text:
    Mercantile Trust Company of Illinois, Appellee, v. E. H. Kastor, Appellant.
    Gen. No. 20,295.
    1. Pledges, § 2

      —what constitutes pledge. Where an agreement stated that a corporation was desirous of “selling” accounts receivable, and that plaintiff agreed “to buy” such accounts as were “acceptable,” but such agreement provided that the corporation should pay all “losses” incurred in and about any account in default suggesting that the plaintiff would look to the corporation and not the debtor if the latter should be insolvent or would not pay, and also provided that the corporation should make entries on its books of the sale, and stating that the corporation was financially responsible, it was an agreement for the loaning of money to the corporation upon accounts receivable as security, and not a sale of such accounts.

      2. Pledges, § 2

      —when pledge distinct from sale. Provisions of . an agreement as to accounts receivable allowing the “buyer” to retain . accounts as “security,” held inconsistent with the idea of a sale of such accounts.
    3. Pledges, § 2*—what distinguishes sale from pledge. Where a corporation “selling” accounts agreed to guaranty all losses, the idea ■ of guaranty was inconsistent with the idea of a sale of the accounts, since it suggested that the plaintiff have additional security for the money advanced for the accounts.
    4. Corporation, § 448*—when loan contract ultra vires. A corporation organized under the General Incorporation Act of Illinois is prohibited from engaging in the business of loaning money (Hurd’s R. S., ch. 32, sec. 1, J. & A. 1f 2418), and such loan is absolutely void. ,
    5. Corporations, § 443*-—what effect of void agreement. An action cannot be maintained against a corporation as guarantor of a void agreement.
    6. Appeal and error, § 1802*—when reversal without remanding proper. The Appellate Court may reverse without remanding where the facts are different from the finding of the trial court and are recited, in the judgment, and when it reverses for errors of law which cannot be cured on another trial.
    Appeal from the. Municipal Court of Chicago; the Hon. Joseph Sabath, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1914.
    Reversed.
    Opinion filed January 26, 1915.
    Rehearing denied .February 6, 1915.

      Certiorari denied by Supreme ”Court (making opinion final).
    Statement by the Court. On October 8, 1913, the plaintiff, Mercantile Trust Company of Illinois, a corporation, commenced an action of the first class, in contract, against E. H. Kastor, defendant, on his • written guaranty in connection with a certain written ' agreement between the United States Kellastone Company, an Oklahoma corporation with principal place of business at Chicago, hereinafter referred to as the Kellastone Company, and the plaintiff. The plaintiff is an Illinois corporation, organized under the general incorporation act of this State. While by its charter it .was authorized, among other things, “to buy, sell, hold and own open acounts * * * and choses in action of any and every kind,” it was not authoiized to engage in the business of loaning money. On November 18, 1913, the cause was tried before a jury who returned a verdict finding the issues against - the defendant and assessing plaintiff’s damages at the sum of $3,140.12. The court instructed the jury that said contract between the Kellastone Company and the plaintiff, introduced.in evidence, “is construed by the court as a contract of sale and not a pledge or a loan,” to the giving of which instruction the defendant excepted. Judgment for $3,140.12 was entered upon the verdict and defendant excepted, and defendant seeks by this appeal to reverse the judgment.
    It was alleged in plaintiff’s statement of claim, in substance, that $4,410.32 was due plaintiff from defendant “as guarantor of the contract” between the Kellastone Company and plaintiff, under and by virtue of which contract the Kellastone Company “assigned and sold” to plaintiff certain of its accounts against three different parties, “which accounts remain unpaid by the debtors,” and which accounts the Kellastone Company “has failed to repay, pursuant to the terms of the agreement aforementioned, after due demand; wherefore, defendant, as guarantor, is liable to pay the amount of said accounts to plaintiff.” The accounts were set forth in said statement of claim as follows:
    “H. A. Jones, Los Angeles, California.
    7/26/1913: 60 To Mdse. D. & R. G. 62651 $1240.50
    8/28 ” 30 ” ” N. Y. C. 96551 885.00
    $2125.50
    J. O. Davis, Hinsdale, Illinois:
    8/27/1913: 30 To Mdse. 708.07
    Wolverine Building and Supply Co.,
    Detroit, Michigan.
    8/21/1913: 30 dys To Mdse. Car— 95868 810.00
    9/2 ” ” ” ” 9/2 10447 640.00
    4 637.50
    $2087.50

      Cr.
    Cash $40.00

      it 280.00

      9$ 50.75

      99 140.00 510.75
    1576.75
    §4410.32”
    The contract between the Kellastone Company and plaintiff, together with the guaranty signed by defendant and by two other persons (said contract and guaranty being partly printed and partly in writing, and the guaranty being on the reverse side of the paper), were attached to plaintiff’s statement of claim as an exhibit and made a part thereof and are as follows (italics ours):
    “Articles op Agreement, entered into at Chicago, Illinois, this second day of September, A. D. 1913, between United States Kellastone Company, an Oklahoma Corporation, hereinafter designated as first party, and Mercantile Trust Company of Illinois, an Ulinois Corporation, hereinafter designated as second party.
    Witnesseth, That Whereas, first party is desirous of selling to second party, Contracts, Accounts Keceivable and Choses in Action, hereinafter designated as Accounts, evidencing shipments of personal property;
    Now, Therefore, In consideration of the premises the parties agree as follows:
    First: Second party agrees to buy the Accounts belonging to first party which are acceptable to it, and to pay therefor 99% of the face value thereof on Accounts that are paid within 15 days from date of purchase by second party, and 98% of the face value thereof on Accounts that are paid within 30 days from date of purchase by second party, and for each 30 days thereafter that said Accounts are not' paid, the purchase price shall be reduced 1%. Payment to be made by second party as follows: 77% of the face value thereof upon acceptance by second party; the remainder, less all deductions, to be paid to first party immediately upon payment of any such Accounts to second party; provided, however, that if at the time of any settlement between the parties hereto, any of the Accounts purchased hereunder shall be in Default, payment of such remainder, while any of the Accounts are in Default, shall be discretionary with second party.
    Second : The term Default or loss as used in this contract is construed to mean the non-payment of an Account to second party at maturity; insolvency of the debtor; failure or refusal of a debtor to accept, receive and retain the property evidenced by such an Account. First party agrees to pay to second party all expenses, attorney’s fees and losses incurred by second party in and about any Account in Default.
    ’Third : It is agreed that contemporaneously with the purchase of Accounts, first party shall assign and set over to second party, such Accounts purchased by it, to the end that second party shall be and become subrogated to all of the rights possessed by first party in respect thereto. Second party shall have the right te endorse the name of first party on all evidences of shipments or payment pertaining to Accounts purchased hereunder. First party shall make entries upon its books disclosing the sale to second party of Accounts purchased hereunder, and all records pertaining thereto shall at all times be open to the inspection of the second party.
    Fourth: It is expressly understood that the purchase of Accounts by the second party is made upon representations in writing concerning the financial responsibility of the first party; statements of which are to be furnished second party once every calendar year.
    Fifth : First party is hereby given the right to make collections of Accounts purchased by second party and to that extent first party shall act as the Agent of second party. The agency hereby created may be terminated by either party upon written notice. During this agency, first party agrees to transmit and deliver to second party at its offices in Chicago, H1Ínois, on the day of receipt thereof, all evidences of payment of Accounts purchased hereunder in the original form received.
    Sixth : This agreement and all its provisions shall inure to and become binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
    In Witness Whereof, The parties hereto have caused these presents to be executed on the day and year first above written.
    UNITED STATES KELLASTONE CO., (Seal)
    By Aaron Bodbnweiser, (Seal),
    (Seal) President
    Attest: J. G-. McConnell,
    Asst. Secretary.
    MERCANTILE TRUST COMPANY OF ILLINOIS.
    (Seal)
    Attest: R. W. Pearson By A. D. Nast,
    Secretary. President.
    The following Guaranty and Waiver is to be signed by individuals.
    In consideration of the sum of One ($1.00) Dollar and other valuable considerations paid by MERCANTILE TRUST COMPANY OF ILLINOIS, to each of the undersigned, receipt of which is hereby acknowledged, they and each of them do hereby jointly and severally guarantee to MERCANTILE 'TRUST COMPANY OF ILLINOIS, its successors or assigns, the full, prompt and faithful payment, performance and discharge by U. S. KELLASTONE COMPANY, of each of the provisions and conditions of the agreement on reverse side hereof, or any other instrument given or executed in pursuance thereof.

    The undersigned hereby jointly and severally waive all notice of default by first party, and waive notice of acceptance of this guaranty of MERCANTILE TRUST COMPANY OF ILLINOIS, its successors or assigns.
    In Witness Whereof, We have hereunto set our hands and seals this 2nd day of September, A. D. 1913.
    Aaron Bodbnweiser (Seal)
    J. G. McConnell (Seal)
    E. H. Kastor (Seal) ”

