text:
    Missouri State Life Insurance Company, Appellant, v. William Copas, Appellee.
    Gen. No. 8,566.

      Heard in this court at the October term, 1931.
    Opinion filed February 1, 1932.
    Gunn, Penwell & Lindley, for appellant.
    Graham & Dysert, for appellee.
   Mr. Justice Shurtleff

delivered the opinion of the court.

Appellee sued the appellant in an action of assumpsit in said court, on a certificate of health and accident insurance issued by it to him. The declaration set forth the certificate in haec verba, and in substance charged that in consideration of the payment of the monthly premiums by him to it, said appellant entered into and delivered to him said contract of insurance. Then, following the language of the certificate, it is averred in substance: 1 ‘ That due proof has been made by him to said company showing that he has not attained the age of sixty years, and that on December 6th, 1929, he became totally and permanently disabled by bodily injury and disease, and wholly prevented thereby from engaging in any gainful occupation, and that he has been so permanently and totally disabled for a period of six months; that the plaintiff has complied with all the provisions and conditions precedent, on his part to be complied with, as set forth in said policy.” Then avers nonpayment, and $1,200 damages.

The declaration was not challenged by demurrer. The certificate sued on was not questioned by any plea that it did not contain everything necessary or material for the appellee’s case. The certificate recites, as inducement, that it is issued under and subject to the terms and conditions of a group policy, yet no group policy was set forth in said certificate of insurance which it prepared and delivered to the appellee. None was attached to it or expressly made a part of said certificate. The certificate is complete in itself and states expressly what appellee must do to recover under it. Appellant never pleaded or offered said group policy in evidence in its behalf, and did not, nor does not now, suggest that it contained anything material to the defense of the case, which was not incorporated in the certificate.

The suit was on the certificate, and not on a group policy. Appellee was not a party to it. The declaration did not attempt to negative matters of defense or to plead matters peculiarly within the knowledge of the defendant.

The trial was by jury. The verdict was $1,000 for appellee. No instructions were offered or given for appellee, while 10 instructions were given for appellant and two refused. Counsel for appellant have set forth in full, in the abstract, the argument of Walter V. Dysert. The entire opening argument was without objection, and the two objections to the closing argument were both sustained by the court.

Motions for new trial and in arrest of judgment being overruled, judgment was entered on the verdict for $1,000, from which this appeal is taken.

Appellant contends that because the certificate sued on mentioned a group policy, it should have been introduced in evidence by appellee and cites 2 Cooley’s Brief on Insurance (2d Ed.) 1050, which quotes four other cases. The first, Conner v. Manchester Assur ance Co., 130 Fed. 743, is not applicable in this case. In the Conner case, the certificate sued on expressly made the group policy a part of it. The one at bar does not. The policy in the Conner case contained a vitally material provision which was not in the certificate sued on. In the Conner case, the defense produced the group policy and made the provision contained in it the defense in the case. Naturally, the issues and proofs are different. In that case the group policy presented a provision which, when pleaded and introduced, was decisive of the case.

In the case at bar, the group policy is not expressly made a part of the certificate, and the certificate is complete within itself, yet, if the appellant knew that the group policy contained a different provision than that contained in the certificate, and had pleaded it as a defense, and had offered the policy and some such provision in evidence, and it had been refused, then there would be some reason and justice in the present claim. But in this case the suit was on the provisions of the certificate alone, and counsel for appellant has nowhere, in pleadings, evidence or statement, shown or suggested that the group policy, if set forth, would furnish any defense or cast upon the appellee any further burden. So, in the absence of such a showing, the law does not require a useless thing to be done. It does not require conditions, or subsequent matters of defense, or matters peculiarly within the knowledge of the defendant to be set forth in the declaration.

A plea was filed by appellant averring that plaintiff did not furnish the defendant with due proofs that before having attained the age of 60 years he had become totally and permanently disabled by bodily injury or disease, and that he was or would be, at all times thereafter, wholly prevented thereby from engaging in any gainful occupation and that he had been so permanently and totally disabled for a period of six months; bnt this plea was abandoned upon the proofs and is not argued in this court.

