text:
    Town of Cicero, Appellee, v. Louis Grisko et al., Appellants.
    Gen. No. 14,457.
    1. Cities, villages and towns—presumption as to validity of anticipation warrants. The presumption in the first instance is that anticipation warrants issued hy a town are legal and valid.
    2. Cities, villages and towns—what constitutes funds coming into possession of town treasurer. Seld, under the evidence in this case, that anticipation bonds issued by the town of Cicero were not merely bailed to a depositary of the treasurer which subsequently failed but were warrants actually cashed by such depositary and were funds which came into the possession of such treasurer for which he and his surety were accountable to the town.
    3. Cities, villages and towns—when report of treasurer operates as estoppel. Reports of a town treasurer showing cash in his hands operate to estop both himself and his surety from interposing by way of defense that such cash was on deposit with a bank which bank was insolvent at and before the time of the giving of the bond by such surety and that such loss resulted from the failure of such bank.
    4. Revenue—what constitutes levy. It is not the extension of the tax by the county clerk that constitutes a levy upon which the legal issuance of anticipation warrants is predicated; the appropriation bill of the proper authorities of the municipality is the levy.
    5. Laches—upon what defense of, cannot he predicated. Failure to take legal action which must necessarily have failed, does not constitute laches.
    6. Bonds—when demand not essential to maintenance of action upon. In an action upon a bond of a town treasurer to recover money reported by said treasurer to be in his possession, a demand prior to suit need not be shown; the bringing of the suit is itself a sufficient demand.
    7. Interest—what constitutes an account stated. In an action upon the bond of a town treasurer to recover an amount shown as in his hands by reports made by him, interest is properly allowed upon the ground that such reports constituted an account stated.
    Action in debt. Appeal from the Municipal Court of Chicago; the Hon. John H. Hume, Judge, presiding.
    Heard in this court at the March term, 1908.
    Affirmed.
    Opinion filed November 12, 1908.
    Runnells, Burry & Johnstone, for appellant.
    John J. Sherlock and Hiram T. Gilbert, for appellee.
   Mr. Justice Brown

delivered the opinion of the court.

The appellee, the Town of Cicero, on a trial before the Municipal Court of Chicago, without a jury, recovered by the consideration of that court on January 22, 1908, a judgment in debt, chancerized at $55,288.80, against the appellants, Louis Grisko and the Metropolitan Surety Company. From that judgment this appeal is prosecuted.

Louis Grisko was supervisor of the Town of Cicero and therefore, by the charter of said town (Section 5 of the Act of March 25, 1869, revising charters of Cicero) treasurer of the same from some time in April, 1904, until May 20, 1907, when his successor, one Kasperski, who was elected during the month preceding, qualified and assumed office.

The supervisor’s term of office was one year, but Grisko, who was originally elected in April, 1904, was re-elected in April, 1905, and again in April, 1906. His duties and obligations as treasurer are defined by Section 5 aforesaid, as follows':

“The Supervisor of said town shall be ex officio the Treasurer of said town, and he shall receive and hold all moneys belonging to the town arising from general or special tax, special assessments, fines, penalties or otherwise, and he shall, upon entering upon the duties of his office, execute a bond to the Town of Cicero, in such sum and in such sureties as shall be determined by the board, conditioned that he will faithfully account for all moneys that may come into his hands, and will pay the same over pursuant to the provisions of law or the orders or resolutions of the board, and that he will faithfully perform the duties of his office. It shall be his duty to keep a correct account of all moneys received and paid out by him, and when required, to furnish from time to time to the board a statement of the moneys in his hands, and he shall receive such compensation as such Treasurer as shall be allowed him by said board, not exceeding two per cent upon all moneys received by him. ’ ’

During Grisko’s first and second terms The American Surety Company was surety upon the official bond presented and filed by Grisko.

On April 16,1906, Grisko and the appellant, the Metropolitan Surety Company, executed and on April 17, 1906, the Town of Cicero accepted from Grisko a bond in the following terms:

“Know all men by these Presents: That Louis Grisko of the Town of Cicero, County of Cook and State of Illinois, as principal, and The Metropolitan Surety Company of New York, a corporation duly authorized to transact business in the State of Illinois, as surety, are held and firmly bound unto the Town of Cicero, county of Cook and State of Illinois, in the penal sum of One Hundred Thousand Dollars ($100,000), for the payment of which well and truly to ba made, the above named obligors hereby bind themselves and their respective heirs, executors, administrators, successors and assigns, jointly and severally by these presents.
Signed, sealed and executed this Sixteenth day of April, 1906.
The condition of this obligation is such; that whereas, the above bounden Louis Grisko was on the 4th day of April, A. D. 1906, duly elected to the office of Supervisor of said Town of Cicero, in the County of Cook aforesaid, for the period of one year.
Now Therefore, if the said Louis Grisko shall faithfully account for all moneys that may come into his hands as such Supervisor and pay over the same pursuant to the provision of law or the order or resolution of the Board of Trustees of the Town of Cicero, and shall faithfully perform the duties of his office to the best of his skill and ability, then this obligation to be void, otherwise to remain in full force and effect.
Louis Grisko,
The Metropolitan Surety Company,
[Seal.] Charles G. Freeman,
Eesident Vice President.
Walter Faraday,
Eesident Assistant Sec.”

On June 3, 1907, Grisko, through one Mr. Buckley, the Town Clerk, whom he, being an illiterate man, employed and paid as his clerk and bookkeeper, presented to the Board of Trustees of Cicero a document purporting to be and entitled,

“Eeport oe Louis Grisko, Treasurer oe the Town oe Cicero. Jan. 1st to May 20, 1907.”

This report Mr. Grisko testified in this case was to the best of his knowledge correct; and that it was made and presented by his authority and direction, although he did not sign it, nor was asked to do so.

It begins with a recapitulation of the subsequently detailed figures of receipts and expenditures, and this recapitulation has for its first item a debit to the Treasurer of $92,646.09 as the amount on hand December 31, 1906, at which date a prior report had been made by him to the Board showing that amount on hand. It appears in this form:

“Balance Dec. 31st, 1906, $92,646.09.”

This is followed by items representing receipts by the Treasurer from “the sale of Tax Warrants,” receipts from the Town Collector on the account of taxes and otherwise, and some interest on deposits. The whole amount of debits is $175,433.39. On the other side of the account in the recapitulation is a variety of items describing payments by the Treasurer on various accounts to the amount of $117,614.34, and the final entry, “To Balance, $57,819.05,” making, with the credited payments the sum of the debits, $175,433.39.

Beneath this balancing of the account is the memorandum :

“Balance in Lincoln Bank now defunct, from sale of appropriation tax warrants years 1905 and 1906, $53,490.91.
Balance cash on hand, 4,328.14.
Total, $57,819.05.”

As implied by this memorandum it appears that although (as is stipulated in the record) “upon said 20th day of May, A. D. 1907, it became and was the duty of Grrisko to pay over to Kasperski as his successor in office, all moneys which had come into the hands of said Grrisko as Supervisor, or which had not been paid out by him pursuant to the provisions of law or the order or resolution of the Board of Trustees of the Town of Cicero, or which had not otherwise been lawfully accounted for by him, ’ ’ the money was not available to him to thus turn over the stated balance of $57,819.05. He turned over instead only $4,328.14, and reported as to the balance, amounting to $53,490.91, that it was a deposit in Lincoln Bank, a private bank in the Town of Cicero (at Morton Park), which had been before August, 1905, owned and operated by William W. Weare, doing business as William W. Weare & Co., as a banking house under that name, but in that month had been transferred to one William J. Atkinson, who changed its name to the “Lincoln Bank.” Atkinson took possession of the Bank on October 1, 1905. He seems to have paid Weare for it with practically all the good assets in the Bank, substituting for them some worthless bonds of a water company in which he was interested. The public were presumably not aware of this, and the deposits shown on the books of the Bank increased from thirty or forty thousand dollars to over a hundred thousand. Atkinson re-deposited the money received in a Chicago Bank and carried there assets or securities received, and then made loans at that Bank, which, when the end of this species of financiering came, with the closing of the doors of the Lincoln Bank and the appointment of a receiver in bankruptcy for Atkinson on December 17, 1906, were apparently sufficient to absorb the funds and collateral on deposit and leave only enough assets in the estate to pay the bankruptcy expenses.

Because of the failure of Grisko to pay over to his successor the entire amount shown by the report above described to be chargeable to him, this present suit was begun against him and the surety upon his last official bond, the Metropolitan Surety Company. The action was in debt, and the declaration set forth the bond and its breach in that “while the said Louis Grisko was the Supervisor of the plaintiff large sums of money * * * belonging to the plaintiff came into the hands of Grisko as such Supervisor, for which said 'Grisko did not faithfully account and did not pay over the same * * * to his successor, * * * but * * * neglects and refuses” so to do, etc.

