as to a natural person.

It is disclosed by this record that the -canvass of the votes took place on the 20th day of ¡November, 1871; that on the 27th day of the same month ¡Mr. Gage deposited this bond in blank with General Hotchkiss, the city clerk; that it remained with him in that condition until the 11th day of December, five days after the expiration of the time when he had a right to give bond and take said office.

Of course the clerk was thus in possession of full notice of the fact that the bond, when delivered to him for and on behalf of the city, was in law void and of no valid effect, by reason of being a mere blank, with scarcely the semblance of a legal obligation.

That during that time Mr. Holden, presiding officer of the common council of the city, had his attention called to this bond. When on the 11th day of December the city clerk, accompanied by Mr. Gage, went with the blank to the office of the corporation counsel to have the same filled up, finding Mr. Tuley, the corporation counsel, temporarily out of his office, Mr. Clyde, his (then) assistant, and in the employ of the city in the legal department thereof, to assist the corporation counsel in the discharge of his duties, filled up the bond in its present form, and subsequently it was returned to the city clerk, and on the 8th day of January, 1872, approved by the common council.

We can not concur with the view taken on the trial below, that in order to affect the city with notice, it must be brought home to the knowledge of the corporation counsel; but are of the opinion that notice to the city clerk was good and valid notice to the city. But if it were necessary to show notice home, even to the common council, we think enough appeared on the face of the bond to have put it on inquiry. The common council knew the law; and that after the 6th day of December said Gage was held to have refused the office, and that after that time he had no legal right to give a bond and take the office. This bond bearing date as it did, on the 11th day of December, was a fact it had no right to close its eyes to; but was a fact quite sufficient to put it on inquiry, and it clearly was its duty to have instituted an inquiry as to how this state of things had occurred. If it had done so it would have found out the terms on which Tucker and Sherman had signed this bond, and that it had been left in the hands of the clerk on the 27th day of November, in blank, and was not in law binding on the sureties. Tinder all these circumstances, we think it cannot be said that the city accepted this bond without notice. What it might have learned by reasonable inquiry it must be held as knowing. The simple date of the bond under the law was enough to have caused a reasonable and prudent party to have made the inquiry, and if the common council had performed its obvious duty in that regard, these sureties would have been called in, and either have ratified the bond or refused to do so. So that in any event the misfortunes of the city in this regard would have been avoided.

But upon the theory that notice to affect the city must be given to the corporation counsel, we suppose it will not be disputed that if given to the assistant corporation counsel it would be quite as effective as if given to the corporation counsel himself. Assuming that to be so, we are unable to see any valid objection to instructions Nos. 12 and 14, which are as follows:

12. “ If the jury believe, from the evidence, that Mr. Clyde, at the time of the preparation of the instrument in suit, was an attorney employed by the city of Chicago as an assistant to the corporation counsel in the law department of said city, and having his office with the said corporation counsel, and in that capacity was by said city and said corporation counsel entrusted with the preparation of official bonds, and that he, as such assistant, was called upon in said office to, and actually did, fill up blanks in said instrument, existing in the same at the time the same was signed by the parties now claimed to be sureties, and that one of said blanks so filled was for the amount of the penalty of said instrument, which had not been fixed at the time the same was signed, then the fact that said instrument was signed so in blank was necessarily known to said Clyde, and the knowledge of said Clyde, thus obtained by him was in law the knowledge of said corporation counsel, and of the city of Chicago.”

13. “And if the jury further believe, from the evidence, that the said instrument now sued on was signed by the said sureties in blank, as aforesaid, with the knowledge thereof, communicated to the city of Chicago, as aforesaid, through' the assistant counsel of said city aforesaid, and in the manner aforesaid, with the understanding on the part of the defendants, Tucker and Sherman, at the time they signed the same, that it would not be valid or binding upon them unless acknowledged by them after it was filled up; and that they were not present at the time said instrument was so filled up by said Clyde, and never afterwards saw, acknowledged, ratified, or in any manner approved of said instrument, then, as to said Tucker and Sherman, the said instrument is absolutely void, and the verdict of the jury must be for the defendants.”

