text:
    James A. Bingham, Appellant, v. Bell & Zoller Coal Company et al., Appellees.
    Gen. No. 16,668.
    1. Insolvency—corporation. Where a corporation is unable to pay its debts as they fall due in the usual course of business, it is in law insolvent.
    2. Corporations—when loan hy director to corporation is void. Where the directors of an insolvent corporation issue bonds secured by a mortgage on the corporate property, for a loan furnished by one of the directors and another stockholder, owners of a competing corporation, who control the board of directors, so that a large part of the money loaned is paid on the obligations due their company, such mortgages and bonds are void in equity at the instance of a minority stockholder who did not consent to any of the proceedings.
    3. Corporations—placing parties in statu quo. Where the directors of an insolvent corporation enter into an unfair and fraudulent contract for a loan from one who is a .director, an innocent stockholder, to maintain an action in equity to set aside the transaction, need not offer to place such party in statu quo.

      4. Corporations—majority of stockholders cannot ratify fraudulent contract. Where the directors of a corporation enter into a contract with the corporation which is fraudulent and unjust and is voidable at the instance of an innocent stockholder, a ratification by a majority of the stockholders does not preclude a court of equity from setting the contract aside.
    Appeal from the Superior Court of Cook county; the Hon. George A. Dupuy, Judge, presiding.
    Heard in the Branch Appellate Court at the October term, 1910.
    Reversed and remanded with directions.
    Opinion filed October 16, 1912.
    Rehearing denied December 4, 1912.
    Steers, Williams & Steers and Edwin White Moore, for appellant..
    Ryan & Condon, for appellees; Irwin I. Livingston, of counsel.
   Mr. Justice Baume

delivered the opinion of the court.

In 1907 the Standard Washed Coal Company, hereinafter called the Standard Company, a corporation, was engaged in operating coal mines in or near Springfield, Illinois, and in the wholesale merchandising of-coal in the City of Chicago. In March of the same year Herbert E. Bell and Walter Gr. Zoller, who then owned all the stock in the Bell & Zoller Coal Company, a competing corporation, acquired 252 shares of the capital stock of the Standard Company. On January 1, 1908, the Standard Company had become financially embarrassed and was unable to pay its debts as they fell due in the usual course of business, although the inventoried value of its assets more than equaled its liabilities. It then owed on accounts due and payable $47,680.52, including an item of about $5,000 due the Bell & Zoller Coal Company; on bills due and payable $40,024.29, $22,000 of which was owing to the Bell & Zoller Coal Company; on notes and bonds not then due $78,500. It then had cash on hand amounting to $443.33. Its trial balance on January 31,1908, showed accounts and bills then payable amounting to $77,856.51, including substantially the same amounts above stated as due to the Bell & Zoller Coal Company. The cash then on hand was $2,768.69. In 1907, the business of the company was operated at a net loss of $662.44, and the net loss for January, 1908, was $457.00.

On January 30, 1908, the capital stock of the Standard Company, consisting of 1350 shares of the par value of $100 per share, was held as follows: James A. Bingham, 233 shares, W. T. Delihant, 233 shares, Michael C. O’Donnell, 244 shares, Herbert E. Bell, 124 shares, Walter G. Zoller, 125 shares, Edward W. Mc-Culloch, 233 shares, Wm. Siebert, 126 shares, George W. Ford, 25 shares, Albert Tebo, 4 shares, and Ransom D. Rundell, Wm. W. Richey, and John W. Hunter each one share. On January 27, 1908, in pursuance to due notice, the annual meeting of the stockholders of the Standard Company was held and adjourned to meet on January 30th following. At the meeting on January 27th, or in the interim preceding the meeting on January 30th, the financial affairs of the company were discussed by the stockholders, except Bingham, and after canvassing the situation Bell and Zoller, or Bell, acting for himself and Zoller, proposed that they would extend financial aid to the company to the extent of $50,000 upon two conditions: first, that they should be given a mortgage by the company on all its property to secure such loan, and second, that they should be given control of the board of directors of the company to be elected at the adjourned annual meeting on January 30th. These conditions were informally agreed to by all the stockholders, except Bingham, who had no knowledge of the proposed plan. At the adjourned meeting on January 30th, which was attended by all the stockholders, except Bingham, the following resolution was unanimously adopted:

“Resolved, that for the purpose of procuring additional money to be acquired for the uses and purposes of the company, and for the making of improvements, betterments and extensions,’ and for funding indebtedness of the company, and for other corporate purposes, the board of directors of the Standard Washed Coal Company be, and it hereby is, authorized and directed to cause to be executed, issued and delivered, for and in behalf of said company, the general mortgage six per cent, gold bonds of said company to an amount not exceeding in the aggregate $50,000, to be dated February 10, 1908, to bear interest from date at the rate of six per centum to mature in series at such time as the board of directors shall determine, both principal and interest to be payable in gold coin of the United States of the present standard weight and fineness at such place as the directors may determine. Such bonds shall contain a provision that they may be redeemed by the company on the date of any interest payment by the payment of the face value and accrued interest with a premium of five per cent, of the par value thereof, upon notice to be given as the board of directors may require.

“Be it further resolved, that the board of directors be, and they are hereby authorized and directed, in order to secure the payment of the said bonds, to cause to be executed, issued and delivered to Chicago Title and Trust Company, of Chicago, as Trustee, a mortgage or deed of trust upon all of the property, rights, privileges and franchises of the company now owned or hereafter to be acquired, including its rights to be a corporation, such mortgage or deed of trust to contain such provisions as may be deemed proper by the board of directors.”

At the time said resolution was adopted it was definitely understood by the stockholders that Bell and Zoller would personally take the entire issue of bonds thereby authorized.

The stockholders then also elected a board of directors consisting of seven members to hold office for the term of one year. The directors so elected were Walter Gr. Zoller, W. T. Delihant, Edward W. McCulloch, M. C. O’Donnell, John W. Hunter, Wm. W. Bichey and Ransom D. Rundell, the three last named being employees of the Bell & Zoller Coal Company, to each of whom one share of stock had been given to qualify them to act as directors of the Standard Company. Thus by the election of Zoller, Hunter, Richey and Rundell as four of the seven directors, Bell and Zoller were given control of the corporation. At a special meeting of the newly elected directors, held February 10,1908, a resolution was adopted which provided that for the purpose of procuring additional money to be acquired for the uses and purposes of the company, and for the making of improvements, betterments and extensions, and for funding indebtedness and for other corporate purposes, the president and secretary of the company be authorized and directed to execute, issue and deliver the general mortgage 6% gold bonds of said company to the amount of $50,000, said bonds to be dated February 10, 1908, and to become due and payable $4,000 in August and $6,000 in February of each year beginning August, 1908. Said resolution also authorized the execution of a trust deed or mortgage to the Chicago Title and Trust Co., conveying all the property of the company to secure the payment of said, bonds, and further provided that the said trust deed or mortgage, a copy of which was filed with the secretary of the company, and which was prepared for the resolution, be ratified, approved and confirmed. On the same day, February 10, 1908, bonds amounting to $50,000 were issued by the Standard Company, and a trust deed securing said bonds was executed in pursuance to said resolution. Said bonds and said trust deed provided that in case of default in the payment by the company of the principal and interest, the whole sum should become due and payable at the option of the holder or holders of the bonds. The resolution presented to the board of directors on February 10, 1908, and the form of the bonds and trust deed, copies of which were embodied in said resolution, were dictated by Bell, and said bonds and trust deed were prepared by an attorney employed by Bell. McCulloch and O’Donnell protested to Bell and Zoller against the propriety of the terms of payment imposed by the resolution and by the bonds and trust deed upon the ground that the other obligations of the company would preclude the possibility of its meeting the obligation imposed by the bonds and trust deed to pay $10,000 each year for 5 years, together with the semiannual interest, and were assured by Bell and Zoller that the bonds would be held by them personally, and if the company was unable to make the payments, they would take no advantage of the situation. Upon the issuance and delivery by the company of the bonds and trust deed to Bell and Zoller on February 24, 1908, they each gave to the treasurer of the company their individual check for $22,000 and their joint note for $6,000. The note was given to enable Bell and Zoller to apply $6,000 to the payment of the last instalment of a prior encumbrance upon the property of the company. This they subsequently did, or caused to be done, and their note was canceled and returned to them. Out of the $44,000 in cash realized by the company upon the checks of Bell and Zoller, the Standard Company on the same day paid to the Bell & Zeller Coal Company $27,849.39. The remainder of the proceeds of the bond issue was applied as follows: $360 for interest due on the last instalment of $6,000 of a prior encumbrance; $4,000 on a prior bond issue of $20,000; $3,000 for interest on unsecured notes; $5,000 due the Continental National Bank, and $1,500 to Bell and Zoller for the semi-annual payment of interest upon the $50,000 issue of bonds; leaving $2,290.61 to be otherwise applied. The unsecured debts of the company then approximated $90,000. The net loss of the company in the conduct of its business for the year 1908 was $12,725.25. The company was unable to pay the bonds maturing August 10, 1908. In December, 1908, or early in January, 1909, Zoller and the three employees of the Bell & Zoller Coal Company resigned as directors of the Standard Company, and one of the reasons assigned by Zoller for snch action was that the Standard Company did not then owe the Bell & Zoller Coal Company any money. It further appears that Bell is now the owner and holder of the entire issue of said bonds of the Standard Company, and that on April 15, 1909, suit was instituted at his instance in the Circuit Court of Sangamon County, Illinois, to foreclose said trust deed.