Appellant complains at the court’s refusal to give in its behalf the following instruction: “Ton are instructed that if, under the instructions of the court, you find from the evidence in this case that the plaintiff is not entitled to recover, then you will have no occasion to consider at all the question of damages”; and also the court’s refusal to give this instruction: “ You are instructed that the burden is upon the plaintiff to prove, by a preponderance of the evidence, that before having attained the age of sixty (60) years, he has become totally and permanently disabled by bodily injury or disease and that he is then and will be at all times thereafter wholly prevented thereby from engaging in any gainful occupation and that he has been so permanently and totally disabled for a period of six (6) months, and you are instructed that if the plaintiff fails to prove all those facts by a preponderance of all the evidence, or, if the evidence on that point is evenly balanced, then it will be your duty, regardless of any other question in the case, to find the issues for the defendant.”

All of the principles of each instruction were fully embodied in other instructions in this case, and the failure to give these instructions was not error.

Appellant contends that the verdict and judgment are manifestly against the weight of the testimony and that there are some things that appellee might do. Appellee, in his proofs as to disability, was supported by the testimony of two physicians who had attended him. Appellee had been a coal miner and was accustomed only to heavy manual labor.

Appellant presented the testimony of five doctors, some of whom took X-rays, and others testified that it was their opinion that appellee was not totally and permanently incapacitated. This was a legal term and was not fully explained.

In the arguments of counsel it seems to have been construed that appellee must be totally and permanently incapacitated for any purpose before he can recover upon the contract in question, and growing out of this construction arose the objections to the argument of counsel for appellee to the jury that appellee must be 100 per cent deficient before he is totally and permanently disabled. This is not the law. In Taylor v. Southern States Life Ins. Co., 106 S. C. 356, 91 S. E. 326, L. R. A. 1917 C, page 911, the court said: “An illiterate three-horse farmer, dependent in large measure on his own strong arm for a livelihood, accustomed and trained only to bodily labor, made by disease suddenly and generally unfit for bodily labor, comes within the meaning of the contract; he is deemed totally disabled when he is no longer able to do his accustomed task, and such work as he has only been trained to do, and upon which he must depend for a living. The man of waning years, of small means, of no education, totally dependent upon the strength of his body for a livelihood, is bankrupt when the marvelous and mysterious parts of his organism go wrong. If they do not answer the summons of his will, if, indeed, it is able to summon them, to do the common tasks, he is undone, and for his purposes totally undone. It would be like squaring a circle for a judge to undertake to say just at what juncture a part became a whole, at what period a disability is enlarged from partial to total.” This subject is further discussed in Armour Grain Co. v. Industrial Commission, 323 Ill. 80, and Powers Storage Co. v. Industrial Commission, 340 Ill. 498.

We have read all the testimony and we are not prepared to hold that the verdict is against the manifest weight of the testimony.

Finally, appellant complains of statements of counsel for appellee in argument to the jury. The remarks were caustic and apparently in reply to argument of counsel for appellant in a similar strain. The argument of counsel for appellee is produced entirely. None of the arguments of counsel for appellants are produced. We are not able to say, without all of the arguments before us, whether counsel for appellee was answering an argument or indulging in invective. What was said, as presented, would not warrant • a reversal of the judgment in this case.

Finding no error in the record warranting a reversal of the judgment, the verdict and judgment of the Vermilion county circuit court is affirmed.

Affirmed.


source: Caselaw Access Project

author: Mr. Justice Shurtleff

license: Public Domain

text:
    Werner C. Vollrath, Appellant, v. Joseph Bordenkecher, Appellee.
    Gen. No. 8,588.

      Heard in this court at the October term, 1931.
    Opinion filed February 1, 1932.
    Herrick & Herrick, for appellant.
    Lemon & Jordan, for appellee.
   Mr. Justice Shurtleff

delivered the opinion of the court.

This is a suit to recover, on a contract for the sale of a secondhand automobile. Appellant’s declaration consists of the common counts and a bill of particulars setting forth that appellant sold and delivered to appellee on May 10, 1930, one Buick 1927 model sedan automobile for $850; $800 was to be paid by appellee’s promissory note due in one year, with seven per cent interest, and the automobile of appellee, a 1922 model Buick touring car, taken in at $50; setting forth that appellee refused to give the note or take the automobile, and appellant brought suit for $800 and interest and storage for the 1927 model Buick sedan from June 10, 1930, at $7 a month.

Appellee pleaded:

First. General issue.

Second. Set-off for the value of appellee’s automobile, then in appellant’s possession.

