text:
    Wilbert Bernier, Administrator, Appellee, v. Illinois Central Railroad Company, Appellant.
    Gen. No. 6,729.
    1. Appeal and error, § 1321*—what presumed as to finding of jury returning verdict for plaintiff in action for death. An instruction, in an action to recover for the death of one struck hy a locomotive on defendant’s track, given at defendant’s request, that at the time of the injury deceased was on defendant’s property “and was nothing more than a licensee thereon. That is to say, she was on said tracks at her peril, and the only duty defendant owed to deceased was that upon discovering she was in danger the law would require defendant to use every reasonable effort to keep from injuring deceased” is equivalent to instructing that plaintiff could recover only for the wilful and wanton injury charged in his declaration, and, on appeal, it must be presumed that, .by its verdict for plaintiff, the jury found defendant guilty of the wanton and wilful injury charged.
    2. Negligence, § 7*—what constitutes constructive or legal wilfulness. To establish wanton and wilful injury, it is not always necessary to prove ill-will towards the person injured, but an entire absence of care for the life, person or property of others, if such as to exhibit indifference to consequences, makes a case of constructive or legal wilfulness such as charges a person, whose duty it was to exercise care, with the consequences of a legal injury.
    3. Negligence, § 192

      —whether evidence establishes wilful and wanton negligence as for jury. The question whether the evidence establishes wilful and wanton negligence is for the jury.

      4. Railroads, § 583*—when evidence in action for death of person killed while near track, sufficient to support finding of wanton and wilful negligence on part of engineer. In an action to recover for the death of one struck by an engine while standing on a platform near defendant’s railroad track, evidence as to the speed of the train, the situation of deceased and the engineer’s knowledge thereof and his failure to give warning, held sufficient to support a finding that the engineer was guilty of wanton and wilful negligence, j 5. Evidence, § 472*—1when criminal charge need not be proved beyond reasonable doubt. In a civil proceeding, a criminal charge against one who is a stranger to the proceeding need not be proved beyond a reasonable doubt.
    6. Railroads, § 497*—when fact that person, killed while near track, had been trespassing is immaterial. In an action to recover for the death of one struck by defendant’s engine as she was standing on a platform near the track, it is immaterial that before the accident occurred she had been trespassing on defendant’s track.
    7. Railroads,, § 557*—duty of person on platform near track to keep watch for approaching trains. Due care does not require that one standing on a platform near a railroad track keep watch in one
    direction for approaching trains all of the time.
    ' 8. Railroads, § 584

      —when evidence sufficient to support finding that one killed while near track was not guilty of contributory negligence in failing to see engine. In an action to recover for the death of one struck by an engine as she was standing on a platform near the track, where it appeared that the track on which the engine ap-
    preached was curved and that sight of it might have been intercepted by a freight train which was going in the opposite direction on another and which was making a great deal of noise, such evidence is sufficient to support a finding that deceased was not guilty of contributory negligence in failing to see the engine.
    Appeal from the Circuit Court of Kankakee county; the Hon. Arthur W. DeSblm, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed December 17, 1919.
    W. B. Hunter, for appellant.
    E. A. Marcotte and J. Beet Miller, for appellee.

      See Illinois Notes Digest, Vois. 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 Dibell

delivered the opinion of the court.

This case was before us in Bernier v. Illinois Cent. R. Co., 213 Ill. App. 530, where we reversed a judgment for plaintiff and remanded the cause for another trial. ■ A second trial has resulted in another judgment for plaintiff, from which defendant appeals. In our former opinion we described the locus in quo and the circumstances attending the killing of Bernice Bernier by the engine or train of defendant. It is not claimed that our description of the surroundings and circumstances in our former opinion was incorrect or that the evidence at the second trial was materially different in those respects from that at the first trial. We therefore adopt our description of the place and circumstances in our former opinion and refer to it here without repeating it.

The first count of the declaration charged that the defendant wilfully and wantonly ran said passenger train against said Bernice Bernier and she was thereby injured and died from said injury. The only plea was not guilty. The court at the instance of the defendant gave to the jury instruction No. 17, as follows: “You are instructed by the court that at the time deceased was struck by the locomotive she was upon the property of the defendant and was nothing more than a licenseé thereon. That is to say, she was on said tracks at her peril, and the only duty defendant owed to deceased was that upon discovering she was in danger the law would require defendant to use every reasonable effort to keep, from injuring the deceased.” This was equivalent to telling the jury that plaintiff could recover only for the wilful and wanton injury charged in the first count. Under this instruction wre must presume that the jury found defendant guilty of a wilful and wanton injury .under the first count. The cases of Heidenreich v. Bremner, 260 Ill. 439; Neice v. Chicago & A. R. Co., 254 Ill. 595; Illinois Cent. R. Co. v. Leiner, 202 Ill. 624; Chicago Terminal Transfer R. Co. v. Kotoski, 199 Ill. 383, and other cases cited in those opinions, are authority for the proposition that to establish the charge of wilful and wanton negligence it is not always necessary to prove ill-will towards the party injured, but that “an entire absence of care for the life, person or property of others, such as exhibits a conscious indifference to consequences, makes a case of constructive or legal wilfulness, such as charges the person whose duty it was to exercise care, with the consequences of a wilful injury.” Thompson on Negligence, vol. 1, sec. 22, says: “An entire absence of care for the life, person or property of others, such as exhibits a conscious indifference to consequences, makes a case of constructive or legal wilfulness, such as charges the person whose duty it was to exercise care, with the consequences of a wilful injury. ’ ’ The foregoing Illinois cases also show that the question whether wilful and wanton negligence is established is a question of fact for the jury.

A careful reading of the evidence of Holly, the engineer who drove the passenger train, read at length in the record, when considered in connection with the other undisputed facts, makes a case of wilful and wanton negligence within the meaning of the foregoing authorities. He estimated the speed of his train when he passed under the viaduct at 15 miles per hour and when he struck Bernice and her mother at 10 miles per hour. A reading of his entire evidence in the record discloses that he was paying no attention to the speed at Which he was then running and that this was but an estimate formed afterwards. Naturally he would have a tendency to testify to that which would as far as possible relieve him of responsibility for this death. He conceded that he was running 45 miles per hour in the upper part of the city and admitted that he might have been running faster than that. He admitted that he Avas running 25 miles per hour not very far north of the viaduct. His estimate, where it could be verified, was incorrect. He testified that when he first saw the Berniers he was about 100 feet south of the viaduct and 125 feet from the cinder pathway, which would make the pathway 225 feet south of the viaduct, whereas it was proven by actual measurements to be 423 feet. Another witness, who saw the engine come under the viaduct, estimated its speed at 25 or 30 miles per hour, or more, but he showed no special training that would give weight to his estimate. Proof introduced by defendant showed that when Mrs. Bernier was picked up after the accident she lay about 30 feet south of the cinder path and that Bernice was 20 feet, according to one witness, and 25 feet or 30 feet, according to another, south of Mrs. Bernier, or some 50 or 60 feet south of the cinder path, where other evidence tended to show that these women were standing when they were struck by the bumper or cylinder head of the engine. The jurors would be permitted to judge by their own observation and knowledge of the affairs of life whether a vehicle, whether engine or automobile, going at the speed of 10 miles per hour and striking a woman, would be apt to throw her 50 or 60 feet. All this evidence considered, we are of 'opinion that the jury were warranted in finding that the train was traveling at a much greater speed than 15 miles per hour when it passed under the viaduct and much greater than 10 miles per hour when it struck Bernice Bernier. Actual measurement showed that the distance from the viaduct to the south water tank, where the engine stopped, was 613 feet. The engineer testified that he knew that people often crossed these yards on that cinder path; that he saw Bernice and her mother when they were crossing the second switch track west of the track on which his train was running; that he watched them until after they had crossed his track; that he did not apply brakes or any other means at his command to check the speed of his train during that time; that he took it for granted that they had time enough to get across his track before he reached them and assumed that they knew what they were about. During that time he did not sound the whistle, and seeing that they had crossed his east rail, he turned away from looking at them. He knew a freight train Was passing on the northbound track between the women and the station and that they could not cross to the station. The proof is that the distance between two trains on that platform was 6 feet 5 inches. He must have known that the space was very narrow. He also noticed that the women did not look his way at all. He must have realized that they probably were not conscious of the approach of his train and that they would naturally be careful not to approach too near the moving freight cars just ahead of them. We are of opinion that, under the circumstances as he knew them to be, he was regardless of the consequences to the life and safety of those persons when he could either have wholly stopped or greatly checked the speed of his train after he saw those women, if he had seen fit to do so. We therefore conclude that the jury were warranted in finding against the defendant under the first count. Under that count it was immaterial whether Bernice Bernier or her mother were in the exercise of due care, and any imperfections in instructions on other subjects would not defeat a recovery under the first count. Defendant urges that an instruction which permitted the first count to be established by a preponderance of the evidence is incorrect because crime alleged in civil proceedings must be proved beyond a reasonable doubt. Even if a crime is charged in the first count, which we do not concede, that point is not well taken, because, in a civil suit, a criminal charge against a stranger to the suit need not be proved beyond a reasonable doubt. Foster v. Graf, 287 Ill. 559.

