text:
    Ferdinand Luthy et al., Appellees, v. Henry Ream et al., Appellants.
    Gen. No. 5,972.
    1. Corporations, § 173

      —validity of voting trust agreement. A voting trust agreement entered into by a majority of the stockholders of a corporation whereby such stockholders assigned their stock to a trustee for a certain period of time, giving such trustee power to vote such stock as a unit as he may deem best, held valid and not against public policy, where the purpose of the agreement was for keeping a certain faction of the stockholders from securing control of the corporation, which the members of the trust agreement believed would be detrimental to the interest of all the shareholders.
    2. Corporations, § VIZ*—when voting trust not shown to he illegal. The formation of a voting trust by a majority of the stockholders is not shown to he illegal for the reason that its purpose was to enable three of their number to obtain salaries as officers of the corporation, where there is no proof that it had any such purpose except such inference as may be drawn from the bare fact that such stockholders after becoming elected officers voted themselves salaries, it also appearing that the amount of the salaries thus voted was reasonable.
    3. Coepobations, § 285

      —right officer to participate in voting Ms salary. A salary voted to an officer of a corporation is illegal i£ the resolution fixing the compensation is carried by his vote.

      4. Coepobations, § 285*—who may fix salary of officers. Courts have no authority to fix the salary of an officer of a corporation, since such salaries must be fixed by the directors of the corporation, under the statute.
    5. Coepobations, § 284*—right of officers to salary. A person who serves as an officer of a corporation when no salary has been provided must render his services gratuitously; salaries cannot be fixed for the time that has passed.
    6. Coepoeations, § 173*—when shareholder not entitled to Question legality of voting trust. A voting trust agreement by a majority of the stockholders of a corporation cannot be attacked by the owner of a small minority of such shares on the ground that it is illegal because the trustee is left in sole control for a certain period of time, where a clause on the agreement contemplates that the trustee may die, resign or be removed for cause, and the vacancy so created filled and it is apparent from the agreement that only the holders of a majority of the shares in the voting trust could make objections to any act of the trustee.
    Appeal from the Circuit Court of Peoria county; the Hon. John M. Niehaus, Judge, presiding. Heard in this court at the October term, 1914.
    Affirmed in part and reversed in part.
    Opinion filed December 3, 1914.
    Jack, Irwin, Jack & Miles, for appellants.
    Thomas F. Doyle, for Peru Plow & Wheel Co.
    Evans & Evans and Chiperfield & Chiperfield, for appellees.

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

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

   Mr. Justice Dibell

delivered the opinion of the court.

The Peru Plow & Wheel Company, an Illinois corporation, has been engaged in the manufacture of plows and other farming implements at Peru in La Salle county for many years and has been generally successful in "business. Its corporate stock has. been increased at least twice, and in 1912 consisted of 4,000 shares of the par value of $100 each. Under date of September 4, 1912, forty-one stockholders, owning in all 2,001 shares or a bare majority of the capital stock, entered into a trust agreement with Henry Beam, one of said stockholders. Said agreement recited that said stockholders deemed it to their interests that all of their -stock should be voted as a unit upon all questions. affecting the business and management of said company, and that Beam had consented to hold and vote such stock on behalf of the stockholders. It was therein agreed between said stockholders and said trustee for a valuable consideration, the receipt of which was acknowledged, and in consideration of the mutual covenants and agreements therein expressed, that said stockholders thereby assigned and transferred to said trustee the number of shares of stock of said company set opposite their respective names, to be held in trust by the said trustee for the respective stockholders by whom it was severally assigned, their personal representatives and assigns, upon the terms and conditions therein stated, some of which were as follows:

“1. The said Trustee shall hold, control and vote said stock as if he was the owner of all of said stock.
“2. Said Trustee shall determine how said stock shall be voted upon any question, at any time, and every meeting of the stockholders.
“3. All of said stock so held by the Trustee shall be voted as a unit.
“4. At all elections of directors of the Peru Plow & "Wheel Company, said Trustee shall nominate three directors, to be voted for at such election, and said Trustee shall vote all said stock held by him as a unit for each and all of the directors so nominated by him. ’ ’

The fifth clause provided the manner of filling a vacancy which might be caused by the death, resignation or removal of the trustee, which was to be done by a majority in amount of the persons who then held the stock now owned by the parties to the agreement. The agreement proceeded:

“6. Said Trustee shall prepare and issue to the stockholders certificates showing the amount of stock held on behalf of each stockholder respectively, and the stock so held may be divided and transferred in like manner as if it had not been assigned, in trust, subject to the rights and powers of the Trustee under this assignment. But no such assignment, or transfer of stock, shall be effective for any purpose until surrender of the certificate issued by said Trustee, and the issue of a new certificate to the purchaser or assignee thereof.
“7. No fee shall be charged by such Trustee herein designated for any services performed in connection with the trust hereby created.
“8. Said Trustee shall collect and receive all dividends on the stock transferred to and held by him and shall immediately pay over the same to the holders of trust certificates representing such stock as their respective interests appear. The Trustee shall not demand or receive any compensation for receiving and paying over such dividends.
“9. The rights, duties and powers hereby conferred upon said Trustee shall expire and wholly cease on the first day of September, A. D. 1922, and the Trustee shall, at said time, assign and transfer to the persons who then hold Trustee’s certificates, evidencing their ownership of shares of stock, the amount of stock to which each holder thereof is shown by his Trustee’s certificate to be entitled.
“10. Said Trustee hereby accepts the trust hereby created by the above and foregoing instrument, and hereby undertakes to hold, own and vote said stock as therein provided, and to re-transfer the same on the first day of September, A. D. 1922, to the holders of Trustee’s certificates, evidencing their right to receive the same.
“Said Trustee further undertakes at all times to vote the said stock by himself, or by proxy, and exercise his powers as Trustee in such manner as he shall deem to be for the best interests of the stockholders of the Peru Plow & Wheel Company. Said Trustee further undertakes to accept additional assignments of stock from any and all stockholders of the Peru Plow & Wheel Company, and to permit any stockholder thereof to become a subscriber to this agreement.”

The contract contained some other provisions. It did not expressly provide that it could not be revoked before September 1,1922, but that was the clear meaning of the language used. Each signer bound himself to all the others. Each agreement by one was a consideration for the signing by the others. The entire purpose intended to be accomplished would be likely to be defeated if a single signer, or his assignee of a trust certificate for two or more shares, could revoke the contract at will. The contract was signed by each of said forty-one stockholders, and by the trustee, and opposite each signature was set forth the number of shares owned by said stockholder. Each of said stockholders also assigned and delivered his certificate of stock to the trustee, and the trustee, pursuant to said agreement, issued to each stockholder a trust certificate, upon the following form:

“CERTIFICATE of Trustee for Stockholders of the PERU PLOW & WHEEL COMPANY
A corporation, under agreement of date September 4, 1912, with HENRY REAM, Trustee.
No....... ......Shares THIS IS TO CERTIFY that ............ is the owner of..........shares of capital stock of the PERU PLOW- & WHEEL COMPANY, held by the undersigned as Trustee, subject and pursuant to the terms, conditions and stipulations of a certain agreement between the undersigned as Trustee and certain stockholders of the said PERU PLOW & WHEEL COMPANY joining in said agreement of date September 4, 1912, (a copy of which said agreement is on file with the undersigned Trustee... .reference being had thereto as to all the terms, conditions and requirements of said trust).
“This certificate is transferable only on the books of the Trustee by the holder thereof in person or by attorney upon the surrender of this certificate properly endorsed, when like new certificates will be-issued to the proper owner thereof of record.
IN WITNESS WHEREOF I, HENRY REAM, Trustee aforesaid, pursuant to said Agreement of September 4, 1912, have hereunto set my hand and seal, this......day of.............., A. D. 1912.
HENRY REAM, (Seal)
Trustee.”

On the back of each certificate was a form for an assignment of such certificate. Section 1 of article 6 of the by-laws of the corporation then in force made the president and the vice-president and the manager an executive committee, and gave such committee, subject to the board of directors, supervision of all the business and affairs of the company and of the policy to be pursued in carrying on its business, and made the vice-president chairman of the executive committee, and made any two members of said committee a quorum to do business at any meeting thereof, however called. Section 4 of article 6 of said by-laws provided that the salaries of the officers and of the manager of the company should be fixed by the board of directors. On September 10, 1912, the annual meeting of said corporation was held, and all but six shares were represented, either in person or by proxy. At that time the trust agreement had not been signed by all of those whose names were signed thereto when it' was offered in evidence, but Ream held a proxy from all those who subsequently signed it. The board consisted of five members, and those who were then serving upon said board were all nnanimonsly re-elected. They were Henry Beam, B. D. Brewster, William Holly, Ferdinand Luthy and D. W. Voorhees. The annual meeting of the directors was duly called and held on October 22, 1912. Beam was elected president, Brewster vice-president, Holly treasurer and Voorhees secretary, each unanimously. Voorhees was already the manager of the company at a salary of $6,000 per year, under a previous contract hereinafter referred to. It was moved that the salary of the president, vice-president and treasurer be each fixed at $2,400 per year, payable monthly, at the rate of $200 per month, and commencing November 1, 1912. Brewster, Holly and Beam voted for said motion. Luthy and Voorhees voted against it, and it was declared carried. Among the stockholders who had entered into said trust agreement were Kate Cahill, John D. Cahill and Cornelius J. Cahill, each owning twenty-three and one-third shares. At some time between that and February 25, 1913, they assigned their seventy shares to Thomas Cahill. Before he paid for said stock he went to the office of Henry Beam, trustee, and Beam read to him said trust agreement, and he also read it himself. He asked for a certificate of shares of the corporation and this was refused to him, and he was given and accepted a trust certificate in the form above set out for seventy shares. On February 25, 1913, Luthy owned 1,092 shares of the capital stock of the Peru Plow & Wheel Company, Voorhees owned 765 shares, George T. Page owned 100 shares and Thomas Cahill owned said trust certificate for 70 shares.