14. “The law makes it competent for the parties defendant to show by proper evidence the exact circumstances existing at the time they signed the instrument sued on, and its condition at that time; and if the jury believe, from the evidence, that said instrument was. signed by the defendants, Tucker and Sherman, whilst the same was in blank as to dates, amount of penalty, and names of obligors, with the understanding that the same would not be used or become, binding upon them, or either of them, until and unless acknowledged and ratified by them after the same was filled up, and that, at that time, and in that connection, their attention was called to the blank form of acknowledgment at the bottom of said instrument; and if they further believe, from the evidence, that in that condition said instrument came into the possession of the assistant corporation counsel of said city, in the discharge of his official duties, and who, as such, was intrusted with the preparation of official bonds and other papers, in which said city was interested, and that said assistant counsel filled up said instrument in the office of said corporation counsel, in the absence of said Tucker and Sherman, without their knowledge or consent; then the knowledge of said -assistant counsel of the fact, that said instrument was so signed in blank, was constructive notice to him of all the facts and circumstances attending the signing of the same, or such of them as would have been discovered upon due inquiry, and such knowledge of, and notice to the said assistant counsel of the city, was equivalent in law to the knowledge of, and notice to the corporation counsel of said city, and therefore was the knowledge of, and notice to, the city of Chicago,” asked by the plaintiffs in error.

They submitted the question of fact to be found by the jury, whether at the time Clyde filled out the bond he.was assistant corporation counsel; and if so, then notice to him was notice to the city. We think they should have been given, and that upon the theory the case was tried, it was error to refuse to do so.

We are therefore of the opinion that the judgment should have been for the plaintiffs in error on the issue formed on the plea of “ non est factum,” and that it was error to give judgment for the defendant in error.

Thirdly, it is claimed by the plaintiffs in error, that the failure of defendant Gage to file his official bond within fifteen days after the canvass of the votes, vacated the office; and that the bond being signed by defendant’s sureties during the fifteen days, but not filled up or dated until twenty-one days after the canvass of the votes, the office of city treasurer became vacant, and that their liability ceased.

It is urged by the defendants in error' that the statute requiring the bond to be filed within fifteen days is directory, and that a failure to file in that time does not vacate such office, and that having filed a bond which was accepted by the common council, it is a waiver on the part of the city of its rights to appoint a treasurer, and that the holding of said office was in conformity to the law providing for the election of such officer, and the recitals to that effect in the' bond.

It becomes important to know whether the holding of the office by Gage was a dejure or defacto holding, for if the latter, the bond by the terms of its covenants forbid the idea of the, liability of the sureties. The recital of the bond under discussion is as follows: “ The condition of the above obligation is such, that whereas, the above bounden David A. Gage was on the 7th d,ay of November, 1871, elected to the office of city treasurer in and for the city of Chicago, to hold said office for the period of two years, and until his successor shall be duly elected and qualified, or until said office shall be otherwise legally vacated.” From the very terms of the undertaking, as it will be seen, if the office became vacant the liability of the sureties ceased, and to hold otherwise we think would be to enlarge the liability of the sureties beyond the plain terms of their covenant, which one of the well established maxims of the law says can not be done. By the section of the city charter above quoted, it is clear that the charter requires the oath of office to be taken, and the bond required by law to be filed within fifteen days after the canvass of the votes—which, in this instance, took place on the 20th day of November, 1871. And it is disclosed by the record that the defendant Gage took the oath of office on the 27th day of the same month, but failed to file his bond until the 11th day of December, 1871, being six days outside of the time limited by law for him to do so.

We are of the opinion that the filing of the- bond within fifteen days from the canvass of the votes was a condition precedent to his obtaining the office, and that therefore the public had such rights in the performance of that condition as to make the language of the statute mandatory, and not simply directory, as contended for by the defendants in error.

We understand the case of Kane v. Footh, 70 Ill. 590, to be an authority in support of such rule. The language of the charter is the language of command, and would indicate that to be the Legislature’s intent. The person so in default shall be deemed to have refused said office, and the same shall be filled by appointment.” We think the public have the right to have the bond given within the time fixed by law, and if not so done, the right to have some one appointed who would give to the public the contemplated security. Tor the purpose of this view it is not material that the city did not assert the right of appointment in this case, but the fact that it had the right on behalf- of the public to appoint, goes to show that it was a requirement of law in which the public was interested, as tending to show to which class of legislation the provision belonged, directory or mandatory. We think the act belongs to the latter class, and that his failure to comply with it in time worked a vacation of the office.

Under the terms of the bond this released the sureties from further liability, even though the bond was in other respects perfect, and for these reasons we think "it was error to overrule the motion for new trial, and render judgment on the verdict.

Tor these errors the judgment of the court below is reversed.

