text:
    Belleville Savings Bank et al., Appellees, v. Mercantile Trust Company, Trustee et al., Appellants. Mercantile Trust Company, Trustee et al., Appellants, v. Southern Coal & Mining Company et al., Appellees.
    1. Mortgages, § 373

      —when mortgage may contain provisions governing foreclosure. Holders of bonds secured by mortgage have a right to ' agree as to the conditions upon which a suit to foreclose the mortgage may be brought and to make that agreement a provision of the mortgage.
    2. Mortgages, § 373

      —effect of provisions in mortgage relative to foreclosure. Under an agreement contained in a mortgage secured by bonds, requiring that before suit upon such bonds or for the foreclosure of the mortgage might be instituted by bondholders individually it should be necessary that the trustee holding the bonds and mortgage should be notified of the default and that a written request by a majority of the bondholders should be made, and that the trustee should be given a specified time to institute suit, held that an action may not, in the absence of fraud, be instituted by a majority of the minority of the original bondholders who did not agree to a plan for the issue of new bonds, and for the substitution of such bonds for old bonds and the giving of a new mortgage, which was to be a prior lien as to all the old bonds and mortgage, and which was agreed to by ninety per cent, of the holders of the old bonds, where there was no intention upon the part of such majority bondholders that their original bonds should be cancelled until all the bonds of the original issue had been deposited with the trustee under the new agreement especially when such an agreement for a new loan was made to prevent financial disaster to the corporation.
    3. Bonds,—when not considered cancelled. The bonds of the majority of the original bondholders of a corporation who, with the intention of saving the corporation from financial disaster, and without fraud, in an agreement for a new loan by the giving of a new mortgage and bonds which were to be a prior lien over the first issue, cannot be considered as cancelled by depositing them with the trustee under the new agreement where the mortgage, which was a part of the agreement provided that bonds of the former issue should be held by the trustee in trust for the owners and holders thereof, depositing the same with the trustee in trust for the holders thereof, as against all bonds of the former issue not deposited with the trustee, and part of the original issue, was still outstanding.
    4. Trial, § 6

      —when causes should he consolidated. There should be a consolidation of cases where one suit is brought by a majority of a minority of the original bondholders of a corporation who did not agree with a plan of the majority for a new loan, and the giving of a new mortgage and bonds which were to be a prior lien to the old mortgage and bonds, for a foreclosure of the original mortgage, and another suit is brought by the trustee at the written request of the holders of the balance of the bonds who represented the majority of the holders of the old and new issue to foreclose both mortgages, the original mortgage providing that suit might be brought by the trustee upon the written request of the majority of the bondholders, and then by such majority upon his refusal to act after a specified time.
    Appeal from the Circuit Court of St. Clair county; the Hon. George A. Crow, Judge, presiding.
    Heard in this court at the October term, 1914.
    Reversed and remanded with directions.
    Opinion filed May 1, 1915.
    Rehearing denied July 7, 1915.

      Certiorari denied by Supreme Court (making opinion final).
    Richard L. Goode, A. H. Baer, Kramer, Kramer & Campbell and R. W. Ropiequet, for appellants.
    Jamison & Thomas and Turner & Holder, for appellees.

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

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

   Mr. Justice Higbee

delivered the opinion of the court.

On October 2, 1905, the Southern Coal & Mining Company, an Illinois corporation engaged in operating large mining properties owned by it in St. Clair and Clinton counties, Illinois, issued bonds to the amount of $1,100,000, bearing interest at the rate of five per cent, per annum, payable semi-annually from date and evidenced by coupons attached to said bonds. The bonds were payable October 1,1930, and to secure the payment of the same the company executed a' mortgage on its properties to the Mercantile 'Trust Company as trustee, a Missouri corporation, with its office in St. Louis. This mortgage provided, among other things, that the mortgagor should provide a sinking fund to pay off said bonds and for that purpose should, on the first day of September, 1907, and annually thereafter, pay a stipulated sum to the said trustee and also the maimer in which said sinking fund should be used in paying off the bonds. It further provided that if any interest on said bonds should be in default of payment for six months- after written demand therefor, or the stipulated amounts should not be paid for said sinking fund for a period of three successive years, then and in such case all of said bonds, principal and accrued interest should become due and payable upon a written declaration of a majority of the owners in amount of the bonds, outstanding being filed with said trustee; that upon such default in interest or sinking fund the trustee upon the written request of such a majority should have the right to proceed in any court of competent jurisdiction to foreclose the mortgage for the benefit of the bondholders, and that such proceeding should at all times be subject to the direction and control of such a majority of said bondholders; that no bondholder or holders should have a right to institute any suit or proceedings at law or in equity upon said bonds or coupons or for the foreclosure of the mortgage or invoke any other remedy without first giving notice in writing to the trustee of the fact that default had occurred and continued as stated in the mortgage, nor unless a majority of the bondholders, in amount, should make a request in writing to the trustee and give him a reasonable opportunity to exercise the powers granted in the mortgage, nor unless the trustee for thirty days, after the request in writing, had failed to institute said suit. Such notice and request are declared in the mortgage to be conditions precedent to the execution, except by the trustee, of the powers and trust of the mortgage or to any remedy under the mortgage or upon the bonds and coupons. Interest was paid on the bonds and the sinking fund provided for until 1907, when on account of depression in financial matters there was a default both in the interest and in the provisions to be made for the sinking fund. This condition and the financial depression continued during the years 1908 and 1909, so that the mortgagor was not only unable to pay the interest provided for the sinking fund but its officers also had to borrow money to operate the mines. To protect the officers on said loans, the bondholders holding approximately three-fourths of the amount of bonds secured by said mortgage signed an agreement that the indebtedness represented by such borrowed money should be a prior lien on said property to their mortgage bonds. The additional indebtedness so incurred, having matured, it was decided by the officers of the mining company that some other way of raising money to pay off such indebtedness and operate the property should be devised. With this in view, notices were sent out and, in compliance therewith, stockholders holding a majority of the stock met at the company’s office and a committee appointed by them submitted a plan for a new bond issue of $1,500,000 on the property of the company, bearing interest at the rate of five per cent, per annum, maturing in 1939, $400,000 of said amount to be preferred and to be used to pay the current indebtedness and to raise such amounts as should be necessary to keep the properties in operation, and the remaining $1,100,000 of common bonds to be exchanged for the bonds issued October 2, 1905. This report and the recommendations of the committee were adopted by the stockholders attending said meeting and a resolution was passed, authorizing the company to issue such bonds for said amount and afterwards, in pursuance of this resolution, the company did on the first day of October, 1909, issue said bonds for the sum of $1,500,000 and execute a mortgage on all its property to the Mercantile Trust Company, as trustee, to secure the payment of the same. It was realized by the parties in interest that it would be impossible to get an immediate exchange of the entire issue of $1,100,000 of the issue of October 2, 1905, for a like amount of the new issue of common bonds; and to protect those who did make the exchange and also permit the early use of the $400,000 preferred bonds, it was provided in the new mortgage as follows:

“Fifty-fourth. Inasmuch as the common bonds herein mentioned are to be issued for the purpose of refunding the former bond issue of said coal company of October 1st, 1905, and the due and unpaid coupons and interest thereon, and it is not probable that all of the owners and holders of the bonds of said former issue will be located and their assent obtained to deposit their holdings of said former bond issue with the trustee in exchange for said common bonds as herein provided within a reasonable length of time; therefore, whenever the owners of 90 per cent, in amount of the outstanding bonds of said former issue shall deposit their bonds, coupons and interest notes with the trustee for exchange for said common bonds, then the trustee shall proceed to authenticate and deliver all of the said preferred bonds to the coal company to be used as herein provided, and shall authenticate and deliver said common bonds as herein provided to the owners of bonds and due and unpaid interest coupons thereon so deposited with the trustee, as provided in this mortgage, and the said bonds of said former issue and due and unpaid coupons and interest thereon and notes given for interest due and unpaid on said bonds shall be held by the trustee in trust for the owners and holders thereof depositing the same with the trustee as against all of the bonds of said former issue and due and unpaid coupons and interest thereon not deposited with the trustee, and the bonds, due and unpaid coupons, and interest on said former bond issue so held by the trustee shall be subject to said preferred bonds herein mentioned, and said preferred bonds shall be a prior lien on the property hereby mortgaged as to all of the bonds of said former issue, due and unpaid coupons, and due and unpaid interest thereon so held by the trustee in trust, and the trustee shall hold said former bonds, coupons and notes so exchanged for the benefit of the owner or owners of the common bonds and coupons exchanged therefor respectively, and a transfer or assignment of any of said common bonds and coupons shall operate as and be a transfer and assignment of all right, title and interest of the owner of said common bonds and coupons in and to the bonds, coupons and notes held by the trustee, and for which said common bonds and coupons were exchanged. The trustee shall hold all of said common bonds of this issue not used in the exchange as aforesaid for the purpose of exchanging them for the bonds of the former issue, the due and unpaid coupons and interest due thereon, whenever the same shall be presented for exchange as herein provided. Whenever all of the bonds of the former issue are so exchanged by the trustee for the common bonds of this issue, then the trustee shall release and satisfy the former mortgage of October 1st, 1905, securing the bond issue of that date, and any of the common bonds then remaining in the hands of the trustee shall be cancelled by the trustee as herein provided. ’ ’