      The defendant, Kastor, in his amended affidavit of merits, alleged, in substance: (1) That the contract sued upon (on the back of which was defendant’s guaranty) is one for the loaning of money and is ultra vires the plaintiff corporation; (2) that said contract, being for the loaning of money, is null and void for the reason that plaintiff, as a corporation organized under the General Incorporation Act of this State is prohibited by law from engaging in the “business of loaning money,” and that said guaranty is also invalid; (3) that said contract, being for the loaning of money, is usurious; (4) that plaintiff has collected moneys on certain accounts transferred to it subsequent to the execution of said contract and guaranty and applied such collections on accounts transferred to it prior to the execution of said contract and guaranty without authority from defendant; (5) that the amounts claimed to be due on the particular accounts mentioned in plaintiff’s statement of claim are incorrect; and (6) that at the time of execution of said contract and guaranty it was agreed between plaintiff and defendant that defendant should not be liable except in the event of ultimate financial loss sustained by plaintiff by reason of its dealings with the Kellastone Company, and after plaintiff had made all reasonable efforts to realize upon the accounts assigned to it.
    It appears from the evidence introduced at the trial that just prior to the making of the contract sued upon, dated September 2, 1913, the Kellastone Company, which company was engaged in manufacturing and selling a certain kind of building material, was “hard up” and needed money to run its business, and requested monetary assistance of the plaintiff. At this time the defendant, Kastor, had recently become a large stockholder in the Kellastone Company, though not the owner of a majority of the stock. Prior to the time of his acquiring said stock and prior to the execution of said contract, the Kellastone Company had entered into a similar contract with plaintiff, with which prior contract Kastor had no connection and under which a number of accounts receivable of the Kellastone Company had been assigned to plaintiff, and it was claimed by plaintiff that, because of certain “duplicated” and “crooked” invoices, it had suffered a loss in the transactions and that the Kellastone Company was indebted to it on said “old” accounts in a large sum. When the Kellastone Company suggested the making of the contract sued upon, plaintiff requested that Kastor, as well as Bodenweiser and McConnell, sign said so-called “guaranty and waiver.” Before Kastoi; would agree to sign the same, he demanded of and received from Nast, president of plaintiff, a letter wherein Hast wrote that “we look to you only to make good any financial loss we may suffer on account of our dealings with” said Kellastone Company. Shortly after, the execution of the contract sued upon, the Kellastone Company delivered over to the plaintiff various' of its accounts receivable, including the accounts mentioned in plaintiff’s statement of claim, aggregating, face value, more than $36,000, and on account of which plaintiff paid to the Kellastone Company, in cash, seventy-seven per cent, of the face value of said accounts, and no more. Each time any accounts were turned over to plaintiff, a certain so-called “certificate of indebtedness,” describing the accounts, was signed by the Kellastone Company and delivered with the accounts to plaintiff. One of these certificates, introduced in evidence, is dated September 2, 1913, and describes fourteen accounts of the aggregate face value of $11,318. It is therein “certified” that the persons named therein are indebted to the “undersigned” (Kellastone Company) for merchandise sold and delivered in the sums set opposite their respective names. Then follows a tabulation, showing respectively the dates of the bills, the names of the debtors, their addresses, the amounts, and the terms of payment, whether thirty or sixty days. Immediately under the tabulation of the accounts, and forming a part of said certificate, is the following:
    “For and in consideration of the sum of One Dollar ($1.00) and other good and valuable considerations to the undersigned in hand paid, the receipt whereof is hereby acknowledged, the undersigned hereby sells, assigns and transfers to Mercantile Trust Company of Illinois, a corporation, its successors or assigns, all its right, title and interest in and to the contracts and open accounts above named, together with the merchandise represented thereby and including the right of stoppage in transitu. The invoices which amount to Eleven Thousand Three Hundred Eighteen and no/100 Dollars ($11318.00) are herewith delivered to Mercantile Trust Company of Illinois. The undersigned guarantees that the moneys due on said contracts and open accounts are correctly set forth in above schedule; that full deliveries have been made on all said contracts and open accounts in accordance with the specifications of the buyer; that there is no contra account against any of them; that the amounts due on said contracts and open accounts as set out in said schedules are not disputed by the debtor and are not past due; that there are no offsets against said accounts or any of them for freight, drayage or other carrying charges, commissions, damages or any other counterclaims of any nature whatsoever; that the amount set out in each item of said schedule is net and that the payment of said item or items is not contingent on the fulfillment of any contracts, past or future, and that entries have been made on its books disclosing the absolute sale thereof to Mercantile Trust Company of Illinois, its successors or assigns. The undersigned further agrees to advise Mercantile Trust Company of Illinois, its successors or assigns, of any occurrence that may in any respect impair or reduce the amount shown to be due from debtors on any of the above named contracts or open accounts. It further agrees to submit to Mercantile Trust Company of Illinois, its successors or assigns, the original correspondence or other documentary evidence relating to any of the contracts or open accounts listed above whenever requested to do so by Mercantile Trust Company of Illinois, its successors or assigns.
    In consideration of the promises aforesaid, and the further sum of One Dollar to. the undersigned hereto- - fore paid, the undersigned hereby guarantees the payment in full to Mercantile Trust Company of Illinois, its successors or assigns, of the above named contracts and open accounts in accordance with the terms indicated and appearing thereon.
    Sep 3, 1913 339.54 —3% Eeg.
    8714.86
    2263.60
    $11318.00
    U. S. KELLASTONE COMPANY (Seal)
    Aaron Bodenweiser. ”
    Both of the items of the “Jones” account, mentioned in plaintiff’s statement of claim, and the first item of the “Wolverine” account, were included in said instrument and said accounts were assigned to plaintiff. Other similar instruments were subsequently signed by the Kellastone Company. The “Davis” account, mentioned in said statement of claim, and the second item of said “Wolverine” account were assigned to plaintiff by instrument dated September 4, 1913, and the third item of said “Wolverine” account by instrument dated September 12, 1913. The Kellastone Company received from the plaintiff, in cash, seventy-seven per cent., only, of the. face value of said Jones, Davis and Wolverine accounts, or the sum of $3,789.22. Subsequently $510.75 was credited by the plaintiff as having been received in cash by plaintiff on said Wolverine account, leaving a balance of money actually paid by plaintiff to the Kellastone Company, and not returned to plaintiff on said accounts, of $3,278.47. Plaintiff, however, about one month after said accounts were assigned to it, sued to recover from defendant as guarantor the face value of said accounts, less said sum of $510.75, or the net sum of $4,410.32. It does not appear whether said debtors were insolvent or not, and it does not appear that any suit was brought against any of them to enforce the collection of said accounts. As to the Jones account, Mr. Fast, president of plaintiff, testified, in substance, that plaintiff had been trying to collect it but without success, that Jones claimed a set-off and had refused to pay. As to the Davis account, he testified that plaintiff had been unable to locate Davis and that letters written to him had been returned. As to the Wolverine account, he testified that the same was in the hands of plaintiff’s attorneys in Detroit and that they reported they were unable to collect the balance. He further testified, in substance, that after ascertaining plaintiff’s inability to collect said accounts plaintiff “made demand on the Kellastone Company for the money under the contract”; that both Bodenweiser and Kastor came to plaintiff’s office about October 5, 1913; that he (Fast) showed them a notice he had from Jones and requested them to “repurchase” the Jones account; that he asked Kastor to “make good these losses ’ ’; that Kastor said that he did not want plaintiff to crowd him and that plaintiff would get its money, as he was good for it; that Kastor kept on giving excuses, but as no money seemed to be forthcoming plaintiff commenced this suit on October 8, 1913.
    On the “new” accounts, i. e., those accounts assigned after the making of the contract sued upon and of which the Jones, Davis and Wolverine accounts were a part, Fast testified that in round figures plaintiff had collected about $10,000; that nothing had been collected on said Jones, Davis and Wolverine accounts save as mentioned in the statement of claim; that before the contract sued upon was signed Kastor verbally agreed with Fast that plaintiff could take twenty per cent, of the collections made on said “new” accounts and apply that twenty per cent, on the shortage which existed on the “old” accounts, i. e., those accounts which had been assigned to plaintiff under said prior contract; and that the amount so applied was about $1,500. ' Kastor, however, denied making any such verbal arrangement with Hast, and the latter admitted that Kastor never gave him any written authority to make such application.
    It further appeared from the evidence that between the time the present suit was brought and the trial thereof, the Kellastone Company had gone into bankruptcy. Nast further testified that plaintiff had been unable to collect anything on certain of the accounts, other than the Jones, Davis and Wolverine accounts, assigned to it after the execution of the contract sued on, but the evidence does not show definitely what ultimate loss, if any, plaintiff will suffer by reason of the transactions with the Kellastone Company under said contract. On the three so-called “certificates of in-, debtedness” introduced, evidencing the assignments to plaintiff of the Jones, Davis and Wolverine accounts, as well as many other accounts, appeared the following indorsement, signed by plaintiff by its assistant secretary, viz.: “For value received, all right, title and interest in and to this contract or claim is hereby sold, assigned and transferred to The Hibernian Banking Association, as trustee, and payment in full is hereby guaranteed.” On the “certificates” dated September 2nd and September 4th, said assignments to the bank are each dated September 9, 1913, and on the “certificate” dated September 12th, said assignment to the bank is dated September 15, 1913.
    At the conclusion of plaintiff’s evidence, and again at the conclusion of all the evidence, the defendant ■ moved the court to instruct the jury to find the issues for defendant, but the motions were overruled and exceptions taken.
    Harris F. Williams, for appellant; Eldon M. Votaw and W. Scott Hodges, of counsel.

      Ringer, Wilhartz, Louer & Concannon, for appellee.

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

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

   Mr. Justice Gridley

delivered the opinion of the court.

The main contention of counsel for defendant is that there can be no recovery by plaintiff in this case because (1) the agreement of September 2, 1913, upon which the suit is based, amounts to the pledging of certain accounts receivable to secure the repayment of money advanced, and is, therefore, a mere money loaning agreement, and not an agreement for the sale of the accounts; and, (2) it being such an agreement, the same is not only ultra vires the plaintiff corporation but is illegal, in that plaintiff as a corporation, organized under the General Incorporation Act of Illinois, is not permitted by its charter to loan money.

We have been favored with elaborate arguments by the respective counsel and, after careful consideration of the same and of some of the cases cited and other cases, we have reached the conclusion that the agreement in question is an agreement for the loaning of money by plaintiff to the ¡Kellastone Company upon accounts receivable of the latter company as security, rather than on agreement for the sale of the accounts to plaintiff, and that the accounts in question in this case should rightly be considered as having been pledged with plaintiff as security for certain moneys loaned thereon to the Kellastone Company, rather tba.u as having been sold by the Kellastone Company to plaintiff. Other agreements, much resembling the agreement in question, have been construed recently by United States courts as not being agreements for the sale of accounts but rather as agreements pledging accounts as security for money loaned, and transactions under said agreements, quite similar to the transactions here disclosed, have been considered by said courts as loans rather than sales. In re American Fibre Reed Co., 206 Fed. 309, affirmed in Home Bond Co. v. McChesney, 127 C. C. A. 552, 210 Fed. 893; In re Grand Union Co., on petition of Hamilton Investment Co., a decision by the United States Circuit Court of Appeals, for the Second Circuit, opinion filed December 15, 1914. See 219 Fed. 353.

