text:
    D. A. Matot, Appellee, v. Frederick R. Barnheisel et al., on appeal of Chin F. Foin, Appellant.
    Gen. No. 25,347.
    1. Appeal and error, § 433

      —when objection that statement of claim does not state cause of action comes too late when made on appeal. Where a bond is attached to a statement of claim as an exhibit, which statement of claim expressly makes the annexed copy of the bond a part of the statement, and the defendant treats the statement of claim as setting forth a cause of action by taking issue thereon in his affidavit of merits, there being no objection nor motion to strike, an objection that,the statement of claim does not state a cause of action because the annexed instrument was not a part of it, comes too late when made on appeal.
    2. Appeal and error, § 806*—when bill of exceptions need not contain evidence of bond attached to statement of claim as exhibit and expressly referred to in claim. Where a bond was attached to a statement of claim as an exhibit and expressly referred to in the claim as a part of the statement, and the execution of such bond was admitted in the defendant’s affidavit of merits, it could not be contended on appeal that there was a failure to establish legal liability for the reason that the bill of exceptions contained no evidence, of the bond, such evidence being unnecessary under the conditions presented, and under the rules of the municipal court as to the admission of facts pleaded when not denied.
    3. Appeal and error, § 1849*—relation back of order amending original judgment. Where an original judgment of the Appellate Court was amended at the same term so as to award an additional amount to a plaintiff in accordance with the original opinion, the decree being affirmed in other respects, the amendatory order was evidently made to correct the former judgment and so as to" make it conform with the court’s opinion, and such amendatory order related back and became a part of the original judgment.
    4. Appeal and error, § 1884*—when admission in action on appeal bond of certified copies of order amending original judgment is not error. In an action on an appeal bond where it appeared that the judgment in favor of the plaintiff was affirmed, but that such judgment was amended so as to increase the amount due the plaintiff, in accordance with the original opinion, the court did not err in admitting certified copies of the amendatory order, although there were technical objections that on cross errors of the defendant in the former proceedings the decree was reversed to the extent that the trial court was directed to increase the decree against the defendant.
    5. Appeal and ebbob—when refusal of court, in action on appeal hand, to entertain motion to vacate judgment is not error. In an action on an appeal bond, the refusal of the court to entertain a motion to vacate a judgment is not error when such judgment is correct, and the court is not required to entertain a motion which it necessarily must have denied.
    Appeal from the Municipal Court of Chicago; the Hon. Hosea W. Wells, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed January 26, 1920.
    Silber, Isaacs, Silber & Woley, for appellant; Clarence J. Silber, of counsel.
    Edmund W. Froehlich, for appellee.

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

   Mr. Justice Dever

delivered the opinion of the court.

In a statement of claim filed in the municipal court of Chicago, the plaintiff averred that he recovered a judgment or decree on December 24, 1917, in the superior court of Cook county against Frederick R. Bamheisel, Mrs. Frederick R. Barnheisel and others in the sum of $2,553.57 and costs of suit, which costs amounted to $350; that an appeal was perfected from this judgment or decree to this court by the giving of an appeal bond, a copy of which was annexed to the statement of claim as an exhibit and made a part thereof ; that on November 11, 1918, the judgment or decree was, in effect, affirmed by this court.

It is conceded that the judgment or decree was not in all respects technically affirmed in the Appellate Court, but was in fact in part reversed and in part affirmed and the cause remanded to the trial court with directions to increase the amount of the judgment entered in favor of the plaintiff by the sum of $949. This court further awarded costs in favor of plaintiff (appellee in the former proceedings) incurred on the appeal.

Upon the trial of the cause plaintiff’s evidence consisted exclusively of certified copies of the final order and judgment of this court in the case of Matot v. Barnheisel, 212 Ill. App. 489.

In an affidavit of merits filed by defendant Chin. F. Foin, who brings the case here by appeal, he admits the execution of the bond but states that he had no knowledge of the judgment in the appeal from which the bond was given; that this judgment had been reversed and that no liability would accrue against the defendant until a new judgment “shall have been rendered and entered by the superior court.” A condition of the bond given on the appeal from the superior court judgment is that:

“If the said Frederick E. Barnheisel and Mrs. Frederick E. Barnheisel shall duly prosecute their said appeal with effect, and, moreover, pay the amount of the judgment, costs, interests and damages rendered, and to be rendered, against them in case the said judgment shall be affirmed in said Appellate Court, then the above obligation to be void, otherwise to remain in full force and virtue.”

The certified copies of the final order and judgment of this court on the appeal from the superior court show that by the judgment of this court the decree of the superior court was reversed in part and the cause was remanded with directions to that court to increase the amount of the decree entered therein by the sum of $949, and the trial court was directed to enter a decree in favor of plaintiff for the increased amount; in other respects the decree of the superior court was affirmed.

It is shown by stipulation that a mandate was never issued.out of this court to the superior court of Cook county; that the cause was not redocketed in the superior court, and that no further judgment or decree was entered therein. The trial judge who tried the present ease, without a jury, found the issues in favor of the plaintiff and a judgment was entered in his favor and against defendant for the sum of $3,000. The defendant, being a surety upon the bond given by Frederick R. Barnheisel and his wife, alone prosecutes this appeal to reverse the judgment for the reasons as stated:

“(1) No cause of action is set forth in the plaintiff’s statement and affidavit of claim, the exhibit purporting to constitute a copy of the appeal bond being no part of the pleading; (2) the evidence fails to establish a legal liability for want of (a) the appeal bond, which was not offered on the trial, and the execution of which, as alleged, was alone admitted by appellant; (b) the condition of the bond, if considered as proved, was satisfied by the action of the Appellate Court, and the appellant exonerated from liability; (c) the amended judgment order of this court, entered March 3, 1919, was not properly before the trial court in the suit previously commenced; and (3) the municipal court had no discretion in the matter of allowing appellant to file his application to vacate the judgment previously entered, whatever the court’s ultimate action thereon might have been.”

It is insisted, first, that the statement of claim does not state a cause of action; that because the bond was attached to the statement of claim as an exhibit it did not thereby become a part of the statement, notwithstanding the fact that the statement of claim on its face expressly made the annexed copy of the bond a part of the statement.

An examination of the abstract of record does not disclose that the defendant who brings this appeal made, at any time before the trial, any objection to the sufficiency of the statement of claim. No motion was made by him to‘strike the statement or any part of it from the files. On the contrary he filed an affidavit of merits thereto in which he expressly admitted the execution of the bond, “as stated in plaintiff’s statement of claim.” It is apparent, then, that the parties, and in particular the defendant, saw fit, so far as the pleadings in the cause are concerned, to treat the bond as a part of the statement of claim. He admitted its execution, and the principal defense made by him in his affidavit of merits is that the judgment of the superior court was reversed and not affirmed, and that inferentially there had been no breach of the condition of the bond which would authorize a recovery against him.

There are cases decided by this and other courts to the effect that instruments attached or annexed to a statement of claim filed in the municipal court do not become thereby a part thereof. Jones v. City of Chicago, 167 Ill. App. 175; Boyles v. Chytraus, 175 Ill. 370.

In Epstein v. Fort Dearborn Motor Cartage Co., 207 Ill. App. 321, relied upon by defendant, this court said:

“Neither the statemerit of claim filed by the plaintiff nor the affidavit of merits of the defendant showed or stated as a fact that the notes sued upon were chattel mortgage notes. * * # # * * *

“Where a copy of a promissory note is filed with, or.a copy of an instrument sued upon is attached to, a declaration, such copies do not become a part of the pleadings. (McFadden v. Deck, 193 Ill. App. 178; McKinstry v. Bras, 180 Ill. App. 648.)”

The Epstein case, supra, is essentially different from the one before us. Here the defendant admits the execution of the bond which was expressly made a part of the statement of claim.

The case of Hesse v. John A. Colby & Sons, 197 Ill. App. 642, also relied upon by defendant, does not, as we read the opinion in that case,, sustain the position of defendant.

In the case of Plew v. Board, 274 Ill. 232, it was held that:

“After judgment, the rule by which pleadings before judgment are construed most strongly against the pleader is reversed and the pleading upon which the judgment is based is liberally construed for the purpose of sustaining the judgment. (Chicago & A. R. Co. v. Clausen, 173 Ill. 100; Klawiter v. Jones, 219 Ill. 626; Sargent Co. v. Baublis, 215 Ill. 428; Diamond Glue Co. v. Wietzychowski, 227 Ill. 388.) If the statement of claim filed in this cause stated a cause of action, however defectively or imperfectly, and the issue joined was such as necessarily to require proof of the facts defectively stated, it would be sufficient.”