To carry out the provisions of said section 54, the bondholders holding more than ninety per cent, of the amount of bonds of the issue of October 2,1905, signed an agreement which was called the “ninety per cent, agreement,” consenting that when ninety per cent, of the amount of the bonds issued were deposited with the trustee, he might deliver bonds for $400,000 to the coal company and exchange the bonds of the first issue for common bonds of the second issue as provided in said section 54, and also that the $400,000 of preferred bonds should be a prior lien upon the property of the company to their interest in the bonds of the first issue held by the trustee as so provided; also that said former coupons and notes given for unpaid coupons be held in trust as was also provided in said section 54. Subsequently $400,000 of preferred bonds were authenticated and delivered to the coal company by the trustee which deposited the same with the Mechanics’ American National'Bank as collateral to secure indebtedness due it, and also to secure the payment of funds procured to pay the operating expenses of the company. Since the deposit of ninety per cent, of the bonds of the first issue with the trustee, he has held them uncancelled for the benefit of those taking the common bonds in exchange therefor. In January, 1911, L. D. Turner representing the Belleville Savings Bank, of which he was president and some private individuals who held certain of the bonds of the first issue not deposited with the trustee, and who had not joined in the agreement to carry out the provisions of said section 54 in the new mortgage, called at the office of the trustee and made inquiries in regard to the payment of interest on the bonds held by them and the condition of the sinking fund. There was a general conversation between Judge Goode, general counsel for the trustee, and Mr. Turner in regard to the matters of inquiry above mentioned, and Mr. Turner testified upon the trial that Judge Goode told him that he agreed “that the Trust Company is in a position that they cannot act, but you can.” Judge Goode in his testimony stated that he had no recollection of making any such statement, but that if he did make such a remark his meaning was that the trustee could not act until requested to do so but that Mr. Turner was in a position to take steps towards presenting tlie request, as provided by the mortgage. It is not contended that any written request was made on the trustee by Mr. Turner or those he represented to foreclose the mortgage. Shortly following this, the savings bank and other parties, holding some $14,000 of the • unexchanged bonds of the first issue, brought a suit, which is known as “No. "3048,” to foreclose the first mortgage. A motion to dismiss this bill was denied and the bill was later amended. As it was amended the bill alleged that the company had mismanaged the property; that judgment had been obtained against it on past due coupons; that complainants had demanded their interest and made demand in writing on the trustee to take steps, or join with complainants to take steps, to declare the whole of the original mortgage indebtedness, principal as well as interest, due, and to foreclose said first mortgage, but that they were informed by the trustee that by accepting the trust under the second mortgage it was so bound by the provisions of said mortgage that it could not take the steps required but that complainants could do so on their \own behalf.

It was the theory of the bill and the court was asked to hold that the bonds deposited under the ninety per cent, agreement in exchange for the common bonds were thereby cancelled, and that the bonds of the first issue not so deposited were a prior lien on all of the property of the company covered by the first mortgage. A demurrer to the amended bill was overruled, an answer and replication filed and the case referred to the master in chancery to take the proof. Bondholders holding about $53,000 of the unexchanged bonds of the -first issue and who had not signed the ninety per cent, agreement deposited their bonds with the master in chancery and made proof of the same. "While the case was still pending before the master in chancery, a meeting was held by the bondholders who had signed the ninety per cent, agreement, and a committee appointed to represent them. The bondholders owning a majority of the amount of the first issue and of the common bonds of the second issue served a written request on the trustee to declare the entire debt of the first issue of bonds and to proceed to foreclose the mortgage. In compliance with this request the trustee in connection with the committee of bondholders filed a bill to foreclose such mortgage, the proceedings being known here as “No. 4006.” This bill set out the facts leading up to the issuing of the second mortgage and the common and preferred bonds secured thereby, the provisions of section 54 of said mortgage, the signing of the ninety per cent, agreement and the deposit of ninety per cent, of the amount of the original issue with said trustee, in accordance with “said agreement and said section 54.

The prayer of the bill was that an accounting be taken of the debt due the Mechanics’ American National Bank, for which the preferred bonds were pledged as security; that in case a foreclosure and sale of the premises should produce enough money to pay the debt in full; that out of the sum received the holders of those bonds who did not join in the ninety per cent, agreement and deposit their bonds with the trustee should first be paid in full; that out of the remainder the amount due the Mechanics’ American National Bank, which held the $400,000 preferred bonds as collateral, be paid in full and that the remainder should be distributed among the bondholders who signed the ninety per cent, agreement and deposited their bonds with the trustee in exchange for the common bonds; but in case there was not sufficient to pay the whole debt, the bondholders not signing the agreement and depositing their bonds with the trustee should be paid their pro rata share of the proceeds of sale, the same as if all the first issue was in the hands of the bondholders and the second issue had never been issued, and that out of the remainder, the debt due the Mechanics’ American National Bank should be paid and the balance, if any, be pro rated among the bondholders signing the ninety per cent, agreement. After this suit was filed a motion was. made by the Mercantile Trust Company, and later by all the complainants in the second bill, to consolidate the two cases and that the trustee be given full charge and control of the same. This motion was denied by the court, but the decree contained the following reference thereto after reciting the denial of the motion: “Except that it is the order and decree of the court that for the purpose of this decree and for the purpose of defining the respective rights of the parties in said cause and to that extent the consolidation of said causes takes place. ’ ’ And it was also further ordered that said cases be consolidated for the purpose of appealing from the decree entered therein. Separate reports were made by the master in chancery in the two cases, to which objections were filed with the master which, being overruled, were filed with the court as exceptions and they having also been overruled. A single decree was entered by the court covering its findings as to both cases.

•The master in his report found the facts showing the history of the various transactions relative to the case substantially as above set forth. He also found that there was no evidence of mismanagement of the aft airs of the company as was alleged in the bill; that there was no provision in the second mortgage, by which the bonds of the first issue held in trust by the trustee and for which exchange had been made, could be returned to the holders of the bonds exchanged; that the exchange of bonds was a bona fide exchange and the holders of bonds of the second issue could not have the first issue returned to them except by the unanimous consent of all the holders of the bonds of the second issue, the trustee and the Southern Coal and Mining Company. He further found that complainants in No. 3048 did not give a notice in writing signed by a majority of all the outstanding bondholders of the issue to the trustee to foreclose the mortgage, and that no such notice in writing was given signed by a majority of the owners of the $63,000 in bonds not exchanged; that the trusteeship of the trustee in the second mortgage was inconsistent with that of the first and therefore it was not necessary for a majority of the owners of the $63,000 of bonds of the first issue outstanding to give notice in writing to the trustee before bringing suit; that the complainants in the first bill, No. 3048, who are owners of bonds to the amount of $63,000, who did not sign the ninety per cent, agreement and did not deposit their bonds with the trustee, have a prior lien to all other holders of the issue of 1905 and are entitled to be paid in full before any of the other bondholders who did deposit their bonds with the trustee are paid anything. He further found the amount due on all the bonds of the first issue and recommended a decree as prayed for in the first bill. The court in addition to overruling the exceptions to the master’s report found that all the material allegations in the bill as amended in No. 3048 were substantially true and the equities were with the complainants therein; that prior to the filing of the first bill, representatives of the trustee had stated to the party representing the complainants that it was so situated it could not act upon their request to foreclose the mortgage of 1905; that by accepting the trust under the mortgage of 1909, the trustee assumed a position which in law prohibited it from acting as an impartial trustee in the mortgage of 1905 as to the holders of those bonds of the first issue who did not consent to exchange them for the common bonds of the second issue. The court further found that there was due the complainants in No. 3048 on their bonds of the first issue with accumulated interest on the date named, the sum of $65,648.82, and decreed that the Southern Coal & Mining Company pay this amount and that in default thereof, the premises be sold and that out of the proceeds such bonds be paid before anything should be paid on the other bonds of the issue of 1905. And it was further decreed that the master in chancery out of the proceeds of sale, pay the complainants in No. 3048 the amount due on their bonds and that he bring the surplus money arising from the sale into court for the further order of the court. From this decree so entered, the defendants in cause No. 3048 and the complainants in cause No. 4006 prayed and perfected an appeal to this court and, as above stated, .the court ordered that for the purposes of such appeal the two causes were consolidated and both of said causes might be appealed by the giving of the bond therein provided for.