On that day Luthy, Voorhees, Page and Thomas Ca-hill filed their bill in equity against said trustee and all the other holders of trust certificates and the Peru Plow & Wheel Company, in which they charged that said trust agreement was void for various reasons, stated in said bill, and that Thomas Cahill was entitled to have 70 shares of said capital stock issued to him by the officers of the company, and that the same had been refused to him; and the bill set up the election of said officers, and the fixing of said salaries by the affirmative vote of Beam, Brewster and Holly. The bill prayed that the trust agreement be cancelled; that the action of the directors in fixing said salaries be declared illegal; that Beam, Holly and Brewster be required to account to the company for the salaries received by each of them under said action and be required to pay the same to the company; that Beam, Brewster and Holly be declared to have forfeited their office as president, vice-president and treasurer, respectively, and be ousted therefrom; and that the president be directed to join with the secretary in issuing to Thomas Cahill a certificate for 70 shares of said capital stock. The corporation filed an answer and Henry Beam and all the other individual defendants also filed an answer. The cause was tried before the chancellor. A decree was entered, finding the facts concerning said trust agreement and said trust certificates and the transfer of the trust certificate to Thomas Cahill for 70 shares, and finding that said trust agreement was void as against public policy in that it placed the voting power and control of the corporation in said trustee, wholly separate from the ownership of said shares of stock, except the stock owned by Henry Beam, trustee; that the trustee had used such voting power to vest in himself and two other directors control of said corporation for the benefit of a part, only, of said stockholders, and that his conduct in that behalf was an abuse of the trust, and subjects said trust agreement to revocation and cancellation at the instance of Thomas Cahill, as the owner of 70 shares included in said trust agreement; that said trust agreement vests in Beam as trustee only the voting power as agent of the owners of stock who joined in said trust agreement, and that he holds only the proxy of said owners who joined him in said agreement and has only the power of voting without any interest whatever in the ownership of said stock, and that such agreement is subject to revocation at the instance of the owners of such stock who joined in such agreement; that Thomas Cahill had the right to revoke such power and had revoked it, and that the complainants were entitled to have Beam enjoined from further voting said 70 shares at any stockholders ’ meeting, and that Beam, as president, or his successor in office, should be required to join the secretary in issuing to Thomas Cahill a certificate of said corporation for said 70 shares of stock. The decree also found the action above stated in fixing said salaries for Beam, Brewster and Holly and that said officers had rendered only nominal services, and that their action in voting themselves said salary was unlawful and gave them no right thereto, and that each of them had drawn $3,000 as such salaries and ought to restore the same to the company, with five per cent, interest, amounting to $87.50 each. It was then decreed that a certificate for 70 shares of capital stock be issued to Thomas Cahill, and that Beam be enjoined from further voting said 70 shares at any stockholders ’ meeting; and that Beam, Brewster and Holly each pay to the corporation within ten days $3,087.50, and that execution issue therefor; and they were enjoined from receiving any further sum as salary under said action of October 22, 1912, and it was ordered that Beam, Brewster and Holly pay the costs of suit. From that decree Beam, Brewster and Holly, and certain other of the signers of said trust agreement, prosecute this appeal.

There are numerous authorities which hold that the right to vote is an incident to the ownership of stock; that each stockholder owes his fellow-stockholders the duty to so use his right to vote upon his stock as to protect the general interests of the stockholders, sustain the general welfare of the corporation and conduct its business upon honest and prudent principles; that, though the stockholder may shirk this duty by absenting himself from meetings of the stockholders or by refusing to vote, yet the law will not allow him to strip himself of the power to perform his duty; that the right to vote upon the stock cannot be separated from its ownership; that it is unlawful and a violation of public policy to contract for a separation of this voting power from the ownership of the capital stock; that the owners of trust certificates in a voting trust are the equitable owners of the shares of stock which such certificates represent; that the incidental right to vote upon the stock necessarily attaches to said trust certificates, and that, where such owners elect to exercise that right to vote, the law will not permit the trustee to refuse it to them, even though the contract so provides; that where individual stockholders form a combination to control the majority of the stock and agree not to transfer their shares to the opposition or not to vote against the combination, such contracts are in restraint, of trade and are against public policy and are void, and any stockholder may withdraw from such contract, though it is agreed that it shall be irrevocable; that such a voting trust agreement creates an inactive, as distinguished from an active, trust and is revocable at the will of the beneficial owners of the stock; that any agreement or device by which stockholders surrender their voting powers are invalid; that the power to vote can only be delegated by proxy with power of revocation, and this regardless of any pooling agreement. Among the cases supporting these positions are Cone’s Ex’rs v. Russell, 48 N. J. Eq. 208; White v. Thomas Inflatable Tire Co., 52 N. J. Eq. 178; Bache v. Central Leather Co., 78 N. J. Eq. 484; Bostwick v. Chapman, 60 Conn. 553; Commonwealth v. Roydhouse, 233 Pa. St. 234; Harvey v. Linville Improvement Co., 118 N. C. 693, 32 L. R. A. 265; Bridgers v. First Nat. Bank, 152 N. C. 293; Clarke v. Central Railroad & Banking Co., [50 Fed. 338], 15 L. R. A. 683. Other eases are cited in the foregoing authorities. Many of these opinions use very forcible language in announcing and sustaining the foregoing positions. The earlier editions of several of the text-books upon the subject are to the same effect.

In the main, these principles have not been adopted in Illinois. In Faulds v. Yates, 57 Ill. 416, speaking of an agreement similar in principle in many respects to the one here in question, the Court said:

“There was no fraud in the agreement, which has been so bitterly assailed in the argument. There was nothing unlawful in it. There was nothing which necessarily affected the rights and interests of the minority. Three persons, owning a majority of the stock, had the unquestioned right to combine, and thus secure the board of directors and the management of the property. Corporations are governed by the republican principle, that the whole are bound by the acts of the majority, when the acts conform to the law of their creation.”

The Court there further said:

■ “They knew they must make large expenditures of money. Incompetent and unfriendly directors and officers might involve them in much trouble, heavy expense and useless litigation. They had a double interest to protect, their interests as shareholders, and their interests as lessees. It is strange that a man can not, for honest purposes, unite with others in the protection and security of his property and rights without liability to the charge of fraud and iniquity. This agreement was made between persons who had invested a large amount of capital in an enterprise somewhat perilous. As shrewd, skilful and prudent men, they were desirous of increasing the investment, and making the stock more valuable. Their interests were identical with the interests of the minority shareholders. They could not destroy the property of the company, for the lands were of immense value if the mineral resources failed. If they increased the value of their own stock, they also increased the value of all other stock. If they destroyed the stock of others, they also, by the same act, destroyed their own. It is absurd to suppose that a sane man will ruin himself for the mere pleasure of ruining others.”

The Court also said:

“The agreement in this case was not for the injury of the minority stockholders. It could not have been so intended, and we can not perceive that it could so operate. The selection of proper officers, the prudent management of the coal mines, the careful sale and purchase of stock, as provided for in the agreement, together with the expenditure of money in the improvement of the property, must have resulted in benefits to all the stockholders, and not alone to the parties to the particular agreement. A careful reading’ of the contract shows no hidden advantage intended, no fraud, no dishonesty.”

This decision was approved in Higgins, v. Lansingh, 154 Ill. 301, on page 357, and in Kantzler v. Bensinger, 214 Ill. 589. The same general question was before the court in Venner v. Chicago City Ry. Co., 258 Ill. 523. Speaking of the voting trust agreement there under discussion; the Court said (p. 538) :

“The effect of the transfer was to place the legal title of the majority of the stock of the Chicago City Bailway Company in the trustees, together with the voting power, which was thus separated from the beneficial ownership existing in the holders of the participation certificates, but was to be exercised in accordance with the latters’ wishes, as expressed by a committee chosen by them for this purpose. Such a trust is not necessarily illegal. Ordinarily, men may make any disposition of their property they see fit, and they may therefore create a trust in their personal property for any purpose they deem best, so long as the purpose is not prohibited by statute or some rule of public policy. There is no statute of this State which prohibits a trust of the stock of a corporation for the purpose of controlling its management. There is no rule of public policy in this State which prohibits the combination of the owners of a majority of the stock of a corporation for the purpose of controlling the corporation. On the contrary, it has been expressly held that a contract by the owners of more than one-half of the shares of stock of a corporation to elect the directors of the corporation so as to secure the management of its property, to ballot among themselves for directors and officers if they could not agree, to cast their vote as a unit as the majority should decide so as to control the election, and not to buy or sell stock except for their joint benefit, is not dishonest, violative of the rights of others or in contravention of public policy.”

The court there refers with approval to Brightman v. Bates, 175 Mass. 105, in which in an opinion by Holmes, O. J., now a member of the Supreme Court of the United States, the Court said (p. 110):

“It is suggested that this was an unlawful attempt by the contracting parties to deprive themselves in advance of their deliberative power and duty as stockholders, and to submit themselves to the dictation of five men who in the future might not be even members of the corporation. * * * There is no doubt that the subscribers might actually have done the things stipulated without giving any one a right to complain. That is to say, they might have held their stock and voted by previous understanding according to the advice of the committee, as long as they chose. The question is what they might contract to do; for this is supposed to be a case where a contract to do lawful acts is unlawful. * * * Supposing that the committee had been trustees, what would the syndicate agreement have amounted to then? Merely an agreement by each of the trustees to vote as they should jointly agree to vote, and an agreement by the subscribers not to demand back their shares for three years. The latter term certainly is not illegal, whether valid or not. A stockholder has a right to put his shares in trust, whatever his motive. If the trust is an active one he cannot terminate it at will/ and the attempt to cut himself off by contract, instead of by the imposition of duties, from ending it; certainly is not enough to poison the covenant with the plaintiff. * * •* It might be held that the duty of voting incident to the legal title made such a trust an active one in all .cases. As to the arrangement for the trustees uniting to elect their candidates, the decisions of other States show that such arrangements have been upheld, and we do not think that it needs argument to prove that they are lawful. If stockholders want to make their power felt, they must unite. There is no reason why a majority should not agree to keep together.”