; On the trial the defendant treated the statement of claim as setting forth a cause of action and he took issue thereon in his affidavit of merits; his objections to the statement of claim were not made in apt time.

It is stated that the evidence introduced upon the trial fails to establish a legal liability against the defendant for the reason that the bill of exceptions contains no evidence of the appeal bond. We do not think that evidence of the bond was necessary. The bond was pleaded and its execution was admitted in defendant’s affidavit of merits.

Paragraph K of Bule 15 of the municipal court provides that:

“Every allegation of fact in any pleading, except allegations of unliquidated damages, if not denied specifically or by necessary implication in the pleading of the opposite party, shall be taken to be admitted, except as provided by Bule 20.” Stoddard v. Illinois Improvement & Ballast Co., 275 Ill. 199.

On the trial of the cause the defendant introduced certified copies, as stated, of the original judgment of this court entered on the 11th day of November, 1918, and an amendment thereto entered on the 3rd day of March, 1919, both dates being within the October term, 1918, of this court. The order of March 3, 1919, amended the original judgment of this court so that the trial court was directed, in accordance with the opinion of the court filed November 11, 1918, to award an additional sum in favor of the plaintiff, and that “in all other respects said decree stands affirmed.” It is insisted that the later order of this court was not admissible in evidence in that it was entered of record in this court after the present suit had been begun. It is said that the amendment to the original judgment in this court had the effect of fixing appellee’s rights as of the day of its entry, namely, March 3, 1919, and that it did not relate back to November 11, 1918, and that hence it was error to admit in evidence certified copies of the order of March 3, 1919. We do not agree with this contention. The amendatory order of this court was evidently made for the purpose of correcting the former judgment entered November 11, 1918, so as to make it conform with the expressed opinion of the court. In our opinion the amendatory order related back to and did become a part of the original judgment of this court. )

In Vail v. Arkell, 146 Ill. 363, it was held that the amendment of a decree of sale was a mere formal matter and did not change the rights of the parties thereto and would not invalidate a publication of notice of the sale made 4 days after the amendment of the decree. >

The full and complete judgment of this court was not expressed in the order of March 3, 1919, but in the judgment of November 11,1918, as amended by the order. The judgment of this court shows that the appeal from the judgment of the lower court was affirmed in so far as the-decree operated against the interests of the appellant. It was shown, however, by certified copies of the judgment of this court and the amendment thereto that the decree was in part reversed, that is, that on cross errors of appellee in the former proceedings in this court the decree was reversed only to the extent that the trial court was directed to increase the amount of the decree rendered against the defendant.

We think that notwithstanding the technical objections made, the trial court did not err in admitting in evidence certified copies of the order of March 3, 1919.

In Seymour & Sons v. Thomas Harrow Co., 81 Ala. 250, the court said:

“Such amendment may be properly made at a subsequent term of court, after an appeal has been taken, the purpose being to make the record speak the truth; and, when properly certified to this court, is before us for consideration and relates back and sustains the judgment.”

We are convinced that no error was committed in entering the judgment in favor of the plaintiff for any of the assigned reasons. The condition of the appeal bond was not satisfied. The judgment of November 11,1918, of this court, was, in our opinion, in substance and in so far as the rights of the defendants are concerned, a judgment of affirmance of the decree which was appealed from. The defendants in that case sought by the appeal to this court to procure a reversal of the judgment against them, and in this there was an utter failure. By the effort of the appellee in the former proceeding it became necessary to reverse the decree in part but solely for the purpose of augmenting its amount.

Our attention has been called to many cases which we think sustain the position of the plaintiff: Clark v. Selfridge, 274 Ill. 275; Best Brewing Co. v. Klassen, 85 Ill. App. 464; McConnel v. Swailes, 3 Ill. 571; Rehm v. Halverson, 94 Ill. App. 627. In the latter case the court said:

“The case of Harding v. Kuessner, 172 Ill. 125, is one where the condition of the appeal bond was that appellant would ‘prosecute its appeal with effect,’ and pay the judgment appealed from in case of an affirmanee; and the argument of counsel was that the judgment was not affirmed because the Appellate Court affirmed the judgment for a less sum than the judgment of the court below—a remittitur having been required as a condition of affirmance. *******

“It is to be presumed the appellants entered into the bond sued on in the case at bar in view of the power so possessed by the AppellateCourt, and therefore the true construction of the condition of the bond is, the obligors obligated themselves to pay any amount for which a judgment of affirmance should be entered in the Appellate Court.”

The evidence in the record before us shows that the judgment against the defendant in the former proceedings was sustained on review by this court and that the defendant is legally bound by the conditions of the bond which he admits he executed.

Under the pleadings and the evidence in this case we do not think that the court erred in refusing to entertain a motion to vacate the judgment which is now before us. As we read the record, no doubt can be entertained as to the correctness of the judgment of the municipal court, and that court was not required to entertain a motion which it necessarily must have denied. On the record and the evidence the judgment against the defendant was the only judgment which the trial court had any authority to enter in the case.

The judgment of the municipal court is affirmed.

Affirmed.

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


source: Caselaw Access Project

author: Mr. Justice Holdom

license: Public Domain

text:
    The People of the State of Illinois for use of Clara M. Foster, Executrix, Appellant, v. Chicago Bonding & Surety Company, Appellee.
    Gen. No. 25,349.
    1. Insane persons, § 29

      —when debt of person appointed conservator of creditor's estate is regarded as paid and amount thereof as cash in conservator’s hands. Where a debtor is appointed conservator of his creditor’s estate and has at the time of such appointment sufficient property to pay his debts, including the one to the estate, the law regards the debt to the estate as • paid and the amount thereof as cash in the hands of such conservator, even though he may subsequently become insolvent.
    2.. Insane persons, § 31*—when finding and order of probate court ordering conservator to pay money to lunatic's executrix is binding on conservator’s surety. A finding and order of the probate court ordering a .conservator to pay a certain sum of money to the executrix of a deceased lunatic, which order is not attacked, is binding upon the surety of the conservator, it being the rule that a surety is bound and concluded by a judgment against his principal which cannot be collaterally attacked except for fraud and collusion.
    Appeal from the Circuit Court of Cook county; the Hon. Anton T. Zeman, Judge, presiding. Heard in this court at the October term, 1919.
    Reversed and judgment here for $5,600 debt and $2,193.65 damages.
    Opinion filed January 26, 1920.
    Rehearing denied February 9, 1920.
    Church & Shepard, for appellant; Howard W. Lewis, of counsel.
    Sabath Stafford & Sabath, for appellee; Charles B. Stafford, of counsel.

      See Illinois Notes Digest, VoJst XI tp XV, $n<J Cumulative Quarterly, same tppic antf spctjpji npmber,

   Mr. Justice Holdom

delivered the opinion of the court.

Defendant was surety on the bond of Charles H. Graves, conservator of the estate of Laura E. Williams, an insane person, in the prohate court of Cook county. The bond is in the penalty of $5,600. The lunatic died and Clara M. Foster was appointed executrix of her will and estate by the probate court of this county. Gfraves, the conservator, settled the estate of his ward after her death in the probate court, and the court found on the rendition of his final account that there was in his hands as such conservator the sum of $1,942.72, and ordered him to pay the same to the executrix, Foster, within 30 days; this he failed to do. Thereupon this suit was commenced to secure payment from defendant.

The order of the probate court directing payment of $1,942.72 remains in full force, unchallenged by any subsequent legal proceedings. The breaches of the conservator’s bond in suit assigned in the declaration are that Craves filed in the probate court on December 20, 1916, his final account as conservator showing a balance in his hands of $1,942.72; that thereafter on May 21, 1917, the probate court ordered Craves as conservator to pay the sum found in his hands to the usee plaintiff within 30 days from the date of the entry of the order, which order is in full force, not reversed, annulled or satisfied; that demands have been made upon Craves for payment, but that he has not paid the same or any part thereof, but has wasted, converted and disposed of said moneys to his own use.

On a trial before the court without a jury there'was a finding and judgment in favor of plaintiff for $42.50. Plaintiff being dissatisfied with the amount of the judgment prosecutes this appeal and asks for a reversal and for a judgment in this court for the whole amount ordered paid by the probate court with interest.

