author: Mr. Justice Thomson

text:
    Illinois Tunnel Company for use of William Farrell, Appellee, v. General Accident Fire and Life Insurance Company, Appellant.
    Gen. No. 25,220.
    1. Insurance, $ 546

      —what is effect of limitation period in insurance policy. A clause- in an employer’s indemnity insurance policy, providing that no action on the policy shall lie unless it he brought within 60 days from final judgment against the assured, is valid and enforceable.
    2. Insurance, § 547*—how limitation period in employer’s liability policy is construed. A clause in an employer’s indemnity policy limiting the time within which action on the policy might be brought was construed to mean that where an action by a claimant was pending against the assured at the expiration of the period within which such an action might be brought, as a result of which the assured actually sustained a loss by reason of a judgment being entered against it, said judgment must be satisfied by the assured, and the action by the assured against the insurer, seeking indemnity for such loss, must be brought within 60 days after final judgment had been rendered in the action against the assured.
    3. Indemnity, § 8*—how contract of indemnity is construed. Employers’ indemnity insurance policies being contracts of indemnity are construed and treated as contracts under which the assured can have no claim against the insurance company unless and until the assured has paid and satisfied the judgment recovered by the claimant, although the insurance company has conducted the defense of the action brought by the claimant against the assured, in accordance with the terms of the policy.
    4. Indemnity, § 11*—when actual loss is necessary to recover on insurance policy. The provision in a policy of employer’s indemnity insurance, that no action shall lie against the insurance company unless the assured has “actually sustained and paid” a loss is not satisfied where there has been no bona fide payment, the assured being insolvent, and the payment being fictitious, and the result of collusion between the assured and another.
    5. Insurance, § 85*—what is relation between insured and insurer. The relation between an assured and insurance company is throughout a contractual relation and never becomes a fiduciary one even when the insurance company assumes to defend the action brought against the assured by the claimant.
    6. Insurance, § 550

      —when limitation period in policy is not loaived. Under a contract of indemnity containing a limitation provision to the effect that no action would lie .under the policy unless it should be brought by the insured to reimburse it for loss actually sustained in satisfaction of a judgment, there was no waiver of such provision by the fact that the insurance company defended an action brought by the claimant against the insured.
    Appeal from the Circuit Court of Cook county; the Hon. Richard S. Ttjxhiix, Judge, presiding. Heard in the Branch Appellate Court at the March term, 1919j
    Reversed.
    Opinion filed October 6, 1920.

      Certiorari denied by Supreme Court (making opinion final).
    John A. Bloomingston, for appellant.
    Harry S. Mecartney, for appellee.

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

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

   Mr. Justice Thomson

delivered the opinion of the court.

By this appeal the defendant insurance company seeks to reverse a judgment recovered against it by the plaintiff in the sum of $9,800 in a trial by the court without a jury.

The claim sued upon arose from the following facts: The plaintiff was covered by a policy of insurance issued by the defendant, in and by which the defendant agreed to indemnify the plaintiff against loss from liability for damages on account of injuries suffered by any of its employees. This was an annual policy which expired August 30, 1908. The defendant issued a similar policy to the plaintiff, covering the year ending August 30, 1909. Within the period covered by the first policy, an accident occurred to one Farrell, an employee of the plaintiff, which was of the kind covered by the terms of the policy. Within the period covered by the second policy, an accident occurred to one Gildea, another employee of the plaintiff, which was also covered by the terms of the policy. Due notice was given the defendant of these accidents and the defendant took charge of the cases and investigated them. In due time suits were begun by these two employees against the plaintiff here, in which they sought to recover for the damages they claimed to have suffered as a result of the accidents referred to. The defendant insurance company conducted the defense of both cases. Farrell obtained a judgment for $20,000 against. the Illinois Tunnel Company and Crildea obtained a judgment for $3,000. Both cases were appealed to this court where the judgments were affirmed. Petitions for writs of certiorari were filed in the Supreme Court in each case and both were denied. The petition in the Farrell case was denied April 18, 1913, and the petition in the Oildea case was denied June 16, 1914. Executions were taken out in both cases and returned nulla bona.

After these cases had been begun against the Illinois Tunnel Company, the latter went into the hands of a receiver, upon the filing of a bill to foreclose a trust deed on its property securing its bonds in the sum of $30,000,000. Decree was duly entered in the foreclosure suit and at the master’s sale, on April 5, 1912, the property of the Illinois Tunnel Company was bought in for $5,000,000 by a committee representing the bondholders.

The judgments at law were not paid -by the Illinois Tunnel Company. It ceased to do business and all its property and assets were sold under the foreclosure proceedings referred to.

The Illinois Tunnel Company was an operating company. After its organization, a holding company called the Chicago Subway Company had been organized, to hold the securities of the Tunnel Company and other affiliated companies. After the foreclosure of the property of the Illinois Tunnel Company, that of the Subway Company was also foreclosed. After the purchase of the property of the Illinois Tunnel Company by the bondholders’ committee, a new operating company, called the Chicago Tunnel Company, was organized, to which the assets and property of the Illinois Tunnel Company were transferred by the committee and thereafter a new holding company, called the Chicago Utilities Company, was organized, which acquired the stock of the Chicago Tunnel Company and certain other companies.

One of the assets of the Illinois Tunnel Company, purchased by the bondholders’ committee and turned over to the Chicago Tunnel Company, was the franchise known as the Automatic telephone franchise. In 1916 the Chicago Utilities Company made a contract to sell this franchise to the American Telegraph and Telephone Company. The attorneys for Farrell and Grildea had filed an intervening petition in the foreclosure proceedings against the Illinois Tunnel Company, seeking to subject the assets of the company to the payment of their judgments, but they were not successful. The Illinois Tunnel Company had obligations in excess of $40,000,000 in addition to the $5,000,-000 for which their property was sold at the master’s sale in the foreclosure proceedings, all of which obligations came in ahead of these damage claim judgments.

In April, 1916, the Farrell and Grildea judgments were settled and satisfied in the following manner: The parties in interest in the Chicago Utilities Company feared that the American Telegraph and Telephone Company, which was buying the Automatic telephone franchise, might consider the judgments a cloud on the title of the Chicago Tunnel Company, which then held the franchise, and counsel for the Utilities Company were of the opinion that the safest thing to do was to get the judgments out of the way. Accordingly, counsel for the Utilities Company proposed to counsel for the judgment creditors that the company would pay them $10,000 and turn over the two policies of insurance in satisfaction of their judgments. Each of the policies in question contained certain special agreements, clause 7 of which read as follows:

“No action shall lie against the corporation (insurance company) as respects any loss under this policy unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within 60 days from the date of such judgment and after trial of the issue. ,
“No such action shall lie unless brought within the period within which a claimant might sue the assured for damages unless at the experity of such period there is such an action pending against the assured; in which case an action may be brought against the corporation by the assured within 60 days after final judgment has been rendered and satisfied as above.”