On July 20, 1908, James A. Bingham filed his amended bill in equity in the Superior Court, wherein, after alleging the facts above stated so far as the same had then transpired, he charged that the object and design of Bell and Zoller in so procuring said bonds and trust deed to be issued was to take advantage of the financial embarrassment of the Standard Company, and to secure a preference to the Bell & Zoller Coal Company over other creditors, and to obtain a mortgage lien on all the property of the Standard Company and by means of a foreclosure and sale thereunder to obtain ownership and possession of said property for the use and benefit of the Bell & Zoller Coal Company; that said proceedings were instituted and carried on for the purpose of wrecking the Standard Company and procuring all its property, assets and business at a fraction of their value to the prejudice, injury and loss of the creditors and stockholders of said Standard Company; that all of said proceedings and the acts of the board of directors of said Standard Company were unlawful, fraudulent, and invalid and were unknown to and were not acquiesced in, ratified or approved by him. The bill prays that said trust deed be set aside and declared null and void; that the said bonds in the hands of Bell and Zoller, or either of them, be canceled; that a receiver be appointed for said Standard Company to take charge of its business and affairs, and that complainant have such other and further relief in the premises as shall to the court seem just and equitable.

After answers and replications filed the cause was referred to the Master in Chancery to take the evidence and report the same, together with his findings and conclusions thereon. The master filed his report, wherein he found the facts substantially as heretofore recited, and recommended that a decree be entered dismissing the bill for want of equity. After overruling the objections and exceptions filed to said report of the master, the chancellor entered a decree in accordance with the said recommendation. To reverse such decree James A. Bingham, the complainant below, prosecutes this appeal.

The rule that a contract entered into between a corporation and one or more of its directors, where the corporation is not represented by a disinterested majority of the directors voting in favor of such contract, is voidable at the instance of a stockholder, whether the directors act in good faith or not, and whether the contract appears to be fair and just or not, is supported by undoubted authority and good reason.

In Higgins v. Lansingh, 154 Ill. 301, it was said:

“In Beach v. Miller, 130 Ill. 162, Roseboom v. Whittaker, 132 Ill. 81, and in Mullanphy Sav. Bank v. Schott, 135 Ill. 655, it was said by this court that so long as a corporation remains solvent, its directors may, with knowledge of its stockholders, deal with it, loan it money, take security or buy property of it, the same as a stranger may. It was further said, that during the solvency of the corporation the directors are the agents or trustees of the stockholders; and in Harts v. Brown (77 Ill. 226) it was said that a director, in so dealing, must act fairly, and be free from all fraud and oppression, and must act for the interest of the company, and impose no unfair or unreasonable terms. But it has not been held that the company or its stockholders may not avoid a contract requiring the action of the board of directors to make it, whether made in good faith or not, where so many of the directors are interested in the contract adversely to the company that the company is not represented by a disinterested majority of the directors voting. On the contrary, it is held that the directors, without the sanction of the stockholders, have no power to contract, for the corporation, with themselves or for the benefit of themselves, and if they attempt to do so the contract may be avoided by the corporation or its stockholders not consenting, whether the contract appears to be fair and just or not.” Citing Gilman, C. & S. R. Co. v. Kelly, 77 Ill. 426, and Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 320.

What was said by the court in the Higgins case, supra, was approved in Klein v. Independent Brewing Ass’n, 231 Ill. 594.

Appellees suggest that in some of the cases cited the court overlooked the distinction which exists between a loan by a director and a contract with a director, but we are unable to perceive any appreciable distinction between the bonds and trust deed involved in this case and a contract by a director with the corporation.

If the rule above stated is supported by authority and reason, it cannot be questioned that a contract which is oppressive, unfair and unjust, entered into between a corporation and a director, by the votes of such director and others under his control constituting a majority of the board, may be avoided at the instance of a stockholder who has not acquiesced therein. Indeed, counsel for appellees concede the right of a dissenting stockholder to avoid such a contract, even though it relates merely to the loaning of money by a director to the corporation.

Appellees, Bell and Zoller, were the sole owners of the capital stock of the Bell & Zoller Coal Company, a competitor of the Standard Company. At a time when the Standard Company was insolvent in law, being unable to pay its debts as they fell due in the usual course of business (Atwater v. American Exch. Nat. Bank, 152 Ill. 605; Kellogg-Mackay-Cameron Co. v. Schmidt Baking Co., 101 Ill. App. 209; Martin v. Hertz, 224 Ill. 84), Bell and Zoller offered to finance the company, provided they were given control of the board of directors. This demand was acquiesced in by the holder’s of a majority of the stock of the Standard Company, and Zoller, together with three employees of the Bell & Zoller Coal Company, who were each given one share of stock of the Standard Company for the sole purpose of qualifying them to act as directors, and who were unquestionably the creatures of Bell and Zoller, were elected directors, and with Zoller constituted a majority of the board. At the meeting of the newly elected board of directors held on February 10, 1908, when the resolution fbn'ug the terms of the loan which Bell and Zoller were to make to the Standard Company was adopted, Bell and Zoller were in complete control of the board, and dictated the action of the board in furtherance of their purposes and schemes. As in Adams v. Burke, 201 Ill. 395, the three employees of the Bell & Zoller Coal Company “were used merely as pegs to fill the required places.” The Standard Company was then and had been for more than a year doing business at a loss, and was unable to meet its current obligations. It was a time of unusual depression in the line of business in which the company was engaged. Notwithstanding the existing situation, the resolution then adopted by the directors provided for the payment of the principal of the loan of $50,000 in semi-annual instalments of $4,000 and $6,000. In view of the financial condition of the company the terms of the loan were not merely oppressive, they were impossible of performance. Upon this branch of the case the findings of the master are not without significance. They are as follows:

“No doubt Bell and Zoller knew that in all probability the company would not be able to pay the first instalments of the bonds as they came due, unless perhaps by letting other creditors wait.”

“Delihant, O’Donnell and McCulloch, three of the directors, and being themselves the owners of more than one-half of the stock of the company, tried to get from Bell and Zoller better terms as to the maturity of the bonds and being unable to do so, all voted for the resolution at the directors ’ meeting. They apparently made the best bargain they could. It may be that Bell and Zoller made hard terms, but I am not convinced that they were seeking to wreck the company, or had a fraudulent purpose towards the company and its stockholders.”

While the evidence does not disclose an express agreement, whereby, in consideration of making the loan, the unsecured claim of the Bell & Zoller Coal Company, amounting to $27,849.39, was to be immediately paid out of the proceeds of the loan, the inference is irresistible that such payment was made at the dictation of Bell and Zoller in reliance upon a well founded expectation that said claim would be so paid, and that such expectation moved them to make the loan. Furthermore, Bell and Zoller withheld from the company $6,000 for the purpose of paying off a prior mortgage encumbrance which was not then due, the payment of which was obviously made for the benefit of the trust deed that was given to secure their bonds. It also appears that $4,000 realized from the loan was applied in payment of a prior bond issue of $20,000, which application it may not be unreasonably presumed was made at their direction. While there is no evidence to show that Bell and Zoller openly threatened to wreck the Standard Company, it is manifest that the transactions involved were so manipulated by them that no other result could reasonably be expected, and that they must have foreseen such result. With their unsecured claim against the Standard Company amounting to more than one-half of the entire loan, fully paid, and the application of $10,000 of the proceeds of such loan to the satisfaction of prior encumbrances, the trust deed securing such loan placed them in a position where loss was impossible and the elimination of the Standard Company inevitable. The transaction was not only consummated by unlawful means employed by Bell and Zoller, but was characterized by bad faith on their part, and was unjust and unfair to the Standard Company and to appellant as a stockholder.

It is insisted by appellees that appellant is not entitled to a decree setting aside the bonds and trust deed here involved, because he has not offered to refund the money paid for the bonds or otherwise to place the parties in statu quo, and the well established rule that a party who seeks by a bill in equity to rescind a contract of sale for fraud on the part of the purchaser must, as a condition precedent, offer to repay the purchase price or to place the purchaser in statu quo is invoked in support of such insistence. This rule is not applicable to the facts in this case, nor is it properly invoked by appellees to preclude such relief as appellant may be entitled to, and a court of equity may administer. Appellant received nothing from the holder or holders of the bonds and trust deed in question, and is bound to return nothing. It is within the province of a court of equity by its decree to place Bell and Zoller in statu quo as near as may be. The wrong complained of was that of Bell and Zoller acting for the corporation, and restitution, if any is required, should be made by the corporation.

After the bill was filed in this case all of the stockholders of the Standard Company, except appellant, signed an instrument ratifying and consenting to the acts of the board of directors of the Standard Company in adopting the resolution authorizing the issue of the bonds and the making of the trust deed in question, and the acts of the officers of the company in issuing and executing said bonds and trust deed, and also declaring that said trust deed was intended to and does secure the payment of said bonds and is a lien on all the property of the company, subject to the lien of a prior mortgagor to secure the payment of certain bonds then amounting to $18,500, and directing the officers and directors of the company to employ counsel to defend this suit. It is insisted that this instrument constitutes a ratification by the corporation, acting through a majority of its stockholders, of the conduct of the directors in causing the bonds and trust deed in question to be issued and executed, and is operative to validate the same. Where the directors of a corporation enter into a contract with the corporation, which contract is voidable at the instance of an innocent stockholder, and it is made to appear that the conduct of the directors in negotiating such contract was actuated by fraudulent motives and the contract is unfair, unjust and oppressive, a ratification of such contract by a majority of the stockholders will not preclude a court of equity from setting aside the same at the instance of an innocent minority stockholder. Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 320; Higgins v. Lansingh, 154 Ill. 301; Bixler v. Summerfield, 195 Ill. 147; Klein v. Independent Brewing Ass’n, 231 Ill. 594.