The evidence above discussed also warranted a verdict of guilty against defendant under counts charging ordinary negligence, but as to them it was necessary that the proof should show due care on the part of Bernice Bernier, and also on the part of her mother, if Bernice is to be treated as a child of tender years. Defendant contends that the proof is undisputed that they were not exercising due care and also that they were trespassers while on the cinder walk. We are disposed to hold that they were licensees on that cinder walk, but regard that as immaterial, because they were not struck while on the cinder walk, but they had reached and were standing upon the station platform when they were struck. Mrs. Bernier testified she looked up the track and did not see an approaching train. It is said this testimony is necessarily untrue, for, if she had looked, she must have seen it. There was a curve some distance above the viaduct and a freight train going north on thb east track. Before the passenger train came around that curve its headlight would be thrown across the freight yards to the west of where the women were, and until the passenger train came around that curve the freight train might have concealed the view of the passenger train from the women. Due care did not require that they look in one direction all the time. As they went upon the platform just east of the southbound track, the attention of the women would naturally be drawn to the passing freight train. Mrs. Bernier testified that those cars were making a very distressing noise, and a passenger on the passenger train, who was required to wait until the freight train got by before getting off after the train had stopped, testified that the freight train was making an unusual noise, clanging, scraping, and shrieking, so that one could hardly hear anything except the noise of the freight train. All this was to be taken into consideration in determining whether these women were exercising ordinary care for their own safety. We are not prepared to say from the evidence that the jury should have found that they were lacking in ordinary care, under all the circumstances surrounding them at that moment.

We think it unnecessary to a determination of the case to decide the much-argued question what the rights of foot passengers were when upon the cinder walk, and we find no substantial error in instructions relating to the material questions in the case.

The judgment is therefore affirmed.

Affirmed.


source: Caselaw Access Project

author: Me. Justice Dibell

license: Public Domain

text:
    Arthur Travis, Appellee, v. Thomas L. Geiger, Appellant.
    Gen. No. 6,762.
    1. Forcible entry and detainer, § 31*—demand for possession as not necessary before bringing action against tenant holding over. Under the 4th paragraph of section 2 of the Forcible Entry and Detainer Act (Rev. St. ch. 57, J. & A. t 5843), a demand for possession is not necessary before bringing an action for forcible detainer against a tenant holding over.
    2. Forcible entry and detainer, § 67*-—title as not litigable. An action of forcible detainer by a lessee against a tenant holding over is possessory only, and the question of title cannot be tried, but only the right of possession.
    3. Forcible entry and detainer, § 67

      —holdover tenant as not entitled to deny right of possession of lessor or second tenant. In an action of forcible detainer brought by a second tenant against a holdover tenant, each of them ‘ having received leases from the same testamentary trustee, defendant cannot be heard to deny the right either of the trustee or of the plaintiff to possession.
    Appeal from the Circuit Court of Lee county; the Hon. Oscar E. Heard, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed December 17, 1919.

      H. A. Beooks and Lebbeus Woods, for appellant.
    E. E. Wingebt, for appellee.

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

   Me. Justice Dibell

delivered the opinion of the court.

Travis sued G-eiger and wife before a justice of the peace in Lee county in forcible detainer to recover possession of a farm and had a judgment against them, from which they appealed to the Circuit Court where the case was tried without a jury. The wife disclaimed any interest in the possession of the premises and the suit was dismissed as to her. Travis had a judgment against Geiger, and the latter prosecutes this appeal.

It was stipulated that at the time of making two leases hereinafter mentioned, Edward E. Wingert was the lawfully appointed, duly qualified and acting trustee under the last will and testament of John L. Geiger, deceased. Under the date of January 25,1918, he leased said premises to Thomas L. Geiger for a term beginning March 1, 1918 and ending March 1, 1919. Under date of November 30, 1918, said trustee leased said premises to Arthur Travis for a term beginning March 1, 1919 and ending March 1, 1920. This suit was begun March 6, 1919, by Travis to secure possession from the former tenant. Geiger contends that before Travis could maintain this action it was necessary for him to serve Geiger with a notice or demand for possession of the premises, and that it was necessary for him to show that said trustee had authority to lease these premises. The suit is, in fact, under the 4th paragraph of section 2 of chapter 57 of the Revised Statutes (J. & A. 5843), an act in regard to forcible entry and detainer. Section 2 reads: “The person entitled to the possession of lands or tenements may be restored thereto in the manner hereafter provided: * * * Fourth-—When any lessee of the lands or tenements, or any person holding under him, holds possession without right, after the determination of the lease or tenancy by its own limitation, condition or terms, or by notice to quit, or otherwise.” Under that clause a demand for possession is not necessary before bringing an action of forcible detainer against a tenant holding over. Condon v. Brockway, 157 Ill. 90, on page 94. If demand were necessary, the trustee mailed Geiger a letter under date of December 6, 1918, in which he told Geiger that he must arrange for another place for the 1st of March next; and it was stipulated that before and after that date, Wingert, as trustee, had orally notified Geiger that said lease must terminate according to its terms on March 1,1919, and that on one occasion Geiger replied that he would leave if he had to, and that before March 1, 1919, Geiger secured another place.

This action is possessory only. The question of title cannot be tried, but only the right of possession. Meier v. Hilton, 257 Ill. 174. A second tenant may recover in this action against the tenant holding over without right. Ball v. Chadwick, 46 Ill. 28. Travis had a lease from the same landlord as Geiger, professing to act in the same capacity as trustee, and it was stipulated that he was the duly acting trustee at the time he executed each of said leases, and it is familiar doctrine that a tenant cannot dispute his landlord’s title. Geiger, therefore, could not be heard to deny either the right of the trustee to possession or the right of the subsequent tenant to possession. The rulings of the court below upon the propositions of law presented by Geiger are in accordance with these views.

The judgment is therefore affirmed.

Affirmed.

Mr. Justice Heabd took no part.


author: Mr. Justice Eldredge

text:
    American Hominy Company, Appellee, v. National Bank of Decatur, Appellant.
    1. Bills and notes, § 86*—when drafts are payable to bearer. Where one, authorized by a milling company to buy grain for it and to draw the company’s drafts upon itself for grain bought and not shown to have been without authority to draw bearer paper, settled grain accounts by charging off his personal credits against the sellers and issued drafts on the company in fevor of the sellers but without any intention that the latter should have any interest in the drafts or that the drafts should be' delivered to or indorsed by them, and he himself disposed of.such drafts by indorsement, held that such drafts were payable to bearer within the meaning of Negotiable Instruments Law, sec. 9 (Hurd’s Rev. St. 1917, ch. 98, sec. 27, J. & A. If 7648).
    2. Banks and banking, § 154

      —when collecting bank does not warrant genuineness of indorsements on drafts payable to bearer. A collecting bank does not warrant the genuineness of indorsements on drafts payable to hearer by presenting such drafts for payment.
    Appeal from the Circuit Court of Macon county; the Hon. William K. Whitfield, Judge, presiding. Heard in this court at the October term, 1918.
    Reversed with finding of facts.
    Opinion filed July 9, 1919.
    Modified and réfiled October 14, 1919.

      Le Forges, Black & Samuels, Redmon, Hogan & Redmon and Moses, Rosenthal & Kennedy, for appellant; Walter Bacheach and H. J. Darby, of counsel.
    Vail, Pogue & Allen, for appellee.

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

   Mr. Justice Eldredge

delivered the opinion of the court.

The American Hominy Company, appellee, procured a judgment against the National Bank of Decatur, appellant, in the Circuit Court of Macon county, in an action of assumpsit in the sum of $2,359.63, to reverse which this appeal is prosecuted.

The declaration under which the case was tried consists of the common counts and six special counts. It is averred in the first special count that on January 7,' 1915, appellant presented to appellee at Decatur for payment appellee’s certain draft on itself drawn by its agent, John C. Meyer, at Garber, Ford County, Hlinois, in the following words and figures, to-wit:

“ Suffern-Hunt Mills
No. 2311.
Branch” American
Hominy Co.
Garber, Ill., Dec. 31-1914.
White Com Products.
Pay to the
Order
of C. J. Heckens..................$749.60-100
Seven Hundred Forty-nine and 60-100.......Dollars
For 1208.44 Bushels white corn
At 62 per Bu.
To Suffern-Hunt Mills)
Decatur, Illinois (Signed) John C. Meyer,
Agent.”