To this declaration Grisko and the Company filed four pleas: First, nil debet; second, non est factum; third, that Grisko “has at all times faithfully accounted for all moneys that came into his hands as ¡Supervisor. * * * and paid over the same pursuant to the provisions of law or the order or the resolution of the Board of Trustees of the Town of Cicero, and faithfully performed the duties of his office to the best of his skill and ability, according to the true intent and meaning of said writing obligatory,” and fourth, that if “the plaintiff has been damnified for or by reason or means or on account of any failure of said defendant, Louis Grisko, to pay over any or all moneys belonging to the plaintiff which came into the hands of the said Louis Grisko as Supervisor, etc., the said plaintiff has been so damnified of its own wrong and through its own means and default, to-wit, that the said Louis Grisko paid over all the moneys that came into his hands as said Supervisor, pursuant to the provisions of law, by the order or resolution of the Board of Trustees of the Town of Cicero, to the Lincoln Bank of Morton Park, Illinois, or to other person or persons designated by said Board, and, so did faithfully account for all moneys coming into his hands as such Supervisor.”

A demurrer was sustained to the first plea. On the second issue was joined, and to third and fourth replications were filed traversing their allegations that Grisko had (a) faithfully accounted; (b) paid over all the moneys that came into his hands, pursuant to the provisions of the law or the order or resolution of the Board of- Trustees of the Town of Cicero, etc.; (c) faithfully performed the duties of said office of Supervisor to the best of his skill and ability according to the true intent of said bond;—and tendering issue on each of the propositions stated.

On the trial, as before stated, the court found for the plaintiff and assessed its damages against both the defendants at $55,288.80, and after overruling a motion for a new trial and a motion in arrest of judgment gave the judgment herein appealed from.

The defense which was made below and is repeated here on the assignments of error is divided into these propositions:

A. That over $48,000 of the $53,490.91 described in the Report of Grisko to the Town Board of June 3, 1907 (which with interest at 5 per cent, from May 20, 1907, to January 22, 1908, is the amount of the judgment herein), should not be charged against Grisko •as “moneys that had come into his hands as Treasurer,” and that therefore its loss is not covered by his official bond.

Under this general proposition it is urged (1) that the report in question does not estop Grisko, and still less the surety on his bond, from showing the true nature of the debit this charged to him,. (2) That such showing is that the sum of $48,340.96 out of the $53,490.91 reported as in the Lincoln Bank was simply the aggregate face amount of certain so called ‘ ‘ anticipation warrants” issued by order of the Board of Trustees of the Town of Cicero, and placed by order of the same Board (not even through the official action of the Treasurer) in the hands of the Lincoln Bank—not as money, but simply as paper of the Town. (3) These “anticipation warrants” were illegally issued by the Town and as they were illegal and given to the Lincoln Bank by the Town, any money which the Lincoln Bank allowed or credited on them to the Treasurer or otherwise, if it did so credit it, was not money coming into his hands as Treasurer in purview of his official bond. The illegality of the warrants depends on the fact (a) that they were unnecessary to defray the ordinary expenses of the Town and consequently unauthorized by the statute; and (b) that they were not issued against “taxes already levied,” which was a requisite to their validity under the statute.

It is further insisted that the Town was guilty of laches barring recovery because after the failure of the bank it took no steps to stop payment of the warrants.

B. That a large part of the loss occurred before the Metropolitan Surety Company became surety. For such loss the Company is not liable. No estoppel arises from Grisko’s reports made to the Board of Trustees and filed with the Town Clerk, of the balances on hand April 17, 1906, June 30, 1906, October 1, 1906, December 31, 1906, and May 20, 1907, because Grisko was not a defaulter, did not consciously render a false report and did not deceive the Town.

C. That a demand was necessary before bringing suit, and none was made.

D. That the judgment asked for and rendered is too large, because (1) the Surety Company should have been allowed a credit of $6,858.84 on account of the general town warrants cashed or paid by the Bank just prior to its failure, and for which the Bank has not been re-imbursed. This amount it is claimed should be credited against the liability on the bond— wiping it out altogether if the “anticipation warrants” are not included in it—and reducing it by $6,858.84 if they are. (2) Interest on the balance reported as of May 20, 1907, should not have been allowed.

The facts on which these defenses are predicated are these:

By the charter of the Town of Cicero (Private Laws of 1869, vol. 3, p. 666) the government and corporate powers of the town are vested in and exercised by a board of seven trustees. Of these the Supervisor is one ex oficio, he and the Assessor and Collector with four other persons elected as Trustees making up the seven. This Board has by the charter “the general management and control of the finances and all the property, real, personal and mixed, belonging to the town.”

By an act of the legislature approved May 31, 1879, and amended May 11,1901, it is provided “That whenever there is not sufficient money in the treasury of any county, city, town, village, school district, or other municipal corporation, to meet and defray the ordinary and necessary expenses thereof, it shall be lawful for the proper authorities thereof to provide a fund to meet said expenses by issuing and disposing of warrants drawn against and in anticipation of any taxes already levied by said authorities for the payment of the ordinary and necessary expenses of such county, city, town, village, school district, or other municipal corporation to the extent of seventy-five per centum of the total amount of any such tax levied; provided, that warrants drawn and issued under the provisions of this section shall show upon their face that they are payable solely from the taxes when collected and not otherwiseand shall be received by any collector of taxes in payment of the taxes against which they are issued, and which taxes against which said warrants are drawn shall be set apart and held for their payment”.

April 20, 1905, the board of trustees unanimously (Grisko being present) passed the following resolution:

“Besolved, that the finance committee be and they are hereby instructed to confer with banking firms and ascertain what rates of interest will be charged and what arrangement can be made for cashing tax warrants issued on the 1905 appropriation”.

On April 26, 1905,—Grisko also being present and voting—the board of trustees unanimously concurred in the following report of the finance committee:

“The Committee on finance, to whom was referred the resolution of Trustee Bills directing the finance committee to confer with banking firms to ascertain what rate of interest and what arrangements can be made for cashing warrants issued on 1905 appropriation, would respectfully report that we have conferred with various banks and find that William W. Weare & Co. agree to cash town warrants drawn against the 1905 appropriation, and charge therefor at the rate of 4y2 per cent interest per annum for the money advanced. The finance committee recommend that the proposal of William W. Weare & Co. be accepted”.

They also unanimously passed the following resolution on the same day:

“Resolved, that the President and Town Clerk be and they are hereby directed to issue a tax warrant on general funds in favor of William W. Weare & Co. for $4,644.71, for the purpose of creating a fund from which to pay warrants drawn in accordance with reports and recommendations submitted by the finance committee to the board and accepted; said warrants to be redeemed by the treasurer upon receipt of the 1905 taxes from the collector”.

Subsequently, during the year 1905, at intervals of a few weeks, eight other resolutions directing the issuance of anticipation warrants substantially in the same terms employed in the resolution of April 26th, were passed. At every meeting except one Grisko was present and at each meeting voted for the resolution, which was in each case passed unanimously. The aggregate amount thus ordered in 1905 (excepting one apparently ordered Sept. 28th, which was evidently not issued, but included in order of the next day, Sept. 29th) was $24,498.63.

On January 18, 1906, the following resolution was unanimously adopted, Grisko voting for it:

“Resolved, that the finance committee be and they are hereby directed to confer with the different banking associations for the purpose of ascertaining the lowest rates of interest that would be charged in cashing Town of Cicero tax warrants issued upon the 1906 appropriation in anticipation of the collection of the general taxes for said year, said committee to make report at the next session”.

February 1, 1906, the board, with one dissenting vote—Grisko voting in the affirmative—“accepted the proposals of the Lincoln Bank” and “concurred in” a report of the finance committee as follows:

“Tour Committee on finance, to whom was referred the resolution directing that the finance committee confer with banking firms and arrange for cashing tax warrants issued upon 1906 appropriation, would respectfully report that we have conferred with several banks and recommend the proposition of the Lincoln Bank, who will agree to cash the same at 4% per cent interest, be accepted”.

On the same day, February 1, 1906, the following resolution was unanimously adopted by the board of trustees:

“Resolved that á tax warrant be and the same is hereby ordered issued in favor of Lincoln Bank upon the Water Works Bond Sinking Fund in the sum of $1,150, for the purpose of paying interest on Water Works Bonds due Feb. 4, 1906; said Tax Warrant to’ be issued upon 1905 appropriation”.

(Note : By a singular blunder in the abstract (not noted by either party in argument) this resolution has been wrongly recited therein, and the warrant ordered represented to be an “anticipation” warrant on the taxes of 1906. It was not an “anticipation” warrant on the taxes of 1906, as will be seen—a fact not without some significance, in our opinion (when its disposal is considered), on the contentions in this case.)

On the same day also, February 1, 1906, it was unanimously ordered by the trustees, in substantially the language of the various resolutions of the preceding year, that tax warrants be issued upon the 1906 appropriations against general funds in the sum of $2,264.47 in favor of Lincoln Bank for the purpose of creating a fund from which to pay warrants ordered drawn.

Between February 1,1906, and October 1,1906, eight other warrants were ordered issued by eight separate resolutions, each unanimously passed.

These anticipation warrants were drawn addressed to the treasurer of the Town of Cicero, ordering him to pay from the tax levies of the years 1905 and 1906, respectively (according to the date of the warrant), “appropriated and levied for the Corporate Expense Department” so many dollars to “W. W. Weare or bearer” or “The Lincoln Bank or bearer” (according also to the daté of the warrant), with interest at 41/2 per cent, per annum from date. The warrants recited also that they were payable' solely from the taxes of 1905 or 1906, as the case might be, when collected, and not otherwise; and that such taxes were pledged to their payment, etc. They were signed by Timothy J. Buckley as town clerk, and George Comerford as president.