It is contended by appellants that the findings of the court were not sustained by the evidence; that the decree is inequitable and not sustained by the law and the evidence; that the court erred in not sustaining the motion to dismiss the bill in suit No. 3048; in not granting the motion to consolidate said suits and permit the trustee to take charge and control of the same when consolidated, and in holding that the bonds held by the complainants in No. 3048 and other bondholders who did not sign the ninety per cent, agreement, and did not deposit their bonds with the trustee, are the only outstanding bonds of the issue of 1905 and entitled to be treated as a prior lien upon all the mortgaged property; and that the bonds of the issue of 1905 deposited with the trustee under the ninety per cent, agreement and under section 54 of the mortgage were in effect cancelled. The first question brought to the attention of the court is as to the rights of complainants in suit No. 3048 to maintain their suit, but this question could be of no practical importance if the motion to consolidate the two suits had been sustained. The proofs show that complainants in that suit did not fully comply with section 11 of the mortgage of 1905, which provided that no holder or holders of any bond or bonds or coupons secured by the mortgage should have the right to institute proceedings to foreclose the mortgage, or for any other remedy upon said bonds under the mortgage, without first giving notice in writing to the trustee of the fact that default had occurred, nor unless the holders of a majority in amount of the bonds outstanding should make a request in writing to the trustee, and afford such trustee a reasonable opportunity to exercise the powers granted, nor unless the trustee should, after thirty days after such request in writing, fail to do so. But the contention of appellees is that the bonds of the first issue deposited with the trustee, by virtue of provision No. 54 of the new mortgage and the ninety per cent, agreement made in connection therewith, were cancelled and that substantially all of the bonds of the first issue remaining in force were those held by appellees; that appellees or a majority of them acting through Mr. Turner, the president of the Belle-ville Savings Bank, had in effect made a demand on the trustee to foreclose the mortgage and that the trustee had refused to do so, and that therefore, in substance, the terms of such section 11 of the first mortgage had been complied with before the suit was instituted. It therefore becomes of interest to determine here what the effect of depositing bonds under the first issue with the trustee under section 54 of the mortgage and the ninety, per cent, agreement really was, with a view of ascertaining whether such action in effect cancelled the bonds so deposited, and this appears to be the main question to be decided in the ease. ■ -

We find upon an examination of the provisions of section 54 of the second mortgage and of the ninety per cent, agreement that the same did not provide for a cancellation of the bonds to be deposited until all of the bonds of the first issue had been so exchanged, but on the contrary the provision of the mortgage, which was made a part of the ninety per cent, agreement, expressly provides that “said bonds of said former issue and due and unpaid coupons and interest thereon, and notes given for interest due and unpaid on said bonds, shall be held by the trustee in trust for the owners and holders thereof, depositing.the same with the' trustee as against all of the bonds of said former issue, and due and unpaid coupons and interest thereon not deposited with the trustee.” It would thus appear that said bonds were not to be cancelled until the whole issue had been deposited with the trustee, but were to be held for the protection of those depositing. The language used does not appear to indicate that there was any intention on the part of those entering into the agreement that those depositing the bonds should surrender their right to an equal interest in the mortgaged property, according to the amount of bonds deposited, with the bondholders not entering into such agreement. It is apparent that the coal company was in distress and its property and the interests of the bondholders in jeopardy. To save the property and the business not only for themselves, but equally for all, bondholders holding approximately $1,045,000 of the bonds of the first issue entered in the new undertaking. They did nothing to effect the rights of those not joining with them unless it be to strengthen their security. It was an arrangement whereby those entering into it might undertake additional obligations and suffer additional loss, but in any event those remaining out could not be injured. It is true that certain of the bondholders had incurred personal obligations to some extent to protect the interests of all alike. It is charged in the bill that the directors and officials of said mining company and said trustee and said Mechanics’ American National Bank were combining and confederating together for the purpose of defeating the just claims of complainants, and were attempting to and were destroying and rendering worthless their security, but the court while finding generally with the complainants in bill No. 3048, by its approval of the master’s report specially found that there was no evidence .of mismanagement on the part of the officers of the company, and we have found no proof in the record to establish the claim that the parties above mentioned had confederated to do or were doing anything to further their own interests at the expense of appellee and those bondholders similarly sibilated. Under these circumstances we feel that the principles of equity impel us to hold that the bonds of the first issue deposited with the trustee, under the ninety per cent, agreement and according to the provisions of section 54 of the new mortgage, are not to be considered as cancelled, but that so far as their relations to the other bonds not deposited are concerned, they must be considered of like force and effect. Therefore, so far as appellees are concerned, all the bonds of the first issue were in force, and before the trustee could be required to bring the suit to foreclose the mortgage securing the same, the holders of such bonds were required to comply with section 11 of the first mortgage above referred to in the matter of notice to the trustee. Cook on Stock and Stockholders and Corporation Law (3rd Ed.) vol. 2, sec. 826. Thompson on Corporations (2nd Ed.) vol. 3, secs. 2636, 2637. Holders of bonds secured by mortgage have a right to agree as to the conditions upon which a suit to foreclose the mortgage may be brought and to make that agreement a provision of the mortgage so that persons buying the bonds may know what their rights are in that regard. Venner v. Chicago City Ry. Co., 258 Ill. 523; Belleville Sav. Bank v. Southern Coal & Mining Co. 173 Ill. App. 250. We are therefore of opinion that the holders of the bonds not deposited with the trustee under the ninety per cent.. agreement and represented by appellees were not empowered to compel the trustee to bring suit to foreclose the mortgage, nor do we think that such holders in the absence of fraud, as is the case here, would be authorized to bring suit in foreclosure under such circumstances in their own names.

In the proceedings which resulted in the decree from which the appeal has been taken to this court, there were two suits pending, one by the holders of the bonds issued under the first mortgage, which had not been deposited with the trustee under the ninety per cent, agreement and which amounted to approximately $55,000. The other was brought by the trustee at the written request of the holders of the balance of said bonds who represented a majority of the bondholders of the old and the new issue to foreclose both mortgages. After this bill was filed, that part of it which asked for the foreclosure of the first mortgage must be treated as being for the benefit of all holders of bonds under that mortgage, and the court should have sustained the motion made by appellant to consolidate the two cases. It is true that the trustee occupied a position which was not favorable to the relief asked for by appellees, and for that reason we think that while the two cases should have been consolidated, the bill of appellees should not after that time have been dismissed, but that it should be permitted to stand in the nature of a cross-bill for the purpose of setting forth the claims of appellees and to give them the opportunity, if possible, of establishing their rights as therein set forth. As a matter of fact, while refusing to permit the two cases to be consolidated generally, the court did consolidate them for the purposes of the decree and the appeal, which in part accomplished what was proper to be done under the circumstances. In conformity with our views as above expressed, the decree will be reversed and the cause remanded with directions to the trial court to order said causes to be consolidated and to enter a decree foreclosing the first mortgage as prayed for in the bill in No. 4006, and said decree should further provide that in case of a sale to satisfy such indebtedness, there should be paid out of the proceeds: First, the costs of suit; next, there should be paid to the holders of bonds not deposited under the ninety per cent, agreement, their pro rata share of said balance, based on the pro rata division of said balance among all the bonds secured by the first mortgage, said payment not to be in excess of the amount due on said bonds including interest; then there should be paid the amount due the Mechanics’ American National Bank, for which the $400,000 of preferred bonds are held as security; and what remains should be paid pro rata among the bondholders who deposited their bonds with the trustee under the ninety per cent, agreement. The decree should also provide that when this is done, all of the bonds issued under the second mortgage should be surrendered and cancelled.

Decree reversed and cause remanded with directions.


source: Caselaw Access Project

author: Mr. Justice Higbee

license: Public Domain

text:
    F. B. Merrills, Receiver, Appellee, v. James J. Rafter, Appellant.
    (Not to be reported in full.)
    Appeal from the Circuit Court of St. Clair county; the Hon. Geobge A. Crow, Judge, presiding.
    Heard in this court at the October term, 1914.
    Affirmed.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Suit by F. B. Merrills, receiver of the village of Cahokia, against James J. Bafter upon a promissory note payable to one Laperch and signed by defendant and Laperch. From a judgment for plaintiff, defendant appeals.
    Defendant contended that the evidence showed a failure of consideration, and that therefore he was not liable upon the note. The proof introduced by plaintiff showed that he was duly appointed receiver of the village of Caholda, and that the note sued on was one of the assets of said village. Defendant testified in his own behalf that the note was without consideration and that he did not get anything from Laperch, who was at that time supervisor. On cross-examination, however, he stated that he was then an attorney for Laperch and represented him in connection with the fund in his hands during his administration of affairs as supervisor; that he signed the note at the request of Laperch and that Laperch was to give it back to him but he never did; that it was executed in a bank in East St. Louis, and at the time it was executed Laperch drew a check on himself as supervisor for the $50, but that he did not know what became of the money.
    Abstract of the Decision.
    1. Bills and notes, § 50