In reply to the proposition made by the Utilities Company, through its counsel, to counsel for the judgment creditors, the latter stated that G-ildea would accept payment of his judgment in full and Farrell would accept the cash offered together with an assignment of the policies, which he regarded as a valuable asset, on condition that the payments be made by the Illinois Tunnel Company out of its own funds, pointing out that “recovery cannot be had upon these policies, unless the Illinois Tunnel Company sustains an actual loss, in making the payments on the judgments, and in order to sustain such loss, it is necessary that the Ulinois Tunnel Company should make these payments out of its own funds” To meet the conditions imposed on the settlement by counsel for the judgment creditors, Mr. Tracy, the president of the Illinois Tunnel Company, and- also of the Chicago Tunnel Company and the Chicago Utilities Company, testified that it was agreed that the Utilities Company, as holder of the mortgage of the Illinois Tunnel Company, should advance the $10,000 “for the protection of its interests and title.” At this time the Illinois Tunnel Company was maintaining its corporate existence but it had ceased to do business and had no assets of any kind nor any bank account. The Utilities Company was not indebted to the Illinois Tunnel Company in any way. There was no action of the Board of Directors of the Utilities Company authorizing this settlement but after the settlement was concluded the board passed a' resolution approving and confirming it, which resolution recited that it was “to the best interests of this company, as holder of the mortgage on Chicago Tunnel Company’s property' that settlement should be made,” wherefore the settlement was ratified, approved and confirmed. Counsel for the Utilities Company wrote the Illinois Tunnel Company saying that the judgment creditors were prosecuting a suit against the Chicago Tunnel Company and others, upon their judgments against the Illinois Tunnel Company, to compel the Chicago Tunnel Company to pay the judgments and to reach the assets in the hands of the Chicago Tunnel Company, which they claimed were derived by it indirectly from the Illinois Tunnel Company. He said in this letter that his clients (bondholders of the Chicago Utilities Company) “are thus indirectly interested in having you obtain satisfaction of the judgments against you, and for this reason and others, they have decided to let you have $10,000, the amount necessary to enable you to carry out the proposed contracts (of settlement), and I accordingly herewith enclose you our check, payable to your order, for that sum. I see no objections to fully complying in good faith with Mr. McShane’s (counsel for the judgment creditors) requirement that the judgments should be paid out of your own funds, and hence, while my clients of course expect and rely upon you to use the money for the purpose indicated, yet, in order that there may be no misunderstanding, they turn the money over to you absolutely and unconditionally, to use for any purpose you may see fit.” The Chicago Utilities Company had given its check to Mr. Shaw, its counsel, and he banked it and sent the check of his firm to the Illinois Tunnel Company in his letter above referred to. At this time the Board of Directors of the Illinois Tunnel Company met and nassed a resolution reciting the proposition of Mr. McShane, representing the judgment creditors, for the settlement of the judgments and that certain bondholders of the Chicago Utilities Company “have offered to let the Illinois Tunnel Company have the sum of $10,000 to enable it to make said settlements, * * * and have offered to turn over said sum of money to the Illinois Tunnel Company 'absolutely and unconditionally to use for any purpose it sees fit,’ ” and said resolution provided that “the Illinois Tunnel Company hereby accepts said offer of said sum of money, as so offered, namely, absolutely and unconditionally, and as its own money,” and then the resolution proceeded to appoint Mr. Tracy, then vice president of the Illinois Tunnel Company, as its agent and attorney in the premises, and directed him to accept said money as so offered and “to make and carry out said settlements and contracts with said Farrell and said G-ildea,” and to use “said sum of $10,000 for that purpose.” The Chicago Utilities Company, the Chicago Tunnel Company and the Illinois Tunnel Company had certain of their offices filled by the same individuals, which insured the carrying out of the wishes of the Chicago Utilities Company by the Illinois Tunnel Company with reference to the use to be made of this money by the latter company. The check for $10,000 was delivered by Mr. Payton, secretary of the Chicago Utilities Company, to its counsel. When the check was received by the Illinois Tunnel Company from the counsel for the Chicago Utilities Company, as it had no bank account, the same Mr. Payton, its secretary, went to the bank and used the $10,000 in purchasing two cashier’s cheeks, both payable to Mr. McShane, counsel for the judgment creditors, one check being for $3,625 and the other for $6,375, and both were turned over to Mr. McShane. The former check wás used to settle the Grildea claim, and his judgment was satisfied in full. Farrell entered into a contract with, the Illinois Tunnel Company in which the company agreed to pay him $6,375 at the time of the execution of the contract, in part payment and satisfaction of his judgment, and in payment of the balance the company agreed to use its best endeavors to collect from the defendant insurance company the money due or which might become due to the Tunnel Company under the two policies which it held, and to promptly pay all of the money so collected to Farrell. The Tunnel Company further agreed to prosecute such suits as might prove necessary to enforce collection under the policies and to assign- all its right, title and interest under said policies to Farrell. In consideration of these obligations on the part of the Tunnel Company, Farrell satisfied his judgment in full and he further released and discharged (as did G-ildea also) not only the Illinois Tunnel Company, but also the Chicago Tunnel Company, the Chicago Subway Company, the Chicago Utilities Company and the Illinois Telephone Construction Company. No note or other evidence of indebtedness was given to the Utilities Company by the Tunnel Company, by reason of this $10,000 transaction, nor was any promise made to return it and it has never been returned so far as the record shows. This action was brought pursuant to the provisions of the contract between Farrell and the Illinois i Tunnel Company.

In urging that the judgment be reversed, the defendant first contends that no .suit was brought within 60 days from final judgment as required by paragraph 7 above quoted. That paragraph was a valid and enforceable clause. Stephens v. Phoenix Assurance Co., 85 Ill. App. 671; Ronan v. Michigan Mut. Life Ins. Co., 96 Ill. App. 355; Hansell-Elcock Co. v. Frankfort Marine Accident & Plate Glass Ins. Co., 177 Ill. App. 500. Of course its provisions must be strictly construed in favor of the assured. The plaintiff contends that the second provision of the paragraph is ambiguous and it should be construed to mean that action against the insurance company is not barred until 60 days from the satisfaction of the judgment. It is the second provision of the paragraph that applies to this case for this action was not brought “within the period within which a claimant might sue the assured for damages,” but at the expiration of that period there was “such an action pending against the assured.” In such case, the provision of the policy in question says “an action may be brought against the corporation (insurance company) by the assured within 60 days after final judgment has been rendered and satisfied as above.”- The alleged ambiguity involves the meaning to be given to the last words of the provision. In our opinion their meaning is entirely clear. There is “above,” in the same paragraph, a provision as to the satisfaction of a judgment, which says that no action shall lie against the insurance company “unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within 60 days from the date of such judgment and after trial of the issue.” In the light of that provision as to satisfaction of a judgment “as above” set forth in the same paragraph, the latter provision of the paragraph must be held to mean that where an action by a claimant is pending against the assured, at the expiration of the period within which such an action might be brought, as a result of which the assured actually sustains a loss 'by reason of a judgment being entered against it, said judgment must be satisfied by the assured and the action by the assured against the insurance company, seeking indemnity for such loss, must be brought,— both within 60 days after final judgment has been rendered in the action against the assured.

In the case at bar this was not done. The judgments obtained by the claimants against the assured stood for over 2 years without any move on the part of the assured to satisfy them. The assured was hopelessly insolvent and ceased entirely the transaction of business and all its property and assets were sold under foreclosure. For the assured itself to have satisfied these judgments was, of course, a physical impossibility.

But the plaintiff contends that the act of the defendant in taking charge of the defense of the assured in the injury suits brought against it by the claimants had the effect of a waiver of the provision of the policy as to the 60-day limitation. In support of this contention, counsel for plaintiff has presented an elaborate argument, with which we are not able to agree. In this connection our attention has been called to Sanders v. Frankfort Marine Accident & Plate Glass Ins. Co., 72 N. H. 485; Davies v. Maryland Casualty Co., 89 Wash. 571; Elliott v. Aetna Life Ins. Co., 100 Neb. 833; Patterson v. Adan, 119 Minn. 308; Standard Printing Co. v. Fidelity & Deposit Co. of Maryland, 138 Minn. 304; Maryland Casualty Co. v. Peppard, 53 Okla. 515, and other cases. Some o:f these cases involve liability policies and so are not in point. But most of them involve indemnity policies such as the one on which the case at "bar was brought, and these support the plaintiff’s contention. Notwithstanding the great respect we have for the courts rendering these decisions, we are of the opinion that they are not based on sound reasoning nor are they in accord with the great weight of authority.

Insurance contracts similar to the one involved here, being contracts of indemnity, have been repeat'idly construed and treated as contracts under which the assured could have’no claim against the insurance company unless and until it had paid and satisfied the judgment recovered by the claimant, although 1he insurance company had conducted the defense of the action brought by the claimant against the assured, in accordance with the terms of the policy. In United Staies Fidelity & Guaranty Co. v. Maryland Casualty Co., 182 Ill. App. 438, the court construed a policy containing a clause similar to the one involved here, as “a contract of indemnity as distinguished from a contract which insures directly against liability,” although there, as here, the insurance company had defended the case brought against the assured. In the case cited, however, the court held that the defendant was estopped to claim exemption from liability upon the ground that no loss had accrued to the assured because the judgment had not in fact been paid and satisfied, because it had assured the plaintiff guaranty company which had become surety on the appeal bond filed in connection with the appeal from the judgment recovered by the claimant against the assured, that it was “carrying the liability” of the assured, which the court held was equivalent to saying that the defendant insurance company had, by the terms of its policy, assumed the liability of the assured, upon the strength of which representation the guaranty company had become surety upon the bond.

In anumber of cases involving policies containing provisions similar to those present in the policy involved here, the courts have held that the policies were not contracts in which the liability of the assured was assumed by the insurance company but were contracts of indemnity only, and in these cases the assured either participated in the defense of the action brought by the claimant against the assured or conducted such defense entirely. Such was the holding in Frye v. Bath Gas & Electric Co., 97 Me. 241; Davison v. Maryland Casualty Co., 197 Mass. 167; Burke v. London Guarantee & Accident Co., 47 N. Y. Misc. 171 (in this case it does not appear the insurance company participated in the defense of the action); Poe v. Philadelphia Casualty Co., 118 Md. 347; West Riverside Coal Co. v. Maryland Casualty Co., 155 Iowa 161. In Carter v. Aetna Life Ins. Co., 76 Kan. 275, involving a policy containing a provision similar to the one involved here, the insurance company defended the action brought by the claimant against the assured and the court held that the claimant had no right of action against the insurance company by reason of the judgment recovered against the assured, and the fact that the insurance company had defended the action brought against the assured did not estop it from denying liability to the claimant. This case expressly refers to the Sanders case and says it appears to be out of line with the current of authority. O’Connell v. New York, N. H. & H. R. Co., 187 Mass. 272, is to the same effect.