On April 25,1905, Grisko as treasurer had deposited with “William W. Weare & Co., Bankers”, $399.95, and on May 1, 1905, $5,000, and these sums had been credited to “Louis Grisko, Treasurer”, on the ledger of the Lincoln Bank. The second item at least was a check from the town collector. Grisko was given a bank pass-book in the usual form of the bank, which was entitled “William W. Weare & Co., Bankers, Morton Park, Ill., in account with Louis Grisko, Treas”.

The first two items were:

Cr.
1905.
April 25, R $ 399.95.
May 1, W. 5000.00.
In the ledger of the bank the corresponding entries also appear:
1905 fol. Debit. Credit. Balance.
April 25, 207 dep. 399.95 399.95.
May 1, 211 dep. 5000.00 5399.95.

The next succeeding items on the Bank ledger, however, are debit entries.

The Bank by arrangement paid on presentation any general warrants issued by the Town of Cicero and brought to them for cashing. These general warrants were for the ordinary, usual expenses of the town, and were signed by the president and clerk of the town, and stamped across the face payable at the Lincoln Bank.

During May, 1905, a check of the treasurer’s for $250 and twelve general warrants aggregating $2,411.61 were presented (on different days) to the bank and paid by the cashier, who, as each item was paid, entered it as a debit entry on the “Grisko, Treas.” ledger account, and made the “balance” carried out on the right of the page correspondingly less.

On May 13th this balance is shown as $2,738.34. On May 15th Grisko deposited with Weare & Go. a check on the Chicago Bank in which he kept town funds for the full amount of these warrants—$2,411.61 —making up the balance again to the $5,399.95 deposited, less the $250 check, or $5,149.95.

The cashier testifies that after that time, although the bank was continually paying general warrants presented to it, there were no charges of them made against the Grisko, Treas. account, but that they were held as cash slips in the cash drawer until a considerable sum had accumulated, and then some messenger from the bank would go down to the town hall and get a check from Buckley to be signed by Grisko and countersigned by Buckley for their amount. This course, the cashier said, was taken by Mr. Weare’s instructions. When Atkinson took possession of the bank he directed that the same course should be continued.

It is of course evident from this that some arrangement not to deplete the treasurer’s balance in the Weare and Lincoln Bank had been made for the benefit of somebody.

Mr. Grisko says that being no bookkeeper, he employed Mr. Buckley for $250 in 1905 and $500 annually in 1906 and 1907, to keep his books and transact all his business, and that he had no explanation of paying back the $2,411.61 to the Cicero Bank by a check on the Chicago Bank to make, except that he depended entirely on Buckley and signed any check or did anything Buckley suggested without hestitation. As to the subsequent withholding of any charge of the warrants cashed from the ledger account and their reimbursement by a check on a Chicago bank, although, as will be seen, large sums were piling up to the treasurer’s credit at the Cicero Bank, Mr. Grisko has no further explanation than that he trusted Buckley to do his business, that he did not know what the “anticipation warrants” were or what they meant, or that he could draw any money on them. He testified, however, that he had looked over the report to May 20, 1907, and believed it to be all right, and that the preceding quarterly reports were made by Mr. Buckley under his direction and authority.

Buckley swears that Grisko employed him first in April, 1905 (which it is to be noted was a year after Grisko’s first election), as his bookkeeper for a year “to keep his accounts as treasurer”, and paid him $200 for it, and that in 1906 Grisko subsequently employed him as his clerk for a year and paid him $500 for his services, which terminated at the expiration of Grisko’s tenure of office, May, 20, 1907, and that he, Buckley, kept a complete set of books showing all receipts, collections and disbursements of Grisko as treasurer, and that he made out from those books quarterly reports, which he presented to the board of trustees at Grisko’s direction, but that when he drew checks on the Prairie State Bank or the Colonial Bank of Chicago to re-imburse the Weare or Lincoln Bank for warrants paid by them, he did so because he was directed to do so by Grisko, who had also told him that he had arranged with the Lincoln Bank to cash the ordinary town warrants at that bank; that he, Buckley, did not and does not know why Grisko kept the account increasing at the Lincoln Bank while paying-warrants from the Chicago funds. He says, “I knew nothing of the treasurer’s cash at all”. Again he testifies, that he does not recall that he ever had one of the collector’s checks given to the treasurer in his hands, or that he ever made out a deposit slip for them or had anything to do with their deposit in the Chicago banks. He says: “I did not know there was a fund in the Lincoln Bank out of which the warrants could be paid”; that so far as he knew, except as Grisko told him of deposits in the bank, Grisko might have kept the money in his pocket; that Grisko gave him a check book on the Colonial Bank and told him to draw all checks from that check book for the warrants, and that he, Buckley, had personally or by advice or direction nothing to do with where Grisko deposited his money or on what bank he drew his checks, except to obey Grisko’s directions.

Wherever the truth may lie in these conflicting statements of Grisko and Buckley in this testimony, and whatever the influence or agency of Buckley in. the matter of the anticipation warrants, hereafter discussed, the controlling fact is that it was not Buckley but Grisko who was treasurer, who was responsible to the town and the people for the money and the places in which he deposited it and for whom the Metropolitan Surety Company became bondsman.

On June 10, 1906, there was the first deposit in the Lincoln Bank (or Wm. W. Weare & Co: bank, as it was then) of the “anticipation” warrants. On that date the anticipation warrant voted on April 26, 1905, for $4,644.71, and a similar “anticipation” warrant voted on June 1, 1905, for $3,900.60, were taken to the Bank by Grisko, to whom the warrants had been handed. He says that Buckley went with him, and that before going when Buckley handed him the warrants, he said, “We will go to the bank and make the deposit of these warrants”. The abstract makes Grisko say that “after the first time Buckley did not tell me what to do with them because I knew”, which is doubtless an inadvertent, but serious departure from the record.

The testimony of Grisko was that before these particular warrants were handed to him by Buckley, the remark above quoted, about going to the bank and depositing them, was made. Then Grisko was asked: “And after he handed them to you what did he say?” Counsel objected. The court allowed him to answer. He begun to answer thus, “Well, he didn’t—” Counsel interrupting: “ Q. Did he tell you what to do with them? A. He didn’t say anything afterwards, because I knew where to deposit them”. This is a very different statement from that which appears in the abstract.

The two warrants were handed by Grisko to the cashier, who thereupon placed in the pass bank book of “Grisko, Treas.”, the third entry as follows:

June 10th, Warrants $8545.31,

and made that day in the bank ledger in the account of Louis Grisko, treasurer, a credit entry, which with the preceding, before' described, we show here :

Credit. Balance.
May 15, 224 Dep. 2411.61. 5149.95.
June 10, 245 Tax Warrants 8545.31. 13695.26.

It will be seen the amount of the tax warrants was added to the previous balance (conceded to be of cash) to make the credit balance at the close of banking hours on June 10th.

On July 10, 1905, the warrant voted on June 28, 1905, for $2,198.51 was carried to the bank and handed to the cashier. A precisely similar entry.was made of its amount in the pass book and the bank ledger, bringing up the balance in the latter to $15,893.77. So on August 7th a warrant voted on July 26th. On October 16th two warrants, one voted on August 31st and one on September 29th, and on December 14th two warrants voted respectively on November 2nd and November 28th, were taken to the bank (which before these later dates had come into possession of Atkinson) and similar entries were made of their amounts in Grisko’s bank book and in the ledger—the latter entries bringing up the balance of “Louis Grisko, Treas.”, credited in that account to $29,648.58.

February 24, 1906, there were taken to the Lincoln Bank and credited to “Louis G-risko, Treasurer”, in a lump sum of $3,414.47, the “tax warrant issued in favor of Lincoln Bank upon the Water Works Bond Sinking Fund in the sum of $11,500, for the purpose of paying interest on Water Works Bonds due February 4, 1906, said tax warrant to be issued on 1905 appropriation”, ordered, as before noted, on February 1, 1906, and the anticipation tax warrant ordered on the same day, issued on the 1906 appropriation for $2,264.47, “in favor of Lincoln Bank for the purpose of creating a fund from which to pay warrants ordered drawn”, etc.

There was no distinction made in the treatment of these warrants, and it is to be noted that although thus depositing the water bond interest warrant in his account at the Lincoln Bank and receiving credit for its amount in his balance, which at the close of February 24, 1906, was $33,063.05, G-risko paid in that quarter, as his report to the trustees from Jan. 1, 1906, to April 17, 1906, shows, $1,125 of Water Bond coupons by check on the funds in a Chicago bank.

On April 12, 1906, anticipation warrants on the 1906 taxes voted March 1st and March 27th, on June 16th warrants voted May 1st and May 28th, on July 20th a warrant voted on July 2nd, on September 12th, warrants voted on July 30th and Sept. 5th, and on October 22nd a warrant voted on October 1st, were taken to the bank, handed to the cashier and their amounts entered like the previous ones, in the hank book and the ledger. In the place of the word “warrants”, however, there appears after the dates of the last three entries the letter “F”, probably signifying the initial of the name of the cashier who took the deposit and made the entry. The total of credits shown in the pass book after the entry of Oct. 22nd was made was $53,740.91, and the balance in the bank ledger was the same amount, less the one check of $250, which had been drawn and paid on this account, or $53,490.91, which was reported to the Town Board, as we have seen, on June 3, 1907, as the “Balance in Lincoln Bank now defunct”.