While in the agreement here in question it is stated that the Kellastone Company is desirous of “selling” to plaintiff accounts receivable and that plaintiff agrees “to buy” such of the accounts of the Kellastone Company as “are acceptable” to plaintiff, still, as it seems to ns, there are many features of the agreement which characterize it as an agreement for the pledging rather than the sale of accounts. We shall make mention of some of these features: (1) In the second paragraph of the agreement the term “default or loss,” as used therein is construed to mean (a) the nonpayment of an account to plaintiff at maturity, (b) insolvency of the debtor, or (c) failure or refusal of the debtor to accept, receive and retain the property evidenced by an account; and the Kellastone Company agrees to pay to plaintiff “all expenses, attorney’s fees and losses” incurred by plaintiff in and about any account in default. This provision suggests that plaintiff will look to the Kellastone Company and not to the debtor, in the event of plaintiff’s failure to realize on an account at the maturity thereof or in the event of the insolvency of the debtor, and also suggests the right on the part of plaintiff, in either of those events, to demand and enforce repayment to it from the Kellastone Company of the moneys previously advanced on said account. The conduct of the parties is in conformity with this construction. Hast testified that when the accounts in question were not paid at maturity plaintiff “made demand on the Kellastone Company for the money under the contract,” and afterwards demanded that Kastor, as guarantor, “make good these losses.” In 35 Cyc. 39, it is said: “If there is a right reserved by the buyer to demand and enforce repayment the transaction is not a sale but in the nature of a mortgage.” In Robinson v. Farrelly, 16 Ala. 472, it was held that where the vendee retains the right to demand repayment of the vendor, notwithstanding the purchase, it is conclusive to show that the transaction was intended as a security and not a sale. If it was the intention of the parties to the agreement to make a sale of such accounts of the Kellastone Company as were acceptable to plaintiff, why should the former agree to pay the latter “all expenses, attorney’s fees and losses ’ ’ incurred by the latter in and about any account in default? The provision appears to us as negativing any intention of a sale of the accounts. The plaintiff does not take the risk of loss on the accounts. (2) In the third paragraph of the agreement it is provided that the Kellastone Company “shall make entries upon its books disclosing the sale” of the accounts to plaintiff, and in the so-called “certificates of indebtedness,” signed by the Kellastone Company at the time the accounts were assigned, the Kellastone Company “guarantees” that “entries have been made on its books disclosing the absolute sale” of the accounts to plaintiff. If there really was to be a sale of the accounts, such provisions were not needed. In the case of Bright v. Wagle, 3 Dana (Ky.) 252, Bright executed a writing to the effect that he had bargained and sold to Wagle “one negro boy named Daniel,” for a certain sum named, and it was stated in the writing that it was understood that Bright was to have the right of “repurchasing” said boy by paying said sum by a certain date, together with twelve per cent, on the amount, and that “the negro aforesaid is to remain in the possession of said Wagle.” In construing the writing not to be a contract for the sale of the slave, the Court said (p. 257); “There is an express stipulation * * * that the negro was to remain in the possession of Wagle. If the minds of the parties were not running upon a loan, and a mortgage, pledge or lien upon the slave, to secure it, why the introduction of this stipulation? If it were a sale, and so intended by the parties, no reasonable man could doubt, but that the property and immediate possession thereof would pass to the vendee, without any special stipulation to that effect.” (3) In the fourth paragraph of the agreement it is provided that the purchase of accounts by plaintiff is made upon representations in writing concerning the financial responsibility of the Kell cost one Company. If a sale of accounts to plaintiff were contemplated plaintiff would not be concerned about the financial responsibility of the seller, but rather with the financial responsibility of the party owing the accounts. (4) In the first paragraph of the agreement it is provided that seventy-seven per cent, of the face value of the accounts shall be paid upon their acceptance by plaintiff, and that “the remainder, less all deductions,” shall be paid to the Kellastone Company immediately upon payment of any such accounts to plaintiff, but there is the proviso that if, at the time of any settlement between the Kellastone Company and plaintiff, ‘ ‘ any of the accounts purchased hereunder shall be in default” (i. e., not paid to plaintiff at maturity, or the party owing the account be insolvent, etc.), “payment of such remainder, while any of the accounts are in default, shall be discretionary” with plaintiff. We think that this means that the parties to the agreement intended that plaintiff might retain the balance of cash received by it on any paid account or accounts, over and above the seventy-seven per cent, thereof paid by it at the time said account or accounts were assigned to it, as long as any other account remained in “default,” and so retain said balance as security on said account so in default. We do not think that these provisions, taken in connection with the other provisions contained in said first paragraph, are consistent with the idea of a sale of the accounts. In the American Fibre Reed Co. case, supra, the contract there in question had provisions very-similar to the provisions in said first paragraph of the agreement here in question, and on the review of that case, in Home Bond Co. v. McChesney, supra, the Court said (p. 894): “'The record discloses to us a mutual intendment that the right at least to 20 per cent, of the full value of each of the accounts receivable was always to remain in the bankrupts, except only for purposes of security; this right could not be both sold cmd owned by the bankrupts.” (5) In the “guaranty and waiver,” signed by defendant and others, it is stated that the undersigned jointly and severally guaranty to plaintiff the full and prompt “payment, performance and discharge” by the Kellastone Company of each of the provisions and conditions of the agreement, i. e., that the Kellastone Company will, among other things, pay plaintiff11 all expenses, attorney’s fees and losses” incurred by plaintiff in or about any account in default. We think that this provision is also inconsistent with the idea of a sale of the accounts. It suggests that the parties to the agreement intended that plaintiff should have additional security for the money advanced on accounts beyond the security afforded by the accounts themselves. (6) Before the agreement was signed the evidence shows that the Kellastone Company was “hard up” and needed money to run its business and had applied to plaintiff for monetary assistance, and that plaintiff insisted upon defendant signing said “guaranty and waiver” before it would enter into the contract. (7) There are many usurious features in the agreement, and we think .that the statement of the Court in the case of In re American Fibre Reed Co., supra, (p: 318) relative to the contracts there in question is applicable to the agreement here in question, viz.: “In so far as the contracts in question here use words fit for a contract of purchase, they are mere shams and devices to cover loans of money at usurious rates of interest.”

The plaintiff is a corporation organized under the General Incorporation Act of Illinois. As such a corporation it is prohibited from engaging in the “business of loaning money” (sec. 1, ch. 32, Hurd’s R. S. J. & A. ¶ 2418). Holding as we do that the agreement here in question is an agreement for the loaning of money by plaintiff to the Kellastone Company, it follows, we think, that the agreement is absolutely void, that no action could be maintained thereon by plaintiff against the Kellastone Company and that the doctrine of estoppel could not apply. In re Grand Union Co., supra; Central Trans. Co. v. Pullman’s Palace Car Co., 139 U. S. 24; National Home Building & Loan Ass’n v. Home Sav. Bank, 181 Ill. 35; Steele v. Fraternal Tribunes, 215 Ill. 190. And we think it also follows that no action can be maintained by plaintiff against defendant as guarantor of a void agreement. 20 Cyc. 1420.

In the “guaranty and waiver,” which the defendant signed and which is on the reverse side of the paper containing the agreement between the Kellastone Company and plaintiff, it is provided that defendant guaranties to plaintiff the full, prompt and faithful payment, performance and discharge by the Kellastone Company of each of the provisions and conditions of the agreement “on the reverse side hereof, or any other instrument given or executed in pursuance thereof.” In the so-called “certificates of indebtedness,” signed only by the Kellastone Company when the accounts in question were assigned by it to the plaintiff, it is stated that “the undersigned hereby guarantees the payment in full” to plaintiff “of the above named contracts and open accounts in accordance with the terms indicated and appearing thereon. ” It is to be noticed that these instruments are not signed by the defendant, Kastor. It is here urged by plaintiff’s counsel that these instruments should be considered as a part of defendant’s guaranty because they are instruments “given or executed in pursuance of” said agreement, and that this fixes the liability of defendant in this ease. We cannot assent to this, for reasons stated in American Credit & Trust Co. v. Wits, 186 Ill. App. 184, 187. And in onr opinion the decision in that case discloses other good reasons in addition to those herein-above mentioned, why there can be no recovery in the present case against the defendant as guarantor. In view of the foregoing, it is unnecessary for us to discuss the other points raised by counsel for defendant.

In Marty Bros. & Harty Co. v. Polakow, 237 Ill. 559, 567, it is said: “The Appellate Court may reverse without remanding under two conditions: First, where it finds the facts in controversy different from the finding of the trial court and recites the ultimate facts so found in its judgment; second, when it reverses for errors of law which cannot he obviated or cured on another trial.” We are of the opinion that under the facts of this case the trial court erred in refusing to grant the motions of defendant, made at the conclusion of plaintiff’s evidence and again at the close of all the evidence, to instruct the jury to find for the defendant, and in entering the judgment appealed from, and that there can be no recovery by plaintiff of defendant on the contract and guaranty sued upon, at any subsequent trial. The judgment of the Municipal Court will be reversed, but the cause will not be remanded.

Reversed.


source: Caselaw Access Project

author: Mr. Justice Smith

license: Public Domain

text:
    B. J. Regnell Company, Appellee, v. Richard A. Meiswinkel, Appellant.
    Gen. No. 20,287.
    (Not to be reported in full.)
    Abstract of the Decision.
    1. Building and oonstbuction contbacts, § 49

      —when delay in performance waived. Where a contractor was allowed to proceed with work after the time fixed for its completion, the owner waived the right to object or claim damages for the delay in completing the work, it appearing that the delay was due to other contractors over whom the plaintiff contractor had no control.