In the Venner case, supra, the Court further used the following language (p. 540):

“The stockholders can control the affairs of a corporation only through the election of directors, and at every such election there is necessarily a combination of shares upon the persons elected. Such combination may be made at the time of the meeting, but there is no reason why stockholders may not agree beforehand to vote for certain persons as directors, and often they must do so in order to elect the persons desired. There is nothing in the law to prevent the owners of a majority of the stock from giving proxies to the same person. Unless restricted by its terms or by some statutory provision a proxy confers on the grantee a discretion, unlimited either in character or duration, until revoked. A majority of the stockholders may therefore, by uniting in the same proxy, confer upon an agent unlimited discretion to vote their stock, and there is no policy of the law to prevent their transferring the stock to a trustee with the like unrestricted power. It is the purpose for which the trust was created which must determine its legality. Besides those alre.ady cited, it has been decided in the following cases, among others, that the pooling of stock by the owners for the purpose of electing directors and officers and controlling the management and business of the corporation was not against public policy so long as no fraud was committed or wrong done to the other stockholders. (Citing cases). On the other hand, an agreement is invalid whose object is not the benefit of all the stockholders equally but is some unfair advantage to the parties to it, only, as where one of the parties is to have a certain office at a certain salary, or the parties to the agreement are to receive the profits to be made out of certain contracts to be entered into by the management under their direction, or the stock of the corporation is to be voted or its affairs managed by the determination of persons other than its stockholders or by a minority of its own stockholders.”

It is held by the Supreme Court of Virginia in Carnagie Trust Co. v. Security Life Ins. Co. [111 Va. 1], 31 L. R. A. (N. S.) 1186, that the mutual promises of subscribers to a voting trust agreement to be bound by the terms thereof forms a sufficient consideration to uphold the agreement, and that such a trust is an active and not a passive trust, and that the placing of capital stock in possession of a trustee for twenty-five years to enable the trustees more effectively to manage the corporation is not against public policy and does not separate the ownership of the stock from the beneficial interest in such a manner as to render the transaction void. In that case the following is quoted from a leading writer on corporation law:

“A deposit of certificates of stock with trustees for a specified period of time, either with or without a transfer of the same to the trustees, is legal, and is not in violation of the usual statute against the alienation of personal property, and is not opposed to public policy as a restraint upon trade, and is not an implied fraud upon stockholders who were allowed to participate, and is not an illegal separation of the voting power from the ownership of the stock; provided always that no actual fraud is involved in the transaction. In other words, such a pooling of stock is not illegal in itself, but, like all contracts, may be illegal if actual fraud is involved.”

In Smith v. San Francisco & N. P. Ry. Co., 115 Cal. 584, 35 L. R. A. 309, the Supreme Court of California held, one judge dissenting, that the owners of the majority of the stock in a corporation may lawfully agree to be bound by the will of the majority of themselves in voting the stock; and that a stockholder entering into an agreement with others as a condition of their joining to purchase the majority of the stock of a corporation, that such stock shall be voted as a unit for five years as a majority of them shall determine, cannot be revoked by such stockholders; that an agreement to restrain the power of voting stock for five years so as to keep the control of the corporation from passing to other persons, made by a person who united in purchasing a block of stock, is not illegal as in restraint of trade; and that such a separation of the voting power of such stock from its ownership is not illegal or against public policy. These doctrines are supported by the later editions of the text writers. The case above stated from 115 Cal. is cited with approval by our Supreme Court in the Venner case, supra. We therefore conclude that in this State (unless it be as to one particular, hereinafter discussed) this voting trust agreement is not against public policy, but is valid on its face, and creates an active trust; that the mutual agreements to assign the stock to a trustee, who should act for the benefit of all, form an adequate consideration as between the stockholders who signed the same; that the subscribers and those who purchase these certificates from them are bound by the agreement and cannot revoke it before September 1, 1922; provided the object of the agreement, the purpose for which it was formed, was not illegal. The purpose which caused the formation of this trust agreement is therefore a material inquiry.

A careful reading of the evidence reveals the conditions which led to the creation of this voting trust. The company was organized many years ago. Its original incorporators and owners lived in Peru and vicinity. Several of the present defendants inherited their capital stock from their fathers. The work of manufacture has always been carried on at Peru. It has been a successful business. Its sales have averaged from $300,000 to- $500,000 per year. Its profits have sometimes been as high as $60,000 or $100,000 per year, and have averaged $40,000 for many years. It has paid large dividends. In recent years a very considerable part of the stock came to be owned by Peoria parties. It is evident that the ownership of the stock became divided between a Peoria faction and a Peru faction. These factions distrusted each other. Voorhees lived at Peoria. He became manager. The evidence is that though the Peoria party owned a minority of the stock, yet it largely succeeded in controlling the corporation. In February, 1912, the Peoria stockholders succeeded in inducing the company to enter into a written contract with Voorhees by which he should be general manager of the business affairs of the company for five years at a salary of $6,000 per year and his traveling expenses, and he at the same time exacted and procured from Beam, who was then the president, a written promise to support Voorhees as general manager. The charter made the general office of the company at Peru. Voorhees opened an office of the company at Peoria. Luthy & Company were jobbers at Peoria of the same kind of implements manufactured by the Peru Plow & Wheel Company at Peru. Luthy had become the largest stockholder in the Peru Company. He was also a part owner of the business of Luthy & Company. Voorhees was also a part owner of that business, and was general manager of Luthy & Company. Voorhees therefore occupied two inconsistent positions. As general manager of the Peru Company, it was his duty to sell its product at the highest fair prices he could obtain. As general manager of Luthy & Company, it was his duty to procure merchandise from the Peru Company at as low prices as he could reasonably obtain. He established the office of the Peru Company at Peoria in the same building with Luthy & Company and employed a stenographer there. All this he did upon his own responsibility and without consulting the president or the executive committee of the Peru Company. Instead of spending his time at Peru he spent most of his time at Peoria," over sixty miles away. He visited the works at Peru one day each week, and sometimes two. He charged the company and caused it to pay him his traveling expenses between the two places. He made much use of the telegraph and telephone between Peoria and Peru and charged this to the company. He kept the books of the company at the office in Peoria. All this time he was also acting as general manager of Luthy & Company and conducting that business. In none of these things did he consult the president or the executive committee of the Peru Company. It is obvious that these things produced uneasiness in the stockholders who lived in Peru, including B. D. Brewster, who had removed to Peoria, but evidently continued his allegiance with the Peru faction; In June, 1912, the board of directors thought it necessary or advisable to adopt a resolution which, among other things, said that the company should not sell to Luthy & Company for a greater or less price than they sold to others. There was no danger under these circumstances that Voorhees would sell to Luthy & Company at a higher price than he sold to others, and the evident purpose of the resolution was to prevent his selling to Luthy & Company at a lower price than to others, and this indicates that distrust existed. In June, July and August, 1912, Luthy, who was the largest single stockholder of the Peru Company, made efforts to purchase a controlling interest in its stock. He first applied in person to some of the stockholders residing in Peru to sell to him, and, failing to buy any stock in that way, he employed several persons who lived elsewhere to bny stock for him. The proof indicates that the stock was considered to be worth par. He authorized his agents to offer as high as three times the par value. In August, members of the Peru faction discovered that Luthy had purchased enough so that the Peoria faction lacked only forty-four shares of having a majority. Then began the organization by the stockholders of this voting trust in order that the Peru stockholders might retain control of the corporation and prevent that control being acquired by the faction at Peoria. We are satisfied from the evidence that this was the purpose which induced the formation of this agreement. Those who entered into it believed that there was danger that the profits of the factory at Peru would be absorbed by the jobbing house of Luthy & Company and they believed that it was being managed from Peoria much more expensively than it had been and could be managed at Peru. It is obvious that what they intended was for the benefit of all the stockholders alike and, if we are correct in this, then the purpose was legal and valid. We would not be understood to mean that no reason appears in the evidence why the Peoria party desired to get control of the corporation. It is evident that they regarded the methods of the Peru party as slow and behind the times, and considered that control by Voorhees was much more advantageous to the stockholders. While the Peru party was in power the officers established a branch house at Council Bluffs and that venture was unprofitable. The proofs tend to show that the company lost $75,000 because of the opening of that branch house. Officers from the Peru party went to Council Bluffs and bought out a person having an interest in that business there, and paid him $7,500 therefor, and it was the opinion of the Peoria party that that purchase could have been made for $2,500. It is not doubted by the court but that each of these factions honestly believed that the welfare of the company and all its stockholders would be enhanced if that particular faction could have and maintain control over the business affairs of this company, and that each party was pursuing an honest and entirely lawful course in seeking to procure a majority of the shares of stock. It is immaterial to this inquiry whose judgment was the best. Whichever one was right, the purpose was lawful.