In Allen v. Aetna Life Ins. Co., 145 Fed. 881, an insurance policy was involved, containing the same provision which we find in the policy here, and the court there held that the contract was not one of liability but one of indemnity. Here also the court referred to the Sanders case and said: “We cannot concur in it. It seems to us not to give due effect to the language of the policy that the insurer agreed ‘to indemnify’ the assured ‘ against loss from common law or statutory liability for damages on account of bodily injuries,’ or to the seventh clause that ‘no action shall lie against the company as respects any loss under this policy unless it shall be brought by the assured himself to reimburse him for loss actually sustained and paid by him in satisfaction of a judgment within 60 days from the date of such judgment and after trial of the issue.’ ” The court held that the undertaking of the insurance company to defend the action did not render it liable for the judgment but that, its liability being only to indemnify the assured against loss, no valid claim existed against it until the judgment should be paid by the assured and that it could not therefore be held liable to the claimant in an action against the assured, as garnishee. The court further held that the insurance company was not estopped to deny its liability by the mere fact that it had defended the action.

In Connolly v. Bolster, 187 Mass. 266, the court expressly repudiates the Sanders case holding that in undertaking to defend the action under the terms of the policy the insurance company does not undertake to defend successfully, and if in spite of its defense the claimant recovers judgment against the assured, the question of whether the insurance company is bound to pay the amount of the judgment depends upon the terms of its agreement to indemnify the assured against loss.

In Carter v. Aetna Life Ins. Co., 76 Kan. 275, the court held that the fact that the insurance company defended the action brought against the assured did not estop it from denying liability under its contract, saying: “The right to defend was specifically given by the contract, and this burden was assumed for the reason that the award to be made in the proceeding might ultimately be the measure of its own liability. ’ ’ The court held that the contract involved was one of indemnity against loss and was not insurance against liability and that until the assured had met with a loss there was no occasion to pay indemnity. Commenting upon the provision in the policy, similar to the one involved here, the court further said: “This provision leaves no doubt of the intention of the parties, which was that the insurance company was not required to pay anything, because of the policy, until losses had been paid by the assured in satisfaction of a judgment.”

In Cayard v. Robertson, 123 Tenn. 382, the court expressly refused to follow the Sanders case, saying: “It is certainly opposed to the weight of authority,” and followed the other line of decisions, many of which we have cited. The same course was followed in Allen v. Gillman, McNeil & Co., 137 Fed. 136, where the court said that the objection to the construction of the clause of the contract of insurance in question, as adopted in the Sanders case, “is that it defeats a plain and unambiguous provision by what appears to be the pure assumption that the parties did not mean what they clearly said. * * * By the plain terms of the contract no action can be brought for ‘any loss under this policy,’ unless the insured has first paid it himself. ’ ’

In Most v. Massachusetts Bonding & Insurance Co. (Mo.), 196 S. W. 1064, the court had occasion to determine whether the policy involved, which was similar to the one involved here, was an indemnity policy or a liability policy and if the former, whether the “no action” clause had been waived. The court there said that the great weight, of authority was to the effect that the policy was one of indemnity and that no action could be maintained upon it except to indemnify the assured for money actually paid in satisfaction of a judgment against the assured, and further that the better reasoning as well as the great weight of authority was against the contention of the plaintiff on the proper construction to be given the terms of the policy and the effect of the conduct of the insurance company on the question of waiver. In commenting on the Sanders case and others cited by the plaintiff in the case at bar, the court held that their reasoning might have much to commend it if addressed to a State legislature but that the courts were powerless to make contracts for the parties and that the provisions of the policy were without any ambiguity requiring an application of the rule that ambiguous clauses in insurance policies are to be construed most strongly against the insurer.

In commenting on the Sanders case and other similar cases, the court said in Goodman v. Georgia Life Ins. Co., 189 Ala. 130: “It seems to us that their construction of the insurance contract is dominated by an undue regard for the injured stranger rather than by a consideration alone of the intention and the obligations of the contracting parties.” The court then pointed out that the great weight of authority was contrary to the holding in that line of decisions. In his work on Accident and Liability Insurance on page 467, Fuller cites numerous cases sustaining the contention of the defendant here and cites the Sanders case, contra, and then says: “This case has been expressly disavowed in numerous decisions. ’ ’ Reference might be made to many other decisions sustaining the weight of authority as above set forth but it is impossible to do so within the limits of this opinion.

The plaintiff argues that when the defendant undertook to and did defend the action brought by the claimant against the assured, it thereby entered into a fiduciary relation with the assured and that the defendant could not withdraw from that attitude and assume or resume an “arm’s length” position as to the assured, at least, until the defendant had served notice on the assured to that effect and had advised it that the judgment had been affirmed and that the insurance provided for in the insurance policy would be lost unless the judgment were satisfied within the period specified in the policy and action begun against the company as provided therein; that by assuming to defend the suit the insurance company becomes bound to 'see that the judgment is satisfied by the assured or to itself pay the amount of the judgment to the assured and all limitation clauses barring a suit on the policy within certain prescribed limits after judgment and satisfaction are waived or at least are suspended while the insurance company is so engaged in defending the action. This does not appeal to us as a sound argument. The relation between the assured and the insurance company is throughout a contractual relation. It never becomes a fiduciary one even when the insurance company assumes to defend the action brought against the assured by the claimant. Such action is taken by the insurance company under an express provision of the policy and its object is not the protection of the assured against loss but to save itself from any obligation to reimburse the assured for loss actually sustained in paying the judgment. No provisions of the policy are suspended when the insurance company avails itself of the privilege of defending the action and thus endeavoring to protect itself as the policy itself provides it may.

Following the weight of authority, we hold that the contract involved in the case at bar was one of indemnity and that the provisions of clause 7, herein above quoted, as to the 60-day limitation and also to the effect that no action would lie against the defendant as respects any loss under the policy, unless it should be brought by the assured to reimburse it for loss actually sustained in satisfaction of a judgment, were not waived by reason of the fact that the insurance company defended the action brought by the claimant against the assured.

It remains to determine whether the Illinois Tunnel Company, by reason of the facts involved in this ease, which we have already fully recited, has “actually sustained and paid” a loss in satisfaction of a judgment. In our opinion the facts show that it has not. At the time the judgments were satisfied it was impossible for the Illinois Tunnel Company to sustain a loss for it had nothing to lose. It was entirely out of business and hopelessly insolvent. While it has been' said that the insurance company cannot question where the money comes from, it has further been said that the payment must be in good faith and that there must be in fact a loss and not merely a pretended loss as a result of some collusion between the assured and another. Even where a bankrupt assured has given its note through its receiver in payment of a judgment and the judgment has been satisfied and then the action has been brought against the insurance company by the receiver, the court has held that the transaction was a subterfuge and that there had been no bona fide payment of the judgment but merely a fictitious one which would not occasion any liability on the part of the insurance company. Stenbom v. Brown-Corliss Engine Co., 137 Wis. 564.

The satisfaction of the Farrell and Grildea judgments was brought about solely by reason of the desire of the bondholders of the Chicago Utilities Company to remove any question of a cloud on the title of the Chicago Tunnel Company to the Automatic franchise. Of course, as a matter of law, that could have been readily accomplished directly between the Utilities Company, which furnished the money, and the judgment creditors. But, at the request of counsel representing the judgment creditors, and solely for the purpose of attempting to bring about a “loss actually sustained and paid” by the Ulinois Tunnel Company in payment of the judgments, and thus giving rise to a liability on the part of the defendant insurance company, the parties went through the motions we have previously desciibed. What was done not only fails to establish a “loss actually sustained and paid” by the Illinois Tunnel Company but it in fact establishes a gain acquired by that company, for it accomplished the satisfaction and wiping out of judgments on which it then owed nearly $30,000, without the loss of a penny to the Illinois Tunnel Company and solely by means of funds paid by the Utilities Company, and that only by reason of an advantage which the latter company desired to gain by the transaction. In our opinion, to hold that such a course of events as is disclosed here could or did amount to a “loss actually sustained and paid” by the Illinois Tunnel Company would be a travesty on justice. Of course there was no privity of contract between the claimant and the insurance company. The liability of the latter rests solely upon the provisions of the contract which it has with the assured.

In Kennedy v. Fidelity & Casualty Co., 100 Minn. 1, there was involved an insurance contract containing the ■ identical clause which is involved here. In construing the limitation clause the court said: “Fairly construed, the language means simply that the judgment must be paid and satisfied within 60 days from date of its entry, and, when such judgment is paid or satisfied, the loss is actually sustained.” Construing the terms of the contract as to a loss “actually sustained and paid before the company becomes liable,” the court held that such loss would occur if the assured actually parted with the cash, or executed' and delivered to the complainant its notes in good faith.

For the reasons stated the judgment of the circuit court is reversed.

Reversed.

Taylor, P. J., concurs.

O’Connor, J., dissenting.


source: Caselaw Access Project

license: Public Domain

text:
    The People of the State of Illinois, Defendant in Error, v. George Rupp, Plaintiff in Error.
    Gen. No. 25,322.
    1. Criminal law, $ 372

      —when judgment is erroneous. Upon conviction of the charge of contributing to the dependency and neglect of children under the statute (J. & A. If 3580), an order imposing neither a fine nor imprisonment is erroneous.
    2. Infants, § 4*—what “parent” is responsible for support of neglected child. The word “parent” in the statute punishing contributing to the dependency and neglect of children [Callaghan’s 1916 Stat. If 3586(1)] means the legal parent and cannot be applied to the father of an illegitimate child.
    3. Indictment and information, § 22*—when information as to neglect of child is insufficient. An information charging that the defendant “did neglect to give said child proper parental care” fails to allege any crime under statute defining and punishing the offense of contributing to the dependency and neglect of children [Callaghan’s 1916 Stat. f 3580(1)].
    Error to the Municipal Court of Chicago; the Hon. William N. Gbmmill, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1919.
    Reversed.
    Opinion filed October 6, 1920.
    William Slack, for plaintiff in error.
    Maclay Hoyne, for defendant in error.