Some point is made in the arguments as to who took the various warrants to the hank. We do not consider it material, for they were taken in the name of and credited to Louis G-risko, Treasurer, but it may be noted that the cashier remembers Grisko and Buckley and a messenger from the town hall each bringing-one or more, but says she never saw Grisko and Buckley at the bank together, while Grisko says Buckley went with him three times to make deposits, and that he went alone sometimes, and Buckley seems in his testimony to state or imply that he never was present when a deposit was made.

It is interesting to note what became of these warrants after they were left at the bank. “I put them in the safe and notified Mr. Atkinson that they were there, and the next morning he took them away and I never saw them again. I learned afterwards that he took them down town and borrowed money on them”, is the cashier’s testimony about this.

These warrants have been all paid by the town— some by Grisko while treasurer and some by his successor.

Evidence was introduced in this case also tending to show that the Lincoln Bank was so treated by Atkinson that it must have been insolvent shortly after he obtained control of it, but this transpired to the public only after the bankruptcy proceedings against him revealed it.

During the time when these tax appropriation warrants were issued and Grisko was thus carrying them to the Lincoln Bank and receiving credit in his account there as treasurer for their amount, there was either in the Prairie State National Bank or the Colonial Trust & Savings Bank of Chicago, to the credit of Grisko as treasurer funds belonging to the town of sums varying from $119,582.08 on August 31, 1905, down to $12,012.22 on October 1, 1906.

As to the money there was evidence tending to show, however, that the Treasurer had in his keeping ‘' about twelve general funds and 350 different special assessment funds”, all, however, kept together so far as his bank balances went, and that there was, therefore, no way of telling from a bank account of the treasurer whether the money in that account was or was not legally available for the payment of particular warrants.

From these facts, as we have said, the appellants deduce the proposition that the Treasurer and his official bondsman are not liable to the town for the amount of these tax appropriation warrants. We do not think their reasoning sound.

The warrants in question are not shown, in our opinion, to have been illegally issued, even if we should adopt the theory, which we regard as open to very serious question, that because of irregularity or even illegality in their issuance, their proceeds coming into the hands of the Treasurer as the money of the town, was not covered by the terms of the bond in question here. That question is academic, however, in this case.

The presumptions are in favor of the legality and validity of the warrants and the action of the trustees. The objection that they were not necessary to defray the ordinary expenses of the town is not proven by the showing of other funds in the treasurer’s hands. The trustees must be held to be the proper judges of the necessity. To decide on this is a duty especially confided to them. What the necessary expenses or what the possible emergencies of the town were not shown in this record, nor even to what funds or for what purposes the money in the hands' of the treasurer was legally and regularly available. The objection that the warrants were illegally issued because issued against a tax levy not then made, is not well taken, because this also is unproven. The objection proceeds on the theory that the extension of the tax by the county clerk is the “levy”. That is not the law. Gage v. Bailey, 102 Ill. 11. The appropriation bill of the proper authorities of the municipality is the “levy”. In section 8 of the Act of March 25, 1869, to revise the charter of the Town of Cicero, it is expressly provided that “all amounts of moneys appropriated” by the Board of Trustees “shall be deemed a tax on the taxable property of said town”. There is nothing in this record to show that apropriation of the amount of the “anticipation warrants” had not been made when they were ordered. Indeed there are indications, somewhat obscure in the absence of a complete record of the doings of the trustees and treasurer respecting them, that the appropriations did exist and that the very bills that the amount of the “anticipation warrants” was meant to pay were specified when the warrants were issued, and were thereafter paid on general warrants by the treasurer out of his Chicago funds, instead of out of the fund especially created to meet them.

However this may be, the presumption is in favor of the regularity and validity of these anticipation warrants when they were issued.

What then became of them? The position of the appellants that they were simply left with the Lincoln Bank as a bailee, and that it misappropriated them, is not consistent with the course adopted by the treasurer. They were expressly issued by the Board of Trustees, of which he was a member, for the purpose of creating a fund to pay certain general warrants recommended by the finance committee. They were issued payable to Weare or bearer or to the Lincoln Bank or bearer, after votes of the said Board of Trustees recommending that the proposals of Weare and of Lincoln Bank to “cash” said warrants at a certain rate of interest be accepted; they were handed to Grisko as treasurer; they were taken by him or by his authority and direction evidently to the bank; the amount of them was passed to his credit on the ledger and entered on the bank pass-book which he held as treasurer; they were treated as the property of the bank by the proprietor; at first and evidently until some other arrangement was made, general warrants were paid from the fund thus created and charged against it, and finally the amount of their proceeds was reported every three months to the Board of Trustees by Grisko as treasurer through his authorized agent as “cash” in his hands. The appellants vigorously contend that these reports work no estoppel on them from denying that there was such cash on hand. It is not necessary to invoke any doctrine of estoppel to justify considering the proof sufficient that these warrants were not “bailed to” but “cashed by” the Lincoln Bank. These reports were at least admissions of the treasurer to that effect, made, as we believe, under all the circumstances that appear in this record, despite his own testimony, quite intelligently and consciously; but even these admissions were not necessary to the case against him, because it was proven by the facts without them. That the amounts entered were “paper credits”, as the appellants say, is doubtless true; so are most of the transactions by which obligations are “cashed” precisely similar paper credits. A man takes to a bank bonds to be sold or notes to be discounted or drafts or bills of exchange to be negotiated or checks to be collected, and in the great majority of cases receives for them a bookkeeping credit in the books of the bank, evidenced besides by an entry on his pass-book. Frequently if not unusually too, these various transactions are respectively identified in the pass-book by the notation of the kind of obligation that is the subject of the deposit. Thus, “chks.” may appear against one item, “bds.” against another and “disc.” against a third, meaning that the deposit was made in the first instance in checks, in the second in bonds, and in the third in notes. This is all a matter of common experience and knowledge, and is what happened in the present case. The term “Warrants” after the entries in pass-book and ledger by no means shows that the items were not intended to be entered as cash, but were mere receipts for the instruments, as appellants contend. It only shows the source of the cash entry. So little importance indeed was attached to it that in the last three entries in the pass-book it was changed for the initial of the cashier, another customary note or quasi-identification of the transaction. The deposits in question produced a cash balance “in the hands” and control of the treasurer as really and efficiently as though the bank had paid Grisko in gold coin for the warrants and he had re-deposited the coin to his credit.

It is said that the town was guilty of laches which should prevent its recovery, because it took no steps to stop payment of the warrants after the failure of the bank. Such attempt would have been futile. The obligations were valid, as we have said, and in the hands of holders for consideration. There is nothing in this point.

But it is said that the bank was insolvent after a large part of this balance credited to Grisko had accrued and before the Metropolitan Surety Company became the surety on his bond April 16, 1906, and that therefore the default, if there was one, on the part of Grisko as treasurer,, was, so far as that amount was concerned, before the bond sued on was executed, and that the appellant Surety Company is not liable therefor. This defense cannot- be sustained. It is true that as a banking house—a separate business—which alone the cashier, Miss Flagler, could and did testify about, and which alone Mr. Jennison, the expert accountant called, seemed to testify about, the Lincoln Bank seems shown by the testimony to have been in a bad way before April, 1906; and it also appears by the testimony of Mr. Sessinghaus that the estate in bankruptcy of William J. Atkinson, of whose assets the “Lincoln Bank was a part”, as the accountant, Mr. Jennison, says, will pay but very little, if anything, to creditors; but all this falls short of actual proof that William J. Atkinson, all of whose assets were liable for every cent of the liabilities of this privately owned “banking house”, was insolvent before April 16,1906, or could not have been made to respond at that date for the deposits of the Lincoln Bank. It is quite conceivable that “plunging” and “speculation” in other schemes, into which he put the funds of his “banking business”, brought him to irredeemable bankruptcy between April 16, 1906, and December 17, 1906.

But aside from this and on the assumption that both the “banking house” and its owner were proved hopelessly insolvent before April 16, 1906, the Metropolitan Surety Company could take no benefit therefrom. Even if, as claimed by appellants, the reports of the treasurer to the Board of Trustees worked no estoppel against his showing that what he charged himself with as “cash” was in fact merely receipts for negotiable paper of the town, yet when that proposition is rejected on other grounds, and it is held that the face amounts of the warrants after they were left with the bank were “cash” in his hands, the reports estop him and his surety from denying that the cash was in his hands and control (however insolvent his bankers or other debtors might be) when he so reported it. This proposition is supported by explicit decisions of the Supreme Court of Illinois, such as Morley v. Town of Metamora, 78 Ill. 394; Chicago v. Gage, 95 Ill. 593; Cawley v. People, 95 Ill. 249; Longan v. Taylor, 130 Ill. 412; and Cowden v. Trustees of Schools, 235 Ill. 604.

The principle of these cases governs in this ease on this point. It is consistent with justice and right reason. The distinction which counsel makes between these cases and the one at bar, in that in them there were conscious defalcations and concealment by false reports, while in the present case there was neither, operates, as we think, rather against than for their contention.