      Appeal irom the Municipal Court of Chicago; the Hon. Oscab M. Tobeison, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1914.
    Affirmed.
    Opinion filed January 26, 1915.
    Statement of the Case.
    Action by B. J. Begnell Company against Bichará A. Meiswinkel upon a contract in writing to do carpenter work on a building for $21,900. Payments were to be made on architect’s certificates, the final certificate being conclusive evidence of performance of the contract. Plaintiff alleged that it secured a final architect’s certificate for $2,838, that it furnished extras amounting to $526.56, that defendant paid $1,500 and refused to return the final architect’s certificate. Plaintiff’s claim was for $1,338, balance due under the certificate, and $526.56 for extras, with interest. At the trial defendant elected to stand by its affidavit of merits and the court entered judgment for the plaintiff for $1,540.89, and ordered that the cause proceed to trial as to the balance of the claim and interest. To reverse such judgment, defendant appeals.
    Campe, Koebel & Mechling, for appellant.
    Joseph G. Sheldon, for appellee.

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

   Mr. Justice Smith

delivered the opinion of the court.

2. Building and construction contracts, § 65*—when architect’s certificate conclusive as to performance. Where a contract provides that the architect’s final certificate shall be conclusive evidence of performance of the contract, such certificate, in an action of assumpsit brought thereon, is conclusive evidence, unless it is shown that it was obtained by fraud or mistake.

3. Judgment, § 106*—when judgment l>y default proper. Where averments of an affidavit of merits and set-off are no answer to a plaintiff’s claim based on a contract, and the admission of defendant render it unnecessary to introduce evidence to support the plaintiff’s claim, the court is authorized under sections 55, 56 of the Practice Act (J. & A. jflf 8592, 8593) to enter judgment as by default for the amount of the plaintiff’s claim.


text:
    Anna May Reid Snell, Appellant, v. Charles W. Snell, Appellee.
    Gen. No. 20,300.
    1. Divorce, § 172

      —when persons may not remarry. Under the statute an attempted marriage less than two months after the divorce of the husband from another woman is void.
    2. Marriage, § 29*—what allegations are material in seeking annulment. In a bill to annul a marriage and set aside a divorce, the fact that the complainant did not know of the defendant’s prior marriage or divorce within the time prohibited by statute for remarrying is immaterial to her right to relief and need not be alleged.
    3. Divorce, § 58*—when decree void. Where a marriage is void, a divorce thereafter granted based on the void marriage is void.
    4. Marriage, § 29*—what contention cannot he maintained in seeking annulment. In a bill to annul a marriage and set aside a divorce, the contention that the complainant does not come into court with clean hands cannot be made the basis of a legal defense where the State is an interested party.

      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, 1914.
    Reversed and remanded with directions.
    Opinion filed January 26, 1915.
    H. A. Barnhardt, for appellant.
    No appearance for appellee.

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

   Mr. Justice Smith

delivered the opinion of the court.

It appears from the averments of the bill of complaint filed by appellant December 2, 1913, that on June 18, 1907, at Chicago, the defendant to the bill, appellee, was granted a decree of divorce from his then wife, Nettie Snell, on the ground of desertion, and in less than two months thereafter, on August 14, 1907, he married the complainant, Anna May Reid Snell, at Crown Point, Indiana. It further appears that complainant did not know of the former marriage and divorce of defendant at the time of the ceremony at Crown Point, and that on November 4, 1913, the complainant was granted a divorce from the defendant on the ground of adultery; that complainant did not know on November 4, 1913, nor until sometime thereafter that her marriage to the defendant was void and that she never was the legal wife of the defendant.

The bill prays for setting aside the divorce and to annul the marriage. The defendant, appellee here, interposed a demurrer to the bill, setting up as grounds the prior divorce of complainant; that complainant does not come into court with clean hands because she does not allege that she did not know of the former marriage and divorce of defendant at the time of procuring her divorce and that complainant- should not be heard to allege that she did not know her marriage to the defendant was void.

The chancellor sustained the demurrer and dismissed the bill for want of equity.

The attempted marriage between the complainant and the defendant, as shown by complainant’s bill, was not voidable but was absolutely void under the statutes of Illinois. Nehring v. Nehring, 164 Ill. App. 527; Selauzis v. Selauzis, 255 Ill. 314; Wilson v. Cook, 256 Ill. 460; Olsen v. People, 219 Ill. 40.

Whether the complainant knew or did not know of the defendant’s prior marriage or divorce within the time prohibited by statute for remarrying is immaterial to her right to relief, and it Is, therefore, unnecessary to allege that she knew or did not know of the defendant’s prior marriage and divorce. The complainant does not allege that she did not know that she was never the legal wife of the defendant until after the decree of divorce was granted; that she had ground for the annulment of her supposed marriage to the defendant. If the marriage was void and the averment of the bill was that it was void, the divorce thereafter granted based upon the void marriage was likewise void, futile and of no effect. The complainant in this case has the right to have, under the allegations of her bill, the marriage declared void and of no effect, and thus her marital rights and condition established by the-decree.

The ground stated in the demurrer, that the complainant .does not come into court with clean hands, cannot be made the basis of a legal defense to the bill where the State is an interested party, as in this case. In Selauzis v. Selauzis, supra, the court held that parties to an illegal agreement were in pari delicto and without remedy against each other so far as property rights are concerned, and the law will refuse to lend its aid to either of them, and on page 319 of the opinion held as follows:

“If, as a consequence of his illegal act, defendant in error has suffered a wrong, he cannot look to the law for redress. Public policy will not permit him to make his own illegal act the foundation of a legal or equitable right. The rule of par delictum will not be applied, however, to prevent relief in a suit to annul and set aside a void marriage. That is a matter in which the State is an interested party. Under the facts as found "by the court the marriage should be set aside-as void, but the parties are entitled to no other or further relief.”

The chancellor erred in sustaining the demurrer to the hill and dismissing the bill for want of equity. The decree is reversed and the cause remanded with directions to overrule the demurrer and proceed in the case in conformity with the views herein expressed.

Reversed and remanded with directions.


text:
    Ira M. Cobe, Appellee, v. Frederick H. Bartlett, Appellant.
    Gen. No. 20,332.
    1. Vendor and purchaser, § 16

      —what is option contract. A contract whereby a plaintiff was under no obligation to sell, but the defendants were under obligations to buy certain premises if acquired through foreclosure of a trust deed, is free from ambiguity and uncertainty, and is an option contract to sell in the event of the happening of the condition.
    2. Vendor and purchaser, § 65*—when contract not ambiguous. Under a contract whereby a plaintiff acquiring premises through foreclosure of a trust deed was to sell the same to the defendant, there was no ambiguity as to the subject-matter of the purchase, the term “premises” being usually used to signify land and its appurtenances.
    3. Vendor and purchaser, § 65*—when vendor has no title to convey. Where a contract provided that a plaintiff was to sell certain premises if acquired under a trust deed, and such plaintiff had no title to the premises as against the mortgagor or his assigns or grantees, but only took a master’s deed under foreclosure of a second trust deed, he had no title to the premises and the deed tendered by such plaintiff would have conveyed no title.

      4. Mortgages, § 96

      —what is interest of mortgagee. The fee title held by a mortgagee is in the nature of a base or determinable fee measured by the mortgage debt, and when paid the mortgagee’s title is extinguished by operation of law.
    Appeal from the Municipal Court of Chicago; the Hon. James C. Martin, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1914.
    Reversed with finding of facts.
    Opinion filed January 26, 1915.
    Rehearing denied February 6, 1915.

      Certiorari allowed by Supreme Court.
    Vail & Vette, for appellant.
    Foreman, Levin & Robertson, for appellee.

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

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

   Mr. Justice Smith

delivered the opinion of the court.

This action was brought by Ira M. Cobe against Frederick H. Bartlett and Clinton S. Woolfolk to recover the alleged loss and damages suffered by the plaintiff by reason of the failure on the part of defendants to perform their obligations under a written contract between the parties. Woolfolk died during the trial and the suit proceeded against Bartlett alone.

The action was tried before the court without a jury. The court found the issues in favor of the plaintiff and entered judgment against Bartlett for $25,144.14.

The parties will be referred to in this opinion as p1a.irit.iff and defendant, as known in the trial court.

A stipulation covering the material and controlling facts was made in the trial court and hence only questions of law are presented and argued on this appeal.

The contract which forms the basis of the action was in writing as follows:

‘‘ This Agreement, made and entered into; this 27th day of November, A. D. 1905, by and between Frederick H. Bartlett and Clinton S. Woolfolk, parties of the first part, and Ira M. Cobe, party of the second part, WitNESSETH:

That Whereas, the parties of the first part have sold to the party of the second part a certain principal note of twenty thousand dollars ($20,000) dated April 3, 1905, payable on or before five (5) years after date, with interest at the rate of five (5) per cent, per annum, payable semi-annually, together with nine (9) interest coupons for the sum of five hundred dollars ($500) each; all executed by Benjamin H. Wallace to the order of himself and by him endorsed, and secured by trust deed dated April 3, 1905, from the .said Benjamin H. Wallace and Dollie F. Wallace, his wife, to the Chicago Title & Trust Company, trustee, conveying lot nine (9) in Whitbeck’s Subdivision of the east half (%) of block seventy-nine (79) in the Canal Trustees’ Subdivision of the west half (y2) of section twenty-seven (27), township thirty-nine (39) north, range fourteen (14), east of the Third Principal Meridian, Cook County, Illinois; said trust deed having been recorded in the recorder’s office of Cook County, Illinois, on July 6,1905, as Document No. 3,720,530.