      —when defense of want of consideration not available. The defense of failure of consideration is not available to one who with a supervisor signs a note payable to the supervisor in his official capacity, the latter drawing a check upon himself as supervisor for the amount of the note, and such note is in the hands of a third person, although such signer himself receives no part of the funds secured by^the supervisor individually.
    2. Costs, § 73

      —when cost of additional abstract may be taxed. Where the abstract of record filed by appellant is so incomplete and insufficient as to make it necessary for appellee to file, an additional abstract to enable the court to consider the merits of the case, the costs of such additional abstract may be taxed against appellant.
    E. R. Davis, for appellant.
    Frederick E. Merrills, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.


text:
    Louise Aur, Appellee, v. East St. Louis Railway Company, Appellant.
    (Not to be reported in full.)
    Appeal from the City Court of Bast St. Louis; the Hon. W. M. Vakdeventeb, Judge, presiding.
    Heard in this court at the October term, 1914.
    Affirmed.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Action by Louise Aur against East St. Louis Bail-way Company for damages for personal injuries sustained in endeavoring to alight from a moving street car. From a judgment for plaintiff for $1,500, defendant appeals.
    Defendant operated a street car line in East St. Louis having double tracks on Thirteenth street running north and south, over which were operated the cars of the Lansdowne division, which go straight through on that street, and also other cars which turn west on Lynch avenue, a street crossing Thirteenth street at right angles. It was the custom of defendant to stop its Lansdowne cars at Lynch avenue at the far side of the street for receiving and letting off passengers. On the morning of November 17, 1913, plaintiff, a woman sixty-two years of age, took a Lansdowne car going south towards Lynch avenue on Thirteenth street intending to change at Lynch avenue to a car going west on the Granite City line. As her car approached Lynch avenue, about five minutes before six o ’clock, it being quite dark, she gave the signal for it to stop by pushing the electric button, causing the bell to ring, and just as her car went on to Lynch avenue on the west track, a car going to Granite City approached from the south on the east track and made the turn into Lynch avenue, crossing the track along which the car plaintiff was on was proceeding ahead of that car, and compelling her car to slow down or stop, to permit the other to pass clear. As it did so, some three or four passengers alighted and went to the Granite City car, among them being appellee who, in attempting to get off the car, was thrown forward onto the street and received severe injuries. The place where she was thrown off was some six feet south of the north curb of Lynch avenue, which was not the accustomed place for the car to stop to receive and discharge passengers, and that fact was shown to be known to appellee, who had made the trip many times.
    It was shown that the conductor at the time in question was in the middle of the car collecting fares, and that neither he nor the motorman Were paying any attention to the persons getting off of their car. Plaintiff testified that after she pushed the button she got up and went to the platform and stood there until the car stopped, when she attempted to alight; that she was upon the top step and was stepping off with her right foot, when the car started and she was thrown into the street. It was her intention to take the Granite City caro which was waiting, as did the others who had left the car she was on.
    There was no substantial controversy as to the facts in the case except as to those which bore upon the question as to whether the car was in fact stationary' or in motion at the time of the injury. Upon this question five witnesses testified for plaintiff that the car was standing still when she attempted to alight therefrom, while five for defendant testified that at that time the car was moving slowly.
    Barthel, Farmer & Klingel, for appellant.
    C. B. Thomas and E. J. Verlie, for appellee,
   Mr. Justice Higbee

delivered the opinion of the court.

Abstract of the Decision.

1. Cabbiebs, § 278*—duty to passengers. The duty of a common carrier to look for the safety and protection of its passengers, so far as it can, consistent with the proper operation of its cars, is of high character.

2. Cabbiebs, § 435*—when passenger not negligent in alighting. A street car passenger is not guilty of negligence per se in attempting, as did other passengers, to get off the car before it reached its customary stopping place at the opposite of a cross street, where she had given the signal to stop and had gone to the platform and the car had come to a standstill while waiting for a car on the intersecting street to pass, and the conductor was busy collecting fares and paying no attention to the people getting off the car.

3. Cabbiebs, § 401*—duty to passengers alighting at other than customary stopping place. It is the duty of the employees of a street car company, who have notice of the tendency of passengers to get off street cars when they stop before reaching the customary point, to exercise a reasonable degree of care to ascertain, before putting in motion a car which has stopped before reaching its customary stopping place, whether passengers attempting to get off the car are in a safe position.

4. Appeal and ebbob, § 1489*—when exclusion of evidence harmless. The rejection of evidence, in an action by a street car passenger for damages for injuries received as a result of the passenger attempting to get off at the near side of the street when the car stopped instead of at the far side, its customary stopping point, as to whether the car had stopped to let anyone off or to receive passengers before plaintiff fell, or whether it was customary to stop cars at the near side of the crossing for passengers to get off, is not material error where the testimony of the plaintiff on cross-examination was that the regular stopping place was on the far side of the street.

5. Damages, § 132*—when verdict not excessive. A judgment for $1,500 having been rendered by a remittitur to such sum from $3,000, in an action for personal injuries, will not be deemed excessive where it appears that the plaintiff was sixty-two years of age; that she was working by the day; that her wrist had been so injured that she could not go back to work and had been in that condition for six months at the time of trial; that she could not reach up with her hand and that things dropped from it when she attempted to use it, and there was expert testimony to the effect that the injury was permanent.


text:
    Harold C. Hardy, Appellee, v. A. J. Alexander, Appellant.
    (Not to be reported in full.)
    Appeal from the Circuit Court of Marion county; the Hon. Albert M. Rose, Judge, presiding.
    Heard in this court at the October term, 1914..
    Affirmed.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Action by Harold C. Hardy against A. J. Alexander to recover $70 claimed to have been loaned defendant. A jury returned a verdict in favor of plaintiff and judgment for $70 and costs was entered against defendant, from which an appeal was taken.
    No witnesses were examined on the part of defendant. The plaintiff testified that he was in the employ of defendant; that the plaintiff gave defendant a check for $70 to make up the amount the latter paid to one Carter on a horse deal; that the defendant took back a bill of sale on the horses. That subsequently there was a lawsuit between defendant and Carter, in which the latter claimed the right to redeem the horses, while defendant claimed there was an outright sale to him. In that case the court found that Carter had the right to redeem, and thereafter he paid appellant $45.55. Plaintiff testified that defendant said to him at the time he got the money: “You let me have this money and if I make any money, why, I will pay you well for the use of it, but if I don’t make any you cannot lose any. I will stand between you and all danger.” Plaintiff was a witness in the Carter case, and there made statements to some extent inconsistent with the claim that defendant owed him the $70. In the case at bar, plaintiff swore positively that defendant owed him this amount, and in that respect he was not contradicted.

      Abstract of the Decision.
    1. Assumpsit, action op, § 89

      —sufficiency of evidence in action for money loaned. A judgment for the plaintiff for money loaned will not be disturbed, where his positive testimony as to the making of the loan is uncontradieted, notwithstanding the defendant’s claim that the money was advanced for use in a joint enterprise or venture.
    2. Joint adventures, § 8

      —instruction as to recovering money advanced for joint venture. An instruction as to the right of one to recover money advanced another for use in a joint enterprise or venture, held correct.
    Defendant contended that the transaction was a partnership venture between him and plaintiff; and that he had paid out in fees and expenses in litigation, concerning the horses, as much as he received from Carter, and that plaintiff should hear the loss.
    W. G. Murphey and L. B. Skipper, for appellant.
    Jonas & Haley, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.


text:
    Henrietta Crouch, Appellee, v. City of Centralia, Appellant.
    (Not to he reported in full.)
    Appeal from the Circuit Court of Marion county; the Hon. Albert M. Rose, Judge, presiding.
    Heard in this court at the October term, 1914.
    Affirmed.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Action by Henrietta Crouch against the City of Centralia for personal injuries sustained by her in falling from a cross walk into a ditch. From a judgment for $2,500 in her favor, the defendant appeals.
    The only question presented by the appeal was the extent and permanency of the plaintiff’s injuries. The evidence showed that in the nighttime the plaintiff fell from an unguarded cross walk into a ditch three and a half feet in depth. After lying there for some little time, she got out and then went to a neighbor’s and returned home by the team road. From her fall she received bruises in two places on her left arm and on the right. Her left ankle was sprained, there was a bruised spot below the knee, and two ribs were broken. She claimed that her most serious injury was to her back and head; that her nerves were seriously affected, that times while walking she would stagger against things, and that on one or two occasions this caused her to fall down; that when she walked along she had to catch hold of things to balance herself, and that her neck and back were still hurting her at the time of the trial. She was fifty-two years of age; and before her injury was strong, in good health and able to do all kinds of work. After it, she became emaciated and unable to perform her household duties. A physician who attended her after the accident testified that be found her suffering from the troubles above mentioned; that her injuries would disable her more or less for the balance of her life, and that her nervousness might or might not be cured. Defendant contends that the judgment should be reversed and the cause remanded because at the time of the trial it was impossible to determine whether the result of the injuries complained of were permanent or not. The injury was received November 1, 1913. Plaintiff commenced her suit December 22, 1913, and the cause was tried February 5 and 6, 1914, which defendant asserts was too short a time for it to be determined whether the consequences of her injuries were going to be lasting and permanent. Another physician, sworn as an expert, testified that he should judge from the condition and injuries that there had been some injury to. the plaintiff’s spinal cord, one of the nervous centers, and that such conditions were usually permanent. Another physician stated that the plaintiff’s symptoms indicated disturbances, diseases or affections of the nervous system, and that he could not state positively whether the injuries would be permanent or not. The attending physician also testified that plaintiff’s injury “might be what is called traumatic neurosis.”
    The defendant went to trial without objection, offered no evidence whatever bearing on the question of damages, and made no claim, in support of its motion for a new trial, that there was any newly-discovered evidence, or any other facts known to it, bearing upon the question of the measure of damages, other than that shown by the evidence.
    W. G. Murphey and S. L. Dwight, for appellant.
    Bundy & Wham and L. B. Skipper, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.