The decree will be reversed and the cause remanded to the Superior Court with directions to that court to enter a decree declaring said bonds and deed of trust to be null and void and setting the same aside, and that Bell and Zoller be subrogated to all the rights of the several creditors of the Standard Company, to whom the proceeds of said bonds were paid, and in the event that the principal of the debts of said Standard Company so paid out of the proceeds of said bonds does not amount to $48,500, being $50,000 less $1,500 improperly paid for interest on said bonds, that said Bell and Zoller have a claim against said company for the amount of the deficiency, if any.

Decree reversed and remanded with directions.


source: Caselaw Access Project

author: Mr. Justice Baume

license: Public Domain

text:
    C. P. Goerz American Optical Company, Appellee, v. Jackson & Semmelmeyer et al., Defendants, on Appeal of Eleanor M. Semmelmeyer, Appellant.
    Gen. No. 17,931.
    1. Corporations—time when foreign corporation may qualify to do business. A foreign corporation by contract appointed a sales agent and upon the termination of the contract obtained a temporary injunction restraining the agent from using complainant’s name in advertising and from selling or disposing of goods on hand. After the termination of the contract and prior to filing the bill complainant obtained a license to do business in the state. Held, that the fact that complainant was not authorized to do business in the state while the contract was in force was no ground for dissolving the injunction.
    2. Injunctions—when officer of corporation is proper party defendant. Where, upon the termination of a contract appointing a corporation a sales agent, a hill is filed to restrain the corporation from using complainant’s name in advertising and from selling or disposing of goods on hand, a secretary of the corporation who is interested in and actively engaged in the business is properly named in the bill as a defendant.
    Appeal from the Superior Court of Cook county; the Hon. Farlin Q. Ball, Judge, presiding.
    Heard in the Branch Appellate Court at the October term, 1911.
    Affirmed.
    Opinion filed October 16, 1912.
    Rehearing denied December 4, 1912.
    George N. B. Lowes and Fred D. Jackson, for appellant.
    Silber, Isaacs, Silber & Woley, for appellee; Frederick Silber, of counsel
   Mr. Justice Baume

delivered the opinion of the court.

This is an appeal by Eleanor M. Semmelmeyer from an order of the Superior Court entered July 8, 1911, denying her motion to dissolve a temporary injunction theretofore issued at the instance of the C. P. Groerz American Optical Company, a New York corporation, restraining Jackson & Semmelmeyer, a corporation, together with Fred D. Jackson, its president and general manager, and the appellant, its secretary, and one of the active managers of its business, from using or displaying the name of the complainant upon the premises or doors or windows of the premises occupied by the defendant corporation in the city of Chicago; from using the name of complainant upon the letter-heads,' stationery, or advertising matter of the defendants, and from selling, disposing of, or attempting to sell, dispose of, convert, trade, exchange, give away or otherwise part with certain property consisting of photographic lenses, cameras, etc., particularly described in the bill of complaint.

The bill alleges that on October 30, 1908, the complainant entered into a written contract with the defendant corporation, whereby complainant appointed the defendant corporation its exclusive sales agent in Cook county for one year to sell upon commission certain goods consigned to it by complainant. A copy of the contract is embodied in the bill. The bill further alleges that during the period of almost a year following the date of said contract complainant consigned to the defendant corporation a large quantity of the goods manufactured and sold by complainant, from which goods said defendant corporation made sales to its customers and made some reports to complainant, as required by said contract, and thereafter from time to time paid complainant as required by said contract for the goods or portions thereof which said defendant had sold and reported sold to complainant; that acting under the terms of said contract complainant gave the defendant corporation 60 days notice of its election to terminate the same, and said contract was thereby terminated on October 30, 1909; that on November 1, 1909, Burke & James became the Chicago agents of complainant with the sole and exclusive right to handle its goods; that within a month prior to October 30, 1909, the defendant, Jackson, purporting to act for the defendant corporation threatened that he would not discontinue handling the goods manufactured and sold by complainant which he had on hand on November 1, 1909, and that he would make complainant as much trouble as he could in the Chicago market in respect to the sale of complainant’s goods; that about November 1, 1909, said Jackson stated to a representative of complainant that he did not have the goods belonging to complainant in the store of the defendant corporation and had hidden and secreted said goods and intended to dispose of the same at large and unusual discounts from the regular prices thereof. The bill further charges the defendant corporation with having made untruthful' reports of sales of goods consigned to it by complainant and with asserting unfounded claims for unliquidated damages as an off-set against the money due complainant on account of goods sold by the defendant corporation, and asks for an accounting. The bill further charges that the defendant corporation is advertising the name of complainant upon the door of the store of defendant corporation in Chicago and is advertising itself upon its letter-heads and stationery as agent of complainant. The bill is voluminous and sets out the transactions involved in detail, but the foregoing statement of its contents is sufficient for the purpose of determining the controlling question involved on this appeal.

The hearing upon the motion of the appellant, Eleanor M. Semmelmeyer, to dissolve the temporary injunction, was had upon the bill and proofs consisting of an affidavit and certain depositions.

Appellant’s main contention in support of her insistence that the motion to dissolve the injunction was improperly denied, is that at the time the contract set up in the bill was entered into, and during the time said contract was in force by Its terms, appellee, the C. P. Goerz American Optical Company, was a New York corporation transacting business in this state, although not duly authorized and licensed so to do, and was, therefore, inhibited from maintaining in the courts of this state any suit or action based upon such contract.

The bill upon which the preliminary injunction was granted was filed November 16, 1909, and on November 8th, preceding, appellee was duly authorized and licensed to transact business in this state. Upon this appeal we are not concerned with any feature of the bill or with any relief prayed therein, save such as relates to the injunction in question. It may be conceded that prior to November 8, 1909, appellee was transacting business in this state without license or authority so to do and yet appellee is entitled to a continuance of the injunction sought to be dissolved until a final hearing upon the merits. The question involved is to be determined by the existing status of the parties at the time of the filing of the bill. The proof discloses that at the time the bill was filed appellee was the owner and entitled to the possession of the property in question, then in the possession or under the control of the defendant corporation, without any reference to the contract set up in the bill, and that said corporation was then doing or threatening* to do the acts inhibited by the injunction. A corporation can only act through its officers or agents and appellant, as secretary of the defendant corporation and interested in and actively engaged in its business, was properly named in the bill as a defendant, and with her co-defendants was not improperly enjoined.

It is not necessary on this appeal to consider and determine the other questions sought to be raised. Appellant’s motion to dissolve the injunction was properly denied and the order will be affirmed.

Order affirmed.


text:
    The People of the State of Illinois, Defendant in Error, v. Edward S. Gard, Plaintiff in Error.
    Gen. No. 18,100.
    1. Appeals and errors—defective abstract may work affirmance. A judgment may be affirmed where the abstract of the record is so informal, defective and unintelligible as to make it necessary to have recourse to the record.
    2. Criminal law—when record cannot be impeached. Where an amicus curiae represents the People in a contempt proceeding in a criminal court, it cannot be contended that at the time the court entertained jurisdiction it was not legally or properly constituted because the state’s attorney was not then present, where the placita in the record recites the presence of the state’s attorney.
    3. Indictment and information—when verification is necessary. An information or complaint presented by a person other than the state’s attorney or attorney general must be verified, and an affidavit accompanying such information or complaint cannot be treated as a part thereof.
    4. Contempt—when precedent order is not necessary. A court of justice has the inherent power, where a contempt is direct and committed in the presence of the court, to punish the offender without a precedent order to show cause or the filing of interrogatories or a formal statement of the charge.
    5. Contempt—when information need not be verified. Where a police officer committed a direct contempt in ■ the presence of the court by making a false and evasive return to a writ of habeas corpus, it is immaterial that an information for contempt presented by an amicus curiae was not verified, since it is unnecessary to file an information.
    6. Contempt—when negative shake of the head constitutes contempt. A police officer shaking his head in the negative in response to a question on the hearing of a writ of habeas corpus whether there are any other charges against the prisoner, when in fact he has sworn out two warrants, commits a direct contempt of court, and it is immaterial that he makes the false return to the writ by a shake of his head instead of audibly speaking the word “no.”
    7. Evidence—judicial notice taken that shaking head in negative manner means “no.” It being a matter of common knowledge that persons frequently indicate their affirmance or denial or their assent or dissent by a nod or shake of the head, judicial notice will be taken, in a contempt proceeding against a police officer for making a false return to a writ of habeas corpus, that in shaking his head in a negative manner is response to a question he answered the question “no.”
    8. Contempt—:punishment not excessive. Where a police .officer commits a direct contempt in the presence of a court by making a false and evasive return to a writ of habeas corpus, a sentence of imprisonment in jail for sixty days is not excessive.
    Error to the Criminal Court of Cook county; the Hon. Kiokham Scanlan, Judge, presiding.
    Heard in the Branch Appellate Court at the March term, 1912.
    Affirmed.
    Opinion filed October 16, 1912.
    Rehearing denied December 4, 1912.
    Michael F. Sullivan, for plaintiff in error; Daniel Donahoe and James Hartnett, of counsel.
    John E. W. Wayman, for defendant in error; Le Boy Fairbank, Z. Hoffheimer and George W. Miller, of counsel.
   Mr. Justice Baume

delivered the opinion of the court.