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

   Mr. Justice Thomson

delivered the opinion of the court.

The information filed in this case alleges that the defendant Rupp, being the father of Elizabeth Kolkan, an infant child, “.did neglect to give said child proper parental care, contrary to the form of the statute in such case made and provided.” After hearing, the court found the defendant guilty in manner as charged in the information and entered an order releasing him upon probation for the period of one year upon certain conditions, one of which was that he pay to the clerk of the court for the use of the mother of the child in question, $4 per week for the period of probation. Later, on motion of the People, by the State’s Attorney, that order was vacated and set aside and a new order was entered “that the defendant pay to the clerk of this court, for the use of Helen Kolkan (the mother of the child), $4.00 on Saturday of each week for the support of Elizabeth Kolkan.” This writ of error was sued out to reverse that order.

The statute [Callaghan’s 1916 Stat. 3580(1)] provides that ‘ any parent, legal guardian or person having the custody of * * *. a female under the age of 18 years, who shall knowingly or wilfully cause, aid or encourage such person to be or become a dependent and neglected child * * * shall be deemed guilty of the crime of contributing to the dependency and neglect of children and on conviction thereof shall be punished by a fine of not more than $200.00 or by imprisonment in the County jail # * * for not more than one year or both by such fine and imprisonment.” There follows a provision for probation of one year upon condition that the defendant ‘ ‘ shall provide and care for such neglected and dependent child in such manner as to prevent a continuance or repetition of such state of dependency and. neglect or as otherwise may be directed by the court,” and it is further provided that if the defendant violates any of the conditions of the parol during the year, the court “may forthwith revoke the order and sentence him under the original conviction. Unless so sentenced, the defendant shall, at the end of the year, be discharged.”

The defendant was not the husband of the mother of the child, which was born to her about a month after she procured a divorce on the ground of desertion. Even if the statute could be applied to the defendant, the order was erroneous as it imposed neither a fine nor imprisonment and clearly is not such an order as the statute provides for.

But we are further of the opinion that this statute cannot be applied to the father of an illegitimate child, —assuming this child to be such. He does not have the custody of the child,—at least such is not shown to have been the case here,—and he is not entitled to such custody, as a matter of right, under the law, nor is he the child’s “legal guardian.” In our opinion the word “parent” in the statute means the legal parent.

It should further be noted that the information, in charging that the defendant “did neglect to give said child proper parental care,” fails to allege any crime or offense under the statute.

For the reasons referred to, the judgment of the municipal court is reversed.

Reversed.

Taylor, P. J. and O ’Connor, J., concur.


author: Mr. Presiding Justice Holdom

text:
    Midland Credit Adjustment Company and Leon A. Berezniak, Plaintiffs in Error, v. Reuben H. Donnelley, Defendant in Error.
    Gen. No. 25,859.
    1. Contracts, § 213

      —when contract is joint and several. A contract, under which a corporation and an attorney were employed to collect accounts, and which provided that the commissions were payable to them jointly whether the collections were made with or without the intervention of the services of the attorney, was a joint contract and an entirety.
    2. Attorney and client, § 6*—when corporation is engaged in practice of law. Where a corporation and an attorney were jointly employed to collect accounts with or without legal proceedings, such corporation was engaged in the practice ot law under the disguise of its attorney associate.
    3. Contracts, § 138

      —what contracts are against public policy. The practice of law by a corporation is against public policy.
    4. Contracts, § 338*—when bill on contract is demurrable because contract violates public policy. In a suit for an accounting, where the petition alleged that the plaintiffs, a corporation and an attorney at law, were employed to collect certain accounts, with or without legal proceedings, and where, the contract for services was joint and not severable, the bill stated a case wherein the corporation and the attorney were engaged in the practice of law, and were attempting to eva'de the law, wherefore such bill was subject to demurrer as the contract was violative of public policy.
    Error to the Circuit Court of Cook county; the Hon. Merritt W. Pinckney, Judge, presiding. Heard in this court at the March term, 1920.
    Affirmed.
    Opinion filed October 11, 1920.
    Jacob E. Dittus, for plaintiff in error; Leon A. Bebezniak, of counsel.
    Thomas H. Haddock, Jacob H. Jaffb and Vincent J. Green, for defendant in error.

      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. Presiding Justice Holdom

delivered the opinion of the court..

The bill in this case is one for an accounting, to which a general and special demurrer was interposed and sustained with leave to amend. Thereafter an amended bill was filed, to which was interposed a similar demurrer, which, being sustained, the amended bill was dismissed for want of equity and complainants appeal to this court seeking a reversal.

The bill alleges that complainants, the Midland Credit Adjustment Company, a corporation, and Leon A. Berezniak, were jointly employed by defendant for the purpose of collecting certain accounts, upon an agreement that if such accounts were collected without suit the complainants should receive as their compensation 25 per cent of the amount collected and if the same were collected after suit was started complainants were then to be paid as their compensation 50 per cent of the amount collected; that a large number of claims was collected through the efforts of complainants, some of which were paid to them and others to defendant; that complainants were entitled to the agreed commissions, whether the collections were made direct to them or paid by the debtor to defendant; that repeated demands had been made on defendant by complainants for a correct accounting, but that defendant neglected and refused to make any such accounting or to pay any money for fees or commissions on such collections. The bill further avers that the complainant corporation is engaged in the business of handling collections and accounts wherever the same may be done without legal proceedings; that complainant Berezniak is an attorney at law and that when legal proceedings are necessary to enforce collections he is employed by the corporation for that purpose and for such services he is entitled to attorney’s fe.es; and it was further averred that defendant had turned over to complainants a large number of accounts for collection, 280 in number aggregating in amount $14,159.10.

It is assigned for error the court’s sustaining defendant’s demurrer to the amended bill and dismissing the same for want of equity.

That the contract was joint and not severable sufficiently appears from the contract itself, and this is not in serious dispute. The compensation which complainants were entitled to receive under the contract was payable to them jointly and not severally, nor were any such payments dependent upon the fact as to whether the collection was made with or without legal proceedings or the intervention of the services of Berezniak or any other attorney at law. Payments, whether 25 per cent of the amount of the collection or 50 per cent when collected through the interposition of an attorney, were to be made to the complainants jointly. Neither was entitled to recover or receive separately, under the terms of the contract, any commission for services rendered in mailing such collections. The averments of the bill as amended stamp the contract, under the terms therein recited, as an entire contract, and whatever amount became due to them for services rendered thereunder in accord with its terms was due and payable to them jointly and not severally. A reading of the contract stamps it as joint, and so far as complainants are concerned it is not divisible. All of the obligations assumed by complainants in the contract are jointly assumed, as the bill in terms avers.

It is averred inter alia that complainants were jointly employed and that all commissions were to be paid by defendant to complainants and that complainants were to be paid commissions on all accounts collected whether the same were paid by the debtor to them or direct to defendant.

It was held in White Brass Castings Co. v. Union Metal Mfg. Co., 135 Ill. App. 32, that whether a contract is entire or severable cannot be determined by any precise rule, but must depend upon the intention of the parties, which in each case is ascertained from the language employed and the subject-matter of the contract. All the collections contemplated to be made were to be made by complainants and all payments due under the terms of the contract were due to them. Their liabilities and obligations under the contract were clearly joint and as to them an entirety. In Morris v. Wibaux, 159 Ill. 627, it was held that the entirety of a contract depends upon the intention of the parties and not upon the divisibility of the subject-matter or the mode of measuring the price.

Under the averments of the bill it is immaterial what arrangement complainants may have had between themselves for the division of any collection fees to be received under the contract. So far as defendant is concerned his rights must be determined from the terms of the contract itself and by it alone.

The bill as amended states' a case wherein the corporation complainant was engaged with its co-complainant in the practice of law. This clearly appears from their having contracted to make collections with or without legal proceedings.