It is assumed in argument that at the time when the directors met in annual meeting in October, 1912, there was no by-law or resolution fixing any salary of president, vice-president or treasurer. The board was composed of five directors. The concurrence of three was necessary to fix a salary. Beam, Brewster and Holly were the only ones who voted for the salaries, and the vote of each of the three was necessary for the fixing of each salary. A salary voted to an officer of a corporation is illegal if the resolution fixing the compensation is carried by his vote. McNulta v. Corn Belt Bank, 164 Ill. 427; Adams v. Burke, 201 Ill. 395; Voorhees v. Mason, 245 Ill. 256. Therefore these salaries were illegally voted to and illegally received by these three officers, and so much of the decree as requires that they be refunded to the company was proper. Appellees contend that the purpose of forming this voting trust was to obtain these salaries, that is, to obtain a benefit special to three of the signers of this agreement. There is no proof that it had any such purpose, except such inference as may be drawn from the bare fact that more than a month after the agreement was signed by most of those who entered into it, these three men, after having been unanimously elected officers, voted to themselves these salaries. The proof is positive that in the making of this trust agreement there was no mention of any choice for directors or officers and nothing was said about any salary to be paid them, and we are satisfied that was not the purpose of the agreement. It was not unnatural that these officers should think that they should be paid salaries. Voorhees, the secretary and general manager, was receiving $6,000 per year. 'A salary of $2,400 per year for the president of a corporation doing so large a business as we have above stated would not be unreasonable, and a salary of that amount for a treasurer who would have the responsibility of handling from $300,000 to $500,000 per year would be very meager. The vice-president was by the by-laws chairman of the executive committee, and his duties and responsibilities would certainly justify a salary of that amount. Appellees introduced proof that these three officers in fact did very little, but this was because Voorhees took to himself practically all of the duties which would devolve on these three officers. He determined and performed all that should have been submitted to a president and to an executive committee. He hired a cashier, who handled substantially all of the moneys and thus absorbed the duties of the treasurer. If he had permitted these officers to perform the ordinary duties pertaining to their offices, the amount of the salaries voted them would not have been unreasonable. We approve the decree of the court below on that subject solely because the law did not permit them to vote salaries to themselves. Appellants contend that if we approve that portion of the decree, we should send the cause back to the Circuit Court with direction to hear proofs and ascertain and decree what would be a reasonable compensation to these officers for the services which they rendered. The courts have no such authority. Salaries must be fixed by the board of directors under the statute. He who serves as the officer of a corporation when no salary has been provided must render, his official services gratuitously. Salaries cannot be fixed for the time that has passed. Ellis v. Ward, 137 Ill. 509, and authorities there cited; Fritze v. Equitable Building & Loan Society, 186 Ill. 183. It is contended that at least one of these officers, after he had received his salary, used some part of it to pay obligations which he assumed when he bought some of this capital stock in order to secure a majority to be signed to this agreement, and that the court may well suspect that they intended that result when this voting agreement was entered into. On a consideration of the slight evidence on this subject, we think this position unwarranted. After one of these officers had received his salary, he could make use of it as he saw fit and could apply it in payment of any debt he owed, and there is nothing in the evidence to suggest that payment for some of this capital stock was intended to be made out of salaries which they might thereafter vote themselves.

In the Tenner case, supra, there was a committee of the stockholders who entered into the voting trust, which committee was to direct the policy of the trustee. Some suggestions are made in that case that through that committee the trustee was under the direction of the majority of those who entered into the voting trust. This agreement does not in terms authorize the majority of those who signed this trust agreement to control or direct the trust, and it is argued that the trustee is left in sole control for ten years, and that this renders the contract illegal. This perhaps presents the most serious question in the case. We have considered it in three lights. The fifth clause of the agreement, contemplates that the trustee may die, may resign or may be removed for some cause, and provides how the vacancy so created shall be filled. Apparently no one could remove him, except those who held trust certificates for the majority of the shares in the voting trust, and this therefore .seems to imply that under this agreement the members of the voting trust are to have control. Again, if, as in" the Tenner case, the members of the voting trust could lawfully appoint a committee of three to control the trust, why could they not select one stockholder instead of three, and permit him to control the situation for the ten years of the life of the agreement? If so, we see no reason why they could not confer that power on the same stockholder whom they selected as trustee; and the members of this voting trust unanimously conferred this power upon the same man whom they selected as trustee. But further, the members of this voting trust have not repudiated or objected to any act which this trustee has performed. Obviously, such objection to be effective must be by those holding a majority of the number, of shares. Thomas Cahill, the owner of a certificate for only 70 shares, is in a small minority. All the others, by signing the answer in this case, approved the acts of the trustee. For aught that we can know, the trustee will always consult and conform to the wishes of the majority in this voting trust, and if he does so, this contract ought not to be set aside because it leaves a loophole by which perhaps he might act contrary to the wishes of the majority. When the majority complain that he has disregarded their instructions, or acted contrary to their wishes, it will be time enough to consider what result should follow therefrom.

So far as the decree holds the action of the board in fixing the salaries of said officers illegal and requires each officer to refund what he has so received, with interest, and enjoins further payment under the action of October 22, 1912, it is affirmed. In all other respects it is reversed.

Affirmed in part and reversed in part.


source: Caselaw Access Project

author: Mr. Presiding Justice Thompson

license: Public Domain

text:
    Joseph F. Davis, Defendant in Error, v. Midland Casualty Company, Plaintiff in Error.
    1. Insurance, § 128

      —how policy will Be construed. Where the meaning of an accident insurance policy is ambiguous and uncertain, it must be construed liberally in favor of the insured and strictly against the insurer.
    2. Insurance, § 432*—what injury covered by accident policy. Under an accident insurance policy providing, for certain payments for certain injuries, “while actually riding within a conveyance drawn by horse power * * * in consequence of a collision or other accident to the conveyance,” it cannot be contended that the only injuries that can be recovered for are confined to injuries received in consequence of a collision or other accident to the conveyance, since the policy was issued to insure against injuries to the person of the insured while riding in a cbnveyance drawn by horse power.
    3. Insurance, § 432*—what is meant by term “total disability.” Under an accident insurance policy insuring against total disability, it is not necessary to constitute total disability that the insured be helpless, and the question of such disability is one of fact.
    4. Insurance, § 432*—when person insured is totally disabled. Where an accident policy insured against total disability, and the insured was injured so that the use of one hand was prevented, and it appeared that he could do no work, though he was able to go around and give instructions to others, a verdict in favor of such insured was justified by the evidence.
    Error to the Circuit Court of Vermilion county; the Hon. E. R. E. Kimbbough, Judge, presiding. Heard in this court at the April term, 1914.
    Affirmed.
    Opinion filed July 2, 1914.
    Rehearing denied October 8, 1914.
    Holmes, Milemore & Levin, for plaintiff in error; McKenzie Cleland, of counsel.
    O. M. Jones and W. J. Bookwalter, for defendant in error.

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

   Mr. Presiding Justice Thompson

delivered the opinion of the court.

This is a suit begun before a justice of the peace upon an accident policy issued by the defendant. An appeal was taken from the judgment in the justice’s court to the Circuit Court, where on a trial before a jury a verdict was returned in favor of the plaintiff for $125, on which judgment was rendered, and the defendant has sued out a writ of error to review that judgment.

Part 2 of the policy sued on provides for “Twenty-five dollars per week indemnity for accidents as specified should the Insured sustain injuries from causes or under conditions such as specified in clauses 1, 2, 3, 4, 5, 6, 7 and 8 in part One (1), which shall not prove fatal or cause other loss as aforesaid, but shall immediately, continuously and wholly disable and prevent the Insured from performing each and every duty pertaining to any and every kind of business, labor or occupation, during the time of such disablement, but not exceeding five (5) consecutive weeks.” Clause 5 of part 1, provides for certain payments for certain injuries: “(5) While actually riding within a conveyance drawn by horse power, provided, that the Insured shall not then be a hired driver thereof, or be riding or driving in or upon any conveyance used for any business purpose or any work whatsoever at the time of the accident, in consequence of a collision or other accident to the conveyance in which the insured is so riding.”

The defendant in error is a farmer, who was injured while driving a young horse hitched to a buggy in which he was riding from his home to the village of Oakwood. The horse being unruly, defendant in error struck it with a whip, when it kicked up over the dashboard striking the defendant in error’s hand, breaking several bones and lacerating it so that he was unable to do any farm labor for several weeks.

The plaintiff in error insists that the only injuries that can be recovered for are confined to injuries received in consequence of a collision or other accident to the conveyance in which the insured was riding. This is too narrow a construction. The policy was issued to insure the plaintiff in error against injuries to his person while riding in a conveyance drawn by horse power. There is nothing in the policy insuring against damage by the vehicle. The policy was pre-, pared by plaintiff in error, "and the meaning being ambiguous and uncertain, because of its phraseology, it must be construed liberally in favor of the insured and strictly against the Company. Travelers’ Ins. Co. v. Ayers, 119 Ill. App. 402. The only reasonable construction to be given to clause 5 of part 1 and part 2 is that defendant in error was insured, while riding in a horse-drawn vehicle, against bodily injuries arising from- a “collision or other accident,” which prevented him from performing his duties, business or labor.

It is also argued that the only accidents insured against are “accidents causing total disability; there is no indemnity whatever for partial disability. * * * The accident prevented only the use of one hand.” The proof is that the plaintiff in error could not do any work although he was able to go around and give instructions to others. It is not necessary to constitute total disability that the insured be helpless. Grand Lodge, Brotherhood of Locomotive Firemen v. Orrell, 206 Ill. 208, 109 Ill. App. 422; Cooley’s Brief on Ins. 3291. The question of total .disability was a question of fact, and the evidence justified the verdict of the jury and the judgment thereon. The judgment is affirmed.