Abstract of the Decision.

1. Damages, § 116 —when damages not so excessive as to warrant reversal to determine permanency of nervous injury. An award of $2,500 damages in an action against a city for personal injuries, held not so excessive as to require a reversal in order to give the defendant sufficient time to determine whether an injury to the plaintiff’s nervous' system was permanent, where her right to recover did not rest upon the question whether she was suffering from traumatic neurosis.

2. Evidence, § 424 —when opinion evidence that injury caused existing physical condition admissible. A physician may testify, in an action for personal injuries, that the plaintiff’s condition, as detailed to the witness, indicated that it was the result of some injury.


text:
    Jeremiah Odum, Administrator, Appellee, v. Corn Products Refining Company, Appellant.
    (Not to he reported in full.)
    Appeal from the City Court of Granite City; the Hon. James E. Dunnegan, Judge, presiding.
    Heard in this court at the October term, 1914.
    Reversed and remanded.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Action by Jeremiah Odum as administrator of the estate of Samuel Batson, deceased, against the Corn Products Refining Company to recover damages for the benefit of the next of kin of the intestate, who received injuries resulting in his death while in the employ of the defendant. There was a verdict and judgment in favor of the plaintiff for $5,000, from which the defendant appeals.
    The facts are fully shown in the opinion filed on a former appeal. (173 Ill. App. 348.)

      Defendant was engaged in extracting syrup from corn, and in preparing the remaining grain for food purposes. A large building, called the mill house, containing a grinding machine or mill, was used, and one hundred or one hundred and fifty feet from the mill was a six story brick elevator. Adjoining the mill house was a fan or cake house containing a large fan, from the top of which an eighteen inch pipe extended to the sixth story of the elevator. When the ground grain had passed through the mill it was conveyed by means of fans through this pipe to the sixth story of the elevator and dropped into a hopper, from whence it was afterwards taken, sacked and prepared for market.
    There was an explosion in the sixth story of the elevator which tore off that story of'the building and threw part of the wall upon Samuel Batson, the foreman of the elevator, and fatally injured him.
    The evidence was substantially the same as that at the former trial, excepting that a witness for the plaintiff was permitted to give his opinion, as an expert, as to what caused the explosion. He testified that he had had experience in general repairing and building machines in different places; that he had worked for the defendant about three years; the first year as a machinist, afterwards as foreman, his duties being to look after repairing of machinery in the buildings. He was asked: “From your experience and observations covering a period of fourteen years, and assuming the facts testified by the witnesses in reference to this explosion are.true, what in your judgment caused the explosion, and where did the fire originate that caused it?” To which the witness answered: “Well, I think it originated” in the feed house. The witness did not himself know where the fire originated, but based his testimony upon facts testified to by witnesses, showing the conditions surrounding the explosion.

      Abstract of the Decision.
    1. Master and servant, § 666

      —when cause of explosion subject of opinion evidence. That an explosion in a grain elevator was caused by fire originating in an adjoining building and carried to it through a grain conveyer, cannot be shown in an action for the death of an employee, by opinion evidence based on testimony showing the surrounding conditions, since such evidence related to a matter of common knowledge.
    2. Master and servant, § 588

      —when doctrine of res ipsa loquitur applicable to injury caused by explosion. The doctrine of res ipsa loquitur, held not applicable to an action for the death of a foreman by the explosion of a grain elevator of which he had charge.
    3. Master and servant, § 683

      —when employer liable for death of employee in elevator explosion. There can be no recovery for the death oí a foreman by an explosion in a grain elevator of which he had charge, where it does not appear that the explosion was caused by any negligence of the part of the employer.
    Dan McGlynn, for appellant.
    Thomas Stallings, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.


text:
    L. C. Turner, Appellee, v. M. E. Paige, Appellant.
    (Not to be reported in full.)
    Appeal from the City Court of Granite City; the Hon. M. R. Sullivan, Judge, presiding.
    Heard in this court at the October term, 1914.
    Reversed and remanded.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Action of assumpsit by L. C. Turner against M. E. Paige to recover damages for the failure of the defendant to comply with the terms of an oral contract made by him to construct a house for the plaintiff. The jury found for the plaintiff in the sum of $180, for which judgment was given. From the judgment entered, the defendant appeals.
    The evidence showed that after the house was substantially completed plaintiff took possession and moved in. He claimed that defendant failed to install a furnace, complete the back porch, tint the walls and enamel certain doors according to his agreement. Defendant claimed that by agreement the furnace was omitted and that the house was completed in accordance with the terms of the contract. The weight of the evidence supported the claim of the defendant; and showed that after the house was completed and plaintiff had moved in, the parties had an adjustment of their accounts, that a full settlement was made, the amount the plaintiff owed the defendant was agreed upon and plaintiff’s notes, secure^ by a second mortgage on the property, were given therefor.
    The court instructed the jury for plaintiff, that if they believed from all the evidence that defendant had failed to perform all or any part of his contract, if they found there was a contract and that plaintiff had suffered damages thereby, they should find the issues for the plaintiff.

      Abstract of the Decision.
    1. Appeal and error, § 1101

      —when appellee’s failure to file brief ground for reversal. Under Rule 27 of the Appellate Court of the fourth district, a judgment may he reversed pro forma where the appellee fails to file a brief.
    2. Witnesses, § 42*—when one spouse may testify as to acts done as agent for the other. A wife cannot testify in behalf of her husband on the theory that she acted as his agent in a transaction, as to matters beyond the scope of the agency.
    3. Building and construction contracts, § 103*—sufficiency of evidence in action for contractor’s failure to comply with contract. The defendant held entitled to a verdict in an action against a contractor for failing to construct a building according to the terms of a contract, where it appeared that previous to the action the building was accepted by the plaintiff, a settlement made with the contractor, and notes given for the balance due him.
    4. Building and construction contracts, § 105*—instructions in action for contractors failure to comply with contract. An instruction in an action to recover damages for the failure of a contractor to complete a building according to the terms of a contract, that a verdict should be returned for the plaintiff if the jury found that the defendant failed to perform all or any part of his contract, held erroneous, because failing to refer to the claim of the defendant that before the bringing of the action there had been a full settlement between him and the plaintiff.
    T. T. Hinde, for appellant.
    A. R. Johnson and Alexander Flannigan, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.