The defense interposed was that all the items except the $42.50 were a personal debt from Craves to his ward prior to his appointment as conservator of her estate and prior to the execution of the bond in suit; that at no time after his appointment as conservator did Graves have in his possession any of such items; that defendant as surety was only liable for such sums as came into the possession of the conservator after the execution of the bond, and the defendant is not liable for the failure of Graves as an individual to pay to himself as conservator money which he owed his ward prior to his appointment and the giving of his bond. Graves as conservator failed to inventory the disputed items, and the probate court by a suitable order coerced Graves to include the items in his inventory as conservator.

Defendant contends that this the court had no right to do for two reasons: First, that the items were debts due to Graves’ ward that were contracted prior to his appointment as conservator; and, second, that Graves was insolvent and financially unable to pay and that therefore the surety on the bonds is not liable, as the debt is personal and not official.

In the first place we will assume that the judge of the probate court found under the proofs before him that Graves was solvent and able financially to respond to his ward for his indebtedness to her. If such assumption was rebuttable, there is no rebutting evidence in this record. The record is silent as to the proofs which were before the probate judge at the time the order on Graves to include the disputed items in an amended inventory was made.

It is the law in this State that where a debtor is appointed conservator of his creditor’s estate and has at the time of such appointment sufficient property to pay his debts, including "the one to the estate, the law regards the debt to the estate as paid and the amount thereof as cash in the hands of such conservator, notwithstanding he may subsequently become insolvent. This is the rule which the probate judge applied to Graves’ debt to his ward.

In Wachsmuth v. Penn Mut. Life Ins. Co., 241 Ill. 409, it was said:

“Appellees contend that when a debtor is appointed administrator of his creditor’s estate the debt is considered paid and the administrator is chargeable with the amount thereof in the settlement of his accounts, regardless of the financial condition of the administrator. This contention is supported to the full extent claimed by appellees by the Supreme Court of Massachusetts in Leland v. Felton, 1 Allen 531; by the Supreme Court of Ohio in McGaughey v. Jacoby, 54 Ohio St. 487; by the Supreme Court of New Hampshire in Judge of Probate v. Sulloway, 68 N. H. 511, and by the Supreme Court of Alabama in the case of Wright v. Lang, 66 Ala. 389. It will thus be seen that the rule contended for is not without support. The reason upon which these decisions rest is that the administrator cannot sue himself, and that therefore when he is appointed his debt to the estate is by a fiction of law regarded as collected and paid to himself, as administrator. The rule laid down in the foregoing cases, which is known as the Massachusetts rule, has been modified by later cases in other States so-as to permit the administrator to show that he was insolvent at the time of his appointment and so remained during the term of his office, and thus relieve himself from the consequences of failing to pay over money which he never, in fact, had and was wholly unable to obtain. The rule in its modified form is applied in the following cases: In re Walker, 125 Cal. 242; Baucus v. Stover, 89 N. Y. 1; Baucus v. Barr, 107 N. Y. 624, affirming 45 Hun 582; McCarty v. Frazer, 62 Mo. 263; Parker v. Irick, 10 N. J. Eq. 269; Rader v. Yeargin, 85 Tenn. 486; State ex rel. McClamrock v. Gregory, 119 Ind. 503.

“In the case last above died the Supreme Court of Indiana uses the following language: ‘One question which seems to have been overlooked on the trial of the cause was the financial condition of Levin T. Miller, the administrator, during the period of his administration, The money collected by him while professing to act as the agent of the administrator in Missouri, and for which he had not accounted when he became administrator, was a claim in favor of his trust, which he should have inventoried and charged himself with, and if by the use of due diligence all or any part of the claim could have been saved to the estate his sureties are therewith chargeable, but if he was hopelessly insolvent they do not become liable therefor, the burden as to the question of insolvency being on the administrator and his sureties.’ Further on in the opinion the court says: *The debt of the administrator is to be accounted for as other debts or assets, and he may show his insolvency during the period of administration in discharge of his official liability. ’

“So far as we are advised this question has never been passed on by this court. ’ ’

The court in ease, supra, settled the rule regarding this situation in this jurisdiction in the following language:

“Where, however, the administrator is solvent, no such hardship can be imposed upon either the sureties or the administrator. . The rule thus applied will accomplish the desired end in most cases and avoid the harsh consequences that would occasionally result from the application of the unrestricted Massachusetts rule. ’ ’

In whatever- light the rules announced, supra, may be viewed in this State as applied to this case, there is another insuperable obstacle to the success of the defense interposed.

It appears without contradiction that the order of December 20, 1916, finding $1,942.72 in the hands of Graves as conservator and the order made May 21, 1917, ordering Graves as conservator to pay that sum to the usee plaintiff within 30 days, remain of record and undisturbed, in full force and effect. Nor is it denied that demand has been made upon Graves in due form for the money, that no part of the same has been paid and that more than 30 days elapsed between the entry of the order and demand and the commencement of this suit.

The finding and order of the probate court being binding upon Graves, the principal, it is likewise binding upon his surety; for as held in Nevitt v. Woodburn, 160 Ill. 203, the surety is bound and concluded by the judgment against his principal, which cannot be collaterally attacked except for fraud or collusion.

In McDonald v. People, 222 Ill. 325, it wás held that a judgment of the probate court approving the accounts of an administrator and ordering the amount in his hands distributed is a final determination of the amount due from him, and it cannot be reviewed in a suit upon the administrator’s bond unless the finding is impeached for fraud.

In Frank v. People, 147 Ill. 105, it was held that the order or judgment of the county court or circuit court on appeal finding the amount in the hands of an administrator, while unreversed and in force, is conclusive not only of the amount in his hands, but that the same was at that time liable to distribution; and upon his failure to pay over the same to the persons entitled thereto, within 30 days after demand made, a right of action will accrue upon his bond; and that an order of the court finding the amount in the administrator’s hands belonging to the estate and ordering its distribution is as conclusive against the surety on his bond as upon the administrator himself, and can be impeached only for fraud. If the order is unwarranted by the evidence, the surety may appeal from the same, but it cannot be attacked collaterally in an action on the administrator’s bond. The same rule applies to all bonds of like character, including a conservator’s bond, as in the instant case. People v. Pacific Surety Co., 155 Ill. App. 586.

In Rahe v. Jobusch, 197 Ill. App. 200, it was held that an adjudication by the county court made upon the final report by an executor that the executor had a certain sum in Ms hands for distribution, and directing him how to make distribution, is concMsive upon the executor and upon Ms sureties under Eev. St. ch. 3, sec. 115 (J. & A. 165), and that a judgment approving the final report of an executor and ordering payment from the funds in his hands cannot be collaterally attacked except for fraud.

The bona fides of the proceedings leading to the orders of the Probate Court heretofore recited is not attacked as being fraudulent or in any way improperly procured.

McDonald v. People, supra, is authority that interest may be charged against a surety upon a bond of the character of the one in suit. The court said:

“This court has frequently held that interest for which a' public officer or one appointed by the probate court is liable is a proper charge against his bondsmen. (Stern v. People, 102 Ill. 540; Cassady v. Trustees of Schools, 105 Ill. 560; Hughes v. People, 111 Ill. 457; Winslow v. People, 117 Ill. 152.) ”

For the foregoing reasons the judgment of the circuit court is reversed and judgment entered in this court in favor of plaintiff and against defendant for $5,600 debt and $2,193.65 damages, debt to be discharged on payment of damages. The damages are ascertained by including the amount of $1,942,72 ordered paid by the probate court with interest at 5 per cent per annum from June 21, 1917, to the date of the filing of this opinion.