Affirmed.


text:
    Charles H. Peirce, Appellant, v. levi W. Sholtey and D. A. Taylor, Appellees.
    1. Pleading, § 104

      —how many pleas party may file. A party may file as many pleas as he may deem necessary for his defense, and each plea stands hy itself and forms a distinct issue.
    3. Pleading, § 104*—when pleas not inconsistent. Pleas of general issue and denying joint liability are not inconsistent.
    3. Set-off and becotjpment, § 28*—when party may recoup damages under general issue. A party may recoup damages under the general issue where the damages arise out of the transaction which is the subject of the plaintiff’s action.
    4. Attobney and client, § 137*—when instruction as to fees not misleading. In an action for attorney’s fees, an instruction that the burden of proof is on the plaintiff to prove his case hy a preponderance of evidence, and if he has failed to make such proof the jury should find the issue for the “defendant,” is not misleading though there were two defendants, and such instruction is not erroneous as placing the burden of proving every issue hy a preponderance of the evidence.
    5. Attobney and client, § 137*-—when instructions as to liability, for fees inaccurate. In an action against two defendants to recover attorney’s fees, instructions requiring the plaintiff to prove that he was employed by both defendants were inaccurate, where one defendant admitted joint liability hy his default but his admission was not binding on the other defendant.

      6. Attobney and client, § 137

      —when party entitled to instructions. In an action for attorney’s fees, where a plea of the Five-Year-Statute of Limitations was on file, the plaintiff was entitled to have the jury instructed on the legal question raised hy the plea; and the error in refusing instructions was not remedied hy the withdrawal of the plea after the verdict and filing of a motion for new trial, or hy the fact that the defendant asked no instructions as to the plea.
    7. Áttokney and client, § 137*—when instruction properly refused. In an action for attorney’s fees, a requested instruction as to the question of recoupment was properly refused where it limited the right to recoup to the loss of a valid claim, and made no reference to money paid out by reason of any negligence of the plaintiff, if any was so paid, and where a proper instruction on the subject was given,
    8. Attobney and client, § 137*—what instruotions erroneous. In an action for attorney’s fees,. instructions that a claim of recoupment was an admission hy the defendant that the amount claimed in the declaration was due, and that the filing of the general issue waived a plea denying joint liability, were properly refused since they did not state a correct proposition of law.
    Appeal from the Circuit Court of McLean county; the Hon. Colostin D. Myeks, Judge, presiding. Heard in this court at the April term, 1914.
    Reversed and remanded.
    Opinion filed July 2, 1914.
    Rehearing denied October 7, 1914.
    Charles M. Peirce and D. D. Donahue, for appellant.
    Welty, Sterling & Whitmore, for appellee Levi W. Sholtey.

      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 Thompson

delivered the opinion of the court.

This suit was brought by Charles M. Peirce in March, 1913, to recover attorney’s fees from Levi W. Sholtey and D. A. Taylor for services averred to have been rendered for defendants by plaintiff. The declaration consists of one count in assumpsit in which the ad damnum is laid at $2,500, to which is attached a bill of particulars containing items of charges extending from January, 1905, to October, 1909, amounting to $6,192.05, and items of credit amounting to $1,258.90. This bill of particulars was afterwards amended by adding items amounting to $750, for services from January, 1903, to December, 1904. The defendant Taylor was defaulted. The defendant Sholtey filed three pleas: (1) A plea of the general issue; (2) a verified plea denying joint liability; and (3) a plea of the Five-Tear-Statute of Limitations.

The case was tried by a jury and a verdict returned in favor of defendants, on which judgment was rendered. The plaintiff prosecutes this appeal.

Appellant claims to have earned the attorney’s fees for which he sues in litigation arising out of the making of a judgment note for $1,200, by Otto Taylor and Mary E. Taylor. Mary E. Taylor is a daughter of Levi W. Sholtey and the wife of Otto Taylor. Judgment in favor of George Johnson was entered on the said note, and an execution was issued on that judgment and levied by the sheriff of Ford county on some farm stock and machinery of the value of about $1,600 that was claimed to be the property of Levi W. Sholtey, Otto Taylor, D. A. Taylor and other persons. The part of this property that was claimed to be owned by Sholtey was of the value of about $1,250, and D. A. Taylor owned most of the remainder of the property. The litigation began in 1903 and continued to 1910.

After the sheriff had levied on the property, Sholtey and D. A. Taylor, who are farmers in Ford county, went to Paxton, where Sholtey employed Peirce to recover the property claimed by him. Taylor was with Peirce at the time Peirce was employed, and Peirce claims he was employed by Sholtey and Taylor jointly. Sholtey and Taylor also went to the office of Schneider & Schneider, attorneys at Paxton, and they were retained, Sholtey claims by Taylor, but Schneider & Schneider claim they were retained by both Sholtey and Taylor. However, after the retainer of counsel, notice of trial of the right of property in the County Court was given, and a trial resulted in a judgment in favor of the claimants, from which no appeal was taken.

Before the trial of the right of property and the various suits for which appellant claims fees, Otto Taylor and Mary E. Taylor were adjudged bankrupts. After the trial of the right of property, in which it was adjudged that Sholtey was entitled to the possession of the property claimed by him, the sheriff, instead of returning the property to Sholtey, turned it over to H. Clay Wilson, trustee in bankruptcy of the estate of Otto Taylor, on an ex parte order of the United States District Court.

Appellant entered a limited appearance for Sholtey in the Taylor bankruptcy matter in the Federal District Court, made a motion.to set aside the order on the sheriff to turn the property over to the trustee and filed a plea to the jurisdiction of that court, but filed no plea of prior adjudication. That court simply passed on the question of jurisdiction and did not pass on the motion to vacate the order to turn the property over to the sheriff. This suit was appealed by Sholtey, on the advice of appellant, to the United States Circuit Court, where the appeal was dismissed, and the court suggested that a petition be filed in the District Court to review the’ ex parte order to turn the property over to the sheriff. That was done and that order was vacated.

In the meanwhile Wilson, the trustee, had advertised the property and sold it as the property of Otto Taylor, bidding it in himself at $975. Sholtey was advised by appellant not to buy the property at the sale, but an agreement was made between Sholtey and the trustee, under which Sholtey accepted the property from the trustee at $975, and the trustee was to hold the money until the District Court decided who was entitled to it. When the ex parte order had been vacated, the court directed the trustee to turn the $975 over to Sholtey.

Peirce brought suit against the sheriff and his bondsmen to recover the value of the property which the sheriff had turned over to the trustee. A verdict was obtained for $1,250, which was set aside. A second trial resulted in a judgment for defendants, which was reversed by the Appellate Court, that court in its opinion informing counsel for Sholtey what the remedy and the measure of his damages were. (People for use of Sholtey v. Crowe, 130 Ill. App. 349). On a retrial in the Circuit Court a judgment in favor of Sholtey for one cent was rendered, the trial court holding that under the declaration only nominal damages could be recovered. On the trial of that case in the Circuit Court, the trial court pointed out to appellant why only nominal damages could be recovered, and suggested that the declaration be amended that actual damages might be recovered, but appellant, as attorney for Sholtey, declined to accept the suggestion of the court. That case on appeal by Sholtey was affirmed by the Appellate Court. (People for use of Sholtey v. Crowe, 145 Ill. App. 450).

After the Federal Court had directed the trustee to turn the $975 over to Sholtey, appellant advised him not to accept it and that he was entitled to all his costs and expenses in getting the ex parte order vacated. After the suit against the.sheriff and his bondsmen had been disposed of, Sholtey employed other counsel who advised him to accept the $975 and interest, which was then paid to Sholtey by the trustee, who had been willing and anxious to pay it to him ever- since the Federal Court had revoked the ex parte order. There was also a replevin suit for a horse and buggy worth $150, resulting in a judgment for Sholtey, from which no appeal was taken.

The foregoing appears to be a summary of the litigation in which Sholtey was interested.

There was other litigation to. which Sholtey was not a party arising out of these matters in which appellant, as counsel, took part, but Sholtey insists without his direction. Among these proceedings was an indictment against certain parties for conspiracy in obtaining the judgment note; the presentation of the claim of Johnson against the bankrupt estate; a suit for damages against Johnson and his attorneys and the trustee in bankruptcy; a suit of Taylor against the sheriff for levying on exempt property; an appeal of that case to the Appellate Court (Taylor v. Crowe, 122 Ill. App. 518) and the taxation of costs in several of the cases.

From the evidence it is clear that all the property that appellee had involved in this litigation was about $1,250, and that the trial of the right of property settled this right to the recovery of what he claimed. While the sheriff turned that property over to the trustee in bankruptcy on an order wrongfully obtained from the Federal Court, that court ordered it transferred back to appellee when a motion was made asking that it be done and a ruling made thereon. There was a large amount of useless, protracted and needless litigation that occupied the time of counsel and the courts for several years. The appellee has paid to appellant $2,096, of which appellant has expended for costs and expenses about $855, leaving $1,241 as fees received by appellant, in addition to which Sholtey has paid to Schneider & Schneider $1,375, and to other counsel $200, as attorneys’ fees in this litigation.

The appellee, Sholtey, first filed a plea, properly verified, denying joint liability. Afterwards a plea of the general issue was filed. The appellant contends that by filing the plea of the general issue appellee waived all right to insist on appellant proving the joint liability of appellees. In this State it is uniformly held that a party may file 6 as many pleas as he may deem necessary for his defense, each plea stands by itself and forms a distinct issue, and it is not an objection that some are inconsistent with each other; for example, where the general issue is pleaded, and with it a plea in bar, or tender, or the statute of limitations.” Farnan v. Childs, 66 Ill. 544. The pleas of general issue and denying joint liability are not inconsistent. That contention of appellant is not well founded.