text:
    Beacon Falls Rubber Shoe Company, Appellant, v. T. S. Gravenhorst, Appellee.
    (Not to be reported in full.)
    Appeal from the Circuit Court of Effingham county; the Hon. Jambs C. McBkide, Judge, presiding.
    Heard in this court at the October term, 1914.
    Affirmed.
    Opinion filed May 1, 1915.
    Statement of the Case.
    Action in assumpsit by the Beacon Falls Rubber Shoe Company against T. S. Gravenhorst. From a judgment for defendant, plaintiff appeals.
    Plaintiff introduced in evidence an order for goods which its counsel said constituted the contract of sale, on which the suit was predicated. This instrument purported to be an order taken by a salesman of plaintiff April 25, 1912, for the shipment of certain goods to defendant at Effingham, Illinois. It was apparently an order blank of plaintiff filled in and signed by its salesman.
    It contained the following provision: “As we are not jobbers and these goods are made up specially for you and delivered direct from the mill, no countermand can be accepted after the goods are in the works.” A copy of this order was sent to the defendant by plaintiff a few days later and with it a letter which asked him to examine the duplicate and advise promptly if there were any errors or omissions. The memoranda made by Mr. Adams when the order was given were on slips of paper, and no order at any time was signed by defendant. There was simply a verbal agreement between plaintiff’s agent and defendant, find defendant testified that the order was given conditionally, and that he was to have the right to change or cancel it altogether if he desired, while Mr. Adams denied this statement. The goods were not to be delivered until in August, 1911, and prior to that time defendant attempted to change the order or cancel part of it, as he claimed the right to do, and there was considerable correspondence between the parties in reference to the matter, plaintiff refusing to concede that defendant had the privilege claimed by him.
    On August 7th, defendant wrote to plaintiff directing it to ship part of the order and cancel the balance. On August 23rd plaintiff wrote to defendant stating, “we shall not accept the cancellation and have advised the mill to ship your order complete at once. ’ ’ Later, on September 24th, defendant wrote stating that he had received an invoice of rubber goods to his surprise, as on June 21, 1912, he had written not to make up or ship until further notice; that since then he had given notice to ship only five dozen and to cancel the balance of the order; that when the order was placed with the salesman the latter was told distinctly the same was conditional only and that he would probably cancel it, notifying plaintiff that he would refuse to accept the goods upon arrival, with the exception of the five dozen ordered shipped August 7th. When the goods arrived, defendant refused to receive them.
    When the order was given there were present, in addition to defendant and Mr. Adams, a salesman and employee of defendant named Bversman. The testimony of defendant and Bversman was to the effect that the order was only a conditional one, subject to change or cancellation, while this was denied by Adams. The court instructed the jury in part as follows:
    “The court instructs the jury that if you believe from a preponderance of the evidence that . the plaintiff sold to the defendant a bill of goods to be delivered by freight at Effingham, Illinois, and did ship said goods to Effingham, and if you further believe the plaintiff sent to the defendant a bill of lading of said goods and if you further believe that said goods were carried by freight by the Vandalia Bailroad and delivered according to agreement and that the employees of said railroad notified defendant of the arrival of said goods, and that defendant did not reserve the right to cancel or change such bill and did not cancel or change the same, then the plaintiff is entitled to recover of the defendant the contract price of said goods, if any price has been shown by the evidence, even though you may further believe the defendant refused to accept said goods, and they are still in the possession of the Vandalia Bailroad.”
    Abstract of the Decision.
    1. Sales, § §5

      —when purchaser entitled to rescind. In an action of assumpsit on an oral order of goods alleged by the buyer to be subject to cancellation, evidence held to sustain a finding that the order was oral, conditional, and that the buyer was not barred by his conduct after giving the order from rescinding it as allowed by the contract.
    2. Instructions, § 84

      —when correct on preponderance of evidence. An instruction, in an action on an oral contract for goods which defendant had refused to accept, that “the plaintiff could not recover under the declaration unless it was shown by a preponderance of all the evidence in the case a contract fully performed on its part,” held correct.
    3. Sales, § 330

      —when instruction on refusal to accept correct. An instruction in an action of assumpsit on an oral order for goods alleged by the buyer to be subject to cancellation, to the affect that if the jury believed from the preponderance of evidence that plaintiff sold goods to defendant to be delivered by freight at a certain place, that the goods were shipped according to agreement, and a bill of lading sent to defendant, that the goods duly arrived, that defendant was duly notified, and that defendant did not reserve the right of cancellation of the order, the plaintiff could recover the contract price, even though defendant refused to accept the goods, held correct.

      G. F. Taylor, for appellant.
    Walter E. Rinehart and W. S. Holmes, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.

McBbide, J., having tried this case in the court below, took no part on the hearing in this court.


text:
    Jeanette Lewis, Executrix of the Estate of T. B. Lewis, Appellee, v. Clay City Electric Light & Power Company et al., Appellants.
    Municipal cobpoeations, § 1141

      —effect of purchase of lighting plant in excess of authorised indebtedness on rights of mortgagee. Where a village, whose legal bonded indebtedness could not exceed $4,200, bought an electric light heating and power plant pursuant to the terms of an agreement providing that the village should pay $4,200 in cash or bonds and that village bonds should be issued for the purpose, and that the property should be subject to a first mortgage lien for $7,296, the village expressly not assuming this debt, and the village was unable to pay for the plant out of the income derived from its operation, but .such plant was in fact operated at a loss, the holder of the first mortgage is not entitled to a first lien and a foreclosure to the exclusion of the rights of the village, but only to its pro rata share of the proceeds of the sale based upon the amount that each had contributed, including cost of repairs by the village, after paying the costs and expenses of the suit and a reasonable amount for the use of the plant, to be deducted from the village’s share.
    Appeal from the Circuit Court of Clay county; the Hon. Thomas M. Jett, Judge, presiding.
    Heard in this court at the October term, 1914.
    Reversed and remanded with directions.
    Opinion filed May 1, 1915.
    Refiled July 6, 1915.
    Monroe & Monroe, for appellant Village of Clay City.
    Keithley & Keithley, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.

This was a foreclosure suit arising out of the following facts and circumstances as shown by the proofs: On March 16, 1907, the president and board of trustees of the village of Clay City, Illinois, passed an ordinance granting to Theodore Fisher a franchise to construct, operate and maintain an electric light and power plant in said village and to use the streets and alleys of the village for the purpose of erecting poles and stringing wires for said plant, and contracting with him for twenty-three are lights to be placed in such streets and alleys, agreeing to pay him the sum of $70 per annum for each of said lights for the period of thirty years. On the same day said village authorities also passed an ordinance providing for the issuing of village bonds to the amount of $4,200, bearing interest at the rate of six per cent, per annum, for the purpose of paying for the electric light plant, described in the ordinance. On March 27,1907, an agreement or arrangement was entered into between Fisher and the village officers acting for the village, wherein was recited the granting of the franchise by the village to Fisher; that the village desired to purchase the plant to be erected by him when completed; that Fisher intended to cause a corporation to be organized and to convey said franchise and the property rights and privileges pertaining thereto to said corporation, and to bond the entire plant for the sum of $7,296, the bonds to be dated June 1, 1907, nine of them being for $750 and the tenth, being the one last maturing, for $546; that said bonds were to bear interest at the rate of six per cent, per annum, to be secured by first mortgage on the electric light, heating and power plant, and all the other property pertaining thereto, belonging to the corporation; that each year there should be paid one bond for $750, as well as the interest on the whole of the bonded indebtedness. And said Fisher agreed that on the completion of said plant he would convey the same subject to said mortgage lien of $7,296 to the village, for the sum of $4,200, to be paid in cash or village bonds. It was also agreed by the village that it would purchase said corporate property at the price named and issue village bonds in the sum of" $4,200 to pay for the same, and it was further mutually agreed that said village in its purchase of the plant did not assume or agree to pay said indebtedness to be secured by said first mortgage or trust-deed. On May 10, 1907, the contemplated corporation was organized pursuant to the agreement with a capital stock of $12,000, divided into one hundred twenty shares of the par value of $100 each. Of this stock Fisher subscribed for sixty shares, II. M. Sekmoldt fifty-nine shares, and C. C. G-arm one share. The three shareholders were elected directors and Schmoldt was also elected president and Garm secretary. All three resided in Beardstown, Illinois, and the principal office was located in that place. On May 14, 1907, Fisher conveyed the property to the corporation so formed, which was known as the Clay City Electric Light & Power Company and on June 1st following, the corporation issued bonds for the sum of $7,296, payable as above provided, and to secure the same conveyed by its trust deed the corporate property to E. H. Garm as trustee. On June 18, 1907, the village trustees issued the bonds of the village for $4,200, and delivered them to the Clay City Electric Light & Power Company to pay for the plant and property connected therewith according to the above agreement, and on August 29th following, said corporation conveyed the plant and other property mentioned in the agreement, incumbered by said lien for $7,296, to the village, and the latter accepted the same. On June 4, 1908, the village paid the first of the $750 bonds and the interest on all of the mortgage bonds for one year. Thereafter, some twenty-four taxpayers of said village brought suit to restrain and enjoin the collection of any excess of taxes levied for the payment of any debt connected with said electric light plant, except that secured by the bonds issued by the village amounting to $4,200, and to enjoin the village from making any appropriation of funds or levying any tax for paying any part of said mortgage indebtedness of $7,296 or the interest thereon or any part thereof.

The suit was based on the fact that the total amount of taxable property within the corporate limits of the village for the year preceding the issuing of the bonds was $84,018, and that the constitutional limit of five per cent, upon the taxable property of the village was therefore the sum of $4,200, which was the amount of the bonds issued directly by the village; that the arrangement made by the village to accept the property, subject to the mortgage, made the electric light plant, in fact, cost the village the sum of $11,496, which was much in excess of this limitation and therefore a violation of the constitutional provision in that regard. The Circuit Court entered a decree enjoining the collectors from collecting any of such excess of taxes and enjoining the village from paying any part of the mortgage indebtedness, or the interest thereon, from any funds raised by taxation. From this decree an appeal was taken to the Supreme Court, where it was held that the transaction,, composed of the passage of said ordinance, the contract between the village and Fisher and the subsequent proceedings connected therewith, constituted as a whole, a device to evade the constitutional provision, limiting the amount of indebtedness which could be properly contracted by the village and was therefore void.