Judgment reversed.


source: Caselaw Access Project

author: Bailey, J.

license: Public Domain

text:
    James B. Storey v. Francis Agnew et al.
    1. Sale bt debtob to cbeditob—When not ebatjdulent.—A debtor lias a right to prefer one creditor over all others, and he may sell his property to such creditor, where no lien exists to forbid it; and if the transaction be an honest one, made in good faith, for an adequate consideration, it matters not how many creditors may be prevented thereby from reaching the property. A creditor violates no rule of law when he takes payment of his demand, though other creditors are thereby deprived of all means of obtaining satisfaction of their own claims.
    2. Possession remaining in debtor.—S. loaned to T. money to carry on his business, with an understanding that the articles manufactured by T. were to be the property of S. until the loans were paid, the manufactured articles remaining in the possession of T. So long as there was no actual delivery of the property to S., it remained, as to third persons, the property of T., and subject to attachment or exeeution for his debts.
    3. Change op possession—Lien of execution—-Presumption.—There being nothing in the record showing when the execution was received by the . sheriff, it will be presumed that it was delivered to him on the day a levy was made. The attachment having previously been dissolved, the defendant had the absolute power of .disposition over his property up to the time of the levy, and S. having before that time taken possession of the property in good faith in payment of his debt, he is entitled to the benefit of the preference thus obtained.
    4. Purchase of property attached.—The purchase by S. is not affected by the fact that at the time of the purchase there was a hen by attachment upon the property; such purchase was necessarily subject to the attachment lien, and that hen being defeated by vacation of the attachment, the rights of S. remained unaffected by it. Nor is such purchase while the attachment remained, any evidence of fraudulent intent on his .part to defeat the creditors of T.
    Appeal from the Circuit Court of Cook county; the Hon. W. K. McAllister, Judge, presiding.
    Mr. J. W. MERRiAM,-for appellant;
    that the original transaction was in the nature of a pledge or collateral security for money loaned, cited Stokes v. Frazier, 72 Ill. 428: Loomis v. Stave, 72 Ill. 623; Cooper v. Ray, 47 Ill. 53.
    Signing the forthcoming bond was an admission by appellant of property in Terhune: Chrisman v. Matthews, 1 Scam. 148.
    An attachment lien ripens only by perfecting a judgment in the attachment suit: Rhodes v. Amsinck, 38 Md. 345; Fetlyplace v. Dutch, 13 Pick. 388; Wheeler v. Nichols, 3 Me. 233; Goddard v. Perkins, 9 N. H. 488; Denny v. Willard, 11 Pick. 519; Starr v. Moore, 3 McLean, 354.
    The attachment being vacated, Terhune had an absolute right to sell the property: Gas v. Williams, 46 Ind. 253; Boggs v. Bindekoff, 23 Ill. 66; Danforth v. Rupert, 11 Iowa, 547; Suydam v. Hoggeford, 23 Pick. 465; Lawrence v. Steadman, 49 Ill. 270.

      The fact that appellant knew of Terhune’s indebtedness to others, does not raise a presumption of fraud: Nelson v. Smith, 28 Ill. 495.
    A creditor may take pay for his debt, though he thereby deprives others of the means of securing their own: Gray v. St. John, 35 Ill. 222; Ewing v. Runkle, 20 Ill. 448; Hessing v. McCloskey, 37 Ill. 341.
    It must be shown that both vendor and vendee intended to hinder creditors: Brown v. Reiley, 22 Ill. 46.
    A debtor may prefer one creditor to the others: Garr v. Hill, 1 Stock. 215; Kirtland v. Snow, 20 Conn. 23; Uhler v. Mulfair, 23 Pa. St. 483.
    The pendency of another creditor’s suit is immaterial: Kerkendall v. Middleton, 15 Mo. 416.
    Messrs. E. & A. Vah Bubex, for appellees;
    that the sale to appellant was void as to creditors of Terhune, cited Johnson v. Holloway, 82 Ill. 324; Boies Adm’x v. Henney, 32 Ill. 130; Phelps v. Curts, 80 Ill. 109.
    Where the finding of the court is not clearly against the weight of evidence, it will not be disturbed: Demoss v. Hannaman, 46 Ill. 185; Smith v. Brown, 46 Ill. 186; Carrigan v. Hardy, 46 Ill. 502; Thompson v. Anthony, 48 Ill. 468.
   Bailey, J.

This is an action of replevin, brought by appellant against appellees, to recover sixty-one show-case frames, which, as was alleged, belonged to appellant, and had been taken and were unjustly detained from him by appellees. Only fifty-three of said frames were seized and returned to appellant under said writ. Appellant thereupon filed his declaration in replevin, and also joined therewith a count in trover for the frames not returned. Appellees appeared, and among other defenses, pleaded a justification under a writ of execution issued from the Superior Court of Cook county to said Agnew, as sheriff of said county, on a judgment rendered by said court in favor of one Caspar Sendlinger against one Mathias Terhune. The real question in issue was, whether at the time said writ of execution came to the hands of said sheriff, said frames were the property of said Terhune, or of appellant.