It is also contended that the appellee Sholtey could not recoup damages occasioned by any carelessness of appellant. The appellee contends that his matters were not properly attended to, and that appellant gave him very negligent professional advice in his legal matters and that the services were not only worthless to appellant but detrimental. The damages, if any sustained by appellee, from the action of appellant in appellee’s legal matters out of the conduct of the suits for which appellant seeks to recover fees, relate to and are a part of those transactions. A party may recoup damages under the general issue, where the damages arise out of the transaction which is the subject of plaintiff’s action. Waterman v. Clark, 76 Ill. 428.

Complaint is made concerning certain instructions given at the request of Sholtey. The first instruction tells the jury that the burden of proof is on the plaintiff to prove his case by a preponderance of the evidence, and if he has failed to make such proof they should find the issues for the defendant. It is contended that this instruction is misleading because there were two defendants. The jury could not be misled by the use of the word “defendant” for “defendants.” It is also said, it placed the burden of proving every issue by a preponderance of the evidence; it only placed the burden of proving his case on the plaintiff. There was no reversible error in this instruction.

The second, third, fourth, fifth and sixth instructions given for Sholtey each relate to different suits in which Sholtey was not a party. They tell the jury that before the appellant can recover for fees in such matters he must prove by a preponderance of the evidence that he was employed by both the defendants. The defendant Taylor admitted by his default that he was jointly liable for such matters with Sholtey, but the admission of Taylor was not evidence against Sholtey that appellee Sholtey and he jointly employed appellant. Appellant might have been employed by both Taylor and Sholtey separately. The plea required that appellant prove by a preponderance of the evidence that Sholtey and Taylor jointly employed appellant in the several matters for which appellant was seeking to recover. These instructions are inaccurate. They technically state a proposition of law more in favor of appellant than he was entitled to.

It is also contended that the court erred in refusing certain instructions requested by appellant. Five instructions refused pertain to the Five-Year-Statute of Limitations. This is not a case where the defendant had to introduce proof to sustain the statute of limitations. The proof offered by plaintiff showed that the contract, for whatever he was retained to attend to, was oral and that the services began eleven years before the suit was brought. A plea of the Five-Year-Statute of Limitations was on file. The statement of the account as amended, and concerning which there is some proof, extended over the entire time of the litigation. With the plea on file appellant was entitled to have the jury instructed on the legal question raised by the plea. After the verdict and the filing of a motion for a new trial, counsel for Sholtey obtained leave to withdraw the plea. That could not remedy an error in refusing instructions on the question raised by the plea, neither would the fact that appellee asked no instructions concerning the statute deprive appellant of his right to have proper instructions given on the questions raised by the plea while it remained an issue in the case before the jury.

The third refused instruction of appellant is concerning the question of recoupment.' It was properly refused because it limited the right to recoup to the loss of a valid claim, and made no reference to money paid out by reason of any negligence of appellant, if any was so paid, and all that was proper in this instruction was given in appellant’s third given instruction. The fourth refused was fully given in appellant’s second and fourth instructions.

The sixth, refused, told the jury that a claim of recoupment was an admission by the defendant that the amount claimed in the declaration was due. The seventh, refused, told the jury that the filing of the general issue waived the plea denying joint liability. Neither of these last mentioned instructions state a correct proposition of law. - Some other matters are presented by the voluminous argument and brief of appellant which we do not deem it necessary to review, as we find no merit in them.

For the error in refusing to give any instruction requested by appellant on the questions raised by the plea of the statute of limitations and the giving of instructions which required plaintiff to prove that he was employed by both defendants, when technically the requirement should have been that he was employed by the defendants jointly, the judgment is reversed and the cause remanded.

Reversed and remanded.


text:
    E. S. Combs, Appellee, v. James Pulliam, Appellant.
    (Not to be reported in full.)
    Abstract of the Decision.
    1. Frauds, statute of, § 2

      —when promise to answer for debt of another must be written. Under the statute of frauds no action shall be brought to charge a defendant on any special promise to answer for the debt of another unless the promise, or some memorandum thereof, is in writing signed by the party to be charged.

      Appeal from the Circuit Court of Shelby county; the Hon. Albert M. Ross, Judge, presiding. Heard in this court at the April term, 1914.
    Reversed.
    Opinion filed July 2, 1914.
    Rehearing denied October 7, 1914.
    Statement of the Case.
    Action of assumpsit by E. S. Combs against James Pulliam to recover the value of certain farm machinery sold and delivered by plaintiff to Harry Paradee. The declaration contained only the common counts. The evidence showed that Paradee was the son-in-law of defendant; that defendant orally guaranteed payment of goods furnished to Paradee; that such goods were sold and charged to Paradee and a note taken in payment of the account and transferred to a bank of which plaintiff was president; that defendant indorsed such note, but after maturity the bank took another note of Paradee without indorsement and surrendered the original note, and that the bank had judgment against Paradee on the last note. A jury returned a verdict in favor of plaintiff for $38.35, on which judgment was rendered, and the defendant appealed.
    Chafee & Chew, for appellant.
    E. A. Richardson and Whitaker, Ward & Pugh, for appellee.

      $ee 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 Thompson

delivered the opinion of the court.

2. Frauds, statute .of, § 119 —when statute need not be pleaded to be available as defense. Where the declaration in an action of assumpsit consists of the common counts only, it is not necessary to plead the statute of frauds in order to have the benefit of such statute.

3. Frauds, statute of, § 16*—what constitutes promise to answer for debt of another. Where goods were sold to a person, the promise of a third person, that he “would see that they were paid for, guarantee the payment,” was simply a promise to answer for the debt of another, and was not an original promise.

4. Bills and notes, § 215*—when indorser discharged. Where a buyer of goods gave a note therefor, indorsed by another, but such note was surrendered after maturity, and an unindorsed note of the buyer accepted, the indorser of the original note was not liable.


author: Mr. Justice Eldredge

text:
    The Starr Piano Company, Appellant, v. G. W. Lawrence, Appellee.
    (Not to he reported in full.)
    Appeal from the County Court of Piatt county; the Hon. Lawrence T. Allen, Judge, presiding. Heard in this court at the October term, 1913.
    Affirmed.
    Opinion filed July 2, 1914.
    Rehearing denied October 7, 1914.
    Statement of the Case.
    By virtue of certain executions issued out of the Circuit Court of Piatt county, the coroner levied on. seven pianos in the possession of the firm of Combes & Prisinger. Such executions were issned on three judgments rendered in favor of G-. W. Lawrence, the first being against Combes, the second against Prisinger and Agnes Prisinger and the third against Prisinger. Afterwards there was a trial of right of property, in which The Starr Piano Company was claimant and Lawrence defendant, before the court without a jury, and judgment being entered finding the right of property in the defendant, the claimant appealed.
    Abstract of the Decision.
    1. Trial, § 295

      —when propositions of law and fact may be submitted in trial by court. Where a court had made its findings, entered judgment thereon, and an appeal has been prayed and allowed, a motion to set aside the judgment and for leave to submit certain propositions of law and fact, and requesting the court to rule on such propositions and mark the same either held or refused, and a motion to set aside the judgment and for a new trial; are properly overruled, since the time to present propositions of law and fact on a hearing without a jury is after the evidence and arguments are concluded and before the court has made its decision, and the court had no jurisdiction to entertain either motion until the order for appeal had been vacated.
    2. Appeal and errob, § 645*—when order allowing appeal may be vacated. Where a court in a trial without a jury had made its findings, entered judgment thereon and allowed an appeal, a motion to set aside .the order for appeal and judgment and for a new trial was properly overruled, since while the setting aside of the order of appeal might have been allowed, the allowance of such motion would not necessarily vacate the judgment, and the vacation of the judgment would not necessarily set aside the findings of the court.
    Hugh Crea, Hugh W. Housum and Hicks & Doss, for appellant.
    Herrick & Herrick, for appellee.

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

   Mr. Justice Eldredge

delivered the opinion of the court.


author: Mr. Justice. Eldredge

text:
    Grace H. Leaverton, Appellant, v. John A. Myers, Appellee.
    (Not to he reported in full.)
    Abstract of the Decision.
    Landlord and tenant, § 449

      —when evidence sufficient to show surrender of premises. In an action for rent, where the evidence was conflicting as to what was said and done between the lessor and lessee and their agents as to the surrender of the premises and the making of a new lease for another 'flat, the questions were for the jury, and the verdict would be sustained when not manifestly against the weight of the evidence.

      Appeal from the Circuit Court of Sangamon county; the Hon. James A. Creighton, Judge, presiding. Heard in this court at the October term, 1913.
    Affirmed.
    Opinion filed July 2, 1914.
    Rehearing denied October 7, 1914.
    Statement of the Case.
    Action in assumpsit by Grace H. Leaverton against John A. Myers to recover for four months’ rent under a lease. It appeared that the defendant was occupying a flat under a renewal of a lease, that he vacated the premises, and that the suit was for two hundred dollars for the rent for the four months after such vacation. There was also evidence that the plaintiff failed to make certain repairs and repudiated an agreement to make such repairs, and that the plaintiff failed to have noise caused by tenants in an upper flat discontinued, causing discomfort to the defendant’s wife, who was ill. The defendant’s plea alleged the surrender of the premises and the plaintiff’s acceptance of the same. The jury found the issues for the defendant and judgment was rendered in his favor, whereupon the plaintiff appealed.
    Smith & Friedmeyer, for appellant.
    Gillespie & Fitzgerald, for appellee.