This writ of error is prosecuted by Edward S. Gard to review the record of a proceeding in the Criminal Court, wherein said Gard was adjudged guilty of contempt of court and sentenced to imprisonment in the common jail of Cook county for a period of 60 days.

The abstract of the record is so informal, deficient and unintelligible as to make it necessary to have recourse to the record, and the judgment might well be affirmed because of the insufficiency of the abstract. We have, however, elected to examine the record itself and review the same upon a consideration of the oral argument of one of counsel for plaintiff in error. The record, abstract and printed argument of counsel for plaintiff in error are needlessly encumbered with what purport to be copies of a certain petition and motion on behalf of plaintiff in error filed in an original proceeding for mandamus against the sheriff of Cook county, lately pending in the Supreme Court, wherein, by the judgment of that court, the respondent was directed to apprehend plaintiff in error and deliver him to the jailor of Cook county. People v. Zimmer, 252 Ill. 9. The matters set np in said petition and motion and any reference to said petition and motion are obviously irrelevant here.

A few days prior to November 21, 1910, one William Schubert was arrested by a police officer of the city of Chicago and confined in a police station on suspicion that he had robbed one F. L. Bates. Schubert was detained in the police station without any formal complaint and without a warrant. On the day last named Schubert filed in the Cirminal Court a petition for a writ of habeas corpus, wherein he charged that he was unlawfully detained by the superintendent of police and prayed that writ be issued directed to said superintendent of police commanding him to bring the petitioner before the court forthwith. The writ was ordered as prayed, and issued on the same day, and in response thereto plaintiff in error, a police officer of the city of Chicago produced Schubert in court. In his oral return then made to the court, plaintiff in error stated that Schubert was held in custody on suspicion of having robbed said Bates, and that he, plaintiff in error, was then unable to produce Bates or to secure the attendance of other witnesses for the purpose of identifying Schubert. The court thereupon continued the further hearing upon the petition until November 23rd. On November 22nd, upon two complaints verified by plaintiff in error and filed in the Municipal Court, charging Schubert with vagrancy and adultery, warrants were issued out of said court for the arrest of Schubert and placed in the hands of plaintiff in error, or of Loftus, also a police officer, to serve. On November 23rd, when the hearing in the habeas corpus proceedings was resumed, plaintiff in error again produced Schubert in court and Bates, who was then present, was unable to identify Schubert as the person who had robbed him. At this stage in the proceedings the facts constituting the contempt charged are alleged to have taken place in the presence of the court, which facts are recited in the order of commitment as being within the personal knowledge of the court, as follows:

“That this court thereupon asked said Gard if he had any other charges against said Schubert, to which question said Gard, then standing within a few feet of this court, responded by shaking his head in the negative, meaning and intending to convey to the court by said shake of his head that he, said Gard, had no other or further charges, process or warrants against said Schubert of any kind upon or under which said Schubert could or should be held in custody and that said court so understood said action and acted in accordance therewith.”

Immediately following this incident, Schubert was, by the court, discharged from custody, and, accompanied by his counsel, left the court room and returned to the county jail. At the same time plaintiff in error, accompanied by an assistant state’s attorney, also went to the county jail where plaintiff in error intended to arrest Schubert upon the two warrants then in his possession issued out of the Municipal Court upon his complaint, and was about to execute such intention when he was intercepted by counsel for Schubert and requested to go before the court and explain his conduct. Plaintiff in error, accompanied by R. E. Cant-well, counsel for Schubert, then went before the court and what then occurred is recited by the court in the order of commitment, as follows:

“That about one-hálf hour thereafter (after the parties left the court room following the discharge of Schubert) said Gard and said Cantwell again appeared before this court in open court, when and where complaint against the conduct of said Gard was made by said Cantwell on behalf of said Schubert, and in response to interrogatories by counsel for said Schubert, and by this court, respondent Gard then stated that he had taken out in the Municipal Court of Chicago on the 22nd day of November, A. D. 1910, two warrants for the arrest of said Schubert, one charging the said Schubert with the crime of adultery and the other with the crime of vagrancy, and that he had such warrants in his possession at the time of the hearing of said habeas corpus proceedings which had taken place before this court on that date, November 23, 1910, and at the conclusion of which said Schubert had been ordered discharged by this court, and respondent Gfard then and there stated further that he took out said warrants for the purpose of arresting said Schubert when said Schubert was discharged in the said habeas corpus' proceedings, and that after the discharge of said Schubert had been ordered by this court, he, Card, went to the jail of said Cook county to again arrest said Schubert when he should be discharged under the order which had theretofore been entered by this court, and that he would have done so had he not been prevented from so doing by counsel for said Schubert.”

On November 30th following, the court upon its own motion appointed Gfeorge W. Miller, an attorney of the court, not the State’s Attorney or Attorney (General, as amicus curiae and to represent the People of the State of Illinois in a proceeding against plaintiff in error for contempt of court, and on the same day Mr. Miller, acting in that capacity, prepared, signed and filed in the court what purports to be an information, charging plaintiff in error with contempt of court in the respect heretofore indicated. The court, then also, entered a rule on plaintiff in error to show cause why he should not be held in contempt of court by December 2nd following. ' This information was not verified, but there were submitted and filed therewith the affidavits of three persons setting forth with more or less detail the facts alleged in the information upon which the charge of contempt of court against plaintiff in error was predicated. A series of interrogatories touching the matters alleged in the information were then prepared by Mr. Miller, which interrogatories plaintiff in error was required by the court to answer. Plaintiff in error then interposed a demurrer to said information which demurrer was overruled by the court. Thereafter, by leave of court, additional interrogatories were propounded to plaintiff in error which interrogatories he was ruled by the court to answer, and the hearing in the proceeding was continued from time to time until February 2, 1911, when the formal order or judgment adjudging plaintiff in error guilty of contempt was entered by the court. Said order or judgment, after reciting the main facts heretofore stated as being found by the court, including the recitals above quoted, concludes as follows:

“And the court doth find further that said respondent Gard at the time of said hearing of said habeas corpus proceedings before this court on the 23rd day of November, A. D. 1910, was guilty of making an insufficient, evasive and false return to said writ of habeas corpus, and was guilty of a direct contempt of the Criminal Court of Cook County, Illinois, from which said answers of said respondent Gard are insufficient to purge him, all against the peace and dignity of the People of the State of Illinois, as in said information charged.

“Wherefore, it is ordered and adjudged by the court that the rule to show cause heretofore entered herein against said respondent, Edward S. Gard, be and the sáme is hereby made absolute and that the respondent, Edward S. Gard, be and he is hereby adjudged guilty of the contempt of the Criminal Court of Cook county, Illinois, charged against him in and by said information and hereinbefore found by the court, and that said respondent, Edward S. Gard, be and he is hereby committed to the common jail of Cook county, Illinois, there to remain charged with the contempt aforesaid for a period of sixty days, or until otherwise sooner discharged in due course of law,” etc.

The point is made that at the time the Criminal Court entertained jurisdiction of the contempt proceedings against plaintiff in error it was not legally or properly constituted, because the State’s Attorney was not then present. The placita in the record recites the presence of the State’s Attorney, and as the record imports verity it cannot be impeached in that regard by what appears therein with reference to the appointment by the court of Mr. Miller as amicus curiae and to.represent the People in the proceedings then had.

An information or complaint presented by a person other than the State’s Attorney or Attorney General is required to be verified, and an affidavit or affidavits accompanying such information or complaint cannot, be treated as a part thereof. Long v. People, 135 Ill. 435; Samuel v. People, 164 Ill. 379. The information or complaint in this ease was not presented to the court by the State’s Attorney or Attorney General and was not verified, and was, therefore, informal, but in the view we take of the case such information or complaint, or any formal information or complaint, was wholly unnecessary to the jurisdiction of the court of the person of plaintiff in error, and of the subject matter of the contempt involved. Every essential element constituting the contempt of which plaintiff in error was adjudged guilty transpired in the actual presence and within the personal observation and knowledge of the court, or was admitted by plaintiff in error in open court, and the order of commitment entered by the court specifically so recites. A court of justice has the inherent power where the contempt is direct and committed in the presence of the court to punish the offender without a precedent order to show cause or the filing of interrogatories mr a formal statement of the charge. Rawson v. Rawson, 35 Ill. App. 505; Kyle v. People, 72 Ill. App. 171; Ferriman v. People, 128 Ill. App. 230. Conduct, in the presence of the court, which is calculated to impede, embarrass or obstruct the court in the administration of justice, or which tends to bring the authority and administration of the law into disrespect or disregard, constitutes a direct contempt of court and is punishable as such. Dahnke v. People, 168 Ill. 102.