That at the time of said presentment said draft bore upon the back thereof the indorsement of one C. J. Heckens, the payee named therein, together with certain other indorsements; and whereas said Meyer, at the time he drew,said draft as such agent of appellee, and at the time of the presentment of said draft as aforesaid, was authorized by appellee to draw appellee’s drafts upon itself and to deliver the same to the payee named therein in payment only for grain in the amount and at the prices named on the face of such drafts, or in payment of supplies or wages noted upon the faces of such drafts, and was not then authorized to draw any drafts upon appellee in said form or otherwise, payable to bearer, or in payment for anything other than grain in the manner aforesaid, nor to deliver the same to any persons other than the persons to whom moneys were then due from appellee for grain purchased and delivered or to be delivered to appellee at said elevator in Garber, save only for supplies and wages, which last-named drafts also were then required to show upon their faces for what purpose they were drawn, issued and delivered; and whereas said draft above mentioned was not drawn and delivered by said Meyer, as agent as aforesaid, to the payee named therein in payment of grain nor for any other purpose, but on the contrary the name of the payee was; prior to its presentment, indorsed in writing on the back thereof by some person other than said payee and without the consent, authorization, knowledge or ratification of said payee or appellee, by reason whereof appellee could not and did not, at the time of the presentment of said draft as aforesaid, lawfully trace its title to the same through said payee or otherwise; and whereas afterwards plaintiff, who then did not know that the name of the payee upon said draft presented as aforesaid had been forged, nor that the same had not been drawn nor delivered to said payee in payment for the grain in said draft mentioned, nor that appellant did not then have lawful title to said draft, and who then believed that said draft had been paid by said Meyer, as agent as aforesaid, and drawn and delivered to said Heckens in payment of grain purchased by him for appellee, then and there paid to appellant the amount of said draft, and although appellant then knew or should have known that the name of the payee then indorsed upon the hack of said draft was forged, and that its payment by appellant was without consideration, appellant then and there received and has retained said moneys of appellee, the same in the amount of said draft then paid by appellee to appellant; that appellant then and there became liable to repay said moneys to appellee, etc.

Special counts two, three and four are in substantially the same language except that they declare upon three other drafts drawn in the same form ostensibly for the payment of grain and payable respectively to the order of Henry Boettger, $626.36; John M. Heckens, $706.47; and Andrew Hoick, $380.25.

The fifth special count declares on all the drafts together and avers that appellant by presenting said drafts for payment thereby vouched and warranted to appellee that the indorsements in writing of the names of the respective payees upon the backs of said respective drafts were the genuine indorsements of such payees.

The sixth special count declares upon all the drafts and avers that appellee paid the same under a mistake of fact.

The proofs show that the National Bank of Decatur received the drafts in question for the purpose of collection only; that it presented them to appellee who voluntarily paid the same; that appellant then remitted the money to the persons or blanks from whom 'or which it had received the drafts for collection and that appellant had no interest of any kind in the transaction, except merely as a collection agency. The American Hominy Company is a corporation engaged in the business of buying, selling and milling grain and has many branches or branch offices throughout the country. Its office for the central part of Illinois is located at Decatur and is operated under the name of Suffern-Hunt Mills and its various agents and offices in the vicinity of Decatnr operate under instructions and direction from the Suffern-Hunt Mills. Among other elevators owned and operated by appellee was one located at Garber, a small station in Ford county. For about 15 years John C. Meyer had been the agent for appellee at Garber. He also conducted, during this period of time, a general merchandise business and was the only merchant or storekeeper in the village. He sold in his business coal, farm implements, dry goods, boots and shoes, groceries and other merchandise. He .purchased grain for appellee at prices directed to be paid by the latter and paid for the same by drafts drawn upon appellee which specified upon the face thereof the amount and kind of grain purchased and the price paid for the same and were always signed with the name “John C. Meyer, agent.” He never signed any of the drafts in the name of American Hominy Company or Suffem-IIunt Mills. Meyer testified that many of the farmers from the surrounding neighborhood traded with him at his store on credit and that frequently, when he purchased grain from the farmers having a credit account with him in his store, he settled the store accounts with the parties from whom he had purchased the grain by giving credit on the purchase of the grain for the amount of the farmers’ store bills and that he then drew drafts on appellee signed by his own name as agent and repaid himself for the amount of goods which he had sold to the farmers and which he had settled on his own account, and that the agent of appellee operating the Suffern-Hunt Mills knew of these transactions. The officers of the Suffern-Hunt Mills deny that they had any knowledge Meyer pursued such methods. Meyer was required by appellee to and did malee daily reports, or at other stated intervals, of the amount and kind of grain that had been purchased by him for appellee and also the amount of grain that had been shipped by him and the amount on hand. Meyer testified also that the grain for which three of the drafts were drawn was purchased from the tenants of their respective landlords; that the grain was actually delivered by the tenants; that he drew the drafts in the names of the tenants; and that he himself settled with the landlords either through merchandise bought by the latter at his store or by payment to them out of his own funds.

It is undisputed, however, that the four drafts in question were never delivered by Meyer to the respective payees named therein, but that Meyer himself indorsed the names of the payees on the backs of the respective drafts and delivered the same to the commission firm of James E. Bennett & Company in payment of transactions covering his personal deals with said firm. In due course of time, these drafts were delivered to appellant for collection and were paid by appellee.

It is the contention of appellee that the indorsement of the respective payees’ names were forg’eries and that appellant, by presenting said drafts, warranted the, genuineness of the indorsements thereon, and that when a drawee pays a draft where the payee’s name is forged, there is no consideration for such payment and he may recover the money paid. Appellant claims that appellee has no right to recover because the respective payees in the drafts were fictitious persons since the drafts were never intended to be delivered to the payees therein named nor was it ever intended by Meyer, the drawer of the drafts, that said payees were to have any interest therein and that said drafts were consequently payable to bearer. Section 9, par. 27 of the Negotiable Instruments Law (chapter 98, Hurd’s Rev. St. 1917, J..& A. 7648) provides that a negotiable instrument is payable to bearer. “3. When it is payable to the order of a person known to the drawer or .maker to be fictitious or non-existent, or of a living person not intended to have any interest in it.”

Appellee admits the force of this statute, but insists that in case of drafts drawn by an agent, if the authority of the agent to draw is broad enough to authorize him to draw bearer paper, his intention in making the paper payable to a fictitious person, and therefore payable to bearer, will,control; but, if he has no authority to issue bearer paper, his fraudulent intention to issue bearer paper by making it payable to a fictitious person will not be imputed to his principal and will not control, and the indorsement of the fictitious payee’s name under such circumstances will amount to forgery. It is also insisted that the burden of proving Meyer’s authority as agent to draw bearer paper was upon appellant and not upon appellee.

Very able and forcible arguments have been advanced by counsel for both appellant and appellee in support of their respective conclusions of the law applicable to the facts in this case, but our opinion is that the rule as announced in the case of Bartlett v. First Nat. Bank of Chicago, 247 Ill. 490, must control our decision in this case. The facts appearing in that case are very analogous to those shown by the record in the case at bar. The principal distinction between the facts in the Bartlett case and those in the case at bar is that the drawee in the Bartlett case had known for a considerable time that its agent, Walsh, the drawer of the drafts, had been in the habit of drawing the same in favor of fictitious persons as payees and indorsing their names on the backs thereof. It is for this reason that counsel for appellee most strenuously insist that the rule as announced in the Bartlett case should not be applied to the case at bar. It is true that the court in the Bartlett case applied the doctrine of estoppel from the facts there presented, and in substance held that where one of two innocent persons must suffer loss by reason of the wrongful act of another party, the one who has made it possible by his own negligence, for the other party to commit the wrongful act, must stand the loss, and when a grain company knowingly permits its agent, although forbidden by it to do so, to draw drafts on the company payable to farmers who have delivered grain and indorsed the names of the payees himself, it must, as against the bank having no notice of the facts, stand the loss resulting from the agent’s misconduct. But this was not the only ground on which the judgment in that case was affirmed. The court, after holding that the drawee could not recover on the ground of estoppel heretofore mentioned, proceeds to give another reason by which the drawee was precluded from recovery. The court said: “The drafts drawn by R. L. Walsh in the name of the appellants against themselves were all made payable to some person who resided near Reddick or bearer, and in the sense that there were such individuals as payees, the payees named in the drafts were not fictitious persons. At the time, however, Walsh drew said drafts, he did not intend that the persons whose names he inserted as payees in said drafts should have any interest in said drafts, or that said drafts should ever be delivered to said payees, or that said payees should indorse said drafts in order to receive payment therefor or for the purpose of negotiating the same. In the eye of the law, therefore, the payees named in said drafts were not bona fide payees, but mere fictitious persons. Said drafts were therefore, in law, payable to béarer, and were transferable, therefore, by delivery, and upon their receipt by the appellee payment thereof could be enforced against the appellants by the First National Bank of Chicago without claiming through the said forged indorsements but as the holders of negotiable paper made payable to bearer. * * * The First National Bank: did not, therefore, make out its title to said drafts through a forged indorsement, and appellants could not, therefore, recover back the money paid to the bank on said drafts.

“Numerous other grounds are urged in support of the judgments of the trial and Appellate Courts, but the two grounds herein considered are so conclusive against the right of appellants to recover upon the undisputed evidence, that we do not think it necessary to consider the other grounds urged in the briefs.”

The proofs in the case at bar show that Meyer, as agent for appellee, had authority from the latter to draw drafts on it in favor of the farmers in payment for the grain purchased by him from them, and that this authority had existed for about 15 years; that such drafts, when presented to appellee, were universally accepted and paid by it. No proof was introduced to show that this authority was limited in any way or that Meyer had no authority to draw drafts payable to bearer. In regard to the drafts in controversy, it is conceded that Meyer never had any intention that the payees named therein should have any interest in the transaction and they were never delivered to the payees by Meyer. Under the plain wording of the statute and the authority of the Bartlett case, these drafts were payable to bearer, and appellant, by presenting them for payment, did not warrant the genuineness of the indorsements thereon.

The judgment is reversed.

Reversed with finding of facts.