Third. That appellant warranted the said 1927 model Buick sedan automobile to be sound and in as good condition as a new automobile, and the said car was not sound and in as good condition as a new car, but was unsound and in an old and worn condition and was of no nse to appellee, and appellee charged fraud and deceit in the sale of said car; '

Fourth. That appellant, when he’sold to appellee the 1927 model Buick sedan automobile for the sum of $800 and the Buick touring car of appellee, represented to appellee that the said 1927 model Buick sedan automobile had been driven a small number of miles, to wit, 15,000 miles, and was in sound condition and in as good condition as a new automobile, but that, on the contrary, the said automobile had been driven a large number of miles, to wit, 46,000 miles, and was not in good condition, and thereby became of no use or value to appellee; and said plea contained charges of fraud and deceit in the sale of said car, to which pleas the appellant filed replications, traversing the pleas.

The cause was tried by jury, the proofs submitted and a verdict rendered in the following form: “We, the jury, find the issues for the plaintiff and assess plaintiff’s damages at $1 and defendant’s wrecked car and the car purchased from the plaintiff by the defendant. ’ ’

The appellee moved the court to amend the verdict by striking therefrom the words, “and the defendant’s wrecked car and the car purchased from the plaintiff by defendant,” and to have the verdict recorded as reading, “We, the jury, find the issues for the plaintiff and assess plaintiff’s damages of $1.” The court sustained said motion of appellee and ordered the verdict recorded as a verdict reading, “We, the jury, find the issues for the plaintiff and assess plaintiff’s damages at $1. ’ ’

The appellant moved the court for judgment for the appellant for $991.33, and, in .the alternative, for a new trial. The court denied both motions and rendered judgment for the plaintiff for the sum of $1 and costs of suit.

Appellant has brought the record to this court by appeal, for review.

Appellee, beforfe the suit was brought, returned the automobile purchased to appellant and claims a rescission of the contract of purchase.

Appellant contends that: “Where there is a warranty of the goods sold and the property has been accepted and there is no stipulation in the contract that it may be returned, the vendee has no right to annul the contract, without the consent of the vendor, for a breach of warranty, but when sued for the purchase price the vendee may recoup damages for breach of warranty,” citing Anderson Computing Scale Co. v. Hattenbach, 199 Ill. App. 467, 468; and Tokheim Mfg. Co. v. Stoyles, 142-Ill. App. 198, 200. Those cases do not apply where fraud and deceit are charged and shown. Cooper v. Empire Security Co., 227 Ill. App. 161. It was charged in the pleas that the machine was a late 1927 model, as good as a new car, and had not been driven over 15,000 miles. Proofs were submitted that the car had been driven 24,000 miles and that appellant had set the mileage in the speedometer back to 15,000 miles, and that the car was otherwise defective and not as warranted, if the jury found that appellant did warrant the car, as claimed by appellee. The proofs as submitted would have supported a verdict for either party and if the jury had found that there was no fraud in the sale of the car or in the contract, there might have been a third form of verdict submitted.

We have examined the instructions given and find the court instructed the jury that if they found the issues for the plaintiff they should assess plaintiff’s damages at the sum of $800 with interest, etc., otherwise, they should find the issues for the defendant. The verdict as rendered in no manner responds to the instructions of the court or the issues in the case. This was not a replevin suit and the jury were not called upon to determine the ownership or right to possession of personal property. Neither was the court within its rights in changing substantially the form of the verdict for the words stricken out do npt leave a verdict responding to the issues in the case.

It has been held that where it is apparent the jury must have misunderstood or disregarded the evidence or instructions of the court, and have failed to do substantial justice the court will set aside the verdict and grant a new trial. Selamakos v. Victory Ice and Ice Cream Co., 246 Ill. App. 178, 182.

Accordingly, the verdict and judgment of the circuit court of DeWitt county is reversed and the cause remanded for another trial.

Reversed and remanded.


text:
    Oscar Nelson, as Auditor of Public Accounts of the State of Illinois v. John B. Colegrove and Company State Bank. Millikin National Bank and First National Bank of Chicago, Appellees, v. Robert G. Earley, Receiver of John B. Colegrove and Company State Bank, Appellant.
    Gen. No. 8,598.

      Heard in this court at the October term, 1931.
    Opinion filed February 1, 1932.
    Oscar J. Putting, for appellant.
    McMillen, McMillen & Garman and Hogan & Coale, for appellees.
   Mr. Justice Shurtleff

delivered the opinion of the court.