Now Therefore, in consideration of the sum of thirty-three thousand five hundred dollars ($33,500), .and as one of the terms of the above mentioned sale, the said parties of the first part agree, in the event of the foreclosure of the said trust deed and the said party of the second part acquiring the said premises, as described therein, through foreclosure for the sum not exceeding the actual amount due under said notes and trust deed, as found by the decree, to purchase the said premises from the said party of the second part immediately upon the expiration of the period of redemption under said foreclosure, apd to pay the said party of the second part for said premises the amount which would be required to redeem the said premises under said foreclosure on the last day of said period of redemption, together with any additional charge for master’s deed, etc., but excluding any sum which may be allowed in said foreclosure proceeding for attorneys’ or solicitors’ fees.

In Witness Whereof, the said parties have hereunto set their hands and seals the day and year first above written,

Clinton S. Woolfolk, [Seal.]

Frederick H. Bartlett, [Seal.]

Northern Liquidation Company, [Seal.]

By Wm. B. Walrath, President.”

From the uncontroverted facts it appears that in 1905 the Northern Liquidation Company purchased the premises described in the above contract, known as Beveridge building property, from the Prudential Life Insurance Company of America, then owner of the - property. The sale was negotiated through the defendant, Bartlett. The title was taken in the name of Benjamin H. Wallace.' Wallace gave his note to the Prudential Life Insurance Company of America, secured by a mortgage on the above described premises, for $60,000, the unpaid part of the purchase price.

On the same date Wallace made another note for $20,000 with interest notes, payable to his order and by him indorsed, and to secure the same he, with his wife, executed a trust deed on the premises to the Chicago Title & Trust Company as trustee, and subject to the above mentioned $60,000 first mortgage. Each of the principal notes was due in five years from date.

The Prudential Life Insurance Company held its paper until it matured, and on May 21, 1910, filed its bill in the Circuit Court of Cook county to foreclose, making defendants all parties having any interest as owners of the equity of redemption, or subsequent incumbrancers, including the Assets Realization Company, the then owner of the $20,000 note and trust deed securing it. In that proceeding Samuel R. Jenkins was appointed receiver, November 19,1910, under an order directing him, among other things, to pay out of the proceeds of rents, etc., “expense of the receiver theretofore appointed in the cause entitled Assets Realization Company v. Benjamin H. Wallace, et al.,” a foreclosure suit then pending to foreclose the second mortgage above mentioned for $20,000.

A decree of foreclosure was entered in the foreclosure proceeding under the first mortgage of $60,000, and on November 26, 1910, the master sold the prop-

erty and the Prudential Life Insurance Company purchased it at the master’s sale for $65,500. On the same day a deficiency decree for $2,266.14 was entered for the balance due under the first mortgage. No redemption having been made by the. defendants in the foreclosure proceedings or others, the master made a deed of the premises to the Prudential Life Insuranee Company February 28, 1912.

It appears that the note and trust deed securing the $20,000 was held by the Northern Liquidation Company until November 27, 1905, at which time the note with some other property was sold to plaintiff, Ira M. Cobe, and the $20,000 proceeds of the sale went to the Northern Liquidation Company. At that date the contract sued on was executed, evidencing the sale of the $20,000 note and was signed by Woolfollc and Bartlett individually, and by the Northern Liquidation Company by W. B. Walrath, its President. The purchase price for the note and other property was paid by the Assets Realization Company’s check, and no other payment was made by Cobe. As one of the terms of the sale of the note and trust deed, Cobe, Woolf oik and Bartlett agreed on certain conditions to purchase the real estate described in the trust deed from Cobe in accordance with the terms of the written contract above set forth.

Cobe transferred the $20,000 note to the Assets Realization Company, and on April 12, 1910, that company filed its bill to foreclose the trust deed. On May 10, 1910, Jenkins was appointed receiver under that bill, and the taxes for the year 1909, not having been paid, .under an order of court September 2, 1910, he, as receiver, issued a receiver’s certificate, of date September 10,1910, for $1,118.82, and with the proceeds of the-sale of the certificate, paid the taxes.

The Assets Realization Company obtained a decree September 30,1910, and on October 28,1910, the premises were sold by the master to Hugo M. Friend, who purchased for Cohe. Friend assigned the certificate of sale to Cobe. The master reported on October 31, 1910, that he had sold the premises for $23,350; that he had paid the Assets Realization Company $21,-146.98, and that the amount realized was not sufficient to pay the amount found to be due by the decree, and that there was a deficiency due the Assets Realization Company of $53.66, for which Wallace was liable. This report was approved by the court November 4, 1910, and a deficiency judgment of $53.66 against Wallace was entered, and complainant was awarded execution therefor.

The receiver Jenkins remained in possession of the property until the right of redemption expired under the foreclosure sale of the Prudential Life Insurance Company case, February 27, 1912. He did not pay either the deficiency judgment or the receiver’s certificate for $1,118.82 still outstanding. No redemption in either case was made. The year for redemption by defendants from the sale to the Prudential Life In-, surance Company expired November 26, 1911, and for judgment creditors February 27,1912.

The fifteen months’ period for redemption expired on the Assets Realization Company’s sale January 29,1912, and on January 30,1912, Cobe obtained a deed from the master to himself which he recorded February 1, 1912. On January 30, 1912, Cobe and wife signed and acknowledged a deed purporting to convey the premises to Bartlett and Woolf oik, and on the same date, through his attorney who had with him the original contract, the master’s deed to Cobe, the deed from Cobe and wife to Bartlett and Woolf oik, and a certificate from the master showing an amount due, said to Bartlett he would deliver the papers on payment of the amount called for by the contract. Bartlett referred him to his attorney. On the morning of January 31, 1912, Cobe’s attorney called on Woolf oik and made the same offer and about noon of the same day saw the attorney for Bartlett who informed him that Bartlett was in negotiation with the Prudential Life Insurance Company about acquiring its interest and that he would not say that they would pay the money.

On February 20,1912, Bartlett, through his attorney, tendered to the attorney for the Assets Realization Company the amount due on the deficiency judgment of that company which was not accepted. On the day following, the attorneys for the parties went into court and an order was entered under which Bartlett’s attorney paid the deficiency judgment of the Assets Realization Company to the clerk of the court.

On February 20, 1912, a contract was executed whereby Bartlett agreed to purchase from the Prudential Life Insurance Company the property in question if it obtained a deed from the master in its foreclosure suit. Cobe, having been informed of this contract, on February 21, 1912, mailed to Bartlett the deed of himself and wife to Bartlett and Woolf oik mentioned above in a letter which stated that he was delivering therewith unconditional deed of the premises, “the title to which now stands in my name upon the records, ■ and will be glad to receive your check for $23,112.50.” This letter was referred by Bartlett to his attorney who replied by mail, under date of Febru-. ary 23, 1912, the intervening day being a holiday, that Bartlett felt he was under no obligation to accept the deed or pay the $23,112.50, and declined to do so and returned the deed. Thereupon, on April 29, 1912, this action was brought against Bartlett and Woolfolk.

Defendants’ affidavit of merits denied that plaintiff acquired the title to the premises, denied the delivery of the deed, alleged that the master’s deed to plaintiff did not convey the premises or any interest therein or title thereto, and set up the sale under the foreclosure decree on the first mortgage and failure of plaintiff to redeem therefrom.

■ The first, and we may say the controlling, question presented for consideration is the meaning and legal effect of the contract of November 27, 1905, between Bartlett and Woolfolk on the one hand raid Cobe on the other. In our opinion it is an option on the part of the plaintiff to sell. the real estate described therein to Bartlett and Woolfolk in the event of the happening of the conditions precedent mentioned therein. Adams v. Peabody Coal Co., 230 Ill. 469. Plaintiff was under no obligation to sell but the defendants were under obligation “to purchase the said premises” from plaintiff subject to the conditions precedent specified, namely the “acquiring the said premises” by plaintiff through a “foreclosure of the said trust deed.” The purchase was to be made “immediately upon the expiration of the period of redemption under said foreclosure.” The contract is, we think, simple, clear and without ambiguity or uncertainty. There are no contradictory terms or provisions in it. There is, therefore, no ground for resorting to any contemporaneous construction which the parties may have given to the contract by their acts at the time, or during the execution of the contract, for the purpose of construing it or to enable the court to ascertain the real intention of the parties. The legal effect of the agreement must be enforced. Walker v. Tucker, 70 Ill. 527; Bolton v. Huling, 195 Ill. 384, 394; Railroad Co. v. Trimble, 10 Wall. (U. S.) 367, 377.

It is contended by the plaintiff that he “acquired the said premises as described therein (the second trust deed), through foreclosure;” that the “premises as described therein” under the circumstances of this case, meant the title to the premises subject to the first lien and its incidents. In other words, it was not the intention that Cobe should pay off the first lien of $60,000 in order to sell the premises to defendants for the amount due under the second lien.

The defendants agreed, (1) in the event of the foreclosure of the second trust deed, and (2) the plaintiff acquiring the premises through the foreclosure, “to purchase the said premises from the said party of the second part (Cobe) * * * and to pay the party of the second part for said premises the amount which would be required to redeem the said premises under said foreclosure on the last day of said period of redemption,” etc.