Finding of facts. The court finds that each draft in question was payable to the order of a person not intended by Meyer, the drawer, to have any interest in it, or that it should ever be delivered to the payee named therein, or that the payee should indorse said draft in order to receive payment therefor or for the purpose of negotiating the same,


text:
    Logan A. Gridley et al., v. John H. Wood, Appellee. Ora Gridley, Appellant.
    1. Appeal and error, § 1245*—when appellant cannot complain that chancellor considered evidence received in another suit. Appellant cannot complain that the chancellor considered evidence received in another suit after having specifically requested him to do so.
    2. Divorce, § 58*—how far divorce decree is decree in rem. A divorce decree, in so far as it provides a lien on real estate for the payment of alimony, is a decree ‘in rem and not in personam.

    3. Divorce, § 106*—when wife entitled to alimony until all of dower interest is assigned. Under a decree of divorce providing that, until the wife's dower interest is assigned to her in certain lands, she should receive a designated amount per year for her alimony and that the payment of such alimony should he secured by a lien upon certain real estate then owned by her husband, the wife is entitled to such alimony until all of her dower interest is assigned to her unaffected by the fact that she receives a portion of her dower interest, and it will be error, in a subsequent suit for partition, to reduce the amount of alimony in proportion to the amount of the payments of dower.
    4. Dower—mode of assignment. Dower can be assigned otherwise than by metes and bounds.
    5. Dower, § 145*—when dower must he assigned in common. In cases where the widow is entitled to dower of a part or portion held as tenant in common, the dower must be assigned in common.
    6. Partition, § 110*-—what provision in order of distribution unwarranted. Provision in the order of distribution in partition that the master in chancery, after making certain payments, should pay the balance of the proceeds of (he sale of the real estate to one of the counsel appearing for one of the parties until certain other litigation should be terminated, held unwarranted.
    7. Partition, § 110*—master in chancery as custodian of proceeds of sale. The master in chancery is the person authorized by law to have the custody of the proceeds of the sale of real estate in partition suits until he is authorized to disburse them by a decree of distribution to the parties entitled to them.
    8. Divorce, § 106

      —when decree for alimony not at variance with recognized principles of law. A divorce decree, providing for the payment of alimony to the wife after the death of the husband during her lifetime or until her dower should be assigned and making the payment of such alimony a lien on the hustiand’s real estate, held, under the circumstances, not at variance with recognized principles of law.
    Appeal from the Circuit Court of McLean county; the Hon. Sain Wblty, Judge, presiding. Heard in this court at the October term, 1918.
    Reversed and remanded with directions.
    Opinion filed July 9, 1919.
    Rehearing denied October 14, 1919.

      Certiorari denied by Supreme Court (making opinion final).
    De Mange, Gillespie & De Mange, for appellant.
    Sterling, Livingston & Whitmore, for appellee; Sigmund Livingston, of counsel.

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

   Mr. Justice Eldredge

delivered the opinion of the court.

Logan A. Gridley and Mary G. Bell, by the People’s Bank, her conservator, filed their bill to partition certain real estate consisting of certain farm lands in the county of McLean and certain lots located in the City of Bloomington. The bill alleges and the proofs show that each of the complainants was the owner in fee simple of an undivided one-third of said real estate and that John H. Wood, appellee, held the legal title under a deed and the will of Edward B. Gridley, deceased, to the remaining one-third, and that said Wood’s undivided one-third was subject to a lien for alimony for the amount of $900 per year after the death of said Edward B. Gridley, payable to Ora Gridley, during her lifetime or until her dower should be assigned to her in the estate of said Edward B. Gridley, and that said Ora Gridley had a dower estate in the undivided one-third owned by said Wood, both said lien and said dower having been decreed to her by the Circuit Court of McLean county in a suit for divorce and alimony in which she was the complainant and said Edward B. Gridley was defendant. Ora Gridley, appellant, filed a cross-bill and from the abstract it does not appear that appellee filed any answer thereto. The property was sold for the sum of $137,-750.77. Appellant was entitled to the value of her dower interest in the undivided one-third of this amount, the sum being appellee’s interest therein, and the first contention made by appellant is that the chancellor erred in fixing the amount of her dower in that he figured it at the 4 per cent interest rate under the Carlyle table instead of at the 5 per cent rate. It is complained that the chancellor on Ms own motion ordered the master in chancery to file a report showing the- evidence taken on the question of dower in another suit between the same parties and based his finding of the rate upon such report. Appellant objected to the original order of distribution in which the chancellor found her dower interest and, in her written objections, she prayed the court to consider therewith the testimony theretofore taken in the other suit upon the question of the present value of her. dower in the proceeds from the sale of the real estate. The chancellor vacated the original order of distribution on account of the objections filed by appellant thereto and upon reconsideration entered the order of distribution from wMch tMs appeal is taken. Appellant cannot now object that the chancellor considered the evidence taken upon this question in the other suit after having specifically requested him to do so.

It is next urged that the chancellor erred in reducing the amount of her alimony in proportion to the amount of the payments of her dower theretofore made to her. The divorce decree provided that $1,800 per year alimony should be paid to her until the death of Edward B. Gridley, and that, after Ms death, $900 per year should be paid to her until her dower was assigned. The decree also provided that said alimony should be a lien upon the real estate and that said decree for alimony shall be binding upon the heirs, executors and administrators of said Edward

/ B. Gridley until dower has been assigned to her in the estate of the defendant, owned and possessed by him on -the date of the filing of the bill for divorce, unless thereafter otherwise ordered by the court. The decree was modified twice for the purpose of transferring the alimony lien to other described property. The last modification was for the purpose of permitting Edward B. Gridley to procure a loan of $5,000 and, by agreement between the parties, the lien was transferred to the property now in controversy and to which Wood, the appellee, had a deed. To the contract signed by appellant and Edward B. Gridley, providing for the modification of the decree last mentioned, appellee Wood attached the following stipulation which he signed and acknowledged: “I, the said John H. Wood, holder of the legal title to all of the said real estate described herein consent and agree to the above. In witness, I have hereunto set my hand .and seal this 18th day of October, 1909.” Appellee never attempted to assign any dower, but paid the amount of the alimony to appellant for over two years after the death of Edward B. Gridley at the rate of $900 per year. It appears that appellant, however, received a portion of her dower interest in the real estate, owned by Edward B. Gridley at the time of the divorce decree, through partition of other portions of said real estate, and the chancellor took the view that the amount of her alimony should be reduced pro rata with the prior payments on the value of her dower interest. The divorce decree, in so far as it provided a lien on the real estate for the payment of alimony, was a deóree in rem and not in personam. The decree plainly provides that, until appellant’s dower interest is assigned to her in all the lands mentioned, she shall receive $900 per year for her alimony and that the payment of said alimony shall be secured by a lien upon certain real estate then owned by Edward B. Gridley. She had a right to this alimony until all her dower interest was assigned to her. She was not com - pelled to receive her dower by piece-meal. It is urged by counsel for appellee that, because the real estate in which appellant claimed dower was held as a tenancy in common, dower could not be assigned by metes and bounds and, therefore, that part of the divorce decree providing for alimony until dower should be assigned could not be fulfilled and was void. Dower can be assigned otherwise than by metes and bounds. “In cases where the widow was entitled to dower of a part or portion held as tenant in common, the dower must be assigned in common.” Hart v. Burch, 130 Ill. 426. Appellee Wood had a right to assign appellant’s dower in common out of his share of the rents derived from the real estate held by him in common with Mary Gridley Belle and Logan A. Gridley. He preferred to pay the amount of the alimony instead of making this assignment. In our opinion, the chancellor erred in pro rating and reducing the amount of appellant’s alimony.

It appears that the order of distribution provides that the master in chancery, after making certain payments, shall pay the balance of the proceeds of the sale of the real estate to one of the counsel appearing for appellee until certain litigation shall have been terminated in two other cases, and this is also assigned as error. We have been unable to find any reason which would warrant the taking of these funds out of the hands of the master in chancery and transferring them to the possession of counsel for one of the litigating parties. Part of these moneys belonged to appellant. The master in chancery is the person authorized by law to have the custody of the proceeds of the sale of real estate in partition suits until he is authorized to disburse them by a decree of distribution to the parties entitled to the same.

Appellee has assigned a cross error to the effect that appellant was not entitled to any alimony after the death of Edward B. Gridley. The express terms of the decree provided that glimony should continue after the death of Edward B. Gridley until dower was assigned. The decree was also subsequently modified at the request of Edward B. Gridley in 1903 and a consent decree entered whereby the lien for the payment of the alimony was transferred to other real estate, and again, in 1909, at his request, the lien was again transferred to other property and, in the latter instance, appellant, by his written agreement under seal and acknowledged by him also, consented thereto. The divorce decree under these circumstances is not at variance with the principles of law announced in Storey v. Storey, 125 Ill. 608; Craig v. Craig, 163 Ill. 184; Lennahan v. O’Keefe, 107 Ill. 620.

The cross error is overruled and the decree is reversed and cause remanded at the costs of appellee, Wood, with directions to enter a decree in accordance with this opinion.