In the present case there could have been no concealment from the Surety Company when it signed the bond in question. It could have seen the reports and investigated their truth. It could have required information as to where every dollar reported was to be accounted for, and on the assumption of Grisko’s honesty as insisted on, could have obtained it. Then, it could have investigated (better probably, because with more facilities—certainly as well—than any citizen or officer of Cicero) the condition of the Lincoln Bank. It was heedless and negligent in not doing so. The more ignorant or illiterate Grisko was, the greater was its heedlessness and negligence. They do not work to the damage and disadvantage of the town, which relied on its bond, but to its own.

Appellants say that judgment should not have gone against the defendants, because no demand was made upon Grisko before bringing the suit, and Dreyer v. The People, 176 Ill. 590, is cited to show the necessity of such demand. That on a criminal indictment for the statutory offense of not paying over money to a successor in office, a man cannot be sent to the penitentiary without proof that the said successor demanded such payment, is a very different proposition from the one urged here—that in a civil case a man who has not turned over such money and has practically admitted that he had no money to turn over, cannot with his surety be sued on a bond which binds him to account for and pay over the same pursuant to law, and faithfully perform the duties of his office. No demand was necessary. The suit is a sufficient demand.

Nor is the position tenable that the town warrants for $6,858.84 paid by the Lincoln Bank before its failure should be set off against the liability of the appellants on the bond sued on here. William J. Atkinson, under the name of The Lincoln Bank, or otherwise, is not a party here. There is no proof in this record that the choice of a hank was dictated to or forced on G-risko. The warrants were to he cashed by the Lincoln Bank, bnt their proceeds might have been deposited by the treasurer wherever he wished. He and his bondsmen are responsible for all the money which his accounts show in his hands and which he has not turned over.

We think that interest was properly allowed on the amount found due. The doubt, if there be one on this point, arises from the fact that no demand was made on Grisko before bringing this suit, but, as we have said, he practically declared by his last report and subsequent action that he could not pay anything beyond the $4,328.14 which he did turn over. The last report, accepted without dispute by the Board of Trustees, liquidated and settled the amount due. We think that the principle of Cassady v. Trustees, 105 Ill. 560, and Stern v. The People, 102 Ill. 540, requires the allowance of interest.

The judgment of the Municipal Court is therefore affirmed.

Affirmed.


source: Caselaw Access Project

author: Mr. Justice Brown

license: Public Domain

text:
    Town of Cicero, Appellee, v. Joseph Hall et al., Appellants.
    Gen. No. 14,458.
    1. Bonds—when liability as at common law enforced. If a bond initially given as a statutory bond does not comply with the statute, it is none the less valid and will be enforced as a common law obligation.
    2. Bonds—when town collector's bond substantially in compliance with statute. The town collector’s bond in question in this case held substantially in accord with the statute providing therefor.
    3. Bonds—when surety liable upon town collector’s. Held, that under the terms of the bond of the town collector in question in this case, treated either as a statutory or as a common law obligation, that the sureties upon such bond were liable for the failure of the tpwn collector to account for moneys reported by him as in Ms possession where he had deposited the same in a bank of his own choosing.
    Action in debt. Appeal from the Municipal Court of Chicago; the Hon. John H. Hume, Judge, presiding.
    Heard in this court at the March term, 1908.
    Affirmed.
    Opinion filed November 12, 1908.
    Statement by the Court. This is an appeal from a judgment of the- Municipal. Court of Chicago in favor of the Town of Cicero and against Joseph Hall and the Metropolitan Surety Company in a case of the first class in debt. The judgment was in the penal sum of a bond sued on,-the damages being assessed at $6,329.96. The judgment was by the consideration of the court, sitting without a jury. After finding the issues for the plaintiff the court overruled a motion for a new trial and a motion in arrest of judgment, and gave judgment as above stated. From this judgment the defendants have appealed to this court and have assigned various errors. Their contention in argument is confined to the proposition that under the undisputed facts, the finding of the court was erroneous in law.
    The facts out of which the suit grew and which appear in the record are these:
    The defendant, Joseph Hall, was on April 4, 1906, elected Collector of the Town of Cicero in Cook county, Illinois, for a period of one year. He entered on his duties April 17, 1906, at which time* he presented and the Board of Trustees of the Town of Cicero accepted and approved a bond in the penal sum of $20,000, with himself as principal and The Metropolitan Surety Company of New York as surety thereon, conditioned as follows:
    “The condition of this obligation is such, that whereas, the above bounden Joseph Hall was on the fourth day of April, A. D. 1906, duly elected to the office of Collector of said Town of Cicero, in the County of Cook aforesaid, for the period of one year.
    Now therefore,, if the said Joseph Hall shall faithfully account for all moneys that may come into his hands as such Collector, and pay over the same pursuant to the provisions of law or the order or resolution of the Board of Trustees of the Town of Cicero, and shall faithfully perform the duties of his office to the best of his skill and ability, then this obligation to be void; otherwise to remain in full force and effect”.
    Joseph Hall continued to perform the duties of Collector of the Town of Cicero until April 29, 1907, at which date his successor in office, Erskine Hart, assumed them.
    Just prior to the relinquishment of his office Mr. Hall made a report to the Board of Trustees, which was thereafter filed in the Town Clerk’s office, showing accurately, as is conceded, his receipts and disbursements during his entire term of office.
    This report first showed the collection of $60,908.77 on general taxes, the charge against it of $1,218.77, or two per cent., as commission for collecting, and the payment to the county, town, sanitary and township treasurers of the balance of $59,690.60. Then followed a separate report or section of the report, entitled Miscellaneous Collections to April 30, 1907, which gave items of receipts from April 18, 1906, to April 30, 1907, of water rates, saloon and pool table licenses, dog licenses, undertakers’, peddlers’, junk dealers’, sewer builders’, express men’s, house movers’ and milk licenses, miscellaneous collections and building, sewer and water permits and the disposition of them.
    The summary or recapitulation with which this section of the report concludes is as follows:

      “Summary.
    Total collections, 53704.29
    Total commissions, 1074.09
    6102.07 Shortage Failure Lincoln Bank,
    46528.13 To Louis Grisko, Treasurer,
    53704.29 53704.29.”
    After testifying to the accuracy of this report Mr. Hall, who was called in this suit as a witness for the plaintiff, testified that he did not turn over to the Treasurer of the Town of Cicero the $6,102.07 mentioned, but deposited it with the Lincoln Bank, which failed." “That is the reason”, he said, “I failed to turn it over”.
    On account of this failure, the present suit was brought and a declaration in debt on the bond filed. The declaration assigned as a breach of the bond that Hall did not faithfully account for all moneys that came into his hands as collector and pay over the same pursuant to the provisions of law to the Supervisor (who by law is the Treasurer) of the plaintiff and did not faithfully perform the duties of his office to the best of his skill and ability.
    The defendants filed a plea of nil debet, which was successfully demurred to, a plea of non est factum, on which issue was joined by a similiter, and the two other pleas, which were traversed with a tender of issue.
    The first of these pleas was to the effect that the said Hall paid over all the moneys that came into his hands as said Collector, pursuant to the provisions of law, by the order or resolution of the Board of Trustees of the Town of Cicero, to the Lincoln Bank-of Morton Park) Illinois, or to other person or persons designated by said Board, and so did faithfully account for all moneys coming into his hands as Collector. The second asserts that Joseph Hall .has at all times faithfully accounted for all moneys that came into his hands as Collector of the Town of Cicero, and paid over the same pursuant to the provisions of law or the order or the resolution of the Board of Trustees of the Town of Cicero, and faithfully performed the duties of his office to the best of his skill and ability, according to the true intent and meaning of said writing obligatory.
    Runnells, Burry & Johnstone, for appellant.
    John J. Sherlock and Hiram T. Gilbert, for appellee.
   Mr. Justice Brown

delivered the opinion of the court.

We have just filed an opinion in the cause of the Town ■ of Cicero v. Louis Grisko et ah, ante p. 564, in which the failure of the so-called Lincoln Bank at Morton Park, and its effect on the funds of the town in the hands of its Treasurer were involved. That opinion shows to some extent the state of things which brought about the failure. The suit at bar is one of its effects, and the defendants unfortunate victims of it. But we can see no valid defense to the claim of the town shown in this record.

One line of argument of the appellant company which was surety on the bond sued on, as shown by a proposition of law tendered by it to the court and refused, is (a) that the bond was not in substance, even the same as the bond required by statute, and (b) that the bond given being substantially different from the satutory bond, the surety is not liable “for money which the collector in good faith and without negligence” deposited in a bank, and lost by the failure of that bank.

The second clause of the proposition is plainly a non-sequitur. If the bond is not in accordance with the statute it may still be valid as a common law bond, and the question of the liability of the surety in the ease is to be determined not arbitrarily by the fact of the difference, bnt by the terms of the bond given.

Another line of argument of the appellants, as shown by another proposition of law rejected by the court, is that in the present case (a) the covenant “to pay over money”, found in the bond sued on, is merged in the covenant faithfully to perform the collector’s duties, and (b) that if the officer otherwise faithfully performed his duties and “honestly and in good faith” deposited money in a bank, which money was lost by the failure of said bank, the surety is not liable.

The connection of these two propositions also involves a non-sequitur, for the question whether the collector has faithfully performed his duties when he has deposited the money in a bank of his own choosing, depends on what the law makes his duty with reference to that money.

Neither proposition as offered 'was sound, and they were properly refused.