It is against public policy for a corporation to be engaged in the practice of law. As said in Buxton v. Lietz, 136 N. Y. Supp. 829 (affirmed in 139 N. Y. Supp. 46): “It cannot be seriously disputed from the records in this case that the plaintiff is engaged in a business which consists of collecting outstanding accounts for ‘clients,’ and, when necessary to institute litigation for that purpose.” In Re Co-operative Law Co.. 198 N. Y. 479, the court said:

‘ ‘ The bar, which is an institution of the highest usefulness and standing, would be degraded if even its humblest member became subject to the orders of a money-making corporation engaged not in conducting litigation for itself, but in the business of conducting litigation for others. The degradation of the bar is an injury to the State. A corporation can neither practice law nor hire lawyers to carry on the business of practicing law for it any more than it can practice medicine or dentistry by hiring doctors or dentists to act for it. ’ ’

In ease supra, Mr. Justice Vann moralized most instructively and illuminatingly on this question in the following language:

“The practice of law is not a business open to all, but a personal right, limited to a few persons of good moral character, with special qualifications ascertained and certified after a long course of study, both general and professional, and a thorough examination by a State board appointed for the purpose. The right to practice law is in the nature of a franchise from the State conferred only for merit. It cannot be assigned or inherited, but must be earned by hard study and good conduct. It is attested by a certificate of the Supreme .Court, and is protected by registration. No one can practice law unless he has taken an oath of office and has become an officer of the court, subject to its discipline, liable to punishment for contempt in violating his duties as such, and to suspension or removal. It is not a lawful business except for members of the bar who have complied with all the conditions required by statute and the rules of the courts. As these conditions cannot be performed by a corporation, it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot indirectly by employing competent lawyers to practice for it, as that would be an evasion which the law will not tolerate. * * * The legislature in authorizing the formation of corporations to carry on ‘any lawful business’ did not intend to include the work of the learned professions. Such an innovation with the evil results that might follow would require the use of specific language clearly indicating the intention. Recent legislation simply emphasizes and protects the established policy of the State and although ex post facto tends tó show that no such object was in contemplation when the general term ‘lawful business’ was used in the statute to authorize the formation .of business corporations. # * * Business in.its ordinary sense was aimed at, not the business or calling of members of the great professions, which for time out of mind have been given exclusive rights and subjected to peculiar responsibilities.”

In L. Meisel & Co. v. National Jewelers’ Board of Trade, 90 N. Y. Misc. 19 152 N. Y. Supp. 913, it was held that the operation, of a collection agency, with or without legal proceedings, constitutes the practice of law.

In People v. Schreiber, 250 Ill. 345, it was held that a person not a licensed attorney was guilty of fraud in holding himself out as being an attorney and qualified to transact a general law business notwithstanding his activities were confined to the maintenance of an office for the purpose of making collections, drawing legal papers, examining abstracts, negotiating loans and real estate deals, forming connections with attorneys and collection agencies throughout the country for the receiving and forwarding of items for collection ; that engaging in this line of business was in fact practicing law.

The averments of the bill show an elusive attempt on the part of the corporation complainant to practice law under the disguise of its attorney associate. It is against public policy and is condemned in State ex rel. Lundin v. Merchants' Protective Corporation, 105 Wash. 12.

It is patent that the combination between complainants was for the very purpose of evading the law regarding its professional practice. The corporation could solicit collections, which is law business, which the lawyer was inhibited from doing by legal ethics, and the lawyer could institute legal proceedings and conduct them to a finality, which the corporation could not do.

It is our opinion that the averments of the bill disclose a contract vulnerable to the demurrer interposed as violative of public policy, and therefore void.

The order sustaining the demurrer to the amended bill and dismissing it for want of equity was without error and is affirmed.

Affirmed.

Dever and McSuredy, JJ., concur.


text:
    In the Matter of the Estate of Otto C. Meinshausen, Deceased. Henry Meinshausen, Administrator, Defendant in Error, v. Alexander W. Hannah, Plaintiff in Error.
    Gen. No. 25,891.
    1. Appeal and ekrob, § 625

      —when delay in suing out writ of error does not prevent review. Where a writ of error is sued out more than 2 years, hut less than 3 years, from the entry of an order sought to be reversed, but the statute of limitations (section 117 of the Practice Act as amended by Act June 28, 1919, Callaghan’s 1920 Stat. V 8654), providing that such writs shall not be brought after the expiration of 2 years, is not pleaded, the merits of the case will be considered, even though there may be some doubt as to the right to maintain the writ.
    2. Judicial sales, § 33*—when rule of caveat emptor applies to judicial sales. The rule of caveat emptor applies to judicial sales unless fraud or mistake has entered into the transaction whereby the purchaser has been deceived and induced to make the purchase.
    3. ..'Executobs and administbatobs, § 452*—when sale by administrator must be objected to. If a purchaser at an administrator’s sale has any objections to make to the sale or any reason why he should be relieved from his obligation as the highest bidder thereat, he must make an objection to the confirmation of the report of sale; otherwise it is presumed that his bid was made for such title as the administrator had authority to sell.
    4. Executobs and administbatobs, § 450*—when notice of proceedings for* confirmation of sale is not necessary. The purchaser at an administrator’s sale is bound to take notice of the statute fixing the time of the presentation of the report of sale for confirmation and must interpose any objection without the. formality of any actual notice.
    5. Executobs and administbatobs, § 450*—what need not be contained in order approving sale. An order requiring a purchaser at an administrator’s sale to pay the balance of the purchase money need not require the administrator to deliver to the purchaser a deed where the estate’s title has been divested by the issuing of a master’s deed in a foreclosure proceeding set forth in the decree of sale and to which the sale was made subject.

      6. Executors and administrators, § 450

      —when interest may he decreed on approval of sale. Interest upon a deferred payment of the purchase price at an administrator’s sale may be decreed without directing an accounting of the rents and profits of the premises sold since the day of the sale, where there is no showing that any rents and profits came to the hands of the administrator.
    7. Executors and administrators, § 448*—how court may enforce hid at administrator’s sale. The probate court after it has approved a bid has jurisdiction to enter an order directing the bidder at an administrator’s sale to pay the balance of the purchase price bid.
    8. Executors and administrators, § 448*—how prohate court may enforce its order. While the probate court cannot issue an execution, it may enforce its order by a contempt proceeding if necessary.
    Error to the Probate Court of Cook county; the Hon. Henry Horner, Judge, presiding. Heard in this court at the March term, 1920.
    Affirmed.
    Opinion filed October 11, 1920.
    Campbell & Fisoher and Matthias Conoannon, for plaintiff in error.
    Lighthall, Dankowski & Carlson, for defendant in error.

      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 Holdom

delivered the opinion of the court.

Alexander W. Hannah bid for certain real estate, to which the late Otto C. Meinshausen had some title at the time of his death, at an administrator’s sale of such real estate to pay ■ debts established against his estate in excess of the personalty belonging to said estate. The bid was $10,000, on which as earnest money Hannah paid $1,000. The administrator’s report of the_ sale and of the payment of the earnest money was approved by the probate court within the time provided by the statute and the administrator tendered his deed to Hannah for the property bought, and at the same time demanded from Hannah the balance of $9,000 due on his bid therefor. Hannah, on several pretenses hereinafter to be recited, declined to accept the deed and pay the $9,000. Thereupon, on petition to the probate court by the administrator and on due notice to Hannah and his answer thereto as well as his appearance at the hearing, the probate court ordered Hannah to pay $9,000 with interest at 5 per cent per annum from July 8, 1914, to 'the administrator within 40 days from April 25, 1917, being the day on which the order was entered. Hannafi brings this writ of error in an effort to reverse that order.

From that order Hannah first appealed to the circuit court of Cook county, where his appeal was dismissed for want of jurisdiction in the circuit court to entertain. This court on further appeal affirmed the action of the circuit court. In that opinion the jurisdictional question only was decided. The merits of the controversy remain for our decision on this writ of error.

Hannah argues for reversal that the probate court erred in entering the order of April 25, 1917, and in requiring him to pay to the administrator $9,000 with interest and in not absolving Hannah from further liability as prayed in a cross-petition by him filed, -for the reason, as he contended, that the rule caveat emptor is not applicable to the circumstances environing the administrator’s sale to him, and further, that the probate court was without jurisdiction to compel the purchaser at an administrator’s sale to pay the balance of his bid and that the order is further erroneous in not requiring the administrator to make and deliver to Hannah a deed to the real estate sold upon payment of the purchase price and that it was error to charge interest upon the deferred payment.

Incidentally the question of the effect of the present statute of limitations is raised. This writ of error was sued out more than 2 years, but less than 3 years, from the entry of the order sought to be reversed. The act approved June 28, 1919, amending section 117 of the Practice Act (Callaghan’s 1920 Stat. ft 8654), provides that “a writ of error shall not be brought after the expiration of two years from the rendition of the decree or judgment complained of.’’ The statute, however, has not been pleaded, and while there may be some doubt as to Hannah’s right under the act, supra, to maintain this writ of error, in the light of Carlin v. Peerless Gas Light Co., 283 Ill. 142, and Wall v. Chesapeake & O. R. Co., 290 Ill. 227, we do not decide that question but base our decision upon the merits of the cause. In Kelly v. Kelly, 291 Ill. 238, it was in effect held that where the statute of limitaions was sought to be invoked it must be so done by c.n' appropriate plea, notwithstanding that upon the face of the "icord it might appear that the statute had run as a ba to the writ, because to such plea it might be replied that the right to the writ was within one of the saving clauses of the statute.

The decree directed that the sale be made subject to the interest of Lou H. Meyers, the holder of the certificate of sale issued to her by a master in chancery of the circuit court, dated September 20, 1913, and recorded in the recorder’s office of Cook county on the 3rd day of October, 1913, etc., and to an easement in Andrew O. Monson and Celia Monson for the use of the southeasterly 8 feet of the real estate sold, designated as a private alley.