Reversed cmd remanded with directions.


text:
    Meridian Amusement Company of Illinois, Appellant, v. Home Theater Company et al., Appellees.
    1. Corporations, § 140*—right of corporation to sell stock owned by stockholders. A corporation cannot sell the stock owned by the stockholders therein.
    2. Corporations, § 144*—when contract under which stock is delivered is one between purchaser and stockholders. Contract under which all of the stock of a corporation was delivered, held to have been a contract between the purchasers and the stockholders although it was executed in the corporate name.
    3. Landlord and tenant, § 428*—when contemporaneous contract is part of sublease. A contract executed contemporaneously with the sublease of a theater building for a moving picture show whereby the sublessor, which was the lessee of another theater ■building near by, agreed not to conduct a moving picture show therein, held a part of the contract of lease.
    4. Landlord and tenant—when contract executed contemporaneously with sublease is valid and binding. A contract executed contemporaneously with the sublease of a theater building for a moving picture show whereby the sublessor, which was the lessee of another theater building near by, agreed not to conduct a moving picture show therein, held a valid and binding contract supported by good consideration.
    5. Corporations—corporate lessor not released from obligation of contract by change in stockholders. Where the corporate lessee of two nearby theater buildings subleases one of such buildings for a moving picture show and contemporaneously with the execution of the sublease enters into a contract whereby it agrees not to conduct a moving picture show in the other building, the force and effect d-f such contract cannot be destroyed by a change in the stockholders of the sublessor corporation.
    6. Corporations—right of corporate lessor to take advantage of want of knowledge of purchasers of stock. The fact that the purchasers of all of the stock of a sublessor corporation did not know of the existence of a restrictive contract, executed contemporaneously with the sublease, does not permit the corporation as an entity to claim that it is not bound thereby.
    7. Corporations, § 194

      —debts and obligations not eliminated by change in stockholders. The debts and obligations of a corporation are not eliminated by a change in its stockholders. '

      8. Corporations, § 197*—what is relation of shareholders to capital stock. The shareholders of a corporation áre conclusively charged with notice of the trust character which attaches to its capital stock. As to it they cannot occupy the status of innocent purchasers, but are to all intents and purposes privies to the trust; and hence when they have in their hands any of such trust fund, they hold it cum onere subject to all of the equities which attach to it.
    9. Corporations—when transactions of purchasers of all of stock of corporate lessee are fraudulent as to sublessee. When persons who purchase all of the stock of a corporation and function as stockholders thereof cause to be incorporated another corporation to which they transfer a lease executed by their corporation prior to their acquisition of its stock and the new corporation admits a violation of a restrictive agreement which was part of the lease, held that the transactions, even though not tainted by actual fraud, operated as a constructive fraud on the rights of the lessee.
    10. Corporations—when purchasers of all of stock of lessor corporation are charged with notice of restrictive agreement forming part of lease. Persons who purchase all of the stock of a lessor corporation and function as stockholders thereof are charged with notice of a restrictive agreement forming part of the lease whether they have actual notice thereof or not.
    11. Corporations, § 194*—lohen corporation not relieved of obligations. A corporation cannot be relieved of its obligations by its stockholders’ causing another corporation to be organized and transferring all of the former’s valuable assets to the latter.
    12. Landlord and tenant, § 431

      —what is consideration for renewal of sublease. Where a corporation gives a short term sublease on a theater building for a moving picture show with an option for renewal at a higher rental and contemporaneously executes an agreement whereby it agrees not to conduct a moving picture show in a nearby theater building of which also it is the lessee, and the sublessee renews its lease, held that the sublessee has a right to rely on the restrictive agreement as a consideration for such renewal at the increased rental.
    13. Corporations—when both old and new corporations are subject to injunction for violation of lease. Where persons who purchase all of the stock of a corporation and function as stockholders thereof cause to he incorporated another corporation to which they transfer a lease executed by their corporation prior to their acquisition of its stock, and the new corporation admits a violation of a restrictive agreement which was part of the lease, held that an injunction will lie against both the old and the new corporations.

      Appeal from the Circuit Court of Vermilion county; the Hon. John H. Marshall, Judge, presiding. Heard in this court at the
    October term, 1918.
    Affirmed in part, reversed in part and remanded with directions.
    Opinion filed July 9, 1919.
    Rehearing denied October 14, 1919.

      Certiorari denied by Supreme Court (making opinion final).
    Actoh & Actor, for appellant.
    Charles Troup, for appellees.

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

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

   Mr. Justice Eldredge

delivered the opinion of the court.

On and prior to February 6, 1915, the Danville Theater Company owned two buildings in the City of Danville, Illinois, which it had leased to the Barhydt-Hoeffler Company, a corporation. These buildings were used by the latter company for amusement purposes and were commonly known respectively as the “Lyric” and “Fischer” theaters. On February 6, 1915, the Barhydt-Hoeffler Company sublet the Fischer theater to the Meridian Amusement Company, appellant. Under the provisions of this lease, appellant was to use the theater for showing moving pictures only and no vaudeville act should be permitted therein. The lease ran from February 18 to August 31, 1915, at a rental of $1,277, and payable $200 per month in advance. It was further agreed in the lease that appellant might extend the period thereof to the 31st day of August, 1922, by written notice to the lessor on or before the 1st day of August, 1915, for a rental of $27,600, payable $300 per month on the first day of each month until August 1, 1916, and thereafter $333.34 per month on the first day of each month for the balance of the term. This lease was extended by the parties thereto in accordance with the terms expressed therein.

On the same day that this lease was executed, the Barhydt-Hoeffler Company executed a written agreement a,s follows:

“In consideration of the execution of a lease of the Fischer Opera House, at Danville, Illinois, dated February 6, 1915, between Barhydt-Hoeffler Company, lessor, and the Meridian Amusement Company, lessee, said lessor, as the lessee of a like period of the Lyric Theater, near to said Opera House, agrees that they shall not during the existence of said lease, conduct a picture show in said Lyric Theater by running more than two reels of films of not more than 1,100 feet each, in any one show, without the written consent of the lessee.
Barhydt-Hoeffler Co.
By L. F. Allardt, Pres.
“Attest:
H. J. Allardt,
Secretary.”

On October 4, 1916, the Barhydt-Hoeffler Company, party of the first part, entered into a written agreement with eleven men, parties of the second part, by which the former agreed to sell to the latter the lease for' the Palace theater, formerly known as the Lyric theater, together with a franchise for exclusive vaudeville bookings for Danville made with the United Booking Offices of America and the sublease made between the former and the Meridian Amusement Company and the consent to said sublease by the Danville Theater Company, for the consideration of the sum of $10,000; and the Barhydt-Hoeffler Company agreed to deliver the stock of said company and the possession of the Palace theater, the said lease, fixtures and operating apparatus, etc., clear and free from debts, loans or obligations whatsoever, and to turn over the possession of said Palace theater together with the receipts from the sale of tickets beginning with October 1, 1916, and that all bills, obligations or debts theretofore contracted or debts due for maintenance or operation of said theater or building for the month of September, or prior thereto, be paid by the Barhydt-Hoeffler Company. At the time of this last transaction, L. H. Balfe, his wife and D. W. Maurice owned all the stock of the Barhydt-Hoeffler Company. One R. V. Holmes was one of the eleven men who purchased the stock of the Barhydt-Hoeffler Company and negotiated the transaction on behalf of himself and as agent for the other ten men. These eleven men purchased the stock in various amounts from $500 to $2,000 each. Holmes collected from the eleven men, including himself, their various subscriptions for the stock and paid the $10,000 to Balfe and Maurice and the latter turned over all the stock owned by them and Mrs. Balfe, properly indorsed, to Holmes for the eleven men, to whom it was distributed in the proportion of the amounts of their respective subscriptions. The eleven men then held a meeting as the stockholders of the Barhydt-Hoeffler Company and elected directors, who met and elected officers of said company. Holmes was instructed by the directors to cause to be incorporated the Home Theater Company (appellee), which he did. The same eleven men who bought the stock of the Barhydt-Hoeffler Company subscribed for all the stock of the Home Theater Company. Between October 4, 1916, and November 14, 1919, the time when the Home Theater Company was organized, the moneys received from the business carried on at the Palace theater were deposited in the bank under the name of the Palace Theater Company and were afterwards turned over to the Home Theater Company; none- of it was ever paid to the eleven men individually.

At a regular meeting of the board of directors of the Barhydt-Hoeffler Company held on the first Monday in November, 1916, the following proceedings as shown by the minutes of said meeting took place:

“Secretary was authorized to make regular monthly checks for the payment of rent to the Danville Theater Co., for the Fischer Theater Building.

“Upon motion made by J. G-. Fisher, seconded by Arthur Worrell, it was carried that the Barhydt-Hoeffler Co. assign over all its right, title and interest in and to the leases between the Danville Theater Co. and the said Barhydt-Hoeffler Co., in so far as it affects the Palace Theater, formerly known as the Lyric Theater, to the Home Theater Co. of Danville, Illinois, for and in consideration of one hundred ($100) dollars, and that the said Home Theater Co. be given the right to purchase the lease of the Fischer Theater now sublet to the Meridian Amusement Company for and in consideration of $100.00, provided said option is exercised within eighteen (18) months from this date. ’ ’

In accordance with this action of the board of directors, the leases mentioned were assigned to the Home Theater Company. It is conceded that the eleven men paid nothing for the capital stock of the Home Theater Company. It is also conceded that the Barhydt-Hoeffler Company has disposed of all its assets and now exists in name only.