This proceeding involves two intervening petitions by the Millikin National Bank and the First National Bank of Chicago in a general equity suit, brought by the Auditor of Public Accounts of the State of Illinois, in winding up the affairs of the John B, Colegrove and Company State Bank of Christian county in this State, in the circuit court of .that county.

In 1928 the Auditor of the State of Illinois notified the John B. Colegrove and Company State Bank, then a going concern, to reduce its real estate holdings, and it appears that the Bank then had the ownership of the “Minnis Farm.” The transaction, as stated by appellees, is as follows: “Following that, a plan was entered into whereby Jesse L. Patterson, one of the directors, should accept for the bank the conveyance of the real estate referred to as the ‘Minnis Farm,’ this farm being about to be acquired because of the insolvency of the owner, one W. Gr. Minnis, and of his indebtedness to the said bank. This farm was then acquired through the bankruptcy of Minnis and was conveyed direct to Jesse L. Patterson, he acting as a trustee for the Colegrove bank, according to the terms of an agreement between Patterson and the John B. Colegrove & Co. State Bank. Following this a mortgage was obtained from the Illinois Joint Stock Land Bank of Monticello, Illinois, to secure the sum of $19,000 borrowed from it. The purchase price of the farm was $45,045. The balance of the purchase price of $26,045. was represented by five notes signed by Jesse L. Patterson and delivered to the Colegrove bank directors. A quitclaim deed conveying this real estate to the Colegrove bank was executed and delivered by Patterson to the cashier of the bank, he to hold the same as an escrowee. According to the agreement between Patterson and the bank and the resolution, both above referred to, the $26,045 notes of Patterson were not to be treated as personal indebtedness of Patterson and the deed to the farm was not to be recorded or treated as delivered until the notes had been delivered back to Patterson and canceled. . _■

‘ ‘ Just prior to the closing of the Colegrove bank it borrowed large sums of money from the First National Bank of Chicago and delivered to the First National Bank of Chicago divers notes, as collateral, among them two being of the series of five notes executed by Patterson, making up the $26,045, the two notes totaling $10,500. About the same time money was borrowed from the Millikin National Bank of Decatur and one of the series of five notes, being a $5,000 note of Jesse L. Patterson, was delivered to the Millikin National Bank as security for its loan among other notes. Of the other of the five notes made by Patterson one was delivered to Josiah Hall, and one was retained by the Colegrove bank. At the date of the closing of the bank, therefore, the $26,045 notes of Patterson were distributed as follows: two notes to First National Bank of Chicago; one note to Millikin National Bank of Decatur; one note to Colegrove bank, and one note to Josiah Hall. Josiah Hall was a director in the Colegrove bank and advanced the bank large sums of money. He had been acquainted with this transaction throughout, and it is the contention of the appellees that he is in no better position than the insolvent bank and its receiver, the appellant herein. The attorney for the Josiah Hall estate was in court as a witness for the appellees. The Hall estate has made no claim for a part of this money.”

Appellant has a different understanding as to some of these facts which will be noted later.

On trial Jesse L. Patterson testified as follows: “The auditor informed us that we would have to take the real estate, or a big portion of it, out of the assets of the bank, and must be done in some way or other, and so we finally decided that the only way we could possibly get rid of some of the real estate was for some of the directors to take title to the land and to borrow money on it in order to take care of these objections.

“I took title to the W. Gf. Minnis land. The bank did not have title to the land at the time. It was a foreclosure proceeding, and I got title through the receiver under the foreclosure.

“It was sold through the Federal Court, in bankruptcy and I got title that way.”

Q. “And the notes you have described represent the difference of $19,000.00 borrowed on it and the amount owing the bank at that time?

A. “Yes, sir.”

“I think I took title to that land on March 12, 1927, and I made a deed the same day I took title to the John B. Colegrove and Company State Bank. I delivered it to H. E. G-ollogher, cashier. I never had that deed back again. None of the notes were ever returned to me or released. So far as I know they have never been cancelled.

“I had other notes in the bank. There was a distinction between my signature on these notes and other notes I had in the bank.”

It was stipulated that the receiver recorded the deed in question in the county recorder’s office of Christian county, having found the deed among the papers and effects of the John B. Colegrove and Company State Bank shortly after he was appointed receiver; that respondent was appointed receiver on or about the 4th day of November, 1929.