Hannah refused to complete the purchase on the ground that there were liens against the property sold other than those mentioned in the decree, and he more particularly insists that a certain judgment by confession for $1,423.75 obtained by Edward J. Uhlein and Francis Lackner in the circuit court of Cook county June 13,1902, against the American Copper, Brass and Iron Works and the deceased Otto Meinshausen is such a lien. It appears that this judgment was assigned to one Nicholas J. Haynes on December 20, 1904, and that on motion of Meinshausen the judgment was opened and he was let in to plead; that the execution was stayed, the judgment to stand until the further order of the court.

Nowhere does it appear that there was an execution issued on this judgment or that any final disposition has been made of the cause. Aside from the question of the application of the doctrine of caveat emptor it is apparent that that judgment was not a lien upon the real estate in question at the time when the administrator filed his petition to sell the real estate of his intestate to pay debts.

Hannah contends that the rule of caveat emptor does not apply to his case because there was fraud or mutual mistake in the transaction. As a general proposition the rule of caveat emptor applies to judicial sales, and so far as we have been able to ascertain has never been departed from except where fraud or mistake was present as a factor in the transaction whereby the purchaser at such judicial sale has been deceived and .induced to make a purchase which he otherwise would not have made had he known of the fraud or was aware of such mistake. Aside from the contention of counsel there is neither fraud nor mistake, mutual or otherwise, disclosed by the record in any phase of the transaction. If Hannah had any objection to make to the sale or any reason why he should be relieved from his obligation as the highest bidder thereat, it was incumbent upon him to make an objection to the confirmation of the report of sale. Not having done so, he is bound to carry out his purchase, and it will be presumed that his bid was made for such title as the administrator had authority to sell.

Hannah contends that he should have had notice of the presentation of the report of sale for confirmation. As the statute fixes the time within which such report must be presented to the court, the purchaser is bound to take notice of the statute and must interpose any objection which he has without the formality of any actual notice by the administrator of the presentation of such report. Verdun v. Barr, 253 Ill. 120. In Tilley v. Bridges, 105 Ill. 336, the court said:

“It may be regarded as a general and well-settled rule that the doctrine of caveat emptor applies to all judicial sales. An administrator or executor selling lands under a decree of court has no authority to warrant the title he sells, and the person who may buy at such sale is bound to examine the title, or purchase at his peril. If he deems it proper to purchase without an examination of the title to be sold, and through his negligence obtains no title, he must, as a general rule, suffer the loss arising from his neglect, unless frand or mistake entered into the transaction. ’ ’ Shup v. Calvert, 174 Ill. 500. As said in Speck v. Pullman Palace Car Co., 121 Ill. 33:
“This is a judicial sale. * * * And the rule is, that the order of confirmation is conclusive as to all matters upon which the court might have been called upon to pass, had the parties chosen to have brought them forward as objections to the confirmation.” Chandler v. Morey, 195 Ill. 596.

The record discloses that Hannah had every opportunity to be protected against any liens not excepted in the decree of sale, as the administrator had arranged with the Chicago Title and Trust Company to issue its policy guaranteeing against such liens. This offer came about from the fact that Hannah had applied to the Title Company for a guaranty policy and in that way had discovered the Uhlein and Lackner judgment, but Hannah failed to take advantage of this offer and by withholding the balance of the purchase price caused the property to be lost to himself and the' administrator under the master’s certificate of sale, a deed for which ripened on December 30, 1914. He did not finally refuse to pay his bid until September 1, 1914, making it impossible for the administrator to proceed and make a resale before the master’s deed issued under the foreclosure proceeding to which the sale was made subject by the decree.

It further appears that the administrator had deposited his deed to Hannah with the Title and Trust Company by agreement of the parties in escrow, to be delivered to Hannah upon payment of the balance due on his bid.

It is contended that the order of April 25, 1917, is erroneous in that it does not require the administrator to make and deliver to Hannah a deed to the property upon his complying with the order to pay the balance due. Ordinarily such a direction would have been proper to have been made, but in this case it would have been abortive and a work of supererogation, as the administrator had no title to convey, as on September 30, 1914, the estate’s title had been divested by the issuing of the master’s deed in the foreclosure proceeding set forth in the decree and to which the sale was made subject.

There was no error in decreeing interest upon the $9,000 deferred payment without directing an accounting to be had of the rents and profits of the premises sold since the day of the sale. In the first place, there is no showing that any rents or profits came to the hands of the administrator. As a matter of law the administrator had no title to the real estate except to. sell it to pay debts under the order of the probate court. The title of the intestate upon his decease vested in his heirs at law.

Hannah challenges the power of the probate court to enter the order in question. When this case was here on appeal we said in our opinion.

“We hold that the order appealed from was an order entered in the matter of the application of the administrator to sell real estate to pay debts, which is, in its essence, a chancery case within the meaning of said section as construed in eases supra, and, with section 8 of the Appellate Court Act [J. & A. ft 2968] and section 91 of the Practice Act [J. & A. f 8628], governs this case.” Lynn v. Lynn, 160 Ill. 307.

The probate court therefore had the same jurisdiction as in cases in chancery, and in such matter was governed by the same rules and doctrines. As early as Dills v. Jasper, 33 Ill. 263, the court said:

“After the court has approved of th'e bid, it may summarily require the bidder to pay the amount thereof, or it may order the property to be resold at the bidder’s risk and expense; and if, upon a resale, it does not bring the amount of the bidder’s liability the court may summarily enforce the payment of the difference.”

In Wakefield v. Wakefield, 256 Ill. 296,. where it was contended that the court had no power to compel a compliance with the terms of the sale but that its power was limited to the ordering of a resale, the court said:

“The method insisted upon as the proper one has been followed in different cases and is proper (Hill v. Hill, 58 Ill. 239), but it has been frequently declared that the court may summarily require the bidder to pay the amount of his bid (Dills v. Jasper, 33 Ill. 262; Chandler v. Morey, 195 Ill. 596); and in the latter case the court quoted with approval a holding that a bidder may be compelled to complete his purchase by an order of the court and by its process for contempt, if necessary.”

In Greenwalt v. McClure, 7 Ill. App. 152, which was a county court proceeding in a proceeding to sell real estate of a decedent to pay debts, the court said:

“We think the county court in such cases, under this law, possesses the jurisdiction and power to proceed in the same summary manner as the circuit court proceeds in cases of sales of land under decrees in chancery, and unless the same necessary preliminary steps are taken in cases of refusal of a purchaser to complete his purchase at an executor’s or administrator’s sale, no recovery can be had of the purchaser for a loss on a resale,”

While the probate court cannot issue an execution, it may enforce its order by a contempt proceeding if necessary.

For the foregoing reasons the order of the probate court of April 25, 1917, is affirmed.

Affirmed.

Dever and McSurely, JJ., concur.


text:
    Herman Mandelkow, Appellee, v. Louis Meyer et al., Appellants.
    Gen. No. 25,966.
    1. Appeal and ebbob, § 1411

      —when verdict will not be disturbed on appeal. A verdict of a jury based upon conflicting facts will not be disturbed by a court of review unless the verdict and judgment are clearly contrary to the weight of the evidence.
    2. Appeal and ebbob, § 1411*—when verdict is contrary to weight of evidence. In an action for assault and battery and false imprisonment, where plaintiffs actions on the night in question were subject to a righteous suspicion that they were the authors of a “Black Hand” letter received by one of the defendants and when requested to halt by a posse lying in wait for such authors, fired on defendants who thereupon returned fire, a verdict for the plaintiff was held to be contrary to the overwhelming preponderance of the evidence.
    3. Abbest, § 29*—when individuals in posse may arrest without warrant. One acting in a suspicious manner and who fires on a posse upon a request to halt may be arrested by any of the posse without a warrant.
    4. Assault and battery, § 7*—when posse may meet force with force„ A posse lying in wait for a person suspected of crime is justified in meeting force with force and in repelling the shots of such person with, such force as may be necessary.

      Appeal from the Circuit Court of Cook county; the Hon. Jesse A. Baldwin, Judge, presiding. Heard in this court at the March term, 4.920.
    Reversed with a finding of fact.
    Opinion filed October 11, 1920.
    Rathje, Lawlor & Connor, for appellants; C. H. Sippel, of counsel.
    Robert A. Meier, Jr. and Harry A. Goldsmith, for appellee.

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

   Mr. Presiding Justice Holdom

delivered the opinion of the court.

In an action in trespass for assault and battery and false imprisonment plaintiff had a verdict and judgment for $1,000, and defendants appeal.

It is argued for reversal that the verdict and judgment are contrary to the probative force of the evidence, and we see no reason to disagree with this contention. The case was unusual on its facts and the recital of the events on the night of the alleged assault by plaintiff and his companion on that eventful evening is contradictory, inconsistent, suspicious and unconvincing.