Reversed and judgment here for $5,600 debt and $2,193.65 damages.


text:
    Consumers Mutual Oil Company, Appellee, v. Western Petroleum Company, Appellant.
    Gen. No. 25,368.
    1. Appeal and erbor, § 866

      —what abstract must show. On an appeal, the abstract is the pleading oí the parties and it must show sufficient of the proceedings in the trial court to support the errors assigned upon the record.
    2. Appeal and ebbob, § 887*—when recitations in abstract are too meager to present anything for review when one of errors challenges judgment. Recitations in an abstract merely stating that motions for new trial and in arrest of judgment were overruled and concluding “order, plaintiff have judgment on verdict and recover from defendant its costs and execution issue,” are too meager to present anything for review, when one of the errors challenges the judgment.
    3. Contracts, § 323*—right of person first breaching contract to sue for damages. A person who first breaches a contract cannot maintain an action for damages against the other party thereto for a failure to further proceed to carry out such contract subsequently to such breach.
    4. Sales, § 320*—when defendant in action for fuel oil sold and delivered cannot maintain set-off for damages. In an action for fuel oil sold and delivered where the defendant interposed a set-off for damages for breach of contract, and it appeared that the defendant was in default in payment for the goods received, it could not maintain its set-off for damages, as a party claiming damages for breach of contract must aver and prove that he is not in default as to the agreement which is broken.
    5. Sales, § 328*—when proper, in action for fuel oil sold and delivered, for court to direct verdict for plaintiff. In an action for fuel oil sold and delivered, a question as to the right of defendant to maintain a set-off for breach of the contract was one of law, and on deciding that the set-off could not be maintained it was proper for the court to peremptorily instruct the jury to return a verdict for the plaintiff.
    Appeal from the Municipal Court of Chicago; the Hon. Hosea W. Wells, Judge, presiding. Heard in this court at the October term, 1919.
    Affirmed.
    Opinion filed January 26, 1920.

      David D. Stansbury, for appellant; Marcus E. Hart, of counsel.
    Hoag & Ullmann, for appellee.

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

   Mr. Justice Holdom

delivered the opinion of the court.

Defendant prosecutes this appeal in an effort to have this court reverse a judgment for $3,753.05 against it and in favor of plaintiff.

As the courts of review in this State have frequently said, the abstract is the pleading of the parties and it must show sufficient of the proceedings in the trial court to support the errors assigned upon the record. One of such errors challenges the judgment. The place in the abstract for the judgment to be made manifest is in the abstract of the statutory record. What we find is the following:

‘‘Instruction directing verdict for plaintiff.” “Verdict. ” “ Motion for a new trial; overruled. ” “ Motion in arrest of judgment; overruled.” “Order, plaintiff have judgment on verdict and recover from defendant its costs and execution issue.”

Under repeated rulings these meager recitations in the abstract present nothing for our review; notwithstanding this state of the record, however, we will briefly discuss the crucial questions involved.

Plaintiff bases its claim on fuel oil sold and delivered to defendant. Of this claim there is no serious dispute. Defendant interposed a set-off for damages arising from an alleged breach of contract by plaintiff.

There are dual theories regarding the relation of the parties to each other. Plaintiff contends that the indebtedness of defendant to it arises from certain specified and separate orders for fuel oil to be, and which'was, delivered by plaintiff to the several concerns as directed by defendant. On the other hand, defendant insists that there existed between itself and plaintiff a contract resting in parol and made November 1, 1916, for .the delivery to consignees to be named by it of twenty-five tank cars of fuel oil at the then market price.

We think it of little moment, under the law controlling the rights of the parties, which of these two contentions is established by the proofs, because plaintiff refused further deliveries on the ground that defendant was in default in paying for the oil already delivered. Whatever might be the decision of the contention as to which of the two contracts the fuel oil in suit was delivered under, defendant was undeniably in default in its payment therefor. On its own proof it had,breached its contract; it was therefore in no position to maintain its set-off for damages, even conceding that defendant’s contention as to the contract between the parties was sustained. Had defendant not been in default in making payments for oil delivered, thereby breaching its contract which it claimed it had with plaintiff, if it had by a preponderance of the evidence established such contract, then it would have been in a position to claim such damages as it might have suffered for plaintiff’s breach thereof, either by set-off, recoupment or in .an independent action. It is, however, a legal axiom that he who has first breached a contract cannot maintain an action for damages against the other party thereto for a failure to further proceed to carry out such contract subsequent to such breach. In Harber Bros. Co. v. Moffat Cycle Co., 151 Ill. 84, a case cited to us by counsel for each contestant, the court said:

“Nor do we see how it could take advantage of appellee’s default, even if it were here seeking to do so by way of set-off or recoupment. Set-off is a counter-claim, as to which the defendant is plaintiff, and must establish his right as upon a distinct action; and, therefore, if for breach of contract, must show he is not himself in default as to the agreement. * * *”

It was further held to be an elementary and inflexible rule that a party suing for damages for a breach of a contract must not only aver but prove he is not himself in default as to the agreement for the breach of which the suit is brought; and again the court said in the Harber case, supra:

“The question here distinctly presented as the controlling one, is whether a vendee who has accepted goods delivered under an express contract, but not at the time or in the quantity required by it, with knowledge of the default of the vendor in those respects, but has himself failed, without legal excuse, to pay for them according to it, can maintain an action on the contract for such a default of the vendor. We think the general rule, everywhere recognized, is against it, and has been specifically so applied in analogous cases in Illinois. Pennsylvania Coal Co. v. Ryan, 107 Ill. 226; Bradley v. King, 44 Ill. 339; Stewart v. Many, 7 Ill. App. 517.”

This case is directly contrary to defendant’s contention, and other cases will be found in the books to a like effect.

The argument in the Earber case was that the plaintiff first breached the contract so that at the time the cycles were delivered for which defendant did not pay, the damages then suffered more than offset such claim. This was, however, held to be fallacious and impotent to defeat plaintiff’s claim for goods delivered under the contract and received by defendant, who breached the contract by failing to pay therefor according to its terms.

In Davenport Vinegar & Pickling Works v. Glaser, Kohn & Co., 150 Ill. App. 567, it was held that upon the nonpayment of an instalment due on a contract, the party entitled to the payment may abandon the same and sue for and recover the amount due thereunder according to the terms of the contract. Keeler v. Clifford, 165 Ill. 544.

It was held in Patten v. Iroquois Furnace Co., 124 Ill. App. 1, that recoupment could not be maintained for failure of the plaintiff to complete the contract sued upon where the contract was properly abandoned by reason of defendant’s default. Chicago Washed Coal Co. v. Whitsett, 278 Ill. 623; Waldschmidt v. Marsh & Bingham Co., 203 Ill. App. 365.

It was held in North Shore Lumber Co. v. South Side Lumber Co., 176 Ill. App. 96, that in an action for the price of lumber delivered under a contract, the defendant, in order to maintain a claim of set-off, must show that he is not in default of such contract.

There are other questions raised and discussed in the briefs of counsel, but we do not regard them as necessary to our decision, for the conclusions at which we have arrived as above outlined are decisive against defendant’s right to maintain its set-off, without regard to every other- question raised. Consequently the questions of the validity of the parol contract being obnoxious to the statute of frauds or whether the set-off is for liquidated or unliquidated damages, are of no controlling importance.

The question of the right of the defendant to maintain its set-off being one of law, it was proper for the court to peremptorily instruct the jury as to its verdict.

The judgment of the municipal court being without error is affirmed.

Affirmed.


author: Mr. Presiding Justice Thomson

text:
    C. Neuman, Appellee, v. Chicago and Northwestern Railway Company et al., on appeal of Chicago and Northwestern Railway Company, Appellant.
    Gen. No. 24,752.
    ' 1. Carriers, § 199

      —what establishes prima faeie case against final carrier for damage to goods. Where property transported over the lines of several carriers is damaged en route, proof that the goods were delivered to the consignee by the final carrier in bad order establishes a prima facie case against such carrier, inasmuch as such carrier could protect itself by inspection when the goods were received, and the sources of evidence regarding where the blame rests are more accessible to the last carrier than they are to the shipper.
    2. Carriers, § 199*-—who has burden of proof in action against connecting carriers for loss of goods. Where a terminal carrier delivers a shipment of goods to a local drayman, who is the agent of the consignee, and there is a shortage in such goods when received by the consignee, it would not be incumbent on the railroad to show that the shortage occurred while the goods were in possession of the drayman, but the plaintiff consignee would have the burden of proving such fact, as the source of evidence regarding blame for the shortage rests with the drayman, and is quite as accessible to the consignee as to the railroad, if not more so.
    3. Carriers, § 5*—when transfer or drayage company is common carrier. A transfer or drayage company which undertakes, for hire or reward, to transport from place to place the goods of those who employ it, is a common carrier.
    4. Carriers, § 199a*—what evidence establishes that transfer company was terminal carrier. Where a consignment of goods handled by other carriers was delivered by a railroad to a transfer company which was a common carrier, the evidence established that such transfer company was the terminal- carrier.
    5. Carriers, § 199*—burden of proof in action against connecting carriers for loss of goods. In a suit by a consignee to recover for a shortage of goods, brought against the railroad which delivered the goods to a transfer company at the point of destination, where the plaintiff established' that the goods were shipped in good condition and that the shortage was discovered when the goods were delivered by the transfer company, the burden was upon the plaintiff to show that the shortage occurred while the goods were in the railroad’s possession, or at least to show a presumption to that effect by showing that no loss was suffered while the goods were in possession of the terminal carrier.
    6. Carriers, § 199a