The situation and circumstances of the property in controversy are briefly as follows. In January, 1876, said Terhune, who was a manufacturer of show-cases doing business in Chicago, was indebted to appellant, who was a broker, to the amount of about $600, for money previously loaned him. With the view of enabling Terhune to make up a stock of show-cases for the spring trade, so as to enable him to pay his debts, appellant entered into an arrangement with him, by which appellant was to advance him money to buy what material he wanted to use in manufacturing a stock of cases. To secure appellant for his advances, it was understood that the show-cases were to be made up in lots of ten or fifteen at a time, and each lot when finished was to be numbered and turned over to appellant, as his own property, and that appellant would then advance more money for materials, and so on. In pursuance of this arrangement appellant advanced to Terhune, from time to time, between the eighth day of January, 1876, _and the sixth day of May following, various sums of money, taking a note for each separate loan, whereby the indebtedness of Terhune to appellant became increased, over and above all repayments, to $1,858.56. During this period Terhune had manufactured between sixty and seventy show-ease frames, which had been numbered and laid aside in Terhune’s ware-room, as the property of appellant. Under the arrangement Terhune was to finish the cases in the spring, and when they were sold appellant was to be paid what he had advanced and Terhune was to have the.balance.

Such being the relations of the parties, a writ of attachment was issued out of the Superior Court of Cook County, on the third day of May, 1876, at the suit of Caspar Sendlinger, against said Terhune, and levied upon forty-three of said show-case frames, the same then being in the warehouse of said Terhune. Terhune thereupon executed to the sheriff a forthcoming bond for said frames, with appellant as his surety, and said frames were restored to said Terhune’s possession. While the property was in this situation, Terhune, on the eighth day of May, 1876, made an absolute sale and delivery to appellant, of sixty-four of said frames, including the forty-three on which the attachment was levied. Appellant paid for the frames so sold and delivered to him by the surrender to Terhune and cancellation of notes then held by him against Terhune, amounting in all to $849.20. This, so far as appears, was the reasonable value of said property. Appellant, on purchasing and receiving a delivery of said show-cases as aforesaid, took them immediately into his actual possession, and removed them from Terliune’s warehouse to an apartment owned by a third party, on the other side of the street, and there stored them, and paid the storage thereon.

In the attachment suit, Terhune filed a plea traversing the facts stated in the affidavit. The issue thus presented does not appear to have ever been actually tried, but on the 8th day of June, 1876, Sendlinger obtained a judgment in the attachmant suit, for $192.78 and costs, and in and by said judgment a general execution against said Terhune was awarded, but no special execution for the sale of the property attached, so far as appears, and on the 10th day of June, 1876, by agreement of the parties, the attachment was dissolved and the forthcoming bond filed in said suit surrendered to Terhune. An execution on the judgment against Terhune was issued, bearing date June 8, 1876. The date of the delivery to the sheriff is not shown by the record, but it appears that on the 23d day of June, 1876, it was levied by the sheriff on sixty-one of the show cases in appellant’s possession as the property of Terhune.

This suit was tried before the court without a jury, and the issues found and judgment rendered in favor of appellee. It is urged by appellant that the finding and judgment of the court below, were against the law and the evidence.

The only theory upon which the judgment can be sustained is, that the transactions between appellant and Terhune were fraudulent and void as to the other' creditors of Terhune, and particularly as to Sendlinger. The attachment in favor of Send-linger having been dissolved, it cannot be pretended that he can now assert any rights depending upon the lien of said attachment. From the time of its dissolution, it could have no further force or effect than if it had never been issued. Send-linger’s lien, then, cannot relate back to the service of the attachment writ, hut only dates from the time his execution was delivered to the sheriff. As there is no proof of the date of such delivery, we know of no principle upon which a delivery is to be presumed anterior to the date of the levy, which was on June twenty-third. Up to the time Sendlinger’s lien attached, Terhune had the absolute power of disposition over his property, and had the undoubted right to use it in good faith, in payment of his other creditors, even to the exclusion of Sendlinger.

The rule of law is well settled, that if the transaction be an honest one, made in good faith and for an adequate consideration, it matters not how many creditors may be prevented thereby from reaching the property. A party, though in debt, may sell his property to any one he pleases, for an honest and fair consideration, if no lien exists to forbid it. Nor can it be denied that a debtor has a right to prefer one creditor over all others. Hesing v. McCloskey, 37 Ill. 341. And a creditor violates no rule of law when he takes payment of his demand, though other creditors are thereby deprived of all means of obtaining satisfaction of their own equally meritorious claims. Gray v. St. John, 35 Ill. 222.