The material facts which we extract from the evidence are that defendant Louis Meyer lives on his farm about 4 miles west of Chicago Heights in Cook county and that there is a crossroad on one comer of it; that two of these roads are the Lincoln highway and Cicero avenue; that there are a church and schoolhouse and other buildings on the northwest comer and a cemetery on the northeast and Meyer’s farmhouse and orchard extend up to each of the roads to the southeast; that on July 7,1915, Louis Meyer received by mail a writing dated July 4, 1915, mailed in Chicago 2 days later, as follows:

' “Juely 4,1915 Beary $500 ond the Nord Wist Connar Black Hand. Or you Life 12 Juley”

The defendants Louis and William Meyer consulted the sheriff of Cook county and showed him the letter for the purpose of getting protection of the officers of the law from the impending danger threatened by the letter. They were fearful of results because buildings in the vicinity of Chicago Heights had been blown up by so-called “Black Hands.” Two visits were made to the sheriff, who, on account of the stress of other matters, was unable to furnish any officer for the night of July 12, but the sheriff advised Louis and William Meyer that they, together with some of their neighbors, arm themselves, organize a posse, select one of their number a leader, conceal themselves about the comers on the night of July 12 and apprehend the persons who might come there during that night in search of money and when captured to take them to the nearest magistrate. These directions were followed by the defendants and five other neighbors gathering at the place where the $500 was requested to be placed by the Black Hand letter on the night of July 12 with shotguns and a rifle after dark and concealed themselves from view. ■ Four of them were stationed in the orchard near the corners, two in the orchard along the road about 250 feet south, two a little distance north of the corners and the other two in the church.,

At about 2:30 a. m. on July 13, plaintiff and one W. J. Anker, both strangers to defendants, approached the scene riding in a light spring.wagon. The wagon first stoppéd about 275 feet from the comers, then shortly it started again, moving slowly until it arrived at the corners, where it stopped. Thereupon plaintiff alighted from the wagon, crouched down in a. low, stooping position and examined the southeast corner, which is the northeast corner of Meyer’s farm. He then walked about in a stooping position looking at the ground. When he reached the spot where the grass was about one and one-half feet tall he moved about, parting the grass with his hands and looking downward. After he had thus searched the corner he went to the southwest comer and examined that in a similar way. From thence he walked to the northwest comer, on which there was grass in triangular shape lying between the two driveways of the two roads and a cut-off which connected them from a point About 10 feet north of their intersection to a point about 25 feet west thereof. He seemed to pay particular attention to this place, parted the grass with his hands and walked about in a low, stooping position with his face towards the ground. Across the cut-off was a place with some loose dirt. When he arrived there he swept away the loose dirt with his hands. When plaintiff was seemingly unable to find what he appeared to be looking for he went to the northeast corner and seemingly examined the ground in the same manner as before. As plaintiff went from corner to corner the team swung around in a short circle, keeping him always near the left side of the wagon, and at the time he was on the northeast corner, the team was facing south. During this time one of the defendants was stationed in the church without his shoes; he laid down his gun for the purpose of putting them on and in so doing made a little noise, which was heard by some of the defendants and evidently by plaintiff, as he immediately ran away and jumped on the wagon. Thereupon the defendant Bereiter, who had been selected as the leader and was in the orchard about 30 feet from the wagon, called to plaintiff and his companion to halt, that they were under arrest. Instead of halting plaintiff and his companion fired several shots at Bereiter and drove away. In an attempt to compel plaintiff to stop several shots were fired in the air by some of the parties, to which plaintiff paid no heed. All the defendants and their companions got through the fence at this time and onto the road and pursued the wagon, without overtaking it. Thereupon seven of the men, including three of defendants, got into an automobile and followed the wagon in which were plaintiff and his companion and overtook it about a mile and a quarter from the corners. When this posse got within 100 feet of the wagon they again called to plaintiff and Anker that they were under arrest. This was answered by two more shots being fired from the wagon. In an attempt to avoid being shot all the parties except the driver jumped out of the automobile and three shots—two.from shotguns and one from a rifle—were fired in the direction of the wagon, which did not stop until it got stuck in the brush of a willow tree standing by the side of the road about 300 feet from where the last firing took place. When the posse got to the wagon plaintiff was standing beside the wagon and Anker was afterwards found a short distance away hiding in a cornfield. It was then discovered that Anker had a flesh wound on the right wrist. Plaintiff on the trial claimed that he was shot in the right arm and side and that one of the defendants told him to throw up his hands and come along and struck him and kicked him and threw him on the wagon and told him to drive back. The defendants took plaintiff and his companion Anker to Matteson, about 2 miles away, and the chief of police of Chicago Heights was telephoned, who, in response to the deputy sheriff, came and took plaintiff and Anker into custody and conveyed them to Chicago Heights and took them before one Lee Carrier, a county magistrate. They were held on a warrant issued by the magistrate upon complaint duly made, and on the same day were released on bail. Upon a preliminary hearing by the magistrate they were held to the grand jury and subsequently indicted for extortion.

When plaintiff and Anker were brought back to the comers they first told defendants that they had stopped at the comers to find out which way the telephone wires ran. When told they did not have to get off the wagon for that purpose plaintiff said that he had gotten off to look for signs. Subsequently plaintiff and Anker told the chief of police at Chicago Heights and later at a preliminary hearing before the magistrate testified that Anker had left his home at South Holland on that night at 6 p. m. to go to a horse market at Monee; that he stopped at Thornton, about two and one-half miles from South Holland, where he met the plaintiff, who agreed to accompany him; that they left Thornton at 11 at night and instead of following the regular road from there to Monee they left that road at the northern part of Chicago Heights and followed the route around Meyer’s corner because some one had told them that the regular road was out of repair and to take the route past the corner; that they first stopped a short distance east of the comer to rest their horses; that when they got to Meyer’s comer, not being certain that it was the one on which they had to turn south, they stopped and plaintiff got off the wagon to read the cemetery signs, and when he got to the northwest comer, in front of the horses, defendants opened fire; that their horses then ran away; that they did not get any of the shots at the comers but got all their injuries while they were being pursued.

Upon the trial, of this case they denied all of the foregoing statements and denied that they had made any of them either before or at the hearing of the charge before the magistrate. They denied having stopped east of the corners or that plaintiff had alighted from the wagon at the corners and denied having stopped there at all. They further testified on the hearing of this case that Anker left South Holland not before 10 p. m.; that when he arrived at Thornton he and plaintiff just happened to meet in a saloon without any previous arrangement and that plaintiff just happened to be out of employment and that without having met or associated with Anker before, and without having any interest in the horses or market, plaintiff immediately agreed to accompany Anker to the horse market at Monee; that they left Thornton at 11 p. m. with a few bottles of beer and one of whisky and that instead of being told that the regular road was out of repair and directed to take the one they did, that Anker was well acquainted with Meyer’s corner, knew and recognized it when they got to it, turned south on it and that after they had driven south about 8 rods, without having stopped or given the slightest indication of guilty conduct, defendants, without cause or reason, suddenly shot at them and their horses.

The evidence, without contradiction, discloses .that Meyer’s corner is not on any of the direct roads that run from Thornton to Monee; that the distance from Thornton to Monee over the regular Monee road is 15 miles, while the route taken by plaintiff and Anker on the night in question is 19y2 miles; that there were other roads running from Thornton to Monee well known to Anker, all of which were shorter, more traveled, in better condition and easier to follow than the route chosen past Meyer’s corner. Neither plaintiff nor Anker claimed that they had ever before taken the Meyer’s corner route to Monee. Anker admitted that ever since he was 15 years old he had frequently gone from Thornton to Monee, and until the night in question had never taken the route past Meyer’s corner, although several times he had driven horses from Monee past the comer to Thornton; the last time was about 1912. The only reason given by Anker on the trial for having taken the Meyer’s comer route was, that it is “a much quicker road,” while it appeared from the testimony that that road was a bad one and very muddy in many places.

The material facts testified to by plaintiff and Anker were contradicted by all the defendants, as well as by nine other witnesses not defendants and not interested in the outcome of the suit.

It may be conceded as the settled law of this State that the verdict of a jury upon the facts where they are in conflict will not be lightly disturbed by a court of review unless the court is firmly of the opinion from such evidence that the verdict and judgment are clearly contrary to its weight. This case most positively comes within the exception to the rule stated. The verdict is manifestly contrary to and in the teeth of the overwhelming preponderance of the evidence.

Plaintiff and his companion in the escapade, Anker, gave contradictory accounts of the whole affair. Their testimony was inconsistent in every material particular and was successfully refuted by the defendants and other credible witnesses. The testimony of defendants and their witnesses is on every material point consistent and carries with it the impression of verity.