      —when evidence insufficient to show loss of goods did not occur while goods were in hands of transfer company. Evidence held insufficient to show that a shortage of goods did not take place while the goods were in the hands of a terminal carrier, a transfer or drayage company, there being no testimony of the draymen to the effect that nothing was taken from them while in their possession, and that they were received in the same condition as when delivered to the plaintiff consignee, which testimony would have contradicted witnesses for the railroad which was a connecting carrier.
    7. Carriers, § 199a*—when finding that loss of goods, delivered t>y railroad company to draymen, occurred while goods were in possession of former is against iveight of evidence. In an action for the loss of goods transported, while in the possession of a railroad company, which afterwards delivered such goods to draymen of the consignee, where all the witnesses for the railroad company testified that the boxes containing the goods were in good condition, and there was no evidence as to the condition of such boxes when received by the draymen, a finding that the shortage in the shipment occurred while the goods were in possession of the railroad company was against the manifest weight of the evidence.
    Appeal from the County Court of Cook county; the Hon. J. J. Cooke, Judge, presiding. Heard in the Branch Appellate. Court at the October term, 1918.
    Reversed and remanded.
    Opinion filed January 28, 1920.
    Edgar R Hart and Ira C. Belden, for appellant; James C. Davis, of counsel.
    A. W. G-laskay, for appellee.

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

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

   Mr. Presiding Justice Thomson

delivered the opinion of the court.

By this appeal the defendant Chicago and Northwestern Railway Company seeks to reverse a judgment for $369 recovered "by the plaintiff Neuman. The suit was an action on the case for damages caused by the alleged loss of certain clothing in course of shipment because of the negligence of the defendant carrier as charged by the plaintiff in his declaration. The Chicago Warehouse & Terminal Company was sued with appellant but was found not guilty by the jury.

The clothing involved was consigned by Flachs & Schetnitz of Chicago to the plaintiff at DeKalb, Illinois, on May 20, 1915. The consignment consisted of eighty suits of clothing packed in two cases. The cases were delivered by the consignor to Marks Express & Teaming Company, and by them on the same day turned over to the terminal company. On May 21, the latter company delivered the cases to the appellant. That night the cases left Chicago over the appellant’s railroad reaching DeKalb at 2:25 a. m. the following day, May 22. The cases were removed from the car that day and put in the freight house and at plaintiff’s request were held there until the 25th when, at plaintiff’s direction, they were delivered by appellant to Coey & Evans Transfer Company and by them on the same day delivered to the plaintiff. Upon the opening of the cases it was found that the shipment was short and that shortage is the basis for this suit.

In his brief, plaintiff contends that the defendant was the terminal carrier in that it was the last railway carrier to handle this shipment, citing Nanson v. Jacob, 93 Mo. 331, and Western & A. Ry. Co. v. Exposition Cotton Mills, 81 Ga. 522. In the former case the question of whether the carrier was a connecting or the terminal carrier was in no way involved in the issues which were presented to the court. In the latter case, certain machinery was shipped from Boston to the plaintiff at Atlanta. It passed over several railroads and arrived at Atlanta over the defendant road. There the defendant turned it over to the Georgia Pacific Railroad Company which transported it two miles and a half, from the defendant’s terminal to the plaintiff’s mills. It was held that the defendant was the terminal carrier. This was so because of the terms of the contract involved, which required' the defendant to deliver the machinery to the plaintiff and under the terms of which the Georgia Pacific Railroad Company was the agent of the defendant.

If it be held that the defendant in the case at bar was the terminal carrier, then the plaintiff further contends that the rule announced in Peoria Packing Co. v. Nashville, C. & St. L. Ry. Co., 164 Ill. App. 646; Ruddell v. Baltimore & O. R. Co., 175 Ill. App. 456, and Trott v. Baltimore & O. R. Co., 192 Ill. App. 239, would apply and that, under the rule, the presumption would be that the shortage or damage sued for occurred while the goods were in the defendant’s possession and it would have the burden of proving the contrary, the plaintiff having proven that the goods had been shipped in good condition and that upon delivery to him the shortage or damage complained of had been discovered. We are of the opinion that, assuming the defendant to be the terminal carrier, the rule referred to would not be applicable here, unless and until the plaintiff showed further that the shortage or damage in question did not occur while the goods were in the possession of the Coey & Evans Transfer Company.

The reason for the rule above referred to is well given by the court in Connelly v. Illinois Cent. Ry. Co., 133 Mo. App. 310, 113 S. W. 233, quoted with approval in Peoria Packing Co. v. Nashville, C. & St. L. Ry. Co., 164 Ill. App. 646, as follows:

“When property is delivered to a carrier in good condition to be transported over its own line, and the line or lines of one or more other carriers, and the property is damaged en route, for the purpose of giving an effective remedy to the owner, who can rarely prove what carrier was to blame for the damage, it is held proof that the goods were delivered to the owner at destination by the final carrier in bad order establishes a prima facie case against said carrier. This is because it could have protected itself from responsibility for losses occurring prior to its reception of the property by an inspection of its condition at the transfer point. And, moreover, sources of evidence regarding where the blame rests are more accessible to the last carrier than they are to the shipper.”.

This rule is applicable whether the consignor or the consignee is the party plaintiff. Where the last railroad carrier delivers a shipment of goods to a local drayman who receives the goods from the railroad and delivers them to the consignee, and especially where the drayman is the agent of the latter, as was the situation in the case at bar, the source of evidence, which may prove whether the blame for the shortage or damage complained of rests with the drayman, is quite as accessible to the consignee as to the railroad, if not more so, and therefore the reason involved in the rule does not apply to such evidence and it would not be true, as plaintiff contends, that the defendant- railroad would have the burden of proving that the shortage or damage occurred while the goods were in the possession of the drayman but it would be incumbent on the plaintiff consignee to show that it did not occur while in the possession of the drayman.

However, in'his argument, the plaintiff refers to. and treats the defendant as a connecting carrier. Defendant contends that such is the case and we are inclined to that view on the facts involved. The Coey & Evans Transfer Company was a common carrier. It undertook, for hire or reward, to transport from place to place the goods of those who chose to employ it; Hastings Exp. Co. v. City of Chicago, 135 Ill. App. 268; Johnson Exp. Co. v. City of Chicago, 136 Ill. App. 368. Under the evidence in this case, it is our opinion that the transfer company was the terminal carrier. Texas & P. Ry. Co. v. Capper, 38 Tex. Civ. App. 61, 84 S. W. 694; Ringwalt v. Wabash R. Co., 45 Neb. 760, 64 N. W. 219. The plaintiff has, therefore, brought his suit against the defendant as a connecting carrier to recover for an alleged shortage of goods, which carrier delivered the goods to a transfer company at the point of destination and the plaintiff has established the fact that the goods were shipped in good condition and that the shortage claimed was discovered when the goods were delivered to him by the transfer company. The burden was also on the plaintiff to show that the shortage was, suffered while the goods were in the defendant’s possession, or at least to raise a presumption to that effect by showing that "the shortage was not suffered while the goods were in the possession of the transfer company. Texas & P. Ry. Co. v. Capper, 38 Tex. Civ. App. 61, 84 S. W. 694; Ringwalt v. Wabash R. Co., 45 Neb. 760, 64 N. W. 219.

Under either theory of the case, where the last railroad carrier does not deliver to the plaintiff direct but through a transfer company, which is the plain-' tiff’s agent, the burden is on the plaintiff to show that the loss did not occur while the goods were in the possession of the latter.

In the case at bar the plaintiff did not call any witness connected with the transfer company or submit any evidence directly showing or tending to show that the shortage complained of did not occur while the goods were in the possession of the transfer company. The plaintiff contends that the testimony of defendant’s witnesses, and particularly that of the witness 0 ’Hoff, hereinafter referred to, was sufficient to establish that fact. We are of the opinion that it was not, and further that the evidence was not sufficient to meet the burden which was upon the plaintiff, of showing that the shortage occurred while the goods were in the defendant’s possession.