The bill filed by appellant made the Barhydt-Hoeffler Company and the Home Theater Company parties defendant, and it is alleged therein that the Home Theater Company is now conducting in said Lyric theater, now known as the Palace theater, a picture show running more than two reels of films of not more than 1,100 feet in any one show, to wit: at least five reels of films of at least 1,100 feet each, in violation of the covenants of the lease and the written agreement between complainant and the Barhydt-Hoeffler Company. The answer of the Barhydt-Hoeffler Company denies that it entered into said written agreement, but admits that on November 1, 1916, by agreement with the Home Theater Company, the latter was authorized to use said Palace theater for conducting therein theatrical amusements or entertainments, but denies that the Home Theater Company had notice of the agreement between it and appellant. By its answer, it also disclaims any interest in the Palace theater since November 1,- 1916, and states that it has no knowledge whether or not the Home Theater Company is conducting a picture show therein by running more than two reels of film of more than 1,100 feet each. It further claims, by its answer, that said written agreement was executed subsequent to the execution of the original lease with complainant and was without any consideration, and that it never conveyed to the Home Theater Company any information as to said written agreement.

In the answer of the Home Theater Company, it is averred that it had no knowledge of said written agreement between the Barhydt-Hoeffler Company and appellant and it is admitted therein that it is now running more than two reels of films of 1,100 feet each at one show.

The court, on the hearing, granted the injunction prayed for as against the Barhydt-Hoeffler Company, but dismissed the bill for want of equity as to the Home Theater Company The contention of appellant In this court is that the Home Theater Company should also have been restrained.

The position of appellees is that all the transactions enumerated in the assignment of the leases, assets and stock of the Barhydt-Hoeffler Company were made with the eleven men as individuals and that they, not having any knowledge of the contemporaneous restrictive agreement executed by the Barhydt-Hoeffler Company at the time the lease was executed with appellant, purchased the stock, leases and other assets of the Barhydt-Hoeffler Company in good faith and without notice and are not bound by the same. This contention cannot be sustained. While the original contract for the sale of the leases owned by the Barhydt-Hoeffler Company by the latter to the eleven men was executed by the company in its corporate name, it is fundamental that a corporal ion cannot sell the stock owned by the stockholders therein. The contract, properly construed, as determined by the actions of the parties thereto in their own construction thereof, was simply a contract between the eleven men and the three stockholders of the Barhydt-Hoeffler Company, whereby the latter agreed to sell to the eleven men their stock in the Barhydt-Hoeffler Company and to cause said company to assign the leasehold interests of said company to the eleven men. The eleven men recognized this and as stockholders immediately elected a new board of directors of the Barhydt-Hoeffler Company, and the board of directors so elected assigned the leases mentioned to the Home Theater Company. These eleven men, who were the only stockholders in the Barhydt-Hoeffler Company, through the board of directors 'of that company, caused the Home Theater Company to be organized as a corporation and they were and are the only stockholders of the Home Theater Company. The contemporaneous restrictive agreement executed by the Barhydt-Hoeffler Company, at the same time it executed the lease of the Fischer theater with appellant, became a part of the contract set out in the lease. The evidence clearly discloses that this agreement and the lease were executed contemporaneously. The restrictive agreement was a valid and binding contract supported by a good consideration. . Its effect and force could- not be destroyed by a change in the stockholders of the corporation. There was evidence tending to show that these eleven men, or, at least some of them, had knowledge of the contemporaneous restrictive agreement, but the evidence in regard to such knowledge is conflicting. Conceding, however, that the eleven men who purchased the stock of the Barhydt-Hoeffler Company had no knowledge of this agreement, the corporation, as an entity, cannot claim that it is not bound by the terms thereof because its new stockholders did not know that it existed. The debts and obligations of a corporation are not eliminated by a change in its stockholders. “The shareholders of a corporation are conclusively charged with notice of the trust character which attaches to its capital stock. As to it, they cannot occupy the status of innocent purchasers, but they are, to all intents and purposes, privies .to the trust. When, therefore, they have in their hands any of this trust fund, they hold it cum onere, subject to all the equities which attach to it.” Clapp v. Peterson, 104 Ill. 26. It is urged that this doctrine has never been applied except in cases where the: e was actual or constructive fraud. If the transactions above set out were not tainted with actual fraud, they certainly operated as a constructive fraud upon the rights of appellant. No reason is assigned why the eleven men, as stockholders of the Barhydt-Hoeffler Company, should cause the Home Theater Company to be organized as a corporation. The eleven men, as stockholders of the Home Theater Company, acquired no greater rights and the Home Theater Company no greater assets than the eleven men had, as stockholders of the Barhydt-Hoeffler Company, or than the Barhydt-Hoeffler Company owned and controlled. The result of these transactions was that the Home Theater Company attempted to acquire the leases in question unincumbered with the restrictive covenants of the contemporaneous agreement. Appellant occupied the same position as to the Barhydt-Hoeffler Company as a creditor would occupy under similar circumstances. The eleven men, when they bought the stock of the Barhydt-Hoeffler Company, were charged with notice of the contemporaneous agreement, whether they had actual notice thereof or not. A corporation cannot be relieved of its obligations by the stockholders thereof causing another corporation to be organized and transferring all the valuable assets of the former to the latter.

In section 12, p. 480, vol. 12, R. C. L., it is said: “A very usual form of fraudulent conveyance consists of the shifting of the assets of a debtor to a corporation frequently formed for that specific purpose, by which means the only assets from which creditors could expect to be paid are placed beyond reach of their process. The courts look askance at such transactions, whether the debtor be an individual, a partnership, or another corporation, and if the proper elements are present, will subject the property so transferred to the claims of the creditors of the transferor. The fact that the persons controlling the vendee corporation are substantially the same persons as those making the transfer is a matter strongly indicating fraud. ’ ’

Appellant exercised its option under the original lease and is paying the increased rental provided therein. It had a right to rely upon the restrictive covenants of the contemporaneous agreement, as a consideration for the renewal of the lease at the increased rental. Appellees are now not only receiving the increased rentals from appellant, but are openly ignoring the restrictive covenants.

That part of the decree ordering that an injunction issue, as prayed for in the bill of complainant against the Barhydt-Hoeffler Company, is affirmed ' and that part of the decree which dismissed the bill of complainant for want of equity as against the defendant, Home Theater Company, is reversed and the cause is remanded with directions to amend the decree by ordering an injunction to issue as prayed for in the bill as against the defendant, The Home Theater Company.

Affirmed in part, reversed in part and remanded with directions.


author: Mr. Justice Waggoner

text:
    M. E. Harris et al., Appellants, v. Doit Young and Casey National Bank of Casey, Illinois, Appellees.
    1. Partnership, § 194*—when partner has preferred claim on partnership property. The interest of a partner in partnership property is only his share which remains after the debts of the firm are paid, and, if one partner has paid more than his share of the partnership debts, he has a claim upon the partnership property which, in equity,” is paramount to the claims of the separate creditors of the copartners.
    2. Partnership, § 207*—when partnership claims do not take precedence over prior lien. Where property of a partner was subject to a certain lien prior to the formation of the partnership, the formation thereof would not give the partnership claims precedence over the prior lien.
    3. Account, § 40*—what is proper practice in suit for accounting. In a suit for an accounting, the proper practice is for the trial court to first determine the question of whether or not the parties are required to account, and, if .they are, to then refer the cause to a master in chancery to state the account, and not to refer the cause to the master to take the evidence and report the same together with his conclusions of fact.
    4. Account, § 55*—when reference to master to take evidence will not be reversible error. A suit for an accounting held not so complicated as to make the action of the trial court, in referring the cause to a master in chancery to take the evidence and report the same together with his conclusions of fact, reversible error.
    5. Account, § 39

      —impropriety of subsequent appearance by special master in chancery, to whom suit is referred, as solicitor for party. The special master in chancery to whom a suit for an accounting is referred for the purpose of his taking the evidence and reporting the same together with his conclusions of fact should not subsequently appear in the suit as a solicitor for one of the parties; such a course of practice is harmful and tends to bring courts into disrepute.
    Appeal from the Circuit Court of Clark county; the Hon. Walter Brewer, Judge, presiding. Heard in this court at the April term, 1918.
    Affirmed.
    Opinion filed July 9, 1919.
    Rehearing denied October 14, 1919.

      Everett Connelly, for appellants.
    Samuel M. Scholfield and John J. Arney, for appellees.

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

   Mr. Justice Waggoner

delivered the opinion of the court.

The appellants, M. E. Harris, J. GL Ewing and C. S. Ewing, filed a bill, and afterwards an amended bill, of complaint against appellee, Doit Young, for an accounting.

The bill charges that on or about April 12, 1910, the appellants and Doit Young were engaged in operating and producing oil and gas under the name of the Monarch Oil Company on twenty-four acres of leased land in Crawford county,- Hlinois; that their interests were as follows: M. E. Harris, one-eighth, C. S. and J. Gr. Ewing, five-eighths and Doit Young, two-eighths; that the parties developed the premises until on or about January 12,1912, when appellants sold their interests; that during this time oil was produced, sold and the proceeds divided among the parties; that it was necessary in developing the premises to pay out large sums of money for work and materials, and it was agreed that each party should pay his share of the expense; that Doit Young failed to pay, and the prayer of the bill is for an accounting.