While the decree of the trial court was in its general features sustained, the relief granted was enlarged, the decree being reversed and the cause remanded with directions to enter a decree enjoining the village from paying the mortgage indebtedness or any part of it or the interest thereon, except from the net income of the electric light plant, after payment of operating expenses and repairs. Evans v. Holman, 244 Ill. 596. In the course of the opinion in that case it is said: “The attempt to evade the constitution in this case was illegal and the transaction void and the village might have been enjoined from executing the plan, but the complainants did not choose to take that course. By their bill they made no objection to the purchase of the plant nor to the issue of the bonds by the village, but they sought to have the village enjoined from paying any of the purchase price above the $4,200, which would result in the speedy loss of the property and the $4,200 paid upon it. That would not be a proper enforcement of the constitutional provision against indebtedness above five per cent, of the value of the taxable property of the village and would be neither just nor equitable. The complainants conceded the validity of the purchase but sought to prevent the contemplated payment for the property, while the defendants insisted that the whole transaction was legal and their counsel assert that the income of the plant will pay for it. In the condition of the pleadings and the attitude of the parties, it appears to us that the only relief that can or ought to be given to the complainants is to enjoin the payment of the mortgage indebtedness except out of the net income from the electric light plant after paying operating expenses and necessary repairs. It is clear that no decree oug-ht to be entered which would recognize a part of an illegal transaction as valid and deprive the village of all benefits from the payment of $4,200 conceded to be legal. A city or village does not create an indebtedness by obtaining property to be paid for wholly out of the income of the property (City of Joliet v. Alexander, 194 Ill. 457), and if this plant will pay for itself there will be no further violation of the constitutional prohibition.”

Appellee, the complainant in the bill filed in this case, alleged that the unpaid mortgage bonds issued by the Clay City Electric Light and Power Company on said property, amounting to $6,546, had come into his hands for value received in the general course of business and that he is the owner of the same, and that on account of default in payment of a portion of said bonds as they came due and the interest thereon, the whole of the principal, with accrued interest, has now become due. He made the Clay City Electric Light & Power Company, Robert H. Garm, trustee, and village of Clay City, Hlinois, parties defendant and asked that an account may be taken of the amount due on said bonds and that the defendants, except Robert H. Garm, may be decreed to pay the complainant whatever sum shall appear to be due him within a short day, and that in default thereof, said premises and electric light plant and all appurtenances thereunto belonging may be sold to satisfy said amount due and costs. The Clay City Electric Light & Power Company and Robert H. Garm failed to answer said bill and were defaulted. The village of Clay City answered the bill, denying appellee’s right to a first lien on the property and also that he had any right, power or authority to bring the suit, and filed its cross-bill making the Clay City Electric Light and Power Company, appellee T. B. Lewis and R. H. Garm defendants.

The cross-bill, after setting out the facts somewhat as above stated, alleges that the income from the light plant is not sufficient to pay the operating expenses and repairs of said plant, and that the village had operated the plant for the five preceding years a.t an annual loss of $1,600 over and above the income derived therefrom, and that if said plant is forced to sale, it will not sell for more than enough to satisfy said mortgage bonds, the interest thereon and costs of foreclosure, and that if the proceeds of sale are so applied, the village will lose all that is paid thereon, amounting in the aggregate to some $7,500. The cross-bill then asks that an account may be taken of the amount of money contributed by the village in erecting said plant, the amount it has paid on the village bonds in principal and interest, and the amount it has paid on said mortgage bonds in principal and interest, and also the amount contributed in the construction of • said plant by said Clay City Electric Light and Power Company; that said plant may be sold under the direction of the court and the proceeds therefrom, after paying the costs and expenses of suit, be pro rated between the cross-complainant and the owners of said mortgage bonds, in the proportion that the amount' of funds each has contributed towards the erection of said plant bears to the total cost of said plant. Upon the hearing it was shown that said H. M. Schmoldt, one of the organizers of the corporation, who took part in the arrangements, whereby said village was to buy the plant, had owned the bonds sued on; that he died June 16, 1909, willing his property to his wife, Mrs. Lena Schmoldt, and daughter, Jennie E. Schmoldt; that the daughter married appellee T. B. Lewis, who, in foreclosing the lien, was acting for them but that he was the holder of the bonds with their consent for the purpose of prosecuting the suit. The court on the hearing dismissed the cross-bill and entered a decree of foreclosure as prayed in the original bill, and from that decree the village of Clay City has prosecuted this appeal, contending that its cross-bill should have been sustained and the relief therein prayed for granted.

The position taken by appellee is that the Electric Light and Power Company, being a private corporation, legally organized, had a right to mortgage the plant which was its own property at the time, and that the foreclosure of the mortgage is something with which the village is not directly concerned and which it cannot prevent. Were this an ordinary case of the foreclosure of a mortgage by the party holding the mortgage indebtedness, this position would be correct, but in this case there are unusual conditions existing which would seem to preclude the application of the ordinary rule. Had the officers of the village been acting in this case as private individuals in conducting the negotiations with Fisher and the light and power company, there would be no doubt of the right of the holder of the mortgage indebtedness as against them to foreclose his lien, but the village as a corporation, or the taxpayers dwelling therein, could not in the same way be barred from enforcing whatever equities the village might have growing out of the transaction. The appellee in this case could occupy no better position and have no greater rights than Mr. Schmoldt, the owner of the bonds, would have had in his lifetime. He, Mr. Schmoldt, was entirely familiar with all the transactions between the village and Fisher and helped to organize the corporation which was to carry out the plan devised. In pursuance or in consequence of this plan, he became the owner of the mortgage bonds which he held at the time of his death. In Evans v. Holman, supra, where this transaction was under consideration, the Supreme Court stated: “The plan was that the village should acquire an electric light plant at the price of $11,496, issue bonds to the amount of $4,200 (which was the constitutional limit of indebtedness), and afterwards pay $7,296 as the mortgage indebtedness matured or lose the property. It was provided in the contract for the purchase that the village was not to assume or agree to pay the mortgage indebtedness, but it was none the less an indebtedness of the village, since the property purchased was pledged to pay it. It was also there held that the attempt to avoid the constitution in this manner was illegal and the transaction was void, and that the village might have been enjoined from executing the plan provided for had the complainants in that case chosen to take that course, and the result of the suit was, that the village was enjoined from paying any part of said mortgage indebtedness except such as could be paid from the net income of the electric light plant. By the bill in this case it was sought to deprive the city of the interest it had in the electric light plant and its accessories, thereby causing it to lose the amount it had invested therein, which was the constitutional limit of its indebtedness, and such other sums as it may have paid out for repairs or otherwise since it had been operating the plant. By this means the holders of the mortgage indebtedness would get the benefit either in whole or in part of the transaction which the Supreme Court has declared illegal and void, and there would be accomplished indirectly what could not have been done directly by reason of the illegality of such transaction. There were no equities existing between the bondholders and the village which would give the former any priority of rights over the latter. The village had equities in the property which it had a right to have enforced in case of any sale of the same, and we are of opinion that the court below erred in finding that the claim of the mortgage indebtedness was a prior lien and granting to the holders thereof a foreclosure of the premises, to the exclusion of the rights of the village, and in dismissing the cross-bill for want of equity. The proofs in this case and the holding of the Supreme Court in Evans v. Holman, supra, appear to us to establish the fact that the village had an equity in the property of equal validity to that of the hcider of the mortgage indebtedness, in the proportion the amount it had expended in creating the plant bore to the amount that had been expended for the same purpose, derived from the sale of the bonds secured by the mortgage indebtedness. The cross-bill of the village sought to enforce its rights, and while joining áppellant in asking that the plant be sold, it further prayed that the proceeds of sale, after paying the costs and expenses of the suit, should be pro rated between the village and the owners of the mortgage bonds in the proportion the amount of funds each had contributed towards the erection of said plant bears to the total cost of such plant. This was the relief which the village had a right to ask for and should have been granted.

We are of further opinion, however, that in determining the amount due to the village when an accounting shall be taken of the amounts due to the respective parties as named, the village should be charged a reasonable amount for the use of the plant during the time it has operated it for its own benefit. As in our view of the case the original bill must be dismissed and the cross-bill sustained, it will be unnecessary to discuss the question whether appellee T. B. Lewis had such an interest in the mortgage bonds as to entitle him to maintain an action for the foreclosure of the lien securing the same in his own name. The judgment of the court below will be reversed and the cause remanded with instructions to the court below to dismiss the original bill and to grant the relief prayed for by the cross-bill, and to cause an accounting to be taken to determine the amount due the parties in interest as above indicated.