The plaintiff testified that when the two boxes in question reached him “they were all broken up. * * * The tops of both boxes were broken, and the ends were even broken from the boxes.” On cross-examination he testified that the Coey & Evans Transfer Company did all of his draying; that he did not know what condition the boxes were in when they were delivered by defendant to that company and he again testified that when he received the boxes at his store both covers were split and broken “and pieces came out of them. * * * One bottom was broke too”; that he did not think one could put his hand in and take out something; that the openings were three-quarters of an inch in some places; that the covers were nailed very loose and the nails were coming out of the box.

Witnesses for the defendant terminal company, which was found not guilty, testified that the cases weighed 350 pounds, which was approximately the weight given by the witness connected with the consignor who said that the weight of the two cases packed would be between 320 and 340 pounds. Witnesses for the terminal company further testified that if they received cases that were broken or not in good condition they would not accept them. One White, assistant foreman of the freight house of the defendant, at which the terminal company turned these cases over to defendant, testified that if they received a case that was tight, they would not reject it merely because there were openings in it, but if the case was poorly nailed and apparently falling to pieces, they would have their cooper examine it and nail it up and if anything like that was done it would appear on their receipt.

One McDermott, a checker for the defendant, received the cases in question from the terminal company. He testified that if they received cases that were nailed tight with spaces between the boards the size of a lead pencil they would pass them as all right, but if they were poorly boxed or showed signs of loosening up or were broken they would not pass them but would call the cooper and have him open the cases and manifest them and then require them to be renailed ■and reboxed, “and note that on -the bill.” He further testified that the mere fact that a case was not nailed well would not give occasion for them to open it up and renail it if the boards were sufficiently fastened. If there were spaces the size of a lead pencil between the boards through which the contents could not pass or be taken, they would pass the case as all right.

One Johnke, a weigher at defendant’s freight house, testified to the same effect. He also said that if nails in cases stick out on the sides where you are liable to catch your fingers and tear them in handling it they sometimes had them “nailed back” by the cooper but that they would not take the boards off and renail them unless, the boards were loose.

One O’Hoff, checking and delivery clerk for defendant at D'eKalb, testified that if a board was tom off or lost when a box came to the freight house he would fix the box up.

As to the condition of the cases in question while they were in, the possession of the defendant, Mc-Dermott testified that they weighed 350 pounds when weighed just after they had been turned over to defendant by the terminal company. O’Hoff testified that he remembered the two cases in question; that they were old boxes which looked as though they had been used “hundreds of times,”—the.boards were not straight edged; that you could see the contents in some of the boxes but it was not possible for the contents to fall out; that the boxes were intact; that the tops of the boxes were not broken into or the boxes opened up in any way while they were in the freight house at DeKalb; that the boxes contained in this consignment to plaintiff were all old boxes; they “wouldn’t stand much knocking around”; they were nailed; on the two cases in question the nail heads stuck out of them; “I caught my finger on one of them”; that the nails were driven in the top and bottom and came out through the wood on the sides of the boxes; that there were spaces between the hoards about the thickness of a pencil while some were much closer together; that these cracks were on the sides of the boxes and not on the tops or bottoms. He was asked whether he would say these two cases were received at DeKalb in good or bad shape and he answered, “I would say they were in good shape. * * * The contents were intact and the cases were received in good shape for old boxes.”

This evidence is not sufficient to prove that the shortage of goods complained of did not take place while the goods were in the hands of the transfer company. From what 0 ’Hoff says we could not say that the suits in question had been removed from the cases at the time he handled them. It may well be that the eases at that time had been somewhat loosened up but that the shortage sued for took place after the cases left defendant’s possession and before delivery to the plaintiff, or, in other words, when they were in the possession of the transfer company. The case would be different if there was testimony in the record by the drayman to the effect that nothing was taken from the cases while they were in his possession and that when he received them from the defendant they were in the condition described by the plaintiff in his testimony,—thus contradicting the witness O’Hoff.

The plaintiff contends that the defendant is the connecting carrier in this shipment in whose possession the condition of the cases first showed a change after leaving the shipper’s possession. We find no evidence in the record bearing out that contention or showing that when these two cases left the possession of the shipper, they were in any different condition than that above described by" the defendant’s witnesses, except that the man who packed the goods for the consignor was asked “whether there were cracks or anything in the boxes” and he answered “No, sir, they were all nailed good and tight,” and he also testified, “there is wide papers on the case that extend across, covers all np completely,” and on redirect examination he was asked, “I believe yon stated that they were wrapped in paper, something all around them?” and he answered, “Yes, sir * * * good heavy wrapping paper.” ' He also testified that these were not new cases but had been received by the consignor in a shipment to them from the woolen mills. The testimony of the witnesses for the two defendants to the effect that they never received cases in a, damaged or broken condition does not support the plaintiff’s contention. All the witnesses who testify on the subject of the actual condition of these cases while in defendant’s possession say that the cases were in good condition although they were old and there were cracks between the boards on the sides of the cases and some of the nails stuck out.

In our opinion a finding that the shortage in this shipment did not occur while it was in the possession of the transfer company but occurred while it was in defendant’s possession is against the manifest weight of the evidence. The evidence of the defendant on the latter point tended to show the contrary. The course of the freight through defendant’s freight house in Chicago and into the cars was shown. It was further shown that the car in which these cases were shipped was closed and both doors sealed when the freight handlers quit work and the seals were intact when the car reached DeKalb. The evidence further tended to show that the cases were in no way tampered with while they were in the hands of defendant’s agents in DeKalb.

For the reasons we have stated the judgment for the plaintiff cannot be sustained and it will, therefore, be reversed and the cause remanded to the county court for a new trial.

Reversed and remanded.


author: Mr. Justice O’Connor

text:
    John F. Golden et al., Complainants, v. John A. Cervenka et al., Defendants. William C. Niblack, Receiver, Cross-Complainant, v. John F. Golden et al., Defendants. Central Trust Company of Illinois, Cross-Complainant and Appellant, v. William C. Niblack, Receiver, et al., Defendants and Appellees.
    Gen. No. 24,532.
    1. Banks and banking—when trust company required to make good its representation that money belonged to bank. Where a trust company participated with representatives of a bank in illegally obtaining a certificate from the State auditor authorizing the bank to do business, by turning over money to the bank and taking it back immediately after the certificate was issued, it was required to make good its representation that the money belonged to the bank, and the liability of the trust company was not caused by impairment of the capital stock and surplus of the bank, but by the tort of the trust company.
    2. Banks and banking—when no fraudulent intention exists in trust company’s participation with bank in illegally obtaining certificate for bank to do business. Where a trust company participated with representatives of a bank in illegally obtaining a certificate from the State auditor for the bank to do business, by turning over money to the bank and receiving it back after the certificate was granted, but .the entire transaction was known and explained to the representatives of the auditor, there was no fraudulent intention, as the parties thought the law was complied with.
    3. Banks and banking, § 25

      -—when purchasers of stock certificates are not liable as stockholders. Where persons purchased stock certificates in a State bank in due course of business without any knowledge that the capital and surplus had not been fully paid up, they were not liable as stockholders, there being no provision of the banking law nor any other statute rendering them liable.
    4. Attorney and client, § 61*—when illegal acts of attorney are not chargeable to clients. Where stockholders of a national bank authorized a person as attorney to do all necessary acts in perfecting the transfer of their stock for stock in a State bank, they did not authorize the attorney to do anything illegal, and they could not be charged with the attorney’s illegal acts.
    5. Banks and bankino—when stockholders of State bank, are not in pari delicto mth trust company. Where stockholders of a -State bank took no part in an illegal transaction by which a trust company advanced money to the bank so that it might be counted by the State auditor and a certificate to do business issued to the bank, after which the money was returned to the trust company, they were not in pari delicto with the trust company.
    6. Banks and banking, § 27

      —when trust company not entitled to reimbursement by stockholders of bank. Where a trust company advanced money to a bank so that it might secure a certificate to do business, after which the money was returned to the trust company, it did a legal wrong resulting in loss to many depositors and creditors of the bank, and such trust company would not be entitled to be reimbursed by the stockholders for money which it was required to pay, as such a decree would not result in- the furtherance of justice, but justice and sound public policy should prevent a recovery so that other persons might be deterred from seeking to evade the banking laws.
    Appeal from the Circuit Court of Cook county; the Hon. Frederick A. Smith, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1918.
    Affirmed.
    Opinion filed January 28, 1920.
    H. B. Hurd, W. T. Abbott and Albert Fink, for appellant..
    Levinson, Becker, Schwartz & Frank and Knapp & Campbell, for appellees Paul W. Cleveland^ N. Crandall, Frank Celia, Elmer Wilson, Alfred C. Gary and Henry D. Stnrtevant; Jerome N. Frank, Irwin T. Gilruth and John B. Cochean, of counsel.
    Moses, Bosenthal & Kennedy, Gibson, Smith & Phillips, Delbert A. Clithero and Delavan B. Cole, for appellees Joseph Hock, William J. Mosley, Seward M. Gunderson and James E. Bennett; Walter Bachrach and Henry Jackson Darby, of counsel.