A creditor has an unquestionable right .to run a race of diligence with other creditors. If, before others have obtained a lien, he succeeds in subjecting the property, in good faith, to the payment of his debt, he is entitled to the benefit of the preference thus obtained. Nor are hig rights in the least affected by notice of proceedings by other creditors to collect their debts. It is only when under guise of collecting or securing his own debt he obtains a gift, grant, conveyance, assignment or transfer of or charge upon the estate or property of his debtor, with intent to disturb, hinder or defraud creditors or other persons that the law pronounces the title thereby obtained void as to other creditors. He may collect his debt, but he will not be permitted to use it as an instrumentality for obtaining colorable title to the property of his debtor, with intent to hold the same for the debtor’s benefit.

There can be no doubt that the original arrangement between appellant and Terhune, under which the former advanced his money to the latter, was, so far at least as third persons were concerned, a mere loan of money. Notwithstanding the agreement that the show-case frames, when completed, should be numbered and turned over to appellant as his property, so long as there was no actual delivery of the frames they remained, as to third persons, the property of Terhune. Doubtless, as between appellant and Terhune, the former acquired a lien by virtue of which, upon sale of the frames, he was entitled to receive his advances out of the proceeds. Such being his rights, we perceive no difficulty in the way of a subsequent arrangement between appellant and Terhune for the absolute purchase by the appellant, at an adequate price, of any given number of the frames, after they were- manufactured. Any lien he might have held under the first arrangement, was no obstacle to the subsequent purchase.

Nor do we perceive that appellant’s purchase can now be regarded as in any degree invalidated by the fact that, at the time it was made, there was a subsisting lien upon the property by virtue of the attachment writ. Had that lien been preserved and perfected, it would undoubtedly have been prior in time to appellant’s purchase, and would have cut off his title thereby acquired. Appellant purchased subject to that lien, but as the lien was itself defeated by the vacation of the attachment, appellant’s rights remain entirely unaffected by it. Nor was the purchase by appellant while the attachment lien was. subsisting, any evidence of a fraudulent intent on his part. We perceive no difference in principle between this purchase- and the purchase of any other property already subject to a lien. The lien here was inchoate, and in all such cases the purchaser takes the property with the risk of being obliged to-pay the lien in case it is finally established and matured.

We fail to find, in the record, any evidence of bad faith on the part of appellant. He purchased the property at an adequate price, at a time when, so far as any rights now subsisting are concerned, he had a right to purchase it. He took it at once into his immediate and exclusive possession, and so held it until taken from him under the execution. There is no evidence that Terhune, after the sale, interfered with it in the least. Nor is there any evidence tending to show that lant held it upon any secret trust for the benefit of Terhune, or with any view of treating it other than as his own absolute property.

It is true, that after the sale of the frames in question, appellant employed Terhune in his business, and issued circulars on which was printed Terhune’s name, and under it the words “Manager for James B. Storey.” We find no evidence, however, that Terhune as appellant’s agent, or otherwise, ever interfered or attempted to interfere with the frames-in question, which had been taken from his warehouse and stored in another place. It appears on the contrary, that a few of them were sold, and that such sales were made by appellant in person.

After duly considering all the facts shown by the record, we are unable to concur with the learned judge before whom the case was tried in the court below, in the conclusions reached by him. We think his finding contrary to the evidence, and that for that reason the judgment should be reversed and the cause remanded.

Judgment reversed.


author: Pleasants, J.