It is conclusively established by the finding of the court, incorporated in the order of commitment, that in its presence and within its personal knowledge upon the occasion in question, plaintiff in error was asked by the court if he, plaintiff in error, had any other charges against Schubert, and that in response to such question plaintiff in error shook his head in the negative; that thereupon the court entered an order discharging Schubert from custody; that at the time the court asked plaintiff in error said question, and plaintiff in error so responded thereto, he had, and then knew he so had, in his possession a warrant for the arrest of Schubert upon another and different charge.

It cannot be and is not seriously urged that if, in response to thé question asked him by the court, plaintiff in error had audibly spoken the word “no,” or some equivalent word or words, or had replied to the question in the negative in writing, he would not- be guilty of a direct contempt of court, hut it is insisted that the court improperly and without justification construed the act of plaintiff in error in shaking his head as any answer in the negative, or its equivalent. It is a matter of common knowledge that persons frequently indicate their affirmance or denial or their assent or dissent by a nod or shake of the head and this practice is so common and its meaning so well understood that courts may take judicial notice of such practice and apply to it the commonly accepted interpretation. We are unable to perceive any merit in this insistence of plaintiff in error. Justice would be blind indeed if it was unable to discern the significance of a means of communication so universally indulged in and acted upon.

It is finally urged that the punishment imposed by the court was grossly excessive. The punishment to be inflicted in cases of contempt is a matter within the sound judicial discretion of the court imposing the punishment, and courts of appellate jurisdiction are averse to interfering with the exercise of such discretion, unless it is made to appear that such discretion has been arbitrarily and oppressively exercised. Hake v. People, 230 Ill. 174; People v. Kizer, 151 Ill. App. 6. We cannot say that the Criminal Court abused the discretion vested in it in this case.

There is no error in the record which requires a reversal of the judgment and the judgment will be affirmed.

'Judgment affirmed.


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    The Austin Powder Company, Appellee, v. Charles D. Crouch et al., Appellants.
    Gen. No. 16,464.
    Kbaud and deceit—when no reliance on representations. A creditor cannot recover for alleged fraud and deceit in representations concerning bonds given to secure payment for goods furnished, where it appears from the testimony of the creditor’s agent that he did not rely on the representations but independently investigated the value of the bonds through his own agent and relied solely on his favorable report.
    Appeal from the Circuit Court of Cook county; the Hon. Jesse A. Baldwin, Judge, presiding.
    Heard in the Branch Appellate Court at the March term, 1910.
    Reversed with finding of facts.
    Opinion filed December 11, 1912.
    Frederick P. Bead and Hamilton & Hamilton, for appellants.
    Childs & Childs and Charles Hudson, for appellee.
   Mr. Justice Baume

delivered the opinion of the court.

Appellee recovered a verdict and judgment in the Circuit Court against appellants, Charles D. Crouch, William T. Coad, Joseph H. Muhlke and Forest C. Murdock, for $5,465.51, in an action for damages for fraud and deceit.

The declaration contains three counts. The first count charges that while appellee was dealing in blasting supplies, the Dakota Pacific B. B. Co., a corporation organized under the laws of South Dakota, applied to it for explosives and offered seven of its bonds of $1,000 each as security, and referred appellee to the appellants for information respecting the character and value of said bonds; that appellants, knowing that said railroad was insolvent and that said bonds were not secured by a first mortgage and were not first mortgage bonds, falsely and fraudulently represented to appellee that the said bonds were first mortgage bonds and a prior lien on said railroad; that relying on said statements appellee gave credit and delivered goods to said Dakota Pacific B. B. Co. to the amount of $10,000; that said bonds were not first mortgage bonds and were not secured by a first lien on said railroad or any railroad, but were worthless, and said railway company was then insolvent, whereby appellee lost said goods and the price and value thereof. The second count charges that the appellants, Goad, as president, Muhlke, as vice-president, Murdock, as secretary, and one Cray, as treasurer, of said Dakota Pacific B. B. Co., issued or caused to lie made seven $1,000 bonds, numbered from 140 to 146 inclusive, and conspired together with appellánt Crouch, as agent, to cheat and defraud appellee, and applied to appellee to sell goods to said railway company on credit, on the security of said bonds, and stated to appellee that said bonds were first mortgage bonds of said railway company, etc. The third count does not differ substantially from the second count. To this declaration appellants pleaded the general issue.

The main facts, in the chronological order of their occurrence, are substantially as follows: In 1891 the Dakota, Wyoming and Missouri Biver Bailroad Company, was organized and incorporated under the laws of South Dakota for the purpose of constructing and operating a railroad in said state between Bapid City and Mystic, a distance of about 33 miles. Appellants, Goad and Murdock, were president and secretary respectively of said company, and appellant Crouch was the general contractor for the construction of the road. In October, 1891, a mortgage upon all the property of the company was authorized and executed to secure the payment of 630 bonds, each of the par value of $1,000 to be issued in amounts not exceeding $20,000 for each and every mile of fully completed and equipped road. Construction and equipment work was prosecuted until 1893, when, owing to the then prevailing financial panic, no more funds were available and the work ceased. Bight miles of road had then been completed and bonds to the amount of $160,000 had been issued. Appellant, Muhlke, had then personally loaned the company about $40,000, and had procured loans aggregating $55,000 from certain of his clients, and to secure the payment of said loans he held the bonds of the company for an equal amount. A considerable portion of the right of way of the said railroad had been laid out through government land under an act of congress which permitted public lands to be appropriated for the purpose of constructing railroads, which act also provided that if any section of said railroad should not be completed within five years after the location of such section, the right thereby granted should be forfeited as to any such uncompleted section of said railroad. A portion of the right of way of said railroad, so laid out through government land, passed through narrow canyons or defiles in which there was only sufficient space for the construction and operation of one railroad, and such portions of the said railroad were located, subject to a provision of said Act of Congress, as follows:

“That any railroad company whose right of way or whose track or road bed upon such right of way passes through any canyon, pass, or defile, shall not prevent any other railroad company from the use and occupancy of the said canyon, pass, or defile, for the purposes of its road, in common with the first located, or the crossing of other railroads at grade.”

When work ceased upon the said railroad in 1893, it was indebted in a large amount in addition to its bond issue of $160,000, for labor, material and supplies, and mechanics’ liens had been filed and judgments had been obtained against it by its numerous creditors.

In October, 1898, a charter was obtained for the incorporation of the Dakota Pacific R. R. Co., and said company was incorporated under the laws of South Dakota, and authorized to construct and operate a railroad between Bapid City and Mystic over substantially the same route which had been located by the Dakota, Wyoming & Missouri Eiver Eailroad Company. 'Appellants, Goad, Muhlke and Murdock, were elected directors and principal officers of said Dakota Pacific R. R. Co. as follows: Goad, president, Muhlke, vice-president, and Murdock, secretary. The particular purpose of organizing the last named company is stated by appellant, Goad, in his testimony, as follows: “Fearing that under the Act of Congress, under which this (the Dakota, Wyoming & Missouri River R. R. Co.) survey was made, the five years having elapsed, and the road not being completed, that the rights and construction work might be lost to the people that had furnished the money to do it, we organized the Dakota Pacific R. R. Co., so as to protect the rights of all parties concerned.”

A bond issue of $650,000 to he secured by a purported first mortgage on the property of the company was authorized and a contract entered into with the American Promoting and Trust Co. of Boston to underwrite $500,000 of said bonds. It was the purpose of the railroad company to retain $150,000 of said bonds and exchange the same for bonds of like amount of the Dakota, Wyoming & Missouri River R. R. Co., held by creditors of said last named company. The Dakota Pacific R. R. Co. also then secured options for the payment of all liens and judgments against the Dakota, Wyoming & Missouri River R. R. Co., and also secured options for the right of way of said last named company over private lands and took entire possession of said last named road and all of its assets and property. On May 15, 1899, the Dakota Pacific R. R. Co., by appellant, Goad, its president, and appellant, Murdock, its secretary, executed 650 bonds, each for $1,000, purporting to be its first mortgage gold bonds secured by a first mortgage on its right of way and all of its property, income, etc., and also then executed what purported to be a first mortgage or trust deed securing said bonds, to the International Trust Co. of Boston, as trustee. About the same time appellant, Crouch, was appointed agent of said company to secure material and supplies, and to carry on the construction of its proposed railroad. Acting in such capacity, Crouch interviewed E. S. Bice, the agent of appellee, for the purpose of negotiating for the purchase of explosives and other incidental supplies necessary for use in the construction of said road. Appellant, Muhlké, was informed of the negotiations then pending between Crouch and several dealers, including Bice, for the purchase of supplies and participated in a conference with Crouch and Coad, as to the means to be adopted in securing credit upon which the necessary supplies, etc., could be purchased. Appellant, Crouch, testified that Muhlke then said: ‘ ‘ If we could get credit around for the material we had to have, so that he would not have to pay for them, he would advance some money for the other things necessary for the prosecution of the work. Gro ahead and rustle, and if we could get those so he did not have to pay for them, he would furnish some money to do other things that those credits would not do for us.” Bice refused to sell supplies to the company unless payment therefor was secured and Crouch then proposed that Bice accept seven first mortgage bonds of the company as security for the payment of such supplies, and exhibited and gave to Bice a copy of one of said bonds and of the mortgage securing the same and also a copy of the contract between the railroad company and The American Promoting and Trust Company for the sale of said bonds. Crouch then also gave Bice a printed prospectus of the railroad and copies of reports by experts and statements made by others prepared and circulated for the purpose of inducing investors to purchase the bonds. Bice testified that Crouch then told him that the bonds were perfectly good; that he had some of them himself and was using them with other people in the purchase of supplies; that they were secured by a first mortgage on the property of the road, part of which had been constructed. Crouch does not deny that he made such statements to Bice. Bice refused to extend the line of credit applied for until he had made an independent investigation as to the bonds, and to this end he communicated with a business acquaintance in or near Boston, stating the name of the railroad and of the trustee in the deed of trust and of the underwriting company and requesting that inquiry and investigation be made as to the value of the bonds and he be advised. Shortly thereafter, Bice received from his correspondent a favorable report upon the bonds as security and immediately informed Crouch that he would accept the same. Bice testified that he would not have extended credit upon the bonds, if his correspondent’s reply to his communication had not been favorable. Coincident with the purchase by Crouch of the required explosives from Bice, as agent, the latter accepted seven of said bonds as security and entered into an agreement, as follows:

“This Memorandum of Agreement entered into tin's first day of September, A. D. 1899, between W. T. Coad, President Dakota Pacific Railroad Co., party of the first part, and E. S. Rice, agent, party of the second part, WITNESSETH:

“That whereas, first party has bought and is proposing to buy explosives in considerable quantities from second party, and desires some accommodation in respect to payment from first party, and said explosives are to be used in the construction of certain sections of the Dakota Pacific Eailroad, and first party desires to secure second party any balance that may be due at any time from first party to second party;

“Therefore, said first party has deposited with sec-, ond party, first mortgage bonds numbered from 140 to 146, inclusive, of said Eailroad Co. as collateral security, to secure payment of any balance at any time due from first party to second party, on account of the sale of explosives, as aforesaid, or otherwise; full and complete authority is hereby given to said second party, his agents and attorneys to sell any or all of said collateral or any additional collateral that may at any time be deposited with said second party at any time said second party may deem it for his best interests so to do at either public or private sale, without notice of the time, place or intention of second party to make such sale; such notice being hereby expressly waived, and to apply the proceeds of such sale or sales to the payment of any indebtedness remaining due from first party to second party including expenses of such sale, and the balance, if any, to remit to the party of the first part.

“Given under our hands and seals the day and year first above written.

Dakota Pacific Eailroad Co.,

By William T. Goad,

President, (Seal.)

E. S. Eice, Agent. (Seal.)”

Late in 1899 or early in 1900 The American Promoting & Trust Co., after remitting about $4,000 to the Dakota Pacific R. R. Co., became financially embarrassed and was unable to further fulfil its contract to underwrite the bond issue, and in the spring of 1900 further construction work ceased for lack of funds. The bonds amounting to $150,000, which were retained by the Dakota Pacific E. E. Co., had been then exchanged by it for bonds of the Dakota, Wyoming & Missouri Eiver R. R. Co., and issued to other creditors of both companies in payment of claims and to secure the payment of claims.

In 1902 appellee recovered judgments in the Circuit Court of Cook county, Illinois, and in the United States Circuit Court for the Western Division of South Dakota against the Dakota Pacific R. R. Co., for $4,177.63 for explosives sold to it, upon which judgment executions were issued and returned unsatisfied.

In August, 1903, in a proceeding instituted in the Circuit Court of Pennington county, South Dakota, to establish and foreclose certain mechanics’ liens, wherein all persons having any interest in or claim against the property of the Dakota Pacific R. R. Co. and the Dakota, Wyoming & Missouri Eiver R. R. Co. were made parties defendant, the said property was ordered sold to satisfy said liens and was thereafter sold to Charles D. Crouch and Francis Seiberling, trustees, for $35,052.29. On June 17, 1904, said Crouch and Seiberling, trustees, conveyed said property to the Missouri Eiver & Northwestern R. R. Co., a South Dakota corporation.

Of the numerous questions raised upon the record we deem it necessary to consider and determine but one, which "is decisive of the case against appellee. In the view we are impelled to take, it may be conceded that the right of way of the two railroad corporations was substantially identical; that the mortgage executed by the Dakota Pacific R. R. Co. covered substantially the same property described in the mortgage executed by the Dakota, Wyoming & Missouri Eiver R. R. Co.; that appellant, Crouch, acting with the knowledge and approval of the other appellants, for the purpose of securing credit, falsely represented to Bice, the agent of appellee, that the bonds in question were secured by a first mortgage upon the property described therein.

It is elementary that a party seeking to recover in an action for fraud and deceit must allege and prove that he relied upon the alleged false and fraudulent representations to his injury. In this case, it is clearly established by the evidence that Bice refused to rely upon the representations made- by Crouch as to the sufficiency of- the bonds as security, and refused to accept the bonds tendered until he had made an independent investigation as to the value of the bonds as security, and obtained information from the source selected by himself that the bonds were good security. Bice testified that he would not have accepted the bonds and extended credit upon them, if he had not received a report favorable to the bonds as security. There is evidence tending to show that at the time Crouch sought to purchase explosives and was refused credit by Bice, that he was indebted to Bice in a considerable amount for explosives purchased by him and used in the construction of the Dakota, Wyoming & Missouri Biver B. B. Co., and that the conduct of Bice in seeking independent information as to the value of the bonds as security was influenced by his want of confidence in Crouch and in his assurances. In view of the somewhat equivocal testimony of Bice to the effect that he did not think he mentioned the existence of a prior mortgage in his correspondence relative to the value of the bonds as security, and did not think he then knew there was a prior mortgage, it is not without significance that the correspondence itself was not produced by the witness or by appellee after due notice to produce the same.

We cannot escape the conclusion that in accepting the bonds in question as security Bice did not rely upon the representations of Crouch, but that he pursued an independent investigation through a correspondent of his own choosing, as to the value of said bonds as security, and relied solely upon the favorable report of such correspondent, and that, but for such report, he would not have accepted said bonds.

The judgment is reversed with a finding of facts to be incorporated in the judgment of this court.

Reversed with finding of facts.

Finding of facts: We find as ultimate facts that appellee, acting through its agent, E. S. Bice, did not rely upon the truth of the false representations made by the appellants or any or either of them, as alleged in the declaration, but that appellee, acting through its said agent, refused to rely upon the truth of such representations and conducted an independent investigation through a correspondent of its own choosing as to the value of the bonds in question as security, and that appellee, through its said agent, accepted said bonds as security upon the faith, solely, of the favorable report by its said correspondent of the value of said bonds.


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    Richard Binder, a minor, by Mary J. Binder his next friend, Appellee, v. Chicago City Railway Company, Appellant.
    Gen. No. 16,553.
    1. Negligence—degree of care. A person slightly more than sixteen years of age is chargeable with the same degree of care for his safety from injury by being struck by street cars as might reasonably be expected of an adult, where such person was born in Chicago, resided on a street on which cars were operated, was graduated from grammar school and attended a night high school.
    2. Negligence—unexpected peril. One compelled for his own safety to act suddenly in the presence of unexpected peril resulting from the negligence of another is not chargeable with contributory negligence if he fails to exercise such prudence as men usually exercise under ordinary circumstances.
    3. Street railroads—when no unexpected peril shown. A ease is not presented wherein a person is compelled to act suddenly in the presence of unexpected peril caused by another’s negligence where such person saw a street car about a block and a half away approaching a crossing and waited till a car about one hundred feet away going in the opposite direction had passed about twenty feet beyond him and then attempted to cross the tracks without looking again, but was struck by the car which he had seen approaching.
    4. Street railroads—failure to look for cars. In the absence of evidence of circumstances which excuse looking for approaching street cars, where looking would disclose the danger, a finding is not warranted that such failure to look is not negligence.

      5. Stbeet baileoads—contributory negligence. Plaintiff was guilty of negligence which proximately contributed to his injuries where on account of his age and experience he should be held to the same degree of care as an adult and where it seems that he saw a southbound street car about a block and a half away and waited near the tracks till a northbound car which was about one hundred feet away had passed twenty feet beyond him and then attempted to cross the tracks without looking but was struck by the southbound car.
    Action in case for personal injuries. Appeal from the Circuit Court of Cook county; the Hon. E. M. Mangan, Judge, presiding.
    Heard in the Branch Appellate Court at the March term, 1910.
    Reversed with finding of fact.
    Opinion filed December 11, 1912, on rehearing.
    James Maher and C. Le Roy Brown, for appellant.
    George E. Gorman, for appellee.
   Mr. Justice Baume

delivered the opinion of the court.

This is a suit by appellee, a minor, by his next friend, against appellant to recover damages for personal injuries alleged to have been occasioned by the negligence of appellant. A trial by jury in the Circuit Court resulted in a verdict and judgment against appellant for $5,000, to reverse which judgment this appeal is prosecuted.

At about 9 o’clock on the night of March 30, 1907, appellee, while crossing the street railway tracks of appellant on Hals ted street at or near the corner of 61st street, was struck and seriously injured by a southbound electric car operated by appellant on said Halsted street. The charges of negligence contained in the declaration are that appellant negligently drove, propelled and operated said south-bound car; that appellant so drove, propelled and operated said car without ringing any bell or giving any warning of its approach; that appellant operated said car across 61st street at a high and dangerous rate of speed, to-wit, 20 miles per hour; that appellant drove and managed said car across 61st street without having any headlight on said car; and that appellant negligently drove, propelled and operated said car across 61st street at a high and dangerous rate of speed without ringing any bell or giving any other means of warning of the approach of said car.