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

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

   Mr. Justice O’Connor

delivered the opinion of the court.

By this appeal the Central Trust Company of Illinois seeks to reverse a decree of the circuit court of Cook county dismissing its cross-bill for want of équity, striking it from the files and denying its motion for a rule on the defendants to answer it.

Another phase of this case was passed upon by the Supreme Court of this. State in the case of Golden v. Cervenka, 278 Ill. 409, where the facts are fully set forth and therefore will not be repeated here. After the cause was reinstated in the trial court, pursuant to the mandate of the Supreme Court, the Central Trust Company filed its cross-bill making parties defendant all persons who were at any time stockholders of the La Salle Street Trust and Savings Bank and others claiming that “in equity the stockholders of the State Bank ought to make good its capital and surplus and asldng that they be required to pay whatever amount the Trust Company should be held liable for, and to thus exonerate it in the premises; and that if prior to such payment on the part of the stockholders, any part of such liability should he satisfied by the Trust Company, the stockholders be required to reimburse the Trust Company therefor. ’ ’

The Supreme Court, in its opinion, held that the Central Trust Company was liable for the difference between the amount of the capital and surplus of the State Bank, $1,250,000, and the value of the assets of the National Bank at the time these assets were transferred to the State Bank, and directed that the matter be referred to the master to ascertain the amount. Subsequently that matter was referred to the master „and is now being heard. It is the position of the Central Trust Company that whatever sum it is required to pay under the decision of the Supreme Court, this payment- will be on account of the capital and surplus of the State Bank, and that the primary obligation to pay such capital and surplus is upon the stockholders of the bank and, therefore, the Central Trust Company should be reimbursed by the stockholders for whatever sum it must finally pay. The difficulty with this argument is that the Supreme Court held that such payment was not payment of the capital or surplus of the State Bank. It there said (p. 443): “The act of the Central Trust Company was not a subscription to the capital stock of the bank or a payment for it. ’ ’

It further contends that the one thing that fastened liability upon it was that the net assets of the National Bank were not worth $1,250,000. Counsel say: “Laying aside for the moment mere matters of form, the one element of the transaction which resulted in fastening liability upon the Trust Company was the value of the assets of the National Bank.” We think this is unsound. It was not the impairment of the capital stock and surplus of the National Bank that fastened,, liability on the Central Trust Company. The impair- ' ment merely fixed the extent or measure of its liability. Under the decision of the Supreme Court, the liability, of the Central Trust Company was based on the fact that it participated with certain representatives of the State Bank in illegally obtaining from the State Auditor his certificate authorizing the State Bank to commence business. The Supreme Court said that the Central Trust Company turned over $1,250,000 to a representative of the State Bank so that he could hand the money over to the auditor to be counted by him and thus obtain the certificate. This was done, and immediately the $1,250,000 was handed back to the i, Central Trust Company. This the Supreme Court : says (p. 426), “amounted to a solemn declaration that the particular money which was there present was the property of the La Salle Street Trust and Savings Bank, dedicated solely to its business, and subject absolutely to its control. The auditor’s certificate was ■ based on this representation.” Continuing, the court said (p. 430): “The Central Trust Company having represented that the $1,250,000 exhibited to the auditor’s agent was the property of the La Salle Street Trust and Savings Bank, and having immediately taken and retained possession of it to the exclusion of the bank, in an action for an accounting for the benefit of the creditors of the La Salle Street Trust and Savings Bank, it must make good its representation and must account for the money so wrongfully taken by it.” From this it is clear that the liability of the Central Trust Company wa.s not caused by the impairment of the capital stock and surplus of the National Bank, but that it was the result of the tort committed by it.

It is stated by counsel for the Central Trust Company that the reason the trial court held its cross-bill insufficient was that it was in pari delicto with the stockholders of the State Bank, and it is strenuously insisted that this was erroneous because the Central Trust Company “if in delicto at all, was not in pari delicto,” and in support of this it is argued that the Central Trust Company had no financial or other interest in the matter, that it received no profits out of it, that it was not a stockholder in the State Bank or in the National Bank, that there was substantially no claim that it knew of the impairment of the assets of the National Bank, and that the cross-bill denied knowledge of any such impairment, while on the other hand, the stockholders of the National Bank did know, or were charged by law with knowledge of the impairment of its assets, that all benefits of the transaction accrued to the stockholders of the National Bank, who were.the same persons that"afterwards became stockholders of the State Bank; that the handing over of the money to be counted and the giving of it back to the Central Trust Company was all done with the knowledge and in the presence of the auditor’s representative; that there was no moral turpitude on the part of the representatives of the Central Trust Company as shown by the opinion of the Supreme Court, and more strikingly by the dissenting opinions of Mr. Chief Justice Craig and Mr. Justice Carter; that in these circumstances, even in equity, a recovery may be had although the transaction is illegal unless it is . against public policy; that the question is whether “public policy, which, in the last analysis underlies all legal principles, is better served by granting than by denying relief.” Counsel then ask the question “Will public policy be served by denying a recovery in this,,, case?” We think it clear that neither the Central, Trust Company nor its officers in the transaction had ; any idea that they were violating any provision of the ,, \ law, as it appears that the entire transaction was ex- ; t plained and the facts known to the representative of / the auditor’s office. In fact, we think that everybody/' concerned in the matter thought that what they were doing was in substance a compliance with the law. But the Supreme Court said (p. 427): “It is also immaterial whether the Central Trust Company or Dawes had any fraudulent intention, knew anything about the condition of the National Bank, or made any profit out of the transaction.” It is to be borne in mind that-the cross-bill is brought against “all persons who were at any time stockholders of the State Bank.” It appears from the allegations of the cross-bill that there were 21 subscribers to the capital stock and surplus of the State Bank; that afterwards, all of the stockholders of the National Bank except one (some 230 in number) exchanged their stock for a similar number of shares in the State Bank; that subsequently, after the issuance of the stock certificates of the State Bank, other persons purchased the same in due course of business, and there is no averment in the cross-bill that these last-mentioned stockholders at the time they became stockholders in the State Bank knew or had any knowledge that the capital and surplus had not been fully paid up. Manifestly, these stockholders were in no way liable. McBryan v. Universal Elevator Co., 130 Mich. 111. There is no provision in the banking law of this State, nor any other law so far as we are advised, that would render this class of stockholders in any way liable. Outside of possibly three or four of the stockholders of the State Bank, the other stockholders knew nothing about the transaction or the method in which it was proposed to be carried out, or the method in which it was actually carried out. But it is said by counsel for the Central Trust Company that the stockholders were all represented by one Ward as attorney, who was authorized in writing to represent them, and that he knew all of the facts. It is true that the stockholders of the National. Bank agreed to exchange their stock for an equal number of shares in the State Bank which was to be created and they authorized Ward to perform “all necessary acts in perfecting such transfer.” They did not authorize Ward to do anything illegal, and, if he did, they could not be charged with such illegal act. We think it clear that the stockholders of the State Bank, except possibly three or four of them, knew nothing of and took no part in the illegal transaction and, therefore, they were not in pari delicto with, the Central Trust Company. Moreover, we think no recovery can be had in this case in any event for the reason that, under the law, before the Central Trust Company would be entitled to a decree in its favor it would have to affirmatively appear that such decree would result in furtherance of justice and a sound public policy. Dunbar v. American Tel. & Tel. Co., 238 Ill. 456; 2 Pomeroy’s Eq. Jur. (4th Ed.), secs. 940-941; 1 Cowper’s Rep. 341; 1 Story’s Eq. Jur. (14th Ed.), sec. 421. The Central Trust Company in the instant case did (unwittingly) a legal wrong which resulted in a great loss to many depositors and other creditors of the bank and, if it is prevented from recovering in this case, this fact mil be a deterrent to other persons who may, in the future, seek to evade the banking laws of this State | in the same manner. We think it clear,, therefore, that ; justice and a sound public policy will not be served by allowing a recovery here.