text:
    'Patrick J. Roche et al. v. The Rhode Island Insurance Association
    1. Garnishment—Foreign corporation doing business in this state subject to.—A foreign insurance company, by establishing an agency here and doing business in this State, becomes a resident for all purposes of suit, and hence is liable here as garnishee of its non-resident creditors.
    2. Jurisdiction in garnishment.—The process of garnishment will not lie against a party who neither resides, nor has in his hands property of the defendant, nor is bound to pay him money or deliver him property within the State where it is issued; but all these conditions must concur to exempt him.
    3. Foreign exemption daws.—The garnishqe answered that it was indebted upon a policy of insurance upon the homestead of the debtor in Wisconsin, and that by the laws of that State such insurance was exempt from attachment and garnishment, and that since the commencement of garnishment proceedings it had been compelled by judgment of a court of competent jurisdiction in that State, to pay the amount of such insurance to the debtor. Held, that the answer was insufficient; that the exemption law of Wisconsin could have no force without that State.
    4. Plea cot suit pending.—While the pendency of another suit between the same parties for the same cause of action in another State is not a defense, the pendency of an attachment in another State for the debt sued for, stands upon different grounds, and is pleadable in abatement.
    Appeal from the Superior Court of Cook county.
    Mr. James Goggin, for appellants;
    that the exemption laws of a foreign State have no force in this State, cited Mineral Point R. R. Co. v. Barron, 83 Ill. 365; Story on Conflict of Laws, §§ 18, 410.
    Messrs. Gardner & Schíjtler, for appellee;
    that a foreign corporation cannot be subject to garnishee process in this State, when it has no property of the defendant in its possession, and is not bound to pay the defendant money in this jurisdiction, cited Tingley v. Bateman, 10 Mass. 343; Ray v. Underwood, 3 Pick. 202; Hart v. Anthony, 15 Pick. 445; Nye v. Liscomb, 21 Pick. 263; Lovejoy v. Albree, 33 Me. 414; Jones v. Winchester, 6 N. H. 497; Lawrence v. Smith, 45 N. H. 533; Sawyer v. Thompson, 4 Foster, 510; Green v. F. & C. Bank, 25 Conn. 452; Bates v. N. O. R. R. Co. 4 Abb. Pr. 72; Wheat v. P. C. & F. D. R. R. Co. 4 Kan. 370; Danforth v. Penny, 3 Met. 564; Gold v. Housatonic R. R. Co. 1 Gray, 424. Smith v. B. C. & M. R. R. Co. 33 N. H. 337; Bradford v. Mills, 5 R. I. 393.
    The laws of the time and place of making the contract, and where it is to be performed, enter into and form a part of it, and govern the rights and remedies of the parties: Van Hoffman v. Quincy, 4 Wall. 552; White v. Hart, 13 Wall. 646; Walker v. Whitehead, 16 Wall. 314; Edwards v. Kearzy, 6 Otto. 595; Bradshaw v. Newman, Breese, 133; Stacey v. Baker, 1 Scam. 417; Roundtree v. Baker, 52 Ill. 421; Rogers v. Meyers, 68 Ill. 92; Penn. Co. v. Fairchild, 69 Ill. 260; Gunn v. Barry, 15 Wall. 610.
    Statutes of exemption pertain to the rights of the parties: Bronson v. Kinzie, 1 How. 315; Gunn v. Barry, 15 Wall. 610; Gilman v. Williams, 7 Wis. 329.
    And are to be liberally construed: Deere v. Chapman, 25 Ill. 610: Good v. Fogg, 61 Ill. 450; Connaughton v. Sands, 32 Wis. 387; Kuntz v. Kinney, et al. 33 Wis. 570.
    The lex loci should govern: Bradshaw v. Newman Breese, 133; Stacey v. Baker, 1 Scam. 417; Phinney v. Baldwin, 16 Ill. 108; Adams v. Robertson, 37 Ill. 45; Roundtree v. Baker, 52 Ill. 421; Story on Conflict of Laws, § 29; Drake on attachment, § 462.
    The plea of action pending in this State was properly held bad in the suit in Wisconsin: McJilton v. Love, 13 Ill. 486; Allen et al. v. Watt. 69 Ill. 655.
    But that suit having proceeded to judgment, and the judgment having been paid before the' trial in this case, it was a complete bar to a recovery here: Lawrence v. Lane, 4 Gilm. 354; Allen et al. v. Watt. 79 Ill. 284.
    A statute of this State exempts the proceeds of insurance on the homestead, but this statute only followed the law, as it had been declared, where there were no such statutes: Stebbins v. Peeler, 29 Vt. 289; Keyes v. Rhines, 37 Vt. 263; Mitchell v. Milhoan, 11 Kan. 617; Houghton v. Lee, 50 Cal. 101; Tillotson v. Wolcott, 48 N. Y. 190; Cooney v. Cooney, 65 Barb. 524; Andrews v. Rowan, 28 How. 126.
   Pleasants, J.

This case is submitted upon a stipulation as to the facts, which, in substance, are: That appellee is incorporated under the laws of Bhode Island, but had established an agency and was doing business in the State under the provisions of the statute. It had an agency in Wisconsin also, from which it issued a policy to Miles McMahon, a resident of that State, upon his homestead there situate, and which was after-wards wholly destroyed by fire.