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

   Mr. Justice. Eldredge

delivered the opinion of the court.


text:
    John Y. Chisholm, Trustee, Appellee, v. First National Bank of Leroy, Appellant.
    1. Bankruptcy, § 23

      —when evidence sufficient to show preference. In an action to recover the amount of an alleged unlawful preference under the provisions of the Bankruptcy Act, where the evidence did not show clearly whether the bankrupt was insolvent at the time of the preference, the question whether the defendant knew or had reasonable cause to believe that such bankrupt was insolvent and that it would receive a preference from the proceeds of the sale of an elevator and, crib of corn and certain drafts was for the jury, its finding in the affirmative being supported by the evidence.
    2. Bankruptcy, § 21*-—what constitutes preference. Where the sale of a bankrupt’s property was made to satisfy a debt of a defendant and not voluntarily, the application of the proceeds not being because of mutual debts, or a debt in the nature of a running account, the payment constituted an illegal preference.
    3. Appeai and error, § 492*—■when erroneous judgment cannot be objected to. Error in the entry of a judgment in excess of the amount claimed in a declaration is waived when there is no objection in the lower court, since the question cannot be first raised on appeal.
    4. Bankruptcy, § 27*—what evidence admissible to show preference. In an action against a bank to recover the amount of an unlawful preference, where the defendant claimed that it ceased to make payments on checks because the bankrupt began doing business with another bank, a receipt for money deposited with another bank was properly admitted when its purpose was only to show that the deposit was not general but in trust for creditors.
    5. Bankruptcy, § 27*—when bankrupt’s schedule of debts admissible in evidence. In an action against a bank to recover the amount of an alleged unlawful preference, the' admission in evidence of the schedule of debts and creditors' filed in the bankruptcy court, while unnecessary was not error, the effect of the evidence being properly limited by the instructions.
    6. Appeal and erbob, § 1632

      —when improper remarle of counsel cured. In an action to recover the amount of an alleged unlawful preference, a question asked of an attorney as to whether he did not state that a conveyance was worthless if there were other creditors, and his negative answer, were harmless and the ruling of the court in excluding the question and answer on motion operated to remedy the error, had" there been any.
    Appeal from the Circuit Court of McLean county; the Hon. Colostin D. Myers, Judge, presiding. Heard in this court at the October term, 1913.
    Affirmed.
    Opinion filed October 16, 1914.
    Rehearing denied December 2, 1914.

      Certiorari allowed by Supreme Court.
    Leslie J. Owen and DeMange, Gillespie & DeMange, for appellant.
    Livingston & Bach and Welty, Sterling & Whitmore, for appellee.

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

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

   Mr. Presiding Justice Thompson

delivered the opinion of the court.

This is an action of assumpsit brought by John Y. Chisholm, trustee in bankruptcy of the Clark Grain & Elevator Company, against the First National Bank of Leroy to recover the amount of an alleged unlawful preference under the provisions of the Bankruptcy Act. The declaration contains several counts alleging in various ways that while the Clark Grain & Elevator Company, hereinafter called the Grain Company, was insolvent and within four months prior to its being adjudicated a bankrupt, the defendant received from it a transfer of property or the payment of money to the amount of $10,000, which it applied on the indebtedness of said Grain Company, and that at the time of the transfer or the payment of the money defendant had reasonable cause to believe that it would thereby obtain a preference over other creditors of the same class contrary to the Bankruptcy Act. A trial before a jury resulted in a verdict and judgment thereon in favor of the plaintiff, which on an appeal to this court was reversed and the cause remanded. Chisholm v. First Nat. Bank of Leroy, 176 Ill. App. 382. At the second trial a jury returned a verdict in favor of plaintiff for $10,718.50, on which judgment was rendered and the defendant again appeals.

The Grain Company, a corporation organized under the laws of Illinois, had been engaged, prior to November, 1910, in buying and selling grain at Argenta. On November 1, 1910, it sold its elevator at Argenta and purchased one at Leroy for $12,500, paying $6,000 in cash' and giving a mortgage on the property for $6,500. It also leased another elevator at Leroy and one at Empire. It began the operation of these elevators on November 4, 1910, and on that day made a deposit of $1,000 with the appellant in a general check and deposit account, known as the Leroy account. On November 21st it borrowed $1,000 from the appellant, giving its note therefor, and opened a second check and deposit account called the Empire account. The accounts of the Grain Company at the appellant Bank were overdrawn much of the time. The Leroy account was continuously overdrawn from January 17th to February 9th. On February 1, 1911, the Grain Company borrowed $5,000 from appellant for which it gave its note payable on demand. The Grain Company continued in business until March 22nd, and was declared an involuntary bankrupt May 15, 1911. The Empire account was continuously overdrawn from February 23rd to March 20th, when the overdraft in that account amounted to $1,438.59.

The Leroy account was continuously overdrawn from February 14th, the overdraft then being $5,746.68. On March 18th the overdraft was $4,027.51. It varied from February 14th to March 20th from $3,500 to $6,769.87. On March 20th the Grain Company sold its elevator and a crib of corn to Simeon Crumbaugh, from whom it had bought the elevator, and received two checks, one for $6,368, the other for $2,337, which were turned over to the defendant in payment of the $5,000 note and accumulated interest, $40, and the balance, $3,657.50, was deposited in part payment of the overdrafts in the Leroy and Empire accounts. The appellant also received two drafts amounting to $980 with waybills attached on March 20th. These drafts were applied in reduction of the overdraft. On March 21st other money was deposited by the Grain Company reducing the overdraft to $300.25.

The questions involved in the case are: (1). Was the Grain Company insolvent? (2) Did the defendant have reasonable cause to believe the Grain Company was insolvent? And (3) did defendant receive money from the Grain Company not in the regular course of business in payment of its debts while the defendant had reasonable cause to believe the Grain Company was insolvent within four months prior to the adjudication in bankruptcy?

It is stated in the argument for defendant: “As a matter of fact it (the Grain Company) was insolvent at the time it opened its account with appellant, but its condition was not known to appellant until after March 20th, 1911.” The proof clearly shows that when the Grain Company began business at Leroy the only assets it had were the equity in the elevator and $1,385. The company at that time owed Thayer & Company a note for $5,000, with interest from July, 1910, and had corn contracted at Argenta on which it lost between $2,000. and $3,000 by a decline in the price of corn. The evidence tends to show that this loss occurred by a shrinkage in the price of corn after the business was begun in Leroy. After buying the elevator the Grain Company expended $1,171 in improvements on it.

On November 28, 1910, Clark borrowed $1,063.97 on some life insurance policies on his own life which was deposited to the credit of the Grain Company with appellant. On November .30, 1910, the Grain Company borrowed $2,500 from B. A. Boyd, a grain commission man of Indianapolis, which it deposited with appellant to its credit. The leased elevator in Leroy, containing corn and oats belonging to the Grain Company of the value of over $6,000, burned February 13, 1911, with only $500 insurance on the contents, the draft for which was received by the defendant. The net loss resulting from the fire was over $5,000. The cashier of appellant was present at the fire and was then told of the amount of the insurance. The owner of the leased elevator that burned, causing such a large loss to the Grain Company, was George Dooley, the vice-president of the defendant. The Grain Company sustained heavy losses on corn sold in December, 1910, and January, 1911. Clark, the president of the Grain Company, on December 28, 1910, used $3,025 of the Company’s money in paying a debt of the H. C. Clark Grain Company, a different party from the Clark Grain & Elevator Company, in Oklahoma, for which the Grain Company was in no way responsible, and this was a total loss, as the party for whom it was paid was not financially responsible.

Shortly before the sale of the Elevator to Crumbaugh, the Grain Company at the demand of the defendant that the Grain Company’s indebtedness should be reduced, borrowed another sum of $2,000 from Boyd which was paid to the Bank on its overdraft. For several days before the elevator was sold, the Bank president and Taylor, its cashier, urged that it be given security and that its indebtedness and overdraft be paid. Cassley, the secretary and bookkeeper of the Grain Company, testified that the appellant was so anxious to have its overdraft paid that shortly before the sale of the elevator the cashier of the Bank said the account was worrying him and that he would give Cassley $100 to get the account transferred to some other bank, and that Cassley said he would do all he could to transfer the account and that he did talk with Clark about it. The Grain Company offered the Bank a second mortgage on the elevator, stock in the Grain Company and insurance policies on the life of Clark, but the Bank insisted the elevator and the com in a certain crib be sold and the proceeds applied on the indebtedness. The Bank began and conducted the negotiations, which lasted several days, for the sale of the elevator and corn to Crumbaugh. The evidence shows that the sale was forced through by the appellant, and that appellant urged Crumbaugh to offer $12,000 for the elevator, that a few months before he had sold for $12,500, and on which $1,171 had since been expended by the Grain Company in improvements. After the sale to Crumbaugh of the elevator for $12,000, and the corn for $2,337.50, had been agreed upon on Sunday, March 19th, the parties early Monday morning went to Mr. Owen, an attorney at Leroy, to make the conveyances. Clark testified that Owen told the parties—Taylor representing the Bank, Crumbaugh and Clerk representing the Grain Company—before the deed was signed that if there were any other creditors the transaction would not stand, unless there was other property remaining to satisfy the other creditors, and Clark said there was no other property, and that after this statement the deed was executed and the checks drawn, the $5,000 note paid and the balance credited on the indebtedness. The deed of the elevator and a bill of sale of the corn were recorded in the recorder’s office in Bloomington at 9:50 A. M. Monday, March 20th. The checks were drawn by the cashier of the Bank, signed by Crumbaugh and applied on the indebtedness without being intrusted to the custody or possession of the Grain Company. The statement of Clark that the attorney said the transaction would not stand is denied by Taylor, the stenographer of the attorney, and the attorney, the testimony of Taylor being that Clark said the Company had grain enough to pay all its debts and have $900 to $1,000 left. There is evidence that the appellant had notice that there was other indebtedness and there were various checks outstanding that the appellant had refused to honor. Clark testified that he told Taylor, the cashier, on March 13th that the Company owed Thayer $5,000 and Boyd $2,500. This, however, is contradicted by the cashier.