The decree of the circuit court of Cook county is affirmed.

Affirmed.


author: Mr. Justice Taylor

text:
    M. Mandelovitz, Appellee, v. New Amsterdam Casualty Company, Appellant.
    Gen. No. 24,592.
    1. Insurance, § 362

      —when insurer estopped from insisting that 'burglary policy was forfeited. Where an insured is covered at one location by an open stock policy of burglary insurance, and he moves his stock of goods to a different location, notifying the company so that the policy may be amended to cover the goods at the new location, and the insurer does not treat the policy as being forfeited, but states that the new location will have to be inspected, and a loss occurs before the inspection is made, such privilege of inspection is waived and the insurer is estopped from insisting that the policy is forfeited.
    2. Insurance, § 321*—right of insurer to waive privilege of inspection of new location of goods covered by burglary policy. The right of inspection by agents of an insurer where goods covered by a policy of burglary insurance are moved to a new location is for the benefit of the insurer, so that the risk may not become greater, and such privilege may be waived at the election of the insurer.
    3. Insurance—difference between burglary policies indemnifying against loss from specified place and loss of parts or whole of changing stock, of goods. Practically considered there is no difference between a burglary insurance policy which indemnifies against loss by theft from a specified place and a policy which indemnifies against the loss by theft of parts or the whole of a changing stock of goods, as the insured pays a premium so as to suffer no loss in case his goods are stolen, and the insurer undertakes to make good if loss occurs.
    Appeal from the County Court of Cook county; the Hon. J. J. Cooice, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1918.
    Affirmed.
    Opinion filed January 28, 1920.
    Bulkley, More & Talmadge, for appellant.
    Fisher, Boyden, Kales & Bell, for appellee; J. F. Dammann, Jr., of counsel.

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

   Mr. Justice Taylor

delivered the opinion of the court.

By this appeal the New Amsterdam Casualty Company, the defendant, seeks to reverse a judgment for $1,000, obtained by M. Mandelovitz, the plaintiff, in a suit on an open stock burglary insurance policy.

Some time in the year 1915—the policy is not dated —the defendant issued to the plaintiff a “Mercantile Open Stock Burglary Insurance Policy,” indemnifying him to the extent of $1,000 for the period between noon December 7, 1915, and noon December 7, 1916. “For loss of merchandise * * occasioned by its felonious abstraction from within the interior of the premises,” “669 West 12th street, Chicago, Illinois.” The plaintiff was in the clothing business, and owned a stock of goods at that place. He got the burglary policy through his own agent, one Umanski, an insurance broker. On August 29,1916, the plaintiff started to move his stock of goods from 669 West 12th street to 1240 South Halsted street. It took him 4 or 5 days to move it. On Tuesday morning, September 12, 1916, so Umanski testified, he took the plaintiff’s policy to the office of the defendant company and told one Miss Goldsmith, an employee of the defendant, that he wished the policy transferred to the new location at 1240 South Halsted street. His testimony, further, is: “She told me all right, we will inspect -it and we will let you know,” and that when he asked her how long it would take, she answered, “about a day.” He left the policy with her.

On Friday, September 15, according to Umanski, he called up the defendant’s office and some one said Mr. Nichols “was very busy, but he surely will do it tomorrow morning, and I asked her, I don’t remember whether it was Miss Goldsmith at that time that was speaking, or someone else in the office, * * * is Mandelovitz insured, and she said, ‘Yes, sir.’ ”

Miss Goldsmith testified that the policy was first brought in on Thursday, September 14, between 5:20 and 5 :30 p. m. She says Umanski asked to have it transferred, and that she asked him when the plaintiff began to move, and that she told Umanski “that we would have to make an inspection”; “transferring all stock burglary policies were subject to the company’s approval, just as a new risk, and that we would have to inspect it, and if it met with the company’s approval we would endorse it,” etc. She stated, further, that she turned it over to the inspection department the next morning, Friday, the 15th, giving' the policy to one McBarron, an inspector, and asked him to make an inspection. She says Umanski did not call her up on Friday.

McBarron was inspector for the defendant and also for another agency. It was the custom of the defendant to send stock policies, such as the one in question, when there was a change of location of the property insured, to the home office in Baltimore for its sanction. If the policy was satisfactory it would be so noted and the policy returned as valid a,t the date the inspection was made. Miss Goldsmith testified that she told Umanski that the inspection would have to be passed upon by the company. McBarron, the inspector, according to her testimony, reported to her every day in order that she might check up the inspections which he had made, and on Saturday morning he told her that the only one he had left was the plaintiff’s and that he would make the inspection that morning. He went to the premises on Saturday morning about 9:00 or 9:15, September 16, but when he got there he was informed that the premises had been burglarized the night before. The following facts were agreed upon by the attorneys for both parties; that a burglary or a felonious abstraction occurred on the premises of the plaintiff, Mandelovitz, at 1240 South Halsted street, some time between the evening of September 15 and the morning of September 16, 1916, and that he sustained a loss of at least $1,000. It is the evidence of one Carpenter, an insurance agent, familiar with the customs and usages in burglary insurance, that where the assured is covered at one location on an open stock policy and then he moves and transfers his stock to a new and different location, and he is desirous of having his old policy amended so it will cover him in his new and changed location, the company, while making an inspection and determining whether or not they will carry him at the new location, does not carry, or, in other words, continue the insurance. On the other hand, one Clancy, an expert, stated that, if the new location was a poor one, it was the duty of the company to repudiate the policy at once, but if the new premises were not within a prohibited area, then to make an inspection within 24 hours, and meanwhile cover the risk.

The cause was tried before a jury and a verdict recovered and a judgment entered in the sum of $1,000 in favor of the plaintiff.

The question arises, did the insurance continue and cover the merchandise at the new location at the time of the burglary?- When the company was notified on the evening of September 14, 1916, which is the date according to the evidence of the company, the policy could have been forfeited, treating the removal of the

goods as a breach of warranty. As the court .said in Williamsburg City Fire Ins. Co. v. Cary, 83 Ill. 453: “It might well treat the removal of the goods as a breach of a warranty implied from a description of the location of the goods, and declare the policy forfeited.” That, however, it did not do. Umanski, the agent of the plaintiff, when he delivered the policy to Miss. Goldsmith, the agent of the company, was asked by her, when did the plaintiff begin to move, and was then told that the company would have to make an inspection. She testified that transferring stock burglary policies was subject to the company’s approval just as a new risk and that they would have to inspect it.and if it met with the company’s approval they then indorsed it. On the other hand, Umanski states that when he delivered the policy to her he asked her how long the inspection would take and she said about a day, and that on Friday, September'15, he called up the defendant’s office and that some one in the office when he asked the question, “Is Mandelovitz insured?” answered, “yes.”

The reasoning in the Williamsburg case, supra, is to the effect that the removal of the merchandise to another location does not ipso facto render the policy voidthat the inspection which the law imposed upon the assured is for the benefit of the insurer, that is, that the risk may not become greater, but that privilege at its election it may waive; and where a waiver is shown the insurer “will be estopped from insisting upon that which is inconsistent with what he has said and done and which affects the rights'of others.”

If the jury believed that the policy was left with the defendant company on Tuesday morning; that the agent of the company then stated that an inspection would take about a day;' that Umanski called up the office of the company on Friday and was answered when he asked, “Is Mandelovitz insured?” “Tes, sir,” then under the law, as stated in the Williamsburg case, “that the company may at its election waive the privilege of inspection,” the verdict must stand on the ground of a proven estoppel.

Counsel for the defendant contend that there is a legal and substantial difference between a policy which indemnifies against loss by theft from a specified place and a policy which indemnifies against the loss by theft of parts or the whole of a changing stock of goods. Hypercritically considered, there is a distinction, but, practically considered, the indemnification in both cases is the same; the insured paid his premium so as to suffer no loss in case his goods were stolen, and the insurer undertook to make him whole in case of loss.

Finding no error in the record the judgment will be affirmed.

Affirmed.