There is no ambiguity as to the subject-matter of the purchase, or what was to be acquired by Cobe. He was to acquire the premises through a foreclosure of the trust deed, and that same thing was to be the subject-matter of the sale to defendants. In common parlance, the term “premises” is used to signify land with its appurtenances; and its usual and appropriate meaning in conveyances and contracts for the purchase and sale of real estate is the thing demised or granted by the deed. 22 Am. & Eng. Ency. of Law, 1175. That is the meaning of the word as used in the contract under consideration. Defendants were selling the paper to get money on it. They obtained no assurance by the contract that plaintiff would acquire the property, or, if he did, that he would sell it to them. The contract was a mere option in plaintiff’s favor. It gave Bartlett and Woolfollc no advantage or benefit, and as it was neither an advantage nor benefit to them, it must be inferred they did not ask for it. But it was a thing that might prove to be a benefit or advantage to Cobe, and, therefore, a situation that he was seeking to impose upon defendants. Bartlett and Woolf oik were selling a $20,000 note for $17,000. They were selling the paper for money, not as a means of acquiring the property, for they transferred to Cobe with the notes, as an incident thereto, the trust deed which gave the right to redeem from the first mortgage by taking up the indebtedness secured by the first mortgage after its maturity and including it with what was due on the notes and trust deed purchased by him and foreclosure for the whole amount, or hold it as a lien upon the premises. This would have enabled plaintiff to acquire the premises and comply with the condition of his contract. This was his plain and effective course of procedure. But, instead of redeeming from the first mortgage, or taking it up and holding it, he allowed the foreclosure suit of the Prudential Life Insurance Company to ripen into a decree against the Assets Realization Company, the owner of the notes and trust deed, a defendant therein, under which decree a sale was made of the premises November 26, 1910. Cobe bought the premises under a decree entered in the Assets Realization Company case on October 28, 1910. Any right which he obtained by that purchase was such only as came through the Assets Realization Company, and was foreclosed by the decree in the Prudential Life Insurance Company case. No redemption was made by any defendant or by Cobe from the sale under the first mortgage within the year given by statute and the decree, and their rights were extinguished. This was not acquiring title to the premises subject to the first lien and its incidents, according to the construction of the contract contended for by plaintiff. On the contrary, it was permitting all rights, title and equity of redemption in the Assets Realization Company or plaintiff to be foreclosed and extinguished, so that the plaintiff had no right in or title to the premises to convey to defendants. If, then, it be conceded that the contract is to be construed as plaintiff contends it should be, and further that the intention expressed therein is that Cobe should convey a title subject to the first mortgage, the plaintiff’s action is not supported thereby, for, according to the record, he never had even such a title to convey. The right of redemption from the sale to the Prudential Life Insurance Company under the decree of foreclosure of the first mortgage expired on November 26, . 1911, as to everybody except judgment creditors. Cobe received his master’s deed in the foreclosure of the second trust deed on J anuary 30, 1912. He took nothing therefore under the deed. Cook v. City of Chicago, 57 Ill. 268. He had no title to the premises to convey to Bartlett and Woolf oik when he tendered a deed to them January 30 and 31, 1912. He had not performed or fulfilled the condition precedent to his right to sell and convey to defendants, namely, had not acquired the premises through foreclosure of the second trust deed, nor the right to receive from them the amount which would be required to redeem the premises under the foreclosure on the last day of the period of redemption, excluding, etc.

Plaintiff contends, however, that after the expiration of the fifteen months’ period of redemption under the second mortgage foreclosure and the issuance of the master’s deed thereunder to Cobe, and until the expiration of the fifteen months’ period of redemption under the first mortgage foreclosure and the issuance of master’s deed thereunder, title to the premises was in Cobe. Lightcap v. Bradley, 186 Ill. 510; Seligman v. Laubheimer, 58 Ill. 124; Ogle v. Koerner, 140 Ill. 170; and Davis v. Dale, 150 Ill. 239, and other cases are cited as sustaining the contention.

This contention is, we think, fully- answered in what we have said above. The claim is rather specious than sound. That it is not sound is admitted in argument by Cobe, that “it is apparent, therefore, that the value of the estate conveyed by Cobe to Bartlett and Wool-folk (in the deed tendered but not accepted) was nothing,” the premises being in the possession of the receiver for the purpose of enforcing the equitable lien of the two incumbrances upon the rents and profits accruing during the redemption period, and the receiver never having collected money enough to satisfy either deficiency decree. It seems to us idle to claim that Cobe during that period had title to the premises, or that whatever title he had was such a title as was contemplated by the parties to the contract. True, Cobe had whatever title remained in Wallace subject to the title of the Prudential Life Insurance Company as mortgagee, but Wallace’s title and Cobe’s title under him had been foreclosed and cut off by the decree in the foreclosure of the first mortgage and the lapse of the redemption period in which Wallace could redeem. The debt secured by the first mortgage was not paid on February 28, 1912. The Prudential Life Insurance Company had a deficiency decree for $2,266.14. It was in possession of the property through a receiver for the purpose of collecting its debt, not as purchaser at the sale or by virtue of the decree, but under and by virtue of the mortgage which was still alive and in force for that purpose. As held in Ware v. Schintz, 190 Ill. 189, at page 193: “The relation of plaintiff and defendant to each other is that of mortgagor and mortgagee, and under the repeated rulings of this court a mortgagee, as against the mortgagor, is held, as in England, in law, to be the owner of the fee, having the jus in re as well as ad rem, and entitled to all the rights and remedies which the law gives to such owner, and may, after condition broken, maintain ejectment against the mortgagor. The mortgagor or his assignee, however, is the legal owner of the mortgaged estate as against all persons excepting the mortgagee or his assigns. Delahay v. Clement, 3 Scam. 201; Vansant v. Allmon, 23 Ill; 30; Carroll v. Ballance, 26 id. 9; Oldham v. Pfleger, 84 id. 102; Fountain v. Bookstaver, 141 id. 461; Esker v. Heffernan, 159 id. 38. The fee title held by the mortgagee is in the nature of a base or determinable fee. The term of its existence is measured by that of the mortgage debt. When the latter is paid or becomes barred by the statute of limitations, the mortgagee’s title is extinguished by operation of law. Pollock v. Maison, 41 Ill. 516; Harris v. Mills, 28 id. 44; Gibson v. Rees, 50 id. 383; Barrett v. Hinckley, 124 id. 32; Lightcap v. Bradley, 186 id. 510. Until it is extinguished the legal title is in the mortgagee for the purpose of obtaining satisfaction of his debt.” See also Owsley v. Neeves, 179 Ill. App. 61.

As against the mortgagor or his assigns, grantees and those claiming under him, the title to the premises during the period mentioned in C'obe’s contention was in the Prudential Life Insurance Company and not in Cobe, and the deed tendered by Cobe to Bartlett and Woolfolk, if accepted, would have conveyed no title.

The finding and judgment of the trial court was erroneous, and the judgment is reversed.

Reversed with finding of facts.

Finding of facts.—The court finds that the plaintiff, Ira M. Cobe, did not acquire the premises described in the contract sued on through foreclosure of the trust deed described in the contract and did not perform or fulfil the conditions of the contract to be performed and fulfilled by him, and the defendant, Frederick H. Bartlett, appellant, is not indebted to the plaintiff Cobe under the contract sued on.


text:
    Paulina Sharmach Wojciehowski, Appellee, v. National Council of the Knights and ladies of Security, Appellant.
    Gen. No. 20,342.
    (Not to be reported in full.)
    Appeal from the Municipal Court of Chicago; the Hon. John J. Sullivan, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1914.
    Reversed and remanded.
    Opinion filed January 26, 1915.
    Statement of the
    Suit by Paulina Sharmach Wojciehowski against the National Council of the Knights and Ladies of Security on a fraternal beneficiary certificate issued by defendant society to one Francis Sharmach payable to his wife, the plaintiff, in the sum of $2,000 in the event of the insured’s death. The defendant contended that the applicant made false statements in the application for insurance both as to a disease of the liver and the excessive use of liquors, and it appeared that Sharmach’s death was caused by chronic organic heart disease, cirrhosis of the liver being a contributing cause, and such disease of the liver was frequently caused by excessive use of intoxicating liquors. It also appeared that deceased suffered from delirium tremens. At the trial the jury returned a verdict for the plaintiff for $1,361.29.
    Abstract of the Decision.
    1. Insurance, § 889

      —what evidence admissible in suit on benefit policy. In a suit on a fraternal benefit certificate, evidence of conversations between the beneficiary, the plaintiff and another woman were erroneously admitted, where it did not appear that such woman was the agent of the society or clothed with authority to bind it.
    2. Insurance, § 896*—what evidence as to medical examination improper. In a suit on a fraternal benefit certificate, evidence of what was said between the applicant and a medical examiner was erroneously admitted, the examination being signed and being a warranty, upon which with the application, the insurance was issued.
    3. Insurance, § 908*—what instructions erroneous. In a suit on a fraternal benefit certificate, an instruction submitting the question that the society had misled the insured, or waived strict compliance with the contract, and had induced the applicant to make false statements, was erroneous, when there was no proper evidence warranting such question.
    4. Insurance, § 908*—when instruction as to warranty erroneous. In a suit on a fraternal benefit certificate, an instruction that the statements in the application for insurance were warranties and that the plaintiff could not recover if they were untrue, unless the defenses were waived, was erroneous when not warranted by the evidence.
    A. W. Fulton, for appellant.
    No appearance for appellee.

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

   Mr. Justice Smith

delivered the opinion of the court.

5. Insurance, § 908*—when instruction not based on evidence. In a suit on a fraternal benefit certificate, where there was no evidence that the applicant was not asked whether he had had delirium tremens, a suggestion to such effect to the jury was improper.-

6. Insurance, § 908*—when instruction erroneous. In a suit on a fraternal benefit certificate, an instruction as tp waiver of the defense whether the insured was addicted to the excessive use of intoxicants was erroneous when not based on the evidence. .


text:
    Leslie A. Needham, Appellant, v. Wilbur Glenn Voliva, Appellee.
    Gen. No. 20,368.
    1. Attorney and client, § 150

      —when lien not enforceable. Equity has no jurisdiction to adjudicate an attorney’s possessory or retaining lien, which is defined as a mere right to retain possession of property belonging to the client which comes into the attorney’s hands within the scope of his employment until his charges are paid.
    2. Attorney and client, § 144*—what property covered by lien. An attorney’s possessory lien covers property of any kind belonging to the client and held by the attorney, including legal documents or money collected.
    3. Attorney and client, § 138*—when statute as to lien does not apply. The Attorney’s Lien Act of 1909 (J. & A. jf 611) was not intended to apply to the establishment of attorneys’ liens upon papers or securities belonging to their clients which come into their possession in the ordinary course of business.
    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, 1914.
    Reversed and remanded with directions.
    Opinion filed January 26, 1915.
    Rehearing denied February 6, 1915.
    John B. Dandridge, for appellant.
    C. P. Barnes, for appellee.

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

   Mr. Justice Smith

delivered the opinion of the court.