Plaintiff and his companion Anker acted upon the night in question in such a way as to convict them of being the authors and instigators of the so-called “Black Hand” letter received by the defendant Louis Meyer. They were both at the scene of action at the place designated in the so-called Black Hand letter upon the night of the day therein stated. It is impossible to believe that their presence there was simply a coincidence. In the light of their actions such presence is unexplainable on any honest theory. What was plaintiff doing in searching the ground in the place where the $500 was ordered by the Black Hand letter to be placed? There were no telephone wires in the ground. He could hardly have expected to find a signpost on the ground, at which plaintiff was looking all of the time he was searching there. Assuming that he heard the noise of the putting down of the gun in the church, he might naturally suspect that there were persons around watching for him, and thereupon immediately ran away to the wagon, in which Anker was sitting, and when commanded to halt, drove away as fast as possible, firing shots in the direction of the voice which commanded him to halt. The posse proceeded to pursue plaintiff and Anker, first on foot and then in an automobile. Plaintiff shot at the automobile and its occupants as they sped along after them. Some shots were fired by the pursuing party in answer to the shots of plaintiff in an attempt to procure him to halt and surrender. Finally, through a mishap to the wagon, plaintiff and Anker were halted and the posse took charge of them and took them to Matteson, 2 miles away, and from there to Chicago Heights, where they were charged with the statutory crime of attempted extortion. On this charge they were held by the magistrate to the grand jury.

The verdict is clearly against the greater weight of the evidence, which evidence entitled defendants to a verdict in their favor. Plaintiff had no right to shoot at any one of the posse present when commanded to halt. His actions were subject to a righteous suspicion, and if he had been a good citizen and innocent of any offense it was his duty to stop and explain the situation, which he naturally would have done if he were innocent of any wrongdoing. In shooting in response to the request to halt plaintiff was guilty of a crime. For such crime any of the posse were authorized under the law to arrest him without a warrant. Smith v. Donelly, 66 Ill. 464; Hitzelberger v. Kanter, 181 Ill. App. 459.

The defendants were justified in meeting force with force and to repel the shots of plaintiff which endangered the lives of defendants and those with them with such force as might be necessary. Foster v. Shepherd, 258 Ill. 164.

We do not consider it necessary to notice in this opinion any of the other errors assigned upon the record.

As the verdict and judgment are clearly contrary to the probative force of the evidence, the judgment of the circuit court is reversed with a finding of fact.

Reversed with a finding of fact.

Dever and McSurely, JJ., concur.

Finding of fact.' The court finds as an ultimate fact that the defendants are not, nor is any one of them, guilty of any of the trespasses charged in plaintiff’s declaration or any count thereof.


text:
    Dearborn Truck Company, Appellant, v. Staver Motor Car Company, Appellee.
    Gen. No. 25,976.
    1. Corporations, § 420

      —when lease by corporation about to dissolve is not ultra vires. Where a corporation had determined to cease business and made a lease of its property for 10 years, giving a plaintiff the option to buy the leased premises within 4 years at. a stated sum, and also reserving the right to sell after notice to other parties, and subsequently, before the plaintiff took possession, the corporation decided to continue its business and repudiated its lease, giving rise to an action for damages, the corporation could not plead that the lease was ultra vires, as the lease indicated a purpose of complying with the statutory provisions requiring the selling of real estate within 5 years, when not required for the corporate business, and the statute does not prevent a corporation retiring from business from renting real estate, during the period of liquidation, whereby such real estate might be rendered more easily salable.
    2. Corporations, § 404*—when possession of real estate is not ultra vires. Where a corporation is organized to manufacture, repair, store and sell self-propelled vehicles, and to operate a general warehouse, the ownership and possession of a building suitable for such purpose is necessary for the corporation’s lawful purposes.
    3. Corporations, § 344

      -—who may attach ultra vires acts of corporations. If the making of a lease for 10 years by a corporation is subject to attack as being ultra vires, the corporation is answerable for the excess of its authority at the suit of the State alone.
    4. Corporations, § 420*—when plea of ultra vires is demurrable. In a suit for damages for the failure of a corporation to carry out the terms of a lease whereby its property was demised to a plaintiff for a period of 10 years, and where it appeared that at the time of the lease the corporation was about to close its business, which intention was subsequently changed, resulting in the repudiation of the lease, a plea of the corporation that the lease was ultra vires, but which contained no averment from which any presumption might arise that the defendant intended to continue to hold its real estate in violation of the statute, was demurrable.
    Appeal from the Circuit Court of Cook county; the Hon. Frank Johnston, Jr., Judge, presiding. Heard in this court at the March term, 1920.
    Reversed and remanded with directions.
    Opinion filed October 11, 1920.
    Melville E. Adams, for appellant.
    Bulkley, More & Tallmadge, for appellee.

      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. Presiding Justice Holdom

delivered the opinion of the court.

This action is for damages for the refusal of defendant to carry out the terms of a certain lease made by defendant to plaintiff for a term of 10 years with a 4-year option to purchase the same at the price of $175,-000, provided that defendant did not receive a bona fide offer fór the same from other parties within that time, and, if it did, then it should give plaintiff 90 days’ notice of such offer, within which time plaintiff might purchase the premises for the amount of such offer.

A general and special demurrer was interposed to the declaration and overruled, whereupon defendant pleaded specially, alleging that defendant was not authorized to own, possess or enjoy real estate except for its business and had no authority to make and deliver such a lease; that defendant was incorporated under the general incorporation statute to manufacture and repair all self-propelled vehicles for use on land, water or in the air; that its charter was thereafter amended so that it was authorized to buy, sell, manufacture, repair, hire, let or store, and deal in all kinds of self-propelled vehicles or instruments of conveyance and all accessions and appurtenances thereto and to operate a general warehouse for storage of goods and chattels and issue warehouse receipts and to malee advances on the goods and chattels so stored; that defendant was in the possession and use of all the demised premises, using and occupying the same in the conduct of its business; that it neither owned nor possessed any other plant where it might .conduct its business; that the premises demised constituted all of defendant’s assets, except some bills receivable and a small quantity of tools and equipment; that the object and purpose of defendant at the time of making the lease was to go out of business, except to hold and manage the leased premises and to collect the rents thereof and to liquidate the business of defendant and to hold the leased premises as an investment for its stockholders and that it so informed plaintiff at and before the time of making the lease.

This plea plaintiff met with a general demurrer, which on argument the court overruled, and plaintiff electing to stand by its demurrer, suffered a nil capiat judgment and seeks by this appeal to have the order overruling its demurrer reversed.

The questions raised present to us for determination whether the lease for breach of which the declaration is grounded is ultra vires of defendant’s charter powers.

It appears from the plea before us that at the time the lease between the parties was executed defendant had determined to cease the business for which it was incorporated, but that before plaintiff was able tb procure possession of the leased premises defendant concluded to continue its business in the exercise of its charter powers and thereupon repudiated its contract of lease with plaintiff.

It will be observed that under the averments of the declaration plaintiff was given an option to purchase the leased premises within 4 years at a stated sum and that according to another provision of the lease defendant was given the right, notwithstanding such option, to sell the leased premises at any time it might receive an offer therefor, providing plaintiff would not purchase the same upon the terms of the offer after 90 days from the receipt of a notice thereof.

The statutes of this State required defendant to sell within 5 years such of its real estate" as it might cease to require in carrying out the purposes for which it was incorporated. It would seem that by the express terms of the lease defendant was seeking to comply with such statutory requirement within the time limited by the statute. It gave plaintiff an option to purchase at a sum named within 4 years and likewise reserved unto itself the right to offer the same for sale at any time. Nor did the 10-year lease in any manner prevent its selling the leased property at any time within 5 years. The statute gives the corporation 5 years in which to dispose of its property, for, we will assume, the purpose of enabling it to realize a fair price which might not be obtainable at a forced sale. The existence of a term lease at a good rental of itself would in all probability materially aid in securing a remunerative price for the fee of the property.

We do not regard the lease in suit as being either void or voidable or as being entered into ultra vires of the powers of the lessor. Surely the law-making power never contemplated that a corporation retiring from its business during the period of liquidation should be deprived of the power of renting its real estate and compelled to keep it unrented and unproductive pending a sale. Moreover, the plain purpose of the limitation in the statute was evidently to prevent the accumulation of real property by corporations and in this respect is akin to the early English statutes of Mortmain. These statutes were enacted in the interest of a sound public policy.

It is not disputed but that defendant lawfully obtained title to the premises leased, which it primarily secured for carrying out the purposes of the business for which it was chartered. It was therefore within the general scope of the express powers of defendant to own and possess the leased building, which was necessary for its lawful corporate purposes. We think if the lease to plaintiff is subject to attack (while not being understood to hold that it is subject to attack either originally or collaterally), that it comes within the holding in Rector v. Hartford Deposit Co., 190 Ill. 380. If it can be said the making of the lease for 10 years is subject to attack, it is answerable only at the suit of the State for its exercise of an excess of authority. Chicago General Ry. Co. v. Chicago City Ry. Co., 186 Ill. 219. Illinois Life Ins. Co. v. Beifeld, 184 Ill. App. 582, while attempting to be differentiated from this case by counsel for defendant, we think is not only clearly in point but decisive of the rights of the parties in this case.

There is no averment in the plea demurred to from which any presumption arises that defendant intended to continue to hold its real estate in violation of the statute.

For the foregoing reasons it is our opinion that the demurrer to defendant’s plea should have been sustained.

The judgment of the circuit court is therefore reversed and the cause is remanded to the trial court with directions to sustain the demurrer of plaintiff to defendant’s plea.

Reversed and remanded with directions.

Devbr and Me Surely, JJ., concur.