The main contention of appellant is that the evidence, considered most favorable for appellee, shows that appellee was guilty of negligence contributing to this injury.

In the consideration of this case it may be conceded that there is evidence tending to show the negligence of appellant in one or more of the respects charged in the declaration.

At the time of his injury the appellee, Eichard Binder, was slightly more than 16 years of age and resided with his parents on Peoria street between 60th and 61st streets. He was born in Chicago and resided for a number of years on Milwaukee avenue, on which street cars were operated. He had graduated from the grammar school and had attended a manual training high school for one year. Since July, 1906, he had been employed as an apprentice at the plumbing trade and pursued a course of study in a night school. On the night in question, appellee, accompanied by his younger brother, Harris, went to a reading room of the Public Library at 63rd street and Union avenue, where they remained until about 9 o ’clock, when they started for home. They walked west on 63rd street to Halsted street and north on the east side of Halsted street to or toward 61st street with the intention of crossing Halsted street and going west on 61st street to Peoria street. Midway between 60th and 61st streets was 61st Place; and midway between 61st and 62nd streets was 62nd Place.

Appellee testified on direct examination that, when he reached the curbstone on the east side of Halsted street at the south crossing of Halsted and 61st streets, he stopped and looked to see if any cars were approacking; that he saw a north-hound oar about 100 feet south of 61st street and saw a south-bound car about a block or a block and a half away, but could not tell whether the south-bound car was moving or standing ; that the north-bound car was so near he knew he could not cross the street, so he took his brother by the hand and walked© down within three or four feet of the track and let the north-bound car go by; that after it went by he walked in back of it and the south-bound car hit him; that the last time he saw the south-bound car before it hit him was when it was about a block or a block and a half away, and at that time he saw no other car between it and the crossing; that he did not notice anything of the south-bound car after he started across the crossing and before he was struck; that at the instant he was struck he thought the north-bound car was 15 or 20 feet from him, or about half way across 61st street. On his cross-examination appellee testified that when he saw the north-bound car coming he looked the other way and saw that the south-bound car was between 100 and 200 feet north of 60th Place; that he could not say whether the south-bound car was coming or standing when he saw it, but that it looked as though it was moving; that he could tell from the lights whether it was standing or moving, but did not recollect which it was doing; that he knew it was coming towards 61st street; that as he walked from the curb out to the track he looked toward the south-bound car and saw it coming; that it was then still about a block away; that as soon as the north-bound car went ■by he started ahead and never looked again to see where the other car was; that he just went right straight across and didn’t see the car until it struck him; that when he went ahead the north-bound car had not gone very far, perhaps 20 feet-—he did not look to see how far; that he did not look in that direction, as he stepped off the north-bound track, to see where the south-bound car was; that he paid no further attention, but kept going right along, walking at a regular gait—not slow and not fast; that he did not have any idea that the south-hound car might be there; that he did not think of it at all. On redirect examination he testified that he did not look to the north for the south-bound car after the north-bound car had passed, because the south-bound car was too far away and he thought it had no chance of getting to 61st street. On recross-examination he testified that he did not then have in mind the question whether the south-bound car would beat him to the track or not; that he saw it so far down he thought it would be safe to cross the tracks without other notice of the car; that he was not measuring whether the car would get there before he did; that he did not give the matter that thought; that it was not in his mind that it would not get there before he did. The testimony of Harris Binder, with reference to his observation of the two cars, and the manner in which the accident occurred was in substantial accord with the testimony of appellee. Both appellee and his brother, Harris, testified that they observed no headlight on the south-bound car as it approached 61st street, and that no gong was sounded or other warning given before appellee was struck.

Before appellee left the street curb and again while standing in the street waiting for the north-bound car to clear the crossing, he saw the south-bound car approaching the same crossing and knew that the southbound car would continue to run south without stopping, at least until it had cleared said crossing, and the presence of a headlight on the car, or the sounding of a gong by the motorman, would have afforded him no more positive knowledge that the south-bound car was approaching the crossing than he already had by actual observation. The only reasonable deduction to be drawn from the somewhat contradictory and confused testimony of appellee is that while the northbound car was passing the crossing, and after it had cleared the crossing, he gave no thought whatever to the south-bound car, which, he must be held to have known, was then approaching, but attempted to cross the south-bound track without looking to the north or exercising any care whatever to avoid a known impending danger. The age, intelligence, capacity and experience of appellee, as disclosed by the evidence, were such that upon the facts in this case, he was chargeable with the exercise of the same degree of care and caution for his own safety as might reasonably be expected of an adult.

The case presented by this record is not analogous to one wherein a person, without his fault, is compelled for his own safety to act suddenly in the presence of an unexpected and imminent peril resulting from the negligence of another. In such case he is not chargeable with contributory negligence, if in attempting to avoid such peril he fails to exercise such care and prudence as men usually exercise under ordinary circumstances. Nor is the case of Chicago City R. Co. v. Fennimore, 199 Ill. 9, relied upon by appellee, in point. There the plaintiff, having looked to the north and seeing no car approaching, was, while attempting to cross the tracks in the rear of a passing north-bound car, struck by a south-bound car which was insufficiently lighted.

It is insisted that, as appellee looked twice to the north before he attempted to cross the tracks, he was not required in the exercise of due care for his own safety to look to the north a third time. If having looked to the north twice before attempting to cross the tracks appellee had failed to see a car approaching the crossing, because of an insufficient headlight or some intervening obstruction, there would be some force in such insistence. Appellee, however, had in fact seen the south-bound car approaching before he attempted to crosp the south-bound track. While the north-bound car was passing appellee, it obstructed his further view of the south-bound car, but as soon as the north-bound car had cleared the crossing a distance of 15 or 20 feet, as he testified, his view was no longer obstructed, and if he had looked to the north, he must necessarily have seen the south-bound car, which he knew was approaching, in time to have avoided it. He did not fail to look, because looking would not have disclosed the presence of the approaching car, but because, as he testified, he “paid no further attention” —“did not think of it at all.”

Without evidence of conditions or circumstances which excuse looking, where looking would disclose the danger, a jury is not warranted in finding that such failure to look is not negligence. Von Holland v. Chicago City R. Co., 148 Ill. App. 320; Burke v. Chicago City R. Co., 153 Ill. App. 388; Koehler v. Chicago City R. Co., 166 Ill. App. 571.

Upon this record we are compelled to the conclusion that appellee was guilty of negligence which proximately contributed to his injuries and the judgment will be reversed with a finding of fact to be incorporated in the judgment of this court.

Reversed with finding of fact.

Finding of fact: We find as an ultimate fact that appellee was guilty of negligence which contributed to occasion the injuries alleged in the declaration.


text:
    City of Chicago, Defendant in Error, v. Blanche Hohman, Plaintiff in Error.
    Gen. No. 16,800.

      Dramshops—sales without license. A finding against one charged with keeping a hotel without a license wherein intoxicating liquor was sold in quantities less than one gallon without a license in violation of the Revised Municipal Code of Chicago, § 1348, cannot he sustained in the absence of evidence that four bottles of beer sold on the premises and to be drunk there was “lager heer,” malt liquor, or intoxicating, or that it produced intoxication in any degree.

      Error to the Municipal Court of Chicago; the Hon. Judson F. Going, Judge, presiding.
    Heard in the Branch Appellate Court at the October term, 1910.
    Reversed and remanded.
    Opinion filed December 11, 1912.
    Stedman & Soelke, for plaintiff in error.
    No appearance for defendant in error.
   Mr. Justice Baume

delivered the opinion of the court.

The complaint in this case charges that plaintiff in error “on the 31st of May, 1910, at the City of Chicago, not having a license to keep a hotel, did keep, conduct and maintain a hotel at 659 N. Clark street, Chicago, Illinois, wherein spirituous, malt, vinous and intoxicating liquor is sold in quantities less than, one. gallon, without having a license for same, in violation of “Section 1348 of the Revised Municipal Code of Chicago.” Upon this complaint a trial by jury in the Municipal Court resulted in a verdict against plaintiff in error, wherein the damages were assessed at $100, and judgment upon such verdict. There is no appearance by defendant in error in this court.

There is proof that plaintiff in error on the day and at the place named in the complaint sold to one John C. Caldwell four bottles of beer to be drunk and which was drunk upon the premises, hut there is not a scintilla of evidence that such beer was “lager beer,” or malt liquor, or intoxicating, or that the drinking of it produced intoxication in any degree.

Under the rule announced and adhered to in-this state the evidence was insufficient to warrant a verdict and judgment against plaintiff in error. Hansberg v. People, 120 Ill. 21; Hewitt v. People, 186 Ill. 336.

The judgment is reversed and the cause remanded.