Leslie A. Needham, appellant, filed this bill against Wilbur Glenn Voliva for the adjudication of an attorney’s lien under the Attorney’s Lien Act, upon a certain note and trust deed of the defendant, Voliva, in the possession of the complainant, for services alleged to have been rendered by the complainant to. the defendant. The bill specifically claims a lien upon the note and trust deed under the Attorney’s Lien Act. It prays, however, for general relief.

The defendant answered the bill, denying many of its averments, and denying that the defendant sought the advice of counsel of complainant with reference to some things stated in the bill. In other matters the answer shows payment for the services rendered. The answer further sets up that George W; Field was acting as defendant’s solicitor, and that Field had prepared a notice of application to the Federal Court for the purpose of securing a certain order of court, and that Field, being unable to be present, without the knowledge of this defendant, employed the complainant to appear for him as well as the defendant in that matter; that complainant was acting as much or more for the receiver in the cause as for complainant, and that the receiver paid him.

The answer admits that the defendant became the owner of the notes and mortgage set up in the bill, upon which note and mortgage the complainant seeks to obtain a lien, the note for $1,700 and trust deed securing the same bearing date August 27, 1906. The defendant avers that in July, 1911, he being still the owtier of the note and trust deed and desirous of foreclosing the same, delivered the papers to his attorney, George W. Field, for the purpose of having a bill prepared for foreclosure. It appears from the answer that Field was unable to attend to the matter and employed the complainant to prepare the bill and delivered the papers to him for that purpose; but the bill was not prepared by the complainant, and it is denied that the complainant has any lien upon the same or a right to withhold the same from the defendant. The answer specifically denied the services rendered and the value thereof.

The case was referred to a master, and upon the master’s report, exceptions thereto and the evidence contained- therein, a decree was entered, dismissing the bill for want of equity.

Appellant urges in his brief and argument that there are only two grounds of possible equity jurisdiction in the case. The first is, that one may resort to equity to adjudicate the validity of a common-law retaining lien. The second ground is, that the Attorney’s Lien Act of 1909 (J. & A. ¶ 611) creates a lien as against the client without the service of the notice provided for in the statute.

In our opinion equity has no jurisdiction to adjudicate a possessory or retaining lien. That lien is defined as the attorney’s right to retain possession of property belonging to Ms client which comes into Ms hands within the scope of Ms employment until Ms charges are paid. Weed Sewing Mach. Co. v. Boutelle, 56 Vt. 570. If the relationship of attorney and client exists, the possessory lien will cover in general any property of any Mnd belonging to the client'and held by the attorney. It includes ordinary legal documents of the client in the possession of the attorney, or money collected by the attorney. 4 Cyc. 1015. The possessory lien is a right merely to retain, and cannot be actively enforced. 4 Cyc. 1023; Compton v. States, 38 Ark. 601; McKelvy’s Appeal, 108 Pa. St. 615; McDonald v. Charleston, C. & C. R. Co., 93 Tenn. 281; Jones on Liens, par. 132. In our opinion the court had no jurisdiction to adjudicate upon the possessory or retaining lien of complainant.

The second ground of relief relied upon by the complainant in Ms bill, that the Attorney’s Lien Act of 1909 creates a lien as against the client upon the note and trust deed described in the bill, cannot be maintained even though it be conceded that the complainant was the attorney of the defendant. While the Act of 1909 does not expressly or by implication repeal the common-law retaining lien, it does not in terms relate or apply to such a lien as is set forth in the bill of complaint and sought to be established or adjudicated thereby. The Lien Act of 1909 gives the attorneys at law a lien upon all claims, demands and causes of action, including all claims for unliquidated damages which may be placed in their hands by their clients for suit or collection, or upon which suit or action has been instituted for the amount of any fee which may have been agreed upon between the attorneys and their clients, or, in the absence of such an agreement, for a reasonable fee for the services of such attorneys rendered or to be rendered for their clients on account of such suits, claims, demands or causes of action; and the act provides for the service of notice in writing upon the party against whom the clients may have such suits, claims or causes of action. Giving the act a reasonable construction and having in mind the evident purpose sought to be accomplished by the legislature in passing the act, we are of the opinion that it was not intended to apply, and has no reference, to the establishment of attorneys’ liens upon papers or securities belonging to their clients which come into their hands in the ordinary course of business. No remedy is given in equity by the act to establish or enforce a lien upon any documents or writings. A remedy by petition is provided under which any court of competent jurisdiction may adjudicate the rights of the parties, and enforce such lien as is contemplated in the act, and it has been held in Sutton v. Chicago Rys. Co., 258 Ill. 551; that the attorney’s lien provided for in the Act of 1909 may be enforced by petition in the client’s cause wherein the employment was made, and that the act contemplates that the attorney shall have a lien from and after service of notice on the defendant which shall protect him in any settlement thereafter made with the client, whether the suit is pending or has been finally determined by judgment.

In construing the statute, the Supreme Court, in Baker v. Baker, 258 Ill. 418, held:

“While the act is entitled as one creating an attorney’s lien and for enforcement of the same, and while it in terms gives the attorney a lien for his fees, the lien created partakes but little of the elements and nature of the ordinary lien. It attaches to any verdict, judgment, decree, or the proceeds of any settlement. In other words, it is a lien upon the proceeds, only, of the litigation or settlement of the claim.”

We are of the opinion that a bill will not lie under this act to establish and enforce an attorney’s lien upon the papers in the attorney’s hands. The act does not purport to cover such a lien.

The bill should have been demurred to for want of equitable jurisdiction to establish and enforce an attorney’s lien either under the Act of 1909, or a mere possessory or holding lien under the common law.

The decree is reversed and the cause remanded with directions to dismiss the bill for want of jurisdiction. All costs of this appeal should be taxed against appellant.

Reversed and remanded with directions.


author: Mr. Presiding Justice Carnes

text:
    Harry Surface, Appellee, v. Chicago, Milwaukee & St. Paul Railway Company and Chicago, Indiana & Southern Railroad Company, Appellants.
    Gen. No. 5,865.
    1. Ry íXeoads, § 364

      —what provisions of lease of right of way are valid. A provision of a lease of a portion of a right of way,1 stating that the lessee assumes the risk of damage by fire, is valid between the parties thereto and enforceable like any other provision in a contract.
    2. Landlord and tenant, § 404*—when subtenant bound by provisions of lease. While there is no privity of contract between a landlord and a subtenant, such subtenant is charged with notice of the terms of the lease, and is bound by its conditions.
    3. Appeal and error, § 1491*—when exclusion of evidence reversible error. In an action against a railroad for the destruction of property by fire, where a lease restricting the railroad’s liability was excluded when competent, and the court gave an erroneous reason for such exclusion operating to mislead the defendants and prevent them from making proof technically sufficient as a foundation for secondary evidence, the action of the court was reversible error.

      4. Railboads, § 364

      —what is effect of condition of lease releasing railroad from, liability for fire. A stipulation of a lease of a portion of a right of way stating that the railroad was not liable for damages by fire escaping from engines operated upon the lessor’s railway cannot be construed as protecting merely the railroad and leaving its agents and servants liable.
    5. Assignments, § 31*—when action may be brought in name of assignor. While section 18 of the Practice Act (J. & A. If 8555) permits the prosecution by the owner of a non-negotiable chose in action in his own name, he is not precluded from bringing the action in the name of his assignor.
    6. Payment, § 24*—how pleaded and proved. Payment may be pleaded specially or proved under the general issue.
    Appeal from the Circuit Court of Putnam county; the Hon. Theodobe N. Geeen, Judge, presiding. Heard in this court at the October term, 1914.
    Reversed and remanded.
    Opinion filed April 15, 1914.
    Rehearing granted and opinion filed January 6, 1915.
    Barnes & Magoon and Boys, Osborn & Griggs, for appellants; R. J. Cary, O. W. Dynes, C. S. Jefferson and Wallace J. Black, of counsel.
    Butters & Armstrong, George W. Hunt and Barger & Hicks, for appellee; C. O. Carlson, of counsel.

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

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

   Mr. Presiding Justice Carnes

delivered the opinion of the court.

Appellee, Harry Surface, about May 12, 1910, purchased from the Illinois Granaries Company, a corporation, a grain elevator building with its machinery and some appurtenant buildings used in connection with handling grain, all located on the right of Way of the Chicago, Indiana & Southern Railroad Company, one of the appellants; the bill of sale evidencing the transaction so stated the location of the property without stating by what right, if any, it was there situated. The property so purchased was destroyed by fire July 9, 1910, which fire is charged to have been communicated from a locomotive engine of the Chicago, Milwaukee & St. Paul Railway Company, the other appellant, while operated by it upon the railroad of the Chicago, Indiana & Southern Railroad Company, by virtue of some authority from that Company. This suit was brought against both Companies to recover for the loss so sustained, and a trial resulted in a verdict and judgment of forty-two hundred dollars against both defendants, from which judgment they prosecuted this appeal.

The Illinois Granaries Company was at the time of the sale occupying the ground on which the building sat under a lease from the Chicago, Indiana & Southern Railroad Company, describing by metes and bounds a tract about thirty by two hundred feet, for a term of five years beginning December 1, 1906, at a nominal rental of five dollars per annum. It was provided in the lease that the premises should be used exclusively for the purpose of receiving, storing, handling and shipping grain, coming to or shipped by the lessee over the railway of the lessor, and that the lessee “assume the risk of all loss and damage to the buildings, * * * their contents, and to property or material placed or stored by said lessee on or adjoining said premises, which may arise from fire escaping from engines operated upon the railway of lessor, * * * that the lessor shall in no event be or become liable for any loss or damage that may occur, or be caused, at any time to the property or employees of the lessee, or to any other person or persons who are not employed by the lessor or to their property, by reason of, or in the use of, the railway track now or hereafter laid upon or adjacent to the premises hereby leased, or by the men, engines, cars or other means or agencies employed or engaged in the use thereof in connection with any business of or for the lessee, whether said loss or damage be caused by the negligence of the lessor or its employees or otherwise.”