Nor is the basis on which either argument rests sound in its premises. We do not think that the bond given differed substantially from the bond prescribed by statute, nor that the covenant “to pay over money” in this case was merged in the covenant “to faithfully perform”.

The bond as given appears in the statement prefixed hereto. Its condition is that:

“Joseph Hall shall faithfully account for all moneys that may come into his hands as such collector, and pay over the same, pursuant to the provisions of law or the order or resolution of the Board of Trustees of the Town of Cicero, and shall faithfully perform the duties of his office to the best" of his skill and ability”.

The condition prescribed for the collector’s bond by section 6 of the charter of the Town of Cicero (Private Laws of 1869, vol. 3, p. 668) is: “That he will well and truly pay over and account for all moneys that may come into his hands as collector to the party or parties entitled thereto, and that he will faithfully discharge the duties of his said office”.

We do not think there is any substantial difference in these conditions. To pay over money “to the party entitled thereto” is to pay it over “pursuant to the provisions of law”, and vice versa. We do not think the addition of the words “or the order or resolution of the Board of Trustees of the Town of Cicero” substantially changes the required condition. It is not to be presumed that the Trustees would order the money turned over to parties not entitled by law to receive it.

Certainly the addition of the words “to the best of his skill and ability” do not add or subtract anything •from the words “faithfully perform the duties of his office”. We know of no case where their conventional use has been held to excuse default resulting from ignorance or credulity not excusable or justifiable in a public officer.

But if the bonds are different, and the bond given merely a common law and not a statutory bond, there is still no doubt that to escape liability in this case, where money received by Hall as collector was not paid over to any one but an insolvent bank selected by himself—which bank had no claim to it—the surety must show that the collector has, notwithstanding such failure, complied with the conditions of the bond he gave. It is plain he did not. He neither faithfully “paid over” the money that came into his hands pursuant to the provisions of law or the order or resolution of the Board of Trustees of the Town of Cicero, nor did he “faithfully perform the duties of his office to the best of his skill and ability”.

The obligations and duties of a town collector are very different from those of the officers or employes and agents mentioned in the cases cited by appellants.

In C., B. & Q. R. R. Co. v. Bartlett, 120 Ill. 603, for example, the principal in the hond was a paymaster of a railroad, from whom the money was stolen, and as the headnote puts it, the court held that “where the company required such agent to keep the moneys in a room not properly protected against the entry of thieves or burglars * * * ' and a large sum was stolen from the safe during the temporary absence of such agent, without any neglect of duty or want of care on his part, the agent could not be held liable on his bond conditioned that he would account for all moneys coming to his hands”.

The difference between such a case and the present one needs no elaboration. In this case the town did not prescribe the place of deposit to the Collector. It did not oblige him to keep the money anywhere. It presumably invited him to turn it over to the treasurer as nearly as possible as he collected it.

That a collector for a municipality giving a bond “to faithfully perform the duties of his office”, even were there nothing else conditioned in it, should be excused from paying over money which he had collected for the municipality by showing that he, of his own volition, had loaned it to an insolvent speculator, whether such speculator did business under the name of a bank or otherwise, would be a very dangerous doctrine to hold.

But that is what the defense amounts to in this case. The Lincoln Bank was William J. Atkinson. The “deposit” in the Lincoln Bank is what all general deposits in a bank are—a loan on demand to . the “Bank”—in this case William J. Atkinson. He was insolvent and could not pay it back. Mr. Hall may be morally guiltless, but he is legally responsible for the money. His bondsman is responsible with him. It would be judicious for bonding companies to keep closer watch of the investments and deposits of public money.

The questions raised in this case concerning the necessity for demand and of the allowance of interest do not differ from those discussed in Cicero v. Grisko et al., before referred to.

We think the judgment of the Municipal Court is correct and should be affirmed, and it is so ordered.

Affirmed.


author: Mr. Justice Holdom

text:
    Louis Olcese, Appellee, v. Val Blatz Brewing Company, Appellant.
    Gen. No. 18,977.
    1. Landlord and tenant—liability for rent of assignee of latter. While at common law and under the decisions of the English courts, an assignee in virtue of a mortgage would he liable to pay-rent to the lessor in the assigned lease, regardless of the fact of actual entry having been made into the demised premises, or possession thereof taken, yet that doctrine has been somewhat relaxed in this country, for while the mortgagee is out of possession the mortgagor for every substantial purpose is regarded as the real owner, and the mortgagee not treated as a real assignee. However, after entry the possession thus obtained by the mortgagee subjects him to that privity of estate with the landlord which imposes upon him the obligation to pay rent in accord with the terms of the lease assigned by the covenants of the mortgage.
    2. Instructions—approved form of, as to when chattel mortgage operates as assignment of lease. The following form of instruction upon this subject approved:
    “The jury are instructed that if they believe from the evidence that the plaintiff, Louis Olcese, made a lease of the premises to Edward Kelly; and that Edward Kelly executed and delivered a chattel mortgage, which by its terms included the lease of the premises in question to Val Blatz Brewing Company, and that thereafter Val Blatz Brewing Company paid rent of the premises in accordance with the terms of the lease of the premises to said Edward Kelly, then such chattel mortgage operated as an assignment of the lease to the Val Blatz Brewing Company and the Val Blatz Brewing Company became liable for the payment of rent in accordance with the terms of the lease.”
    Trespass on the case. Appeal from the County Court of Cook county; the Hon. David T. Smiley, Judge, presiding.
    Heard in this court at the October: term, 1907.
    Affirmed.
    Opinion filed November 12, 1908.

      Statement by the Court. Plaintiff in this action seeks to recover rent of the premises 7 Dearborn street, Chicago, from defendant as the assignee of Edward Kelly. The lease was in writing, under seal, and contained a covenant against assignment without the consent of the landlord. The term commenced November 4, 1902, and was to end April 30, 1908. On March 28, 1905, Kelly, being in arrears of rent and indebted to defendant, made a chattel mortgage to defendant conveying a saloon license, certain personal property, consisting of saloon fixtures in the leased premises, and also by the conditions of the chattel mortgage assigned the lease to defendant as security for its debt. Kelly quit the premises about April 20, 1905, and procured from plaintiff a consent in writing to sublet the premises or transfer the lease to any “respectable party”. After Kelly went out of possession, the lease with the consent to sublet or assign was given to and remained with defendant, and defendant paid the past-due rent, amounting to $288.33, and a further payment, on account of rent subsequently accruing, of $266.67. The receipts run to Kelly, but were given to defendant, who retained them in its possession. One Merslak conducted the saloon business in his own name from the time Kelly moved out until defendant foreclosed the Kelly chattel mortgage. The rent so paid, defendant contends, was received by it from Kelly and Merslak, and that in paying the same to plaintiff they were acting as agents only. The premises were subsequently closed and defendant took steps to foreclose the Kelly mortgage, and on June 1, 1905, removed the mortgaged saloon property from the demised premises. Plaintiff re-rented the premises July 14, 1905, and claims rent for the months of April, May, June and one-half of July, 1905, amounting to $700, for which he recovered judgment in the County Court. At the close of plaintiff’s case, and again at the close of all the proofs, defendant moved the court to instruct a verdict in its favor, both of which motions were denied and exceptions duly preserved. Motions for a new trial and in arrest of judgment having been made and denied, defendant duly excepted and prayed an appeal to this court, which was allowed and perfected.
    Winston, Payne, Strawn & Shaw, for appellant; Edward W. Everett and Garrard B. Winston, of counsel.
    Iles & Martin, for appellee.
   Mr. Justice Holdom

delivered the opinion of the court.

It was assigned for error and argued that there is a fatal variance between the averments of the declaration and the proof, in the rulings of the court in the admission and rejection of evidence, and in the giving and refusal of certain instructions to the jury upon the law.

We think the jury were justified from the evidence in concluding that the defendant took actual possession of the premises under the assignment of the lease to it in the Kelly chattel mortgage, and that such possession was taken through Merslak, who held possession for .the defendant until the physical foreclosure of the Kelly chattel mortgage occurred June 1, 1905. The fact that when Kelly made the chattel mortgage he delivered with it the lease of the premises, and that defendant in fact paid directly several months rent to plaintiff, taking and retaining the receipts therefor, and also took and retained the written consent of plaintiff to the assignment of the lease, and the further fact that Merslak paid money from the saloon business to defendant during the time he had charge of that business, are all inconsistent with the claim by defendant that it acted in all these matters merely as the agent of Kelly and Merslak. The lease, while it remained in the possession of defendant, was not assigned, except as the covenant in the chattel mortgage worked an assignment of it to defendant. There was no other assignment made by Kelly to defendant and no pretense of an assignment to Merslak. Neither Kelly nor Merslak were produced -as witnesses by defendant to explain, if explanation were possible, their relations to defendant in an effort to show that -they were contrary or different from that arising from the admitted dealings of defendant with plaintiff and the leased premises. There is nothing in the proofs from which an inference should be indulged that either Kelly or Merslak were hostile to defendant. The matters alleged by defendant were in the nature of defenses to plaintiff’s claim, the burden of sustaining which rested upon defendant. The admission of Meyer that defendant was good for the rent was made, at a time when its liability therefor was asserted and his admission must be construed with that fact in mind. He made it as the representative of defendant in a matter impliedly entrusted to him as its manager, in the usual course of defendant’s business.