' An answer was filed by Doit Young, in which he denied that he was engaged, with the appellants, in operating and producing oil and gas under the name of the Monarch Oil Company on the land in question, and denied the other allegations of the bill. The answer avers that the Monarch Oil Company was a partnership consisting of the appellants and K. Queen, now deceased, and was operating for oil and gas on the leased premises in question; that the appellee, Doit Young, is cashier of the Casey National Bank, and that K. Queen, in his lifetime, was indebted to such bank in the sum of $2,500, and to the First National Bank of Shelburn, Indiana, in the sum of $1,200; and that at the time K. Queen purchased an interest in said lease, in order to secure the indebtedness to the Casey National Bank and the First National Bank of Shelburn, Indiana, he (K. Queen) had his interest deeded to Doit Young to hold it as security for such indebtedness.

Appellants filed a further amendment, to their amended bill, alleging that they had been informed, since the filing of their amended bill, that Doit Young held and is now holding said tw’o-eighths interest as trustee for K. Queen; that the conveyance to Doit Young was made for the purpose of securing an indebtedness to the Casey National Bank of $2,500 and to the First National Bank of Shelburn, Indiana, for $1,200 from K. Queen; that K. Queen was a resident of Sullivan, Indiana, where he died, intestate, July 21, 1913, leaving A. B. Queen, his wife, and Edith Thompson and Margaret Queen, his two children, all residing at Sullivan, Indiana. The widow, children and the two banks were made parties defendants.

A guardian ad litem was appointed for Margaret Queen and an answer was filed by him. Replications were filed and the cause was referred to John J. Arney, as a special master in chancery, to take the evidence and report the same together with his conclusions of facts.

The lease was owned by the J. S. Nay Oil and das Company, a corporation, and was sold under an order of the United States District Court, for the Eastern Division of Illinois, in a bankruptcy proceedings against that company. It was purchased, at the sale, by W. W. Schuler for $5,500, and assigned to him on December 27, 1909. On January 24, 1910, W. W. Schuler assigned a one-half interest to Doit Young for $4,678.98. Doit Young, on March 16, 1910, assigned for $2,400 one-eighth thereof to J. Gr. Ewing and one-eighth to C. S. Ewing. W. W. Schuler assigned a one-eighth interest to M. E. Harris for $1,169.75 under date of March 11, 1910, and assigned a three-eighths interest to J. (x. and C. S. Ewing, for a stated consideration of $1.00, on April 12, 1910.

Doit Young, on December 31, 1909, signed a declaration of trust certifying that he had received from W. W. Schuler an assignment of two-eighths interest in the lease, and that the same is held in trust.for K. Queen as security for the payment of any and all notes given by him to the Casey National Bank, or any overdraft or account in said bank, and on payment of all such notes or overdrafts, Doit Young agrees to assign to K. Queen said interest.

The .appellants claim that they expended $6,041.20 in developing the - lease; that C. S. Ewing paid $2,966.02, J. Gf. Ewing paid $1,408.69, M. E. Harris paid $1,655.50, and that K. Queen’s share should have paid $1,510.30. In other words, C. S. Ewing paid $1,078.14 more than his share, and M. E. Harris paid $911.35 more than his share, while J. G. Ewing paid $479.19 less than his share, and K. Queen owes $1,510.30.

The court found that K. Queen was indebted to the Casey National Bank in the sum of $3,833.08, and that he was 'indebted to the appellants in the sum of $1,510.30. It was ordered, by the court, that the Casey National Bank be given a first lien on said two-eighths interest owned by K. Queen, and that the appellants be given a lien on said two-eighths interest subject to the lien of the bank. The appellants claim that they were entitled to a. first lien and that the lien in favor of the bank should have been made subject thereto.

The appellants invoke the principle of the law of partnership, that the interest of a partner in partnership property is only his share which remains after the debts of the firm are paid; and if one partner has paid more than his share of the partnership debts, he has a claim upon the partnership property which, in equity, is paramount to the claims of the separate creditors of the copartners. Alkire v. Kahle, 123 Ill. 496 (503); Sindelare v. Walker, 137 Ill. 43 (45); Morrison v. Austin State Bank, 213 Ill. 472 (480). The principle invoked by appellants is a correct rule of law, but has no application to the facts in this case. Under the evidence it cannot be claimed that there was a partnership, among the parties concerned in this suit, prior to April 12, 1910. The interest of K. Queen, which was held in trust by Doit Young to secure the debt owed by him to the Casey National Bank, was conveyed to Doit Young on January 24, 1910. This was more than two months before the partnership would have been formed under the most favorable construction of the evidence that we can accord appellants. This interest was therefore subject to the lien of the Casey National Bank long prior to the formation of the partnership and the subsequent formation of the partnership would not give the partnership claims precedence over the prior lien of the Casey National Bank. Hurlbut v. Johnson, 74 Ill. 64. It is therefore unnecessary to decide whether the partnership property included the leasehold interest.

The trial court should have followed the practice approved in Ligare v. Peacock, 109 Ill. 94 (96-7), and first determined the question of whether or not the parties were required to account, and, if so, then refer the cause to a master in chancery to state the account. Rhodes v. Ashurst, 176 Ill. 351 (354); Moffett v. Hanner, 154 Ill. 649 (655); Barnes v. Barnes, 282 Ill. 593 (595). But this case is not so complicated as to make it reversible error to proceed as the trial court did. Southworth v. People, 183 Ill. 621 (624).

We note, with disapproval, that the special master in chancery to whom this cause was referred, and who made a report of the evidence together with his conelusions on the facts, is appearing as one of the solicitors for the appellees. Such a course of practice is harmful and tends to bring courts into disrepute.

The decree of the circuit court should be and is affirmed.

Decree affirmed.


author: Mr. Presiding Justice Graves

text:
    Central Illinois Public Service Company, Appellant, v. City of Sullivan, Moultrie County, Illinois et al., Appellees.
    1. Iwjunctios", § 202*—what confessed by general demurrer to bill. A general demurrer to a bill for an injunction confesses the truth of all facts well pleaded.
    2. iKforusrcTioN, § 177*—when averment in bill by electric company sufficient tb show complainant is public utility. The averment in a bill for an injunction that the complainant is a corporation organized under the laws of the State of Illinois, chartered to construct and operate plants, machinery, poles, pole lines and apparatus for generating and distributing electrical energy for light, heat and power, is sufficient to show that the complainant was a public utility within the jurisdiction of the State Public Utilities Commission.
    3. IimriTCTioit, § 179

      —when averment in bill by electric company sufficient to show that complainant has right in public streets. Where complainant in a bill for an injunction is a public utility corporation, organized under the laws of this State, the averment in the hill that it “owns and operates an electrical generating station and distribution system within” a certain city is sufficient, as against a general demurrer, to show that it had a right, franchise or license in the public streets, alleys and grounds of such city to do the things necessary to the operation of the business of erecting and maintaining in the streets of the city “poles, pole lines and other apparatus” for “distributing electrical energy for light, heat and power,” its charter power.

      4. Injunction, § 177*—what immaterial on question of sufficiency of bill by electric company. On the question of the sufficiency of a bill to enjoin respondent city from interfering with the complainant electric light, heat and power company, in its carrying out of the order of the State Public Utilities Commission that it furnish service to all citizens requesting it—which order specifically provided that it was not intended to in any way affect or influence pending litigation between the city and the company— held that it was wholly immaterial whether the city had notice of the proceeding before the Commission in which the order was entered or whether or not the order was void as to the city.
    5. Public utilities, § 4*—what is effect of order of State Public Utilities Commission. In so far as an order of the State Public Utilities Commission conflicts with city ordinances concerning matters over which the Commission has jurisdiction, the order of the Commission supersedes and sets aside the provisions of the ordinances.
    6. Injunction, § 181*—when bill does not involve question, whether equity will enjoin commission of crime. A bill by an electric light, heat and power company asking that the respondent city be enjoined from interfering with the complainant in its carrying out of the order of the State Public Utilities Commission that it furnish service to all citizens requesting it, held not to involve the question whether equity will restrain the commission of crime or the arrest and prosecution of persons charged therewith.
    7. Injunction, § 177

      —when bill by electric company shows cause for equitable relief. A bill by an electric light, heat and power company to enjoin respondent city from interfering with complainant in its carrying out of an order of the State Public Utilities Commission that it furnish service to all citizens requesting it, held to show a cause for equitable relief and to be good as against a general demurrer.
    Appeal from the Circuit Court of Moultrie county; the Hon. George A. Sentel, Judge, presiding. Heard in this court at the April term, 1919.
    Reversed and remanded with directions.
    Opinion filed October 21, 1919.
    Vause, Hughes & Kiger, for appellant.
    E. J. Miller, for appellees.

      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 Graves

delivered the opinion of the court.

This is an appeal from an order dismissing a bill in chancery filed by appellant against appellees, for want of equity, after a general demurrer to it had been sustained.