That this provision of the lease, against liability for fire, is valid between the parties thereto, and enforceable according to its terms like any other provision in a contract, is so well settled by the case of Checkley v. Illinois Cent. R. Co., 257 Ill. 491, and the principles of law and the authorities there so fully discussed, that further citation of authority is unnecessary. In this and many other cases dealing with the subject is found the expression, in substance, that the railway company is under no obligation to permit the structure to be placed on its right of way, and, if it does permit it, it has the right to impose this restriction upon its liability for loss by fire.

A copy of the lease was offered in evidence by the defendants below, and on objection excluded by the Court. The controlling question here is whether the Court erred in so doing. It is contended by appellee that he is in no wise bound by the provisions of that lease; that while the stipulation that the railway company should not be liable for loss by fire may be binding as between the parties to the lease, that he as the purchaser of the property did not become a party to the lease and that there is no privity of contract between him and the railway company, and he cites authorities to the effect that there is no privity of contract between a sublessee and the original lessor, and that the sublessee is not bound by covenants in the original lease; and it is true that as to certain covenants in leases a sublessee is not bound because of no privity of contract; but while there is no privity of contract between the landlord and a subtenant, still subtenants are charged with notice of the terms of the lease, and are bound by its conditions. 24 Cyc. 986. This general principle, and that the sublessee acquires no greater right in the premises than that of the original lessee, is sustained in the authorities cited in Cyc. and often repeated in cases that may be found by reference to the volume of annotations supplementing Cyc. We said in Large v. Wabash R. Co., 168 Ill. App.. 310, where we had a similar question before us, that the purchaser knew the building was on defendant’s right of way, and that it must be there by virtue of some arrangement express or implied; and he was bound to know, at his peril, by what right the building was there. Appellee insists that this decision is based on neither principle nor authority and that it should not be followed. It seems to us supported by the authorities above cited, and on principle much more reasonable than the position that the protection contracted for by the lessor should be entirely lost if the lessee should sublet or sell the building erected under the conditions prescribed in the lease. If the railway company had permitted the erection of the building on its right of way and attempted to protect itself from liability for fires that might be set from its engines by providing that the building should be constructed fireproof, it would hardly occur to anyone to argue that a sublessee might construct a frame building because by reason of no privity of contract he was not bound by that provision of the lease, and we see little difference in principle between the case supposed and the one before us in that respect. There is no claim that appellants or either of them were responsible in any way for appellee’s purchase of the property. Appellee testified that he knew it was on the railroad right of way, and, as we have seen, it was so recited in his bill of sale. We are of the opinion that he had no greater rights against- appellants, than had his grantor, the original lessee. He was seeking to recover of a railway company damages for an injury to his property found on its right of way. It seems material to know why the property damaged was there. If it was wrongfully there the duty of the company to not damage it is quite restricted; if it was rightfully there then the duty of the company, is fixed and determined by the conditions imposed in permitting it to be and remain there. We are of the opinion that the lease in question was competent and very material evidence in the case.

The copy of the lease was offered in evidence by appellants and objected to by appellee on the grounds: That the Chicago, Milwaukee & St. Paul Railway Company is not a party to it or protected by its covenants; that the Chicago, Indiana & Southern Railroad Company by its conduct had made it incompetent as to it; that the evidence showed that the lease had been surrendered before the fire, “and furthermore there had been no proper foundation laid for its introduction as an instrument in evidence on behalf of either defendant.” The Court took the question under advisement. There was considerable testimony offered on the question whether the original lease had been, surrendered and cancelled before the fire and as to the present whereabouts of the paper itself, in which it appeared that there had been a former partial trial of the case in the same court; that the original lease had been used on that trial and was thought to have been left with the clerk of the court but could not now be found. There was also evidence tending to show that - the original lease might then be in possession of the Chicago, Indiana & Southern Railroad Company, at its office in Cleveland, Ohio. Then the lease was reoffered and the objection renewed and the court still kept the matter under advisement until about the end of the trial, when the court announced to counsel that in his opinion the lease was not competent evidence on behalf of the defendant Chicago, Milwaukee & St. Paul Railway Company; that it was uncertain under the evidence whether it was cancelled before the fire but he thought he ought not to permit it to go to the jury and he would sustain the objection to its admission; whereupon appellants’ counsel reoffered the copy of the lease on the part of each defendant, and plaintiff entered a general objection which the Court sustained, adding “that the Court does.not sustain it upon the ground that the proper foundation has not been laid to introduce secondary evidence.”

Counsel for appellee strongly insist that the action of the Court is sustained on the ground that there was no sufficient evidence of the loss of the original-lease, or that the copy offered was a true copy, to warrant the introduction of secondary evidence, and they say it is immaterial what reason the Court gave for his ruling if the decision was correct. This is true as a general principle, but in the instruction of testimony, where, as in this case, the burden of the argument is not that the evidence is secondary but that it is incompetent and irrelevant, we assume if a trial judge, on a motion for a new trial, found that he was mistaken in holding against the party offering the instrument on the main question and had advised him that he would not permit the introduction of the copy for the reason that the original was not competent and that he was not ruling against him because of his failure to lay a proper foundation for secondary proof, that he would grant a new trial on that ground, and that the Court in this case would not have overruled the motion for a new trial had he been of the opinion that he was in error in the reasons he gave for sustaining the objection to this evidence. Being of the opinion that the Court was in error in his view of the case as shown by the record in his statement to counsel, and that appellants may have been misled by such statements and for that reason failed to make proof technically sufficient as a foundation for secondary evidence, we are inclined to hold it reversible error.

There was evidence tending to show that the lease had been surrendered and other evidence tending to show that it had not. On another trial the facts connected with that transaction will no doubt more fully appear, but on this record the most that can be said for appellee on that question is that the evidence left it in doubt and therefore the Court was not warranted in assuming the fact in ruling on the introduction of evidence. We are of the opinion that the stipulation as to damages by fire “which may arise from fire escaping from engines operated upon the railway of lessor,” and against “loss or damage that may occur * * * by reason of, or in the use of the railway track,” etc., is available as a defense to the Chicago, Milwaukee & St. Paul Railway Company. • It is literally within those provisions, and as said by appellee in his brief to have been operating by virtue of some authority, license, consent or permission of the Chicago, Indiana & Southern Railroad Company. It may be more clearly shown on another trial why the St. Paul Company was there operating its engine. The Court instructed the jury at the instance of appellee that if the Chicago, Milwaukee & St. Paul Railway Company was found guilty of negligence causing the fire, then they should find both defendants guilty, and refused to instruct the jury on the request of appellants that if the fire was set by an engine of the Chicago, Indiana & Southern Railroad Company then they should find both of the defendants not guilty. If the Chicago, Indiana & Southern Railroad Company permitted the engine of the other defendant upon its tracks under circumstances and conditions that made it responsible for its acts, it would seem that the stipulations in the lease should apply to both companies. It seems to us that the stipulations cannot be construed as protecting merely the corporation from liability for negligence and leaving its agents and servants liable.

No error being assigned on the giving or refusing of instructions, we therefore do not pass on them. There is some argument as to the action of the Court in sustaining demurrers to pleas, and there is confusion in the argument, and perhaps in the record, as to just what was done in that regard. We may say, for the purpose of another trial, that if it be a fact that the claim of appellee was assigned by him to an insurance company before this suit was brought, we do not regard that as a defense to the prosecution of this action in the name of appellee. While section 18 of our Practice Act (J. & A. ¶ 8555) permits the prosecution by the owner of a non-negotiable chose in action in his own name, we do not understand that he is precluded from bringing the action in the name of the assignor under the practice established before the enactment of that statute. Appellants in their arguments claim to have filed pleas to the effect that the claim had been settled and discharged before suit was brought and that the Court refused to sustain such pleas. The general rule is that payment may be pleaded specially, or proved under the general issue; but on another trial the defendants should be permitted, if they deem it necessary, to file such further pleas as in their judgment are required to present their defense.

The judgment'is reversed and the cause remanded.

Reversed and remanded.


text:
    Finley Barrell, Appellee, v. Lake Forest Water Company.
    Gen. No. 5,982.
    (Not to be reported in full.)
    Interlocutory appeal from the Circuit Court of Lake county; the Hon. Chables Whitney, Judge, presiding. Heard in this court.
    Reversed and remanded.
    Opinion filed January 6, 1915.
    Statement of the Case.
    Suit by Finley Barrell against Lake Forest Water Company, a public service corporation to restrain it from shutting off the water from the complainant’s premises because of his failure to pay a bill for water alleged to be greatly in excess of what he used. The bill alleged an offer to pay a reasonable amount, and prayed for an accounting. An injunction was granted without notice on the bill, and defendant appealed from an interlocutory order overruling a motion to dissolve the injunction.
    Abstract of the Decision.
    1. Waters and water courses,—when consumer may enjoin enforcement of unreasonable charge. A consumer of water furnished by a public utilities company may restrain the enforcement of an unreasonable charge.
    2. Waters and water courses,—how water company may collect charges. A public service corporation may shut off water for nonpayment of a bill if there is no overcharge, and a motion 'to dissolve an injunction preventing such shutting off should not be overruled when it appears that there was no overcharge.
    3. Injunction, § 273

      —how hearing to dissolve may be had. Under sections 14 ef seq., of the Injunction Act (J. & A. 1fjf 6174 et seq.) a motion to dissolve an injunction should be heard and determined upon the weight of’ the testimony introduced by the respective parties at the hearing.
    4. Waters and water courses,—when injunction preventing collection of water charges should be dissolved. An order overruling a motion to dissolve an injunction preventing a public service corporation from collecting a bill for water served, held erroneous when supported only by the general statement of the consumer that he was charged for more water than he consumed, and more than he was charged for in former years.
    Cooke, Pope & Pope, for appellant.
    Frederick Sass, for appellee.

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

   Mr. Presiding Justice Carnes

delivered the opinion of the court.