Whether the assignment of the lease under the conditions of the Kelly chattel mortgage followed by the continued possession of the lease, otherwise unassigned, was sufficient to fasten upon defendant liability to pay the rént reserved by the lease' without the taking of possession of the demised premises, is not of the essence of the right of plaintiff to maintain this judgment, in view of the fact that defendant did take possession through Merslak and did pay rent in accordance with the terms of the lease. While at common law and under the decisions of the English courts, an assignee in virtue of a mortgage would be liable to pay rent to the lessor, in the assigned lease, regardless of. the fact of actual entry having been made into the demised premises, or possession thereof taken, yet that doctrine has been somewhat relaxed in this country, for while the mortgagee is out of possession the mortgagor for every substantia:! purpose is regarded as the real owner, and the mortgagee not treated as a real assignee. However, after entry the possession thus obtained by the mortgagee subjects him to that privity of estate with the landlord which imposes upon him the obligation to pay rent in accord with the terms' of the lease assigned by the covenants of the mortgage.

There are no decisions in this state announcing a contrary doctrine. Babcock v. Scoville, 56 Ill. 461, was not the case of assignment by mortgage, but an assignment direct of the lease itself. The question there was the liability of the assignees, who had not taken possession of the leased premises, for the rent. It was contended on the part of the assignees that they were not liable and could not be held liable, because they had not gone into possession. On the part of the lessor it was contended that the assignment being of the whole estate under the lease, nothing being reserved by the assignment to the lessee, it did not require possession to create a privity of estate between the lessor and the assignee; and the court say in the Babcock case, supra: “With this much of authority in support of the doctrine, laying out of view the case of an assignee by operation of law, so far as has come under our examination we do not find it elsewhere laid down in any reported case, or by any legal writer of approved authority, that, in case of an absolute assignee in fact of a term of years, an entry by the assignee is necessary in order to subject him to a liability for the rent, but the whole tenor of authority is to the contrary”. However, the exact principle enunciated in the Babcock case is not precisely the same as the one now before us, because we hold that defendant both entered into possession and attorned by the payment of rent under the terms of the assigned lease—elements entirely lacking in the Babcock case. The only significance arising here is in relation to its application to the first instruction and the error assigned to its giving, which we will hereafter refer to.

We are unable to discover any substantial variance between the averments of the declaration and the material evidence adduced in support of them. Some of the averments concern the assignment of the lease in virtue of the terms of the Kelly chattel mortgage to defendant and the entry into possession by the defendant, and that the rent claimed was due and unpaid. The averments that the making of the lease by plaintiff to Kelly, its assignment by means of the chattel mortgage given by Kelly to defendant, the entry into possession of the leased premises by defendant through Merslak, attorning to plaintiff by payment of rent, and that the amount recovered was rent due under the terms of the assigned lease, find ample support in the evidence. An examination of the evidence rejected by the trial court discloses that it was in the nature of hearsay testimony, conclusions of the witnesses interrogated and of matters immaterial to the issues, such as whether or not the leasehold interest conveyed by the chattel mortgage was sold at the time of the foreclosure sale of the saloon fixtures. The mortgage conveying the leasehold interest with possession in and payment of rent by defendant, all of which occurred some time prior to the foreclosure sale, was a sufficient appropriation of the lease, and as to it a foreclosure of the mortgage. The usual covenant to sell with or without notice, at public or private sale, being in this mortgage what was sold after the seizure of the saloon fixtures June 1,1905, did not affect or change what had already been done about the lease.

It is ably argued with much apparent confidence that the giving of the following instruction was reversible error:

“The jury are instructed that if they believe from the evidence that the plaintiff, Louis Olcese, made a lease of the premises to Edward Kelly, and that Edward Kelly executed and delivered a chattel mortgage, which by its terms included the lease of the premises in question to Val. Blatz Brewing Company, and that thereafter Val. Blatz Brewing Company paid rent of the premises in accordance with the terms of the lease of the premises to said Edward Kelly, then such chattel mortgage operated as an assignment of the lease to the Val. Blatz Brewing Company and the Val. Blatz Brewing Company became liable for the payment of rent in accordance with the terms of the lease”.

This instruction did not necessarily exclude from the jury the consideration of the fact that possession by defendant under the assignment in the chattel mortgage of the lease was an essential element to charge defendant with liability for rent. The payment of rent by defendant was an attornment to plaintiff as landlord, paid, at least inferentially, while defendant was in possession; still, should it be conceded that this instruction did not contain the element of possession at all, it is clear that nothing was stated in it to the contrary, so that any omission of this character was amply supplied by instructions given at the request of defendant, in which the jury were informed that if they found from the evidence that the defendant did not accept the assignment of the lease and did not become the tenant of plaintiff, there could be no recovery. Furthermore, all the law applicable to the several phases of the defense which the defendant requested by instructions were given to the jury, with the exception of one, in which the claim of agency in the payment of rent by defendant was asked to be submitted to the jury, and in which it was laid down that if the rent was paid by defendant as agent there could be no recovery. There was no evidence to which such instruction had any application, and it was therefore properly refused. The instructions must be taken and read as a whole, and in so doing it appears that the jury were fairly and sufficiently instructed on the law of the case and upon every point requested favorable to the defense.

Upon the whole record substantial justice appears to have been done upon the therits, and as said in Lebanon Coal & Machine Ass'n v. Zerwick, 77 Ill. App. 486: "Where upon the whole case substantial justice has been done, erroneous instructions will not reverse, and where one or more instructions are erroneous and others state the law correctly and the verdict returned is strongly supported by the evidence and clearly right and just, the presumption usually prevails that upon the whole the jury was not misled as to the law".

The most that can be said about the first instruction is that it did not go quite far enough; but even so, what it lacked was supplied in the instructions given at the instance of defendant.

Finding no error in this record warranting a reversal of the judgment of the County Court, it is consequently affirmed.

Affirmed.


text:
    George H. Wilson, Appellee, v. Chicago City Railway Company, Appellant.
    Gen. No. 13,983.
    1. PASSaNGER AND CARRIER-what essential to establish prim~a facie case of negligence. The allegations of negligence being shown, a pri~rta facie case in favor of the plaintiff is established by evidence tending to show that the defendant was the owner of and operating the cars in collision, that the plaintiff was a passenger upon one of the colliding cars, that the cars came into collision while he was in the exercise of due care for his own safety, and that he was injured as a result of such collision. The fact that the plaintiff at the trial attempted to prove specific acts of negligence is not material as affecting the prima facie case thus made out; such prima facie case being made out, the burden is shifted to the defendant to exculpate or excuse itself from the liability so cast

      upon it by the evidence of the plaintiff that the collision of its cars occurred from negligence imputable to it from that fact.
    2. Vebdict—when not excessive. A verdict of $2,500 in an action for personal injuries is not excessive where it appears that as a result of the accident the plaintiff suffered a severe injury to the drum of his ear, that the impairment of his hearing was permanent, and that he suffered pain in consequence of his injuries.
    3. Damages—when medical expenses may properly he allowed. Evidence of payment or assumption of the obligation for the payment of medical services is not essential to the allowance thereof as damages, if the evidence shows that the liability has in fact been incurred.
    ^4. Evidence—what testimony attending physician may give. An attending physician may properly be permitted to testify concerning his knowledge, acquired as such attending physician, of the plaintiff’s suffering pain from an injury made the basis of the action.
    5. Evidence—what test competent in proof of injury. A watch ticking test made by an attending physician to determine the hearing of the plaintiff held competent.
    Trespass on the case. Appeal from the Superior Court of Cook county; the Hon. Akthub H. Fbost, Judge, presiding.
    Heard in this court at the October term, 1907.
    Affirmed.
    Opinion filed November 12, 1908.
    Statement toy the Court. This is an action of trespass on the case for the recovery of damages for personal injuries suffered by plaintiff as the result of a collision between two cars of the defendant, upon the east-bound of which he was a passenger.
    The declaration consists of one count, and charges negligence generally in these words: that defendant “so negligently, carelessly and unsafely managed and operated the said car upon which the plaintiff was riding as aforesaid, and said other car, that said cars through such negligence, careless and unsafe operation and management collided and came together with great force and violence at the intersection of said Thirty-fifth and Halsted streets”.
    Plaintiff on the morning of June 10, 1902, left his home, 3810 Honoré street, Chicago, to go to the place of his employment at Schlesinger & Mayers, at the corner of Madison and State streets in the business district of Chicago, and in so doing took a car of defendant running east on Thirty-fifth ■ street. Defendant also operates a line of cars north and south on Halsted street, which intersects the line upon which plaintiff was riding as a passenger at Thirty-fifth street. The Halsted street car had the right of way across Thirty-fifth street, making it incumbent upon the motormen in charge of cars on Thirty-fifth street when approaching Halsted street to stop their cars so as to accord that right and avoid the risk of colliding with a passing Halsted stret car. The motorman in charge of the car upon which plaintiff was a passenger failed to arrest the progress of his car at the point mentioned, such failure resulting in a collision with a Halsted street car proceeding south across the Thirty-fifth street tracks. The excuse made by defendant for the collision is the greasiness of the track, occasioned by the sprinkling of water upon the street over which the tracks were laid, and that notwithstanding the motorman exerted himself to the utmost and made application of all the appliances at hand in an endeavor to stop the car before reaching the west crossing of Halsted street, all of such appliances on the car being in good order, and the fact that he reversed the wheels of the car, still the car slipped along the track and the collision resulted without the fault of the motorman and in spite of all his efforts to avoid the impact.
    The force of the colliding of the cars was such as to throw plaintiff from his seat, striking' his mouth against the rail on the top of the rear dashboard; his body then rebounded backwards, striking'the back of his head and neck on the sill of a window in the partition back of the seat on which he was sitting at the moment of the contact between the cars. As a consequence of the collision plaintiff had one of his teeth knocked out and three others loosened, all of which he subsequently lost; his lip and gum were cut; the drum of his ear was injured, from which he suffered great pain and an impairment of his ability to hear.
    Defendant pleaded the general issue and the cause proceeded to trial before the court with a jury and resulted in a verdict and judgment for $2,500. After the court overruled defendant’s motion for a new trial and in arrest of judgment, to which the usual exceptions were preserved, defendant prayed and was allowed this appeal, and the record is before us for review.
    William J. Hynes, John E. Kehoe and Watson J. Ferry, for appellant.
    Gann & Peaks and Charles G. Neely, for appellee.
   Mr. Justice Holdom

delivered the opinion of the court.