Appellants, in an action in the Superior Court of Cook county, by attachment, in which appellee was duly garnisheed, obtained judgment against him by default for $355.80. To interrogatories therein filed the garnishee answered that it was indebted to said McMahon, upon the policy so issued to him, in the sum of $1,250; but that by the laws of Wisconsin his homestead and the proceeds of any policy of' insurance upon the same were exempt from levy and sale under any execution, attachment or other legal process against him. Exceptions to the answer were overruled, and issue was then taken upon it-

On the trial, which was before the Court without a jury, the evidence fully sustained the allegations of the answer, and showed further, that since the institution of this suit McMahon had brought an action against appellee upon the policy, in a court of competent jurisdiction in Wisconsin, in which the defense of the pendency of this proceeding, duly interposed, was overruled by said court; and there being no further defense, a judgment was entered against appellee, defendant therein, for the full amount of said policy and costs, which it had paid. It also appeared that McMahon had other insurance upon the same property, from which he had received the sum of eight hundred and fifty dollars.

Upon these facts the Superior Court found for the appellee, and entered judgment against appellants for the costs.

In support of this judgment it is urged that appellee in this case was not liable to garnishment here, for two reasons: first, because it is incorporated under the laws of Rhode Island, and the contract upon which it was indebted to McMahon was made and payable in Wisconsin; second, that the exemption ■ law of that State entered into and formed part of the contract, and being valid there must be binding everywhere.

Whether consistently with general principles or not, it seems to be settled that in this proceeding the debt as well as other personal property to be attached is regarded as having locality; that the situs of the debt is where the debtor resides, or where his contract requires him to pay it; and that of other personal property is where he resides, or where he is so bound to deliver it, or where he actually has it in his hands or under his control; and upon this turns the question of jurisdiction. Hence, the rule is that the process will not lie against a party, whether a natural person or a corporation, who neither resides, nor has in his hands property of the defendant, nor is bound to pay him money or deliver him property, within the State where it is issued. Drake on Attachment (5th Ed.), § 474 and cases cited in the notes. But all these conditions must concur to exempt him. Id. §§ 477-8-9.

This court held in the Pennsylvania Co. v. Sloan, 1 Bradwell, 364, in supposed accordance with the views of the Supreme Court in C. D. & V. R. R. Co. v. The B’k of N. America, 82 Ill. 495, and with the weight and tendency of authority elsewhere, that a corporation, under whatsoever law incorporated or organized, is a resident for all purposes of suit wherever by authority of the local law it exercises its corporate powers and functions. Appellee, then, having chosen to avail itself of the privilege offered by our statute by establishing an agency and doing business here, was a resident of this State. Under the rule, therefore, it was liable here as garnishee of its nonresident creditors; and so in several of the States it has been expressly held. Fithian v. The N. Y. & Erie R. R. Co. 31 Penn. State, 114; McAllister v. The Penn. Ins. Co. 28 Mo. 214; Brauser v. The New England F. I. Co. 21 Wis. 506.

Being a resident here in contemplation of law the debt it owed was here. It would therefore be strange if the Legislature of Wisconsin could exempt it from the operation of the attachment law of Illinois. We think this question is directly decided in The Mineral Point R. R. Co. v. Barron, 83 Ill. 367. In that case the principal defendant and the garnishee were residents of Wisconsin; the contract between them was made and to be performed there, and the debt was exempt from attachment by the law of that State; but the Supreme Court held it liable here, and that the exemption law could have no, force without the' State.

We consider it immaterial in this case that the principal defendant recovered a judgment in Wisconsin against appellee for the same indebtedness here attached and notwithstanding the pendency of this proceeding was there interposed as a defense. The lien .had attached upon it here by due service upon appellee before that suit was instituted; and we may further remark that while the pendency of another suit between the same parties for the same cause of action in another State is not a defense, yet it seems that the pendency of an attachment in another State for the debt sued for stands upon different grounds and is pleadable in abatement. Embree v. Hanna, 5 Johns. 101; Brook v. Smith, 1 Salk. 280; Wheeler v. Raymond, 8 Cow. 315, note (a); and numerous cases cited in note to Andrews v. Herriot, 4 Cow. on p. 521.

For the reasons above given, we think the judgment óf the Superior Court was erroneous. It is therefore reversed and the cause remanded.