It is not clear from the evidence whether the Grain Company was solvent or insolvent when it began business in Leroy. The proof tends to show that' the Grain Company had contracted for 22,000 bushels of corn at Argenta, and that the price of corn declined about ten cents a bushel in November and December, and that there was a loss on the Argenta corn of over $2,000 when it was delivered in December. If the loss on the Argenta corn occurred after the beginning of the business at Leroy, then the Grain Company was not insolvent until after it had begun business at Leroy, as the $3,025 paid on an Oklahoma debt of Clark’s was not the debt of the Grain Company but was a misappropriation by Clark of the funds of that Company. When the Grain Company was declared bankrupt, and it does not appear to have done any business after March 21st, it was indebted- to the amount of $17,864.63, and had assets of not to exceed $5,244.85.

The verdict was for the amount of the proceeds of the sale of the elevator and crib of corn to Crumbaugh and the $980 draft with interest thereon. It was a question for the jury, and the jury was justified in finding from the evidence that on March 20th, when the proceeds of the sale of the elevator and crib of com to Crumbaugh and the delivery of the drafts for $980 were obtained, that appellant knew or had reasonable cause to believe that the Grain Company was insolvent, and that in applying: the proceeds of the sale of the elevator and crib of corn and drafts appellant would receive a larger percentage of its debt than other creditors.

It is also contended that the Grain Company was insolvent all the time it did business in Leroy and that the transactions between the appellant and the Grain Company increased the assets of the Grain Company, that the net result of the business was beneficial to the Grain Company. The facts show that the assets were very much diminished and the debts very much increased while the business was run in Leroy. Appellant only claims that the deficiency of the Grain Company’s assets to pay its debts was $1,000 in November, 1910, while when it was declared a bankrupt the deficiency was about $12,000.

It is also insisted that the appellant had the right to apply the deposits to the debts of the Grain Company and that the application, as made, did not constitute an illegal preference. The debts were not mutual debts, or in the nature of a running account, but the sale of the elevator, the crib of corn and the receipt of the two drafts were made for the purpose of applying such proceeds on the Grain Company’s debt at the insistent demand of appellant and not voluntarily by the Grain Company. A payment of debts so obtained constitutes an illegal preference. In re Mohr Contracting Co., 157 Fed. 469; In re V. & M. Lumber Co., 182 Fed. 237; Ernst v. Mechanics’ & Metals Nat. Bank, 201 Fed. 664, 120 C. C. A. 92.

It is also contended that the trial court erred in rendering judgment on the verdict for $10,718.50 when the damages claimed in the declaration are $10,000. The appellant has waived all errors in that regard by not having raised any question concerning it in the trial court. That question may not be first raised in an Appellate Court. Wheatley, Buck & Co. v. Chicago Trust & Savings Bank, 167 Ill. 480; Leathe v. Thomas, 218 Ill. 246.

On March 20, 1911, at the time the elevator and crib of com were sold, the Grain Company was shelling and shipping other corn. Four cars had been loaded and billed for shipment. The bookkeeper testified that ■immediately after the proceeds of the elevator and crib of com had been applied on the indebtedness, the cashier of appellant went to the grain office and insisted that the bills of lading and drafts on the four ■cars should be turned over to appellant. The bookkeeper testified that these cars were to be shipped to Boyd on the money he had advanced to the Grain Company, but that the cashier demanded that they be turned over to appellant, and that on his demand two of the drafts, amounting to $980, and the accompanying bills of lading were turned over to appellant and credited on the overdraft. On March 21st the Grain Company made a deposit of $1,895, which was applied by the appellant on the overdraft, leaving an overdraft of $300.25, when the appellant ceased to pay any further checks of the Grain Company.

It is assigned for error that the court erred in the •admission and rejection of evidence. It is argued that it was error to admit proof of a receipt for money •deposited with another bank by the Grain Company after the receipt of the sums by appellant which appellee claims were preferences. Appellant claimed that it ceased to pay checks after it received the alleged • preferences because the Grain Company had begun • doing business with another bank. The receipt was admitted for the purpose only of showing that the deposit was not a general deposit but was in trust for the creditors. It is also contended that it was error to admit in evidence the schedule of debts and creditors filed in the bankruptcy court because insolvency was admitted. While such evidence was not necessary, it was not necessarily erre .íeous, and the court instructed the jury at the request, of appellant to disregard any evidence proving or tending to prove the existence of any indebtedness of the Grain Company which arose after making the deposits in question, and that the bankruptcy schedule is not to be regarded in so far as it proves or tends to prove any debts of the Grain Company which arose after making the deposits in question.

It is further contended that a question put to the attorney, who .drew the conveyances of March 20th, whether he did not state at a meeting of the creditors five days after the making of the conveyances that if the Grain Company had any other creditors the conveyance was not worth the paper it was written on. The attorney answered that he did not, and on motion of appellant the question and answer were excluded. The question and answer were harmless, and the ruling of the court remedied any error there might have been if the answer had been other than it was. Complaint is made concerning some other rulings on evidence, but on examination we do not find any reversible error.

Error is also assigned on the giving and modifying instructions, but we find the jury were fully and properly instructed.

Finding no reversible error in the case, the judgment is affirmed.

Affirmed.


text:
    A. H. Miller and A. E. Foster, Appellees, v. Joseph A. Miller, Appellant.
    (Not to be reported in full.)
    Appeal from the Circuit Court of Douglas county; the Hon. Solon Philbeick, Judge, presiding. Heard in this court at the October term, 1913.
    Affirmed.
    Opinion filed October 16, 1914.
    Rehearing denied November 6, 1914.
    Statement of the Case.
    Action in assumpsit by A. H. Miller and A. E. Foster against Joseph A. Miller to recover $480 claimed to be due on account of services performed in finding a purchaser for an eighty acre tract of land. The case was tried three times in Moultrie county and new trials granted, after which the case was transferred to Douglas county by a change of venue. It appeared that the defendant agreed to pay $1 per acre commission for selling the land and all the plaintiffs could get above the price of $150 per acre. A purchaser was procured who agreed to pay $155 per acre, but such purchaser abandoned the contract and forfeited the first payment of $400. At the close of the plaintiff’s evidence, the defendant not offering any evidence, the court instructed a verdict for plaintiff for $94.30, being the commission of $1 per acre and interest. Both parties moved for a new trial, and the motions being overruled, judgment was entered whereupon the defendant appealed.
    Abstract of the Decision.
    1. Vendob and pukchaseb, § 118

      —-when contract may 6e enforced. A contract for the sale of land which stipulates for the payment of liquidated damages in case of failure to perform, but which is not in the alternative, and does not contain any provision that it shall become null and void on the failure to perform any of its conditions, is not an optional contract, and its performance may be enforced.

      At the April term the Appellate Court reversed and remanded the case on the plaintiff’s assignment of cross-errors. A petition for rehearing was filed and granted. Afterwards the appellees notified the court that such petition was not filed within the time prescribed by the rule of court, and should not have been allowed, but no motion to strike the petition was made.
    Jack & Whitfield, for appellant.
    E. J. Miller and F. M. Harbaugh, for appellees.

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

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

   Mr. Presiding Justice Thompson

delivered the opinion of the court.

2. Brokers, § 65 —when "brokers entitled to compensation. Where real estate brokers produced a purchaser ready, able and willing to buy land at the price fixed, they were entitled to compensation for their services, and when the agreement provided that the brokers were to be entitled to an additional sum if the price exceeded that asked by the seller, they would be entitled to such excess when the sum was paid, but an action for the excess could not be maintained until the money was paid.

3. Brokers, § 99*—when instruction as to amount of compensar tion erroneous. In an action for commissions for procuring a purchaser for real estate, the refusal to give an instruction assessing damages, as requested, was proper, where the amount stated was more than the ad damnum, and such amount stated was not due under the contract.

4. Appeal and error, § 1156*—when rehearing may be permitted though petition not filed in time. While the granting of a rehearing may be erroneous because the petition therefor is not filed in time, the court has control over its judgments during the term at which they are entered, and such rehearing may be allowed to stand as granted on the court’s initiative.


text:
    Martin Underwood, Appellee, v. C. C. Ankrum and Ida R. Ankrum, Appellants.
    (Not to be reported in full.)
    Appeal from the Circuit Court of Vermilion county; the Hon. E. R E. Kimbrough, Judge, presiding. Heard in this court at the October term, 1913.
    Reversed.
    Opinion filed October 16, 1914.
    Statement of the Case.
    Action commenced before a justice of the peace by-Martin Underwood against C. C. Ankrum and Ida R. Ankrum to recover damages for the alleged wrongful closing of a public highway, thereby depriving plaintiff and his customers of access to a coal mine, whereby he sustained damages to Ms coal business. Plaintiff obtained a judgment before the justice, and on appeal, in the Circuit Court a verdict for fifty dollars was returned in his favor, on which judgment was entered, whereupon the defendants appealed.
    Abstract of the Decision.
    I. Justices of the peace, § 36

      —how jurisdiction of justice determined. The jurisdiction of a justice of the peace is limited to cases in which jurisdiction is given in art. XI, § 16 of the Justice’s and Constable’s Act. J. & A. If 6877.
    2. Justices of the peace, § 64*—what action cannot be brought before justice. An action for wrongfully closing a public highway, where the only remedy is by a suit in case, and the damages sued for are neither an injury to real estate nor to personal property, is improperly brought before a justice of the peace, since such justices have no jurisdiction in actions on the case.
    3. Roads and bridges, § 200*—what is nature of proceeding to recover penalty for obstructing road. A proceeding in the name of a town to recover a statutory penalty for obstructing a highway is in the nature of a criminal action.
    H. M. Steeley and H. M. Steeley, Jr., for appellants.
    Isaac A. Love, for appellee.

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

   Mr. Presiding Justice Thompson

delivered the opinion of the court.