Reversed and remanded.


text:
    Anna Bernick, Appellant, v. Illinois Commercial Men’s Association, Appellee.
    Gen. No. 16,809.
    1. Insurance—burden of proof. In an action on a certificate of insurance against accidental death, if the only question is whether death was accidental, the burden of proof is on plaintiff to show that the injury was not self-inflicted.
    2. Evidence—presumption that men are sane and, avoid death rebuttable. In an action on a certificate of insurance against accidental death the presumption that all men are sane and avoid injury and death may establish, prima facie, in the absence of proof to the contrary, that the injury which caused death was not self-inflicted, but such presumption is rebuttable.
    3. Insurance—when suicide shown. Verdict is properly directed for defendant in an action on a certificate of insurance against accidental death where the only reasonable conclusion from the position of the body on a bed in a locked room of a bath parlor after an attendant had thought he had heard a shot from such room, the manner in which a revolver, one chamber of which was discharged, was held, the location and character of the wound and an indentation in the wall, is that death was self-inflicted.
    Appeal from the Municipal Court of Chicago; the Hon. Stephen A. Foster, Judge, presiding.

      Certiorari denied by Supreme Court (making opinion final).
    Heard in the Branch Appellate Court at the October term, 1910.
    Affirmed.
    Opinion filed December 11, 1912.
    Edwin C. Crawford and John D. Sullivan, for appellant.
    James Maher, for appellee.
   Mr. Justice Baume

delivered the opinion of the court.

This is a suit by appellant against appellee instituted in the Municipal Court to recover $5,000 upon a certificate of insurance against accidental death, issued by appellee to John P. Bernick, the husband of appellant. At the close of the evidence for appellant a peremptory instruction tendered by appellee was ’ refused by the court, but at the close of all the evidence the court gave to the jury a peremptory instruction then tendered by appellee, and upon the directed verdict finding the issues for appellee, judgment was entered against appellant for costs.

The sole question involved is whether the evidence, together with all reasonable inferences deducible therefrom, considered most favorably for appellant, warranted the court in instructing the jury that appellant had failed to show that the death of the insured resulted, independently of all other causes, from bodily injuries received through external, violent and accidental means.

The facts are not controverted. At the time of his death on May 12, 1909, John P. Bernick was 36 years of age and resided with his wife and three children in St. Joseph, Minn. His domestic relations were free-from trouble. He was and had been for about six months a traveling salesman for a wholesale liquor dealer with headquarters in St. Paul. He had successively been constable and village marshal in St. Joseph, and deputy sheriff and sheriff of Stearns county. On May 10th he stopped at his home in St. Joseph a few hours, while on his way to St. Paul, and gave his wife $40. He then had, as it appeared to her, $200 or $300 in bills. After leaving St. Joseph for St. Paul on May 10th, the evidence does not disclose his whereabouts until about 11 o’clock on the night of May 11th, when he, together with two young men whom the attendant did not know, appeared at Debach Bros, bath parlors in St. Paul. Bernick and bis companions then had a turkish bath, after which each retired to a separate small room or apartment in which was a cot or small bed, to remain during the night. Burnick was not observed again until about 7 o’clock in the morning, when he was given an alcohol rub by the attendant, after which he told the attendant he wanted to lie down a little longer. "When Paul E. Conley, the day attendant, arrived, he noticed a call marked on the board for Bernick at 10 o’clock, and at that time he opened the door of Bernick’s room and saw him lying on the bed on his right side, beneath the covers, with his head exposed upon the pillow and his eyes open. Conley then told Bernick it was 10 o’clock, whereupon Bernick thanked him, and Conley shut the door, which closed with a spring lock, and left the room. About half an hour thereafter Conley heard a shot which he thought proceeded from the room occupied by Bernick, and immediately went to the door of the room where he listened and “heard a trickling sound as if liquid was running.” He then unlocked the door and saw Bernick with his underclothes on lying on his left side upon the bed wih his head toward the foot of the bed, the posterior part of his body about the center of the bed, his feet and legs below the knees extending over the side of the bed, his right hand grasping the butt of a revolver which was resting on the right side of his body with the muzzle turned upward, and the fingers of his right hand slowly relaxing. The cartridge in one chamber of the revolver had been discharged and the other chambers were loaded. A bullet had entered Bernick’s right temple about midway between the upper attachment of the ear and the outer margin of the eye and emerged from the left temple at a point slightly above the point where it had entered the right temple. The flesh on the right temple was lacerated, seared and powder burned. In the wall of the room, at a point about on a line with the head of Bernick, if he had been sitting on the bed when the shot was fired, was a fresh indenture apparently made by a bullet, which was found in the room. Bernick’s clothes were found hanging in the room and a search disclosed that he had only thirty-nine cents. He habitually carried a revolver which upon retiring for the night he placed under his pillow, and which one witness testified, he handled so carelessly that the witness had frequently warned him of the danger of so doing.

Where, as in the case at bar, the only question involved is whether the injury which caused the death of the insured was accidental or self-inflicted, the burden of proof is cast upon the plaintiff to show that such injury was accidental and not self-inflicted. Fidelity & Casualty Co. of New York v. Weise, 182 Ill. 496; Wilkinson v. Aetna Life Ins. Co., 240 Ill. 205.

While the legal presumption that all men are sane and are prompted by the natural instincts of self-preservation to avoid injury and death, may, in the absence of proof to the contrary, establish prima facie that the injury which caused death was not self-inflicted, such presumption is rebuttable by proof and by the circumstances in evidence surrounding the death. Wilkinson v. Aetna Life Ins. Co., supra.

The coroner’s certificate of his official investigation of the cause of the death of the insured states that the insured “met his death by gunshot wound (suicide).”

Upon the uncontroverted evidence and circumstances appearing in evidence the only reasonable conclusion to be deduced is that the injury which caused the death of the insured was self-inflicted and not accidental.

The position in which the body of the insured was found upon the bed, the manner in which the revolver was held by the insured and its position upon and against his body, the location and character of the wound, the course taken by the bullet and the location in the wall of the indenture made by the bullet, all unmistakably tend to show that, while sitting upright upon the bed with his legs projecting over the side of the bed, he directed the muzzle of his revolver horizontally towards and nearly against his right temple and so fired said revolver, and that the wound or injury made by the bullet was self-inflicted and not accidental.

A supposition is indulged in by counsel for appellant that the insured on May 11th turned over to his employer in settlement of the collections made by him, the money shown to have been in his possession on May 10th, but such supposition is not substantiated by proof which must have been available to appellant, if it existed.

The peremptory instruction was not improperly given to the jury and the judgment is affirmed.

Judgment affirmed.


text:
    C. H. Blakeslee for use of Charles Turgrimson, Defendant in Error, v. Make-Man Tablet Company, Plaintiff in Error.
    Gen. No. 16,810.
    1. Assignment of wages—when invalid. An assignment of wages is not operative or valid when made with reference to a new or different contract of employment not then in existence.
    2. Assignment of wages-—not made valid by power of attorney. .A power of attorney with an assignment of wages, made previous to the existence of a contract of employment, cannot give the authority to make such an assignment valid.
    Error to the Municipal Court of Chicago; the Hon. John D. Turnbaugh, Judge, presiding.
    Heard in the Branch Appellate Court at the October term, 1910.
    Reversed.
    Opinion filed December 11, 1912.
    Morse Ives, for plaintiff in error.
    Charles R. Napier and Charles S. McIlvaine, for defendant in error.
   Mr. Justice Baume

delivered the opinion of the court.

The defendant in error, for the use of Charles Turgrimson, brought suit in the Municipal Court against plaintiff in error to recover an amount claimed to be due from plaintiff in error to defendant in error for wages, and upon a trial "by the court without a jury there was a finding and judgment against plaintiff in error for $121.50, to reverse which judgment this writ of error is prosecuted.

The claim is "based solely upon a written assignment to said Turgrimson of wages earned and to he earned by defendant in error, together with an instrument designated “Powers of Attorney and Agreements.” These instruments were in fact executed and delivered by defendant in error on August 30, 1905, but the date of execution of the assignment was then left blank, as wasoalso the name of the person, firm or corporation tu be designated as the employer of defendant in error. The instrument constituting the assignment, powers of attorney and- agreements are too voluminous to be transcribed in this opinion. It is sufficient to say of them that they are “fearfully and wonderfully” devised. Nothing less than their exact reproduction can convey an adequate conception of the thraldom they seek to impose upon a hapless victim.

Defendant in error was not in the employ of plaintiff in error when said instruments were executed and delivered, and did not enter its employ until June, 1909, nearly four years thereafter, and continued in such employment under a commission contract until May, 1910.

Assuming to act under and by virtue of said powers of attorney, Turgrimson, on January 5, 1910, inserted in the instrument of assignment the name of plaintiff in error as the employer of defendant in error, and the date of its execution as the “5th day of January, A. D. 1910.” On the same day Turgrimson notified plaintiff in error that he held an assignment of the wages of defendant in error and requested plaintiff in error to protect him in the matter.

There is one sufficient bar to a recovery in this case.

An assignment of wages, if enforceable at all, is only enforceable when made with reference to a then existing contract of employment, but is not operative or valid when made with reference to a new or different contract of employment not then in existence. Mallin v. Wenham, 209 Ill. 252; National Biscuit Co. v. Consolidated Agencies Co., 153 Ill. App. 214; Stromberg, Allen & Co. v. Hill, 170 Ill. App. 323.

The assignment here involved was executed and delivered on August 30,1905, and was clearly inoperative to assign wages accruing under a contract of employment not then in existence, and which had no existence until June, 1909. What defendant in error could not do directly, Turgrimson could not do for him or in his name indirectly by virtue of the instrument executed August 30, 1905, purporting to be a power of attorney.

The judgment of the Municipal Court is reversed.

Judgment reversed.