Reversed and remanded.


author: Murphy, P. J.

text:
    John Schweyer v. John Anstett.
    Motioh fob hew tbial—Newly discovebed evidence.—The principal item for which judgment was rendered was $100, claimed to have been loaned to appellant. Upon this point appellee testified that he gave appellant the check of third parties for that amount, which appellant afterwards endorsed, and procured to be cashed, and retained the money. This appellant denied. On a motion for new trial, appellant offered to' show, by proper affidavits, that the check was in fact loaned to another party, and admissions of appellee that he had loaned such party money, and also produced the check in evidence, showing that there was no endorsement thereon by appellant, and that he did not know of such evidence at' the time of the trial. Held, that such testimony was vital 'to appellant’s rights, and presented sufficient grounds for a new trial.
    Appeal from the County Court of Cook county; the Hon. Mason B. Loomis, Judge, presiding.
    Messrs. Monroe & Leddt, for appellant;
    contended that where a party has -been vigilant in preparing for trial, and is taken by surprise by evidence that could not be anticipated, such evidence contributing to an unfavorable verdict, he will be entitled to a new trial, and cited Holbrook v. Nichol et al. 36 Ill. 161; Goldstein v. Lowther, 81 Ill. 396; 3 Graham and Waterman on New Trials, 952.

      That the evidence offered was not cumiilative: 1 Greenleaf on Ev. §2; 3 Graham and Waterman on ¡New Trials, 1046; Martin v. Ehrenfels, 24 Ill. 187; Parker v. Hardy, 24 Pick. 246; Glidden v. Dunlop, 28 Me. 379; Bradish v. State, 35 Vt. 452; Gardner v. Mitchell, 6 Pick. 114; Kane et al. v. Burns et al. 2 Smede & M. 313; Vardeman et al. v. Byrne et al. 7 How. 365; Grubb v. Kalb, 37 Ga. 459; Chatfield v. Lathrop, 6 Pick. 417; Wilder v. Greenlee et al. 49 Ill. 253; Goldstein v. Lowther, 81 Ill. 399; C. & St. L. R. R. Co. v. Schumacker, 77 Ill. 583
    Mr. William M. Stanley, for appellee;
    that the evidence offered, as shown by appellant, is not sufficient ground for a new trial, cited Martin v. Ehrenfels, 24 Ill. 187; Emory v. Addis, 71 Ill. 273; Cowan v. Smith, 35 Ill. 416; Ray v. Bell, 24 Ill. 444; Frizell v. Cole, 29 Ill. 465; 1 Greenleaf on Ev. § 204; R. R. I. & St. L. R. R. Co. v. Rose, 73 Ill. 183; Knickerbocker Ins. Co. v. Gould, 80 Ill. 388; Wright v. Gould, 73 Ill. 56; Crozier v. Cooper, 14 Ill. 139.
   Murphy, P. J.

We have examined the record in this case, and given consideration to the points made by the appellant, and are not satisfied with the result of the trial in the court below. It was an action of assumpsit in the County Court of Cook county by the appellee against the appellant, the declaration containing the common counts only. The trial in that court resulted in a verdict and judgment against appellant for §175 and costs. Appellant made a motion for a new trial on the ground of newly discovered evidence; in support of which he submitted three affidavits—his own, and those of Henry Leeb and William Haisch. The motion was overruled and judgment rendered on the verdict, to which appellant excepted, and prayed an appeal to this Court, and assigns for error the overruling of said motion.

On the trial in the court below, the principal item in controversy was §100, alleged by appellee to have been loaned to appellant September 22, 1874. Appellee testifies that on that day Messrs. Sternenburg & Leeb, business men in Chicago, owed him §100, which he had previously placed in their hands for safe keeping; that they gave him a cheek for that sum on the First National Bank of Chicago; that he indorsed it over to appellant, who drew the money on it.

This the appellant denies, and testifies apparently with equal truthfulness that he never received the check nor the $100 thus charged to him. Since the trial the appellant has found the check and attaches the same to his affidavit in support of his motion for a new trial; from which it appears to have heen drawn hy Sternenburg and Leeb, and payable to appellee or bearer, and is not endorsed by him. From which facts we think the inference quite irresistible that appellee is mistaken in his testimony, and that the check was paid to himself. This view is strongly corroborated by the affidavit of Henry Leeb; that on the 22d day of September, 1874, the appellee came to him and told him he wanted the $100 so left with his firm, to loan to one Fred Schmith, to help him start in the saloon business, and that said Leeb then and there drew the check of his firm, and delivered the same to the appellee.

It is shown by the affidavit of Haish that appellee subsequently admitted that he had loaned Schmith $150.00. This testimony we think vital to the rights of the appellant, who, hy his own affidavit, shows that at the time of the trial he was ignorant of, which we think, makes a much stronger case for a new trial than was made in the case of Goldstein v. Lowther, 81 111. 399. And in that case the Supreme Court was of opinión that it was error to deny the motion for new trial. Under the authority of that case, which we concede to be a material modification of the holding of that court on this question, we think the motion for a new trial should have been sustained, and that it was error to refuse it.

For which error the judgment of the court below is reversed and cause remanded.

Judgment reversed.