The errors assigned and argued as constituting grounds for reversal of the judgment of the trial court are: that the verdict is not justified by the evidence, but it is contrary to its manifest weight; that the trial court excluded proper and admitted improper evidence; refused to submit to the jury certain instructions tendered by defendant, and gave certain other instructions at the instance of plaintiff, and that the damages are excessive.

The insistence of defendant that the plaintiff did not prove acts of defendant which were negligent and through which negligent acts the collision between the defendant’s cars was brought about, with the resulting injury to plaintiff, seems to be occasioned by a misconception of that degree of proof made necessary by the pleadings. Plaintiff’s declaration charges defendant with negligence generally as bringing about the collision between its cars at Halsted and Thirty-fifth streets. Had the allegation been of specific acts of negligence, then plaintiff would have been restricted to his right of recovery to proofs sufficient to sustain such specific acts. Under the pleadings found in the record, all the law required plaintiff to prove by competent evidence, in order to make a prima facie case entitling him to recover in the absence of countervailing proof, was that defendant was the owner of and operating the cars in collision; that plaintiff was a passenger upon the colliding Thirty-fifth street car; that the cars came into collision while he was in the exercise of due care for his own safety; and that he was injured as a result of such collision.

It is true that plaintiff attempted upon the trial to prove specific acts of negligence, such as the failure of the motorman to exercise diligence in the management of the car, and that the motorman of the Halsted street car was negligent in not using due diligence to avoid the collision. Even admitting that proof of specific acts of negligence did not appear from the evidence at the time plaintiff closed his main case, yet, as it contained the proof incumbent upon him to make under the averments of his declaration to entitle him to recover, he had satisfied all legal requirements. The burden was thereupon shifted to defendant to exculpate or excuse itself from the liability so cast upon it by 'the evidence of plaintiff, .that the collision of its cars occurred from negligence imputable to it from that fact. Much of the argument of defendant is without force, in the light of our ruling as to the limitations of plaintiff’s proof. It is, however, urged as a complete defense that the accident was without the fault of defendant because all was done that possibly could be done with the approved agencies at hand to prevent it. The failure of the motorman sufficiently to control the movements of the car so as to stop it before the collision, is attributed to the greasiness of the track brought about by the sprinkling of the street with water; that the day was bright, the air clear and the sun shining, and that the effect of the sun’s rays was to evaporate some of the water and make a greasy, muddy condition upon the tracks, which prevented the motorman from observing their condition in time to stop the car. There was testimony tending to show that the motorman made no attempt to arrest the speed of his car so as to stop it before crossing Halsted street, and furthermore there is an entire absence of any evidence of a sprinkling cart or wagon being in the neighborhood of Thirty-fifth street west of Halsted street the morning before the accident. On the contrary there was some evidence to the effect that the street car tracks at that time and place were dry. The jury may have believed from this evidence that the claim that the street had been sprinkled and the car track was greasy was a fabrication. There is also some evidence tending to demonstrate that the motorman of the Halsted street car might have stopped his car in the exercise of due care in time to have avoided the collision, and that his not so doing was negligence. The jury may have regarded the testimony of the numerous witnesses of defendant as insufficient to relieve it from the liability for negligence imputable to it from plaintiff’s proofs. The jury saw the witnesses—a privilege denied us—and from’ their manner of testifying, their appearance upon the witness stand, their impartiality or bias, whichever was apparent, were better able than we to say which of them was the most worthy of belief; and as plaintiff made all the proof necessary under the averments of his declaration to entitle him to prevail, we cannot say that the verdict is not justified by the evidence or that it is contrary to its manifest weight. On the contrary, we do not perceive how the jury could have decided otherwise than they did.

The injuries of plaintiff are deemed trifling by defendant, and for that reason it regards the damages awarded as excessive. It is quite true that plaintiff immediately after the accident did not regard himself as seriously injured, for he at once acted the part of a good Samaritan and helped carry an injured woman to the office of a medical practitioner. After doing this humane act he proceeded to his employment, and there for the first time discovered blood flowing from his ear, whereupon he returned home. He affirms that from the injury to his ear he suffered great pain and has a permanent impairment of his hearing. The morning after the accident he wrote to the general attorney of defendant, explaining his condition. This afforded defendant an opportunity to test by inquiry the reliability of plaintiff’s statements and the extent of his injury. Defendant did not avail of the opportunity thus within its power. The injury to the car and hearing of plaintiff is corroborated by Dr. Bobertson, a reputable practitioner of medicine, as we assume, the record showing nothing to the contrary. The measure of damages is primarily for the jury to fix, and we are not warranted in disturbing their award unless we are convinced from the record that it is excessive. Plaintiff’s injuries were of a serious character. The pain suffered from the injury to the drum of the ear was severe, and this was followed by a permanent impairment of his hearing. Plaintiff also lost four teeth as a result of the accident. We are not inclined to hold that $2,500 is more than a reasonable compensation for so painful and permanent injuries.

Complaint is made about the evidence in relation to expense for necessary medical attendance. Dr. Bobertson testified that his services to plaintiff were worth $200, but there is lacking any evidence that plaintiff either paid this or obligated himself to do so. This is not the legal test. In Chicago & Erie R. R. Co. v. Cleminger, 178 Ill. 536, it was held that the true test was whether a liability had been incurred to pay for the medical services. From the undisputed evidence of Dr. Bobertson it is very plain that plaintiff incurred a liability to pay Dr. Bobertson the amount the service rendered him was worth.

We have examined the evidence and rulings of the trial court thereon, about which defendant complains, and do not discover any reversible error in either the admission or rejection of such evidence. The question asked Miss Tully concerning the speed of the car and her answer that “there was no change in speed”, is of no importance as affecting the merits or the ultimate result, even conceding, as claimed by counsel, that the question asked was suggestive of the answer given.

Dr. Robertson was the attending physician, and it was permissible for him to testify concerning his knowledge, acquired as such attending physician, of plaintiff’s suffering pain from the injury to his ear. These are said to be self-serving statements and as such inadmissible, and Chicago City Ry. Co. v. Mauger, 128 Ill. App. 512, and other cases to a like import are cited as authorities sustaining such contention. What was said in the cases cited had reference to physicians testifying as experts from examinations made of the injured party with the express purpose in view of qualifying to give testimony upon the trial. Were Dr. Robertson an expert witness and not the attending physician, the point would be well taken. But a different rule obtains in the ease of an attending physician. This was stated in W. C. St. Ry. Co. v. Carr, 170 Ill. 478, in these words. “We think, however, the correct rule to be deduced from that laid down by Greenleaf and most conducive to justice, is that such declarations, being in favor of the party making them, are only competent when made as part of the res gestae, or to a physician during treatment. * * * This view is in harmony with what we said in the Illinois Central Railway Company v. Sutton, 42 Ill. 438”.

The watch-ticking test made by Dr. Robertson in an endeavor to test the hearing of plaintiff did not transgress the rules of evidence, nor did the testimony of Dr. Robertson describing the method pursued infringe any like rule. His statement was in effect as to what distance plaintiff indicated he could hear the watch tick, and in no sense an opinion of the witness as to whether he could hear the ticking of the watch at any particular distance. The attending-physician rule is likewise invokable in support of this latter evidence.

It follows from what has heretofore been said concerning the proofs that instruction 4, given at the request of plaintiff, states a correct legal principle applicable to this case. The burden of proof did shift to defendant, after plaintiff had made out his prima facie case, to repel by facts and circumstances the liability imputable to it under the case made by the plaintiff’s evidence in chief. It would be otherwise ímder a declaration charging specific acts of negligence, for in such case the burden of proving the specific negligence charged by a preponderance of the evidence is the burden of the plaintiff throughout the trial.

Instruction 7 is also without error, for as we have already indicated, plaintiff was entitled to recover as a part of his damages any reasonable sum he was liable to pay for medical attendance. The complaint concerning the refusal to give instruction 28 is obviously imprudently made, for what appears in No. 28 was embodied in instruction No. 2, given at the instance of plaintiff. The latter instruction included the wilful exaggeration as well as wilfully swearing-falsely theory.

The whole record considered, justice seems to have prevailed, and the judgment of the Superior Court is affirmed.

Affirmed.