Reversed and remanded with directions.


text:
    Mabel Barnard, Administratrix, Appellant, v. Springfield & Northeastern Traction Company, Appellee.
    1. Railroads, § 55

      —when person not an agent for service of process. The mere fact that an agent of one railroad sells tickets entitling the purchasers to travel from a point on the railroad he is representing to a point on the line of a connecting railroad does not constitute him an agent of the connecting railroad for purposes of service of process.
    2. Executors and administrators, § 488

      —form of award on recovery of judgment. Where a plaintiff sues as administrator of an estate and judgment is obtained for costs, execution should not be awarded thereon but the order should be that the costs be paid by the administrator “in the due course of administration.”
    3. Appeal and error, § 1766

      —when Appellate Court may amend judgment. A judgment of a trial court erroneously authorizing execution for costs in its judgment against an administrator, who is unsuccessful as plaintiff in a suit, may he amended by the Appellate Court by striking out the clause authorizing execution and inserting in lieu thereof the clause “to be paid in due course of administration.”
    Appeal from the Circuit Court of Madison county; the Hon. William E. Hadley, Judge, presiding.
    Heard in this court at the October term, 1914.
    Affirmed.
    Opinion filed May 1, 1915.
    Harry Faulkner and C. H. Burton, for appellant.
    John B. Hardaway and Burton & Hamilton, for appellee.

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

   Mr. Justice Higbee

delivered the opinion of the court.

Appellant brought this suit in Madison county to recover damages for the death of her husband, Ira V. Barnard, who is alleged to have been killed by the negligence of appellee while working in the yards and on the track of the company at Jones and Adams Coal Mine siding in Sangamon county, Illinois. Summons was issued to and served by the sheriff of said Madison county, his return being as follows: “I have duly served the within writ by reading the same and delivering true copies thereof to the within named Phil E. Sommerlad, agent for the Springfield & Northeastern Traction Company, the president, secretary or treasurer of said company not found in my county, as I am therein commanded this 11th day of October, A. D. 1912.”

To the declaration in this case appellee filed a plea in abatement, verified by the affidavit of C. F. Hand-shy, its general superintendent, stating that the writ had never been served on appellee and that the return thereon was untrue and false, in that P. É. Sommerlad, the person upon whom the pretended service was had, was not at the time of such attempted service, a ticket agent, clerk, secretary, superintendent, agent, cashier, principal director, engineer, conductor, station agent or any agent of any sort of appellee; that said suit was not brought in the county where appellee’s principal office is located, or where the alleged cause of action occurred or in any county in or through which appellee’s road runs; that at the time of such pretended service, appellee was a corporation organized under the laws of the State of Illinois, and was the owner of a line of electric railway extending from the city of Springfield, Sangamon county, Hlinois, to the city of Lincoln, Logan county, Illinois, and that its principal office was located in The city of Champaign, in Champaign county, Illinois. A demurrer to this plea was overruled and a replication filed by appellant, stating that the return on said writ was wholly true and that Sommerlad was at the time of the service thereof, on him, an agent of appellee, and that at the time of the service the president and secretary of appellant were not in said county. A hearing was had before the court which resulted in a judgment in favor of appellee and against appellant for costs, for which execution was awarded.

The proofs on the hearing showed appellee was a corporation under the laws of Illinois; that its road ran from Springfield to Lincoln, Illinois; that its principal office was located in Champaign and that the accident causing the death occurred in Sangamon county, Illinois; that the line of road of said traction company did not extend into Madison county where suit was commenced and service had; that appellee was one of a number of corporations, operating traction lines in Illinois, composing what is known as the Illinois Traction System; that said system was not a corporation and the name given it was a trade name and not a corporate name. It was further shown that another one of the roads composing the Illinois Traction System was the St. Louis, Springfield and Peoria Bail-road Company, whose road ran through Edwardsville in Madison county and on to Springfield; that there was an arrangement between the different roads composing the system, by which tickets could be sold for passage by the agent' of any one of the roads over other roads of the system connecting with the same. Sommerlad was employed and paid by the St. Louis, Springfield and Peoria Bailroad Company, and was its agent at Edwardsville, and could sell a ticket from that station to Springfield and to points on appellee’s line, but could not sell á separate ticket on appellee’s line alone. That is, he could sell a ticket from Edwardsville to Lincoln good over the St. Louis, Springfield and Peoria Bailroad, and over appellee’s line from thence to Lincoln, but he could not sell a ticket from Springfield to Lincoln alone. It was also shown by appellant, a bulletin was posted up in the office of the St. Louis, Springfield and Peoria Company at Edwardsville, where Sommerlad was agent, giving the names of the several railway companies constituting the Illinois Traction Company, stating that complete public files of the tariffs of these companies were located at addresses given in Springfield, Illinois, and St. Louis, Missouri, and that the rate and fare schedule applying from the Edwardsville station were on file at that office and might be inspected by any person upon application; also that the agent or other employee on duty in the office would lend any assistance desired in securing information from or interpreting such schedules.

The only question for the consideration of the court below and for us here is, was Sommerlad, by reason of his authority, as agent of the St. Louis, Springfield and Peoria Railroad Company, at Edwardsville, to sell joint tickets over all the lines of the Illinois Traction System, including that of appellee, an agent of appellee, within the contemplation of the statute providing for the service of process upon corporations! It is so well known that it can be said to be a matter of universal knowledge that local agents of railroad companies sell tickets to and collect the fare therefor from passengers whose points of destination are beyond or outside of the line of road belonging to the company which employs the agent, and that frequently these tickets entitle the holder to ride over a number of different lines of road. Such a local agent, however, cannot be held to be the agent of the companies operating other lines than the line of the company which employs him, for the purpose of the service of process under our statute. To hold otherwise would be to constitute substantially every local railroad agent in this State the agent, for the purposes of the service of process, of a large portion of the railroad companies of the country.

In the case of Bristow v. St. Louis, S. & P. R. Co., 184 Ill. App. 305, the plaintiff’s intestate received injuries in an accident on the line of appellee’s road in Macoupin county and the suit therefor was brought in Macon county, Illinois. The persons upon whom the summons was served were a ticket agent and an assistant ticket agent in the employ of a corporation owning and operating a line of railroad from the city of Springfield through the county of Macon and city of Decatur to the city of Danville, Illinois, while the injury occurred on the line of the St. Louis, Springfield and Peoria Railroad Company, the limits of which are above described, and which is the company employing Mr. Sommerlad, upon whom service was had in the case before us. The road upon which the injury in the Bristow case, supra, occurred and the one employing the agent upon whom service was had were parts of the Illinois Traction System above mentioned. In that case it was said that the record disclosed that the parties on whom service was had “were employed by a company operating from Decatur, Illinois, to Danville, Illinois; that they were not employed by appellee company and did not represent them in any way. The theory upon which appellant contended that they were agents of appellee company is because they sold tickets at Decatur by which parties were entitled to travel over both of these lines of railroad from Decatur to any point of destination thereon designated by the ticket, and that this constitutes the parties agents of appellee company. Further, that the two lines were operated under the name of the Illinois Traction System. The proof that these parties at Decatur were authorized to sell a ticket upon which parties might ride upon the line of railroad which they did represent and arriving at the end of that line were entitled to ride upon another railroad to the point of destination to which the ticket was sold is not sufficient. to and does not show agency on behalf of the second or connecting railroad.”

In the case of Chicago, B. & Q. R. Co. v. Weber, 219 Ill. 372, which was an action by an administrator against the railroad company for causing the death of his intestate at the crossing of a public highway over said railroad, it appeared that said railroad company, a corporation under the laws of the State of Illinois, had leased its lines to the Chicago, Burlington and Quincy Railway Company, a corporation incorporated under the laws of the State of Iowa, and at the time of the injury the railway company was operating the road. It was there held that service upon the agent of the railroad company was not sufficient, under the statute, and was also said that the fact that the lessee company and its servants and agents may, as a matter of public policy, be held the servants and agents of the lessor company in actions for negligence arising! in the exercise of the chartered powers of the lessor company, does not require or authorize the holding of such servants and agents as the servants and agents 'of the lessor company for the purpose of the service of process. The same question arose in the case of Chicago, B. & Q. R. Co. v. Suta, 123 Ill. App. 125, where it was held that the agent of the lessee’s railroad corporation was not the agent of the lessor corporation for the purpose of the service of summons upon the lessor, and the whole subject is there fully discussed. From a consideration of these cases, as well as from what appears to us to be the proper reasoning growing out of the application of the law to the facts in this case,; wepconclude,. that there was no legal service of process upon.appellee and that the plea in abatement in this case was properly sustained.

The judgment in this case was against appellant, the plaintiff below, for costs, and execution was awarded therefor. Appellant was suing as administratrix of the estate of her deceased husband and it was therefore improper to award execution against her for the costs. The 'order in relation to the payment of the costs should have been that they be paid by appellant “in due course of administration.” It is not necessary, however, to reverse and- remand the case to correct this technical error as the correction may be made here. The judgment of the court below will be modified by striking out the words ‘ ‘ and have execution therefor” and inserting in lieu thereof “to be paid in due course of administration,” and as so modified the same will be affirmed.

Judgment affirmed.