The bill alleges that appellant is a corporation, duly organized and existing under and by virtue of the laws of the State of Illinois, and that by its charter, among other things, it is authorized to own, construct and operate plants, machinery, poles, pole lines and other apparatus for generating and distributing electrical energy for light, heat and power, and in the exercise of its charter powers, it owns and operates an electrical generating station and distribution system within the City of Sullivan, Moultrie county, Illinois, and was on the 1st day of December A. D. 1915, ever since has been and still is engaged in the business of generating, distributing and selling electrical energy for light, heat and power to said City of Sullivan and its inhabitants, and is the owner of the property used as aforesaid, situated in the said City of Sullivan; that citizens of the City of Sullivan had requested appellant to connect their houses and business places with its distributing system so that such citizens could have the use of the electric current and energy of appellant; that appellant had attempted to comply -with such request but had been prevented from so doing by appellees and that thereupon appellant had refused to further attempt to comply with such requests; that thereupon a petition had been filed with the State’s Utilities Commission seeking for an order compelling appellant to - comply with the request of such citizens; that in due course an order was entered by that commission in which it found that appellant was a public utility engaged in furnishing electric light and power to the public in the City of Sullivan; that it was failing and refusing to furnish and provide service to many of the citizens of the said City of Sullivan and ordering it to furnish such service to all the citizens of said city, who should request to be furnished therewith until the further order of the commission, and declaring it to be the purpose of the order to require appellant to furnish service to the public in the City of Sullivan pending the determination by the courts of the rights of the said City of Sullivan and appellant then in litigation; that thereupon further applications were made to appellant to connect up the houses and places of business of such citizens of the City of Sullivan and that it attempted to comply with such request but was again interfered with and prevented from so doing by appellees who threaten to continue to interfere with and prevent it from connecting up said residences and business plapes with its electric system and current. The relief prayed for in this bill is for an injunction against appellees restraining them from in any manner interfering with your appellant in attempting to carry out and conform to and obey the order of the State Public Utilities Commission of Illinois.

Appellees contend that the demurrer was properly sustained to the bill because the bill does not show, first, that appellees claim to have any right, franchise or license in the public streets and alleys and grounds of the City of Sullivan; second, that the order of the State Utilities Commission was void as to the City of Sullivan because that city had not been served with notice of the order or of the hearing at which it was made; third, that equity will not take jurisdiction to prevent the arrest and trial of persons charged with crime.

The' demurrer confesses the truth of all facts well pleaded. The bill contains the averment that appellant is a corporation organized under the laws of the State of Illinois, chartered to construct and operate plants, machinery, poles, pole lines and apparatus for generating and distributing electrical energy for light, heat and power. Upon the authority of Chicago, B. & Q. R. Co. v. Cavanagh, 278 Ill. 609, where it is held that the averment by a railroad company in a petition for the condemnation of a right of way, that it “owned and operated a railroad” was a sufficient' averment to show that it was a public utility within the jurisdiction of the State Public Utilities Commission, we hold that the averments above stated are sufficient to show that appellant is a public utility and, if so, of course is subject to the jurisdiction of that commission. - Appellant being a public utility corporation organized under the laws of Illinois, the averment that it “owns and operates an electrical generating station and distribution system within the City of Sullivan” is a sufficient averment when challenged by a general demurrer to show that it had a right, franchise or license in the public streets, alleys and grounds of the City of Sullivan to do the things necessary to the operation of the business of erecting and maintaining in the streets of that city “poles, pole lines and other apparatus” for “distributing electrió energy for light, heat and power,” it is charter power.

The order of the Public Utilities Commission was not void for want of notice to the City of Sullivan of the hearing or order in question. The city was not required by that order to do or refrain from doing a thing. In Chicago, B. & Q. R. Co. v. Cavanagh, 278 Ill. 609-617, the Supreme Court say on this subject: “These provisions relate only to notice, or service of an order, upon some persons or corporation either complained of or required to do something or comply with some order, rule or regulation.” The order of the Utilities Commission was not addressed to1 the City of Sullivan nor .were the rights or obligations of the City of Sullivan adjudicated. It merely directed appellant to continue to exercise the rights and privileges it

liad been and was then exercising, until the relative rights of appellant and the said City of Sullivan were adjudicated by the courts in the then pending litigation, and specifically provided that by that order it was not intended to in any way affect or influence pending litigation. On the question of the sufficiency of this bill, it is wholly immaterial whether the City of Sullivan had notice of the proceedings before of the order of the Utilities Commission or whether the order of that commission was void as to the city or not. Neither is it material, if true, that the City of Sullivan had passed an ordinance which conflicts with the order of the State Utilities Commission. In so far as an order of the Utilities Commission conflicts with city ordinances concerning matters over which the commission have jurisdiction, the order of the Commission supersedes and sets aside the provisions of the ordinances. City of Chicago v. O’Connell, 278 Ill. 591-606.

The third question argued by appellees, namely, whether equity will restrain the commission of crime or the arrest and prosecution of persons involved. Such an injunction is not sought for. It is only asked that appellees shall be restrained from interfering with appellant, its agents and servants in connecting the houses and business places of applicants in the City of Sullivan for the purpose of distributing electrical energy and from disturbing the lines of appellant. "

The bill shows a cause for equitable relief and is good against a general demurrer. The demurrer to this bill was improperly sustained.

The decree of the Circuit Court is reversed and the cause is remanded with directions to overrule the demurrer.

Reversed and remanded with directions.


text:
    Skiles-Rearick & Company, Defendant in Error, v. B. J. Brooks, Plaintiff in Error.
    1. Bills and notes, § 179*—what is effect of conditional signing 6y surety. A note signed by one as surety and left with the payee to be signed by the real debtor does not, as between the parties to the note, obligate the surety to pay it until the name of the principal debtor, is attached thereto according to agreement.
    2. Trial, § 153*—when case should go to jury. When there is competent proof in the record fairly tending to establish a contested material issue in the case, from which, if it stood alone, a jury might fairly without acting unreasonably in the eye of the law find that such issue was established, the case should go to the jury.
    3. Trial, § 203*—when error to direct verdict. It is error to direct a verdict when, in order to determine the rights of the respective parties, the evidence introduced by them must be weighed.
    4. Bills and notes, § 461

      —when error to direct verdict for plaintiff in action on notes. In an action on promissory notes signed by the defendant, one of whose defenses was that he signed as surety only, that when he signed it was expressly understood and agreed between him and the officers of the payee bank, which brought the action, that the principal, the real debtor, should sign the notes, and that such principal did not sign them and therefore they never became a binding obligatión of defendant, held that it was error to give a peremptory instruction 'directing a verdict for the plaintiff because defendant’s evidence on the question was such as to require a determination of the weight of the evidence offered by the plaintiff.
    Error to the Circuit Court of Cass county; the Hon. Guy R. Williams, Judge, presiding. Heard in this court at the April term, 1919.
    Reversed and remanded.
    Opinion filed October 21, 1919.
    C. F. Mortimer, John J. Friedmeyer and Oscar J. Putting, for plaintiff in error.
    J. J. Neiger, for defendant in error.

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

   Mr. Presiding Justice Graves

delivered the opinion of the court.

Defendant in error, a banking corporation, brought suit on certain promissory notes bearing the signature of plaintiff in error. One of the defenses interposed by him was that the notes sued on were signed by him as surety only and that when he signed his name to them it was expressly understood and agreed between him and the officers of the bank that the principal, the real debtor, should sign the same; that she did not do so and therefore the notes never became a binding obligation of plaintiff in error. At the close of all the evidence the court, on motion of defendant in error, instructed the jury to find the issues for the plaintiff and to assess its damages at the sum of $1,861.41, which was done and judgment was eventually entered on the verdict. -

There was some evidence offered on the trial fairly tending to support the defense made. ' Plaintiff in error testified that the facts were as set up in the plea. The notes were signed by plaintiff in error on the second line made for signatures and the first of such lines was left blank. Kittie Sinclair also testified to a conversation with Mr. Bearick, an officer of defendant in error, which strongly tends to corroborate the testimony of plaintiff in error.

A note signed by one as surety and left with the payee to be signed by the real debtor does not, as between the parties to the note, obligate the surety to pay it until the name of the principal debtor is attached thereto according to agreement. Knight v. Hurlbut, 74 Ill. 133; Stricklin v. Cunningham, 58 Ill. 293. See also Belleville Sav. Bank v. Bornman, 124 Ill. 200-205, and cases there cited.

When there is competent proof in the record fairly tending to establish a contested material issue in a case, from which, if it stood alone, a jury might fairly without acting unreasonably in the eye of the law find that such issue was established, the case should go to the jury. Frazer v. Howe, 106 Ill. 563; Woodman v. Illinois Trust & Savings Bank, 211 Ill. 578-580; Libby, McNeill & Libby v. Cook, 222 Ill. 206.- It is error to direct a verdict when, in order to determine the rights of the respective parties, the evidence introduced by them must be weighed.

Because the evidence in this case on the question of whether plaintiff in error signed the note with the understanding that it should also be signed by his wife before it should be treated as delivered to defendant in error was such as to require the weight of the same offered by the opposite side to be determined, the giving of the peremptory instruction directing a verdict for the plaintiff was error.

The judgment of the Circuit Court is reversed and the cause remanded to that court.

Reversed and remanded.