Patterson further testified: “The first I knew that some of the $26,000 worth of notes which I signed were in the hands of the Millikin National Bank was on the evening the John B. Colegrove and Company Bank closed. That was the first information I had. At the same time I found that some of my notes were in the hands of the First National Bank of Chicago. I got this information from the books — from the note record in the bank. The John B. Colegrove and Company State Bank note record — then was when I got the note record and made an examination and looked at my account to see what had happened to my notes and I found, as I looked in the ‘P’s’ in the note book, I found there was one $5,000 note there and that was the only one that was left in the bank.'

“That was the first investigation I had made concerning where my notes were. That was in October, along the first part of October, 1929.

“I knew that the John B. Colegrove and Company State Bank was examined by a bank examiner two or three or more times each year. ’ ’

On July 8, 1929, Patterson, with others, signed an agreement for a valuable consideration with the First National Bank of Chicago, by which the signers jointly and severally obligated themselves to pay to and indemnified said First National Bank and guaranteed that they would pay all loans, discounts and overdrafts made for said John B. Colegrove and Company State Bank, by said bank which was a continuing guarantee, and provided for the depositing of collateral notes of the bank as security for any and all such loans, discounts and overdrafts, with the right to exchange collateral paper and substitute new paper, whenever required. A similar contract and guaranty was signed by Patterson to and with the Millikin National Bank of Decatur, upon both of which contracts, the John B. Colegrove and Company State Bank and Patterson were much indebted at the time these proceedings were commenced.

A document was offered in evidence during the trial, known as Exhibit 14, while Patterson was testifying. It is as follows: “Whereas, in the conduct of its business it becomes necessary for the John B. Cole-grove and Company State Bank to take title to the farm formerly' owned by W. G. Minnis either in their own corporate name or in the name of some person selected by the board of directors of said bank and the board of directors having elected to having said premises deeded to Jesse L. Patterson as a matter of convenience in handling said premises and account for the proceeds and expenses incurred; and

“Whereas, in financing the acquisition and operation of said farm it has become necessary that certain notes or obligations have been incurred by said Jesse L. Patterson and from time to time be incurred in the future for like purposes; and

“Whereas, said, Jesse L. Patterson and his wife have, as a matter of equity and precaution, executed their certain deed conveying the above mentioned premises to John B. Colegrove and Company State Bank, said deed being delivered into the hands of the cashier of said bank for the purpose of preventing said farm from becoming a part of the estate of said Jesse L. Patterson, who is hereby understood'to be only the nominal record owner thereof;

“Therefore, be it resolved, that the deed heretofore executed and hereinabove mentioned shall be held by the cashier of said bank as a delivered deed but which shall not be placed of record unless at the same time all notes executed to said bank by said Jesse L. Patterson which are in any way an obligation incurred in the acquisition or operation of said W. G-. Minnis farm by him shall be cancelled and delivered to said Jesse L. Patterson or his legal representatives without payment by him; and

“Be it further resolved, that no note executed by said Jesse L. Patterson for any of the aforementioned purposes or for any purpose whatever incurred in the management of said,farm or by virtue of being the nominal record owner thereof shall be - considered as a personal obligation against said Jesse L. Patterson in any case whatever except in case that a loss shall be sustained by said bank by virtue of acquiring said premises said Jesse L. Patterson shall have no further loss or obligation on account of said ownership, operation or obligations incurred as hereinbefore provided except his legal obligation as director or stockholder in said bank, and

“Be it further resolved, that as a matter of identification of the notes which shall be executed in all instances pertaining to obligations incurred as herein provided it shall be the duty of any executive officer of this, bank who shall receive for said bank any such note or any renewal thereof to see that said note is signed by and in the name and style of Jesse L. Patterson, whereupon it shall be considered as an obligation on account of said farm and provided for herein and that any and all other, obligations which may be from time to time owing said bank by said J esse L. Patterson shall be signed by and as J. L. Patterson and when so signed shall not be considered as an obligation hereunder.”

Patterson testified- that he signed the notes to help the bank, “just as any director does; they do everything to assist the bank to make it a going concern. ’ ’

Patterson further testified: “The understanding was, I was not to be held liable, and there was no reason why I should be held liable.

“That understanding was had in an open board meeting, and the president knew. The resolution was read before the board, I don’t just remember who was there, and I would not attempt to state just what directors were there. I am referring to those members who were there. The board of directors had a regular record book in which it kept its records of its meetings. The minutes were read from time to time at the board meetings and the board passed on the minutes. . .

Q. “Did you ever hear these minutes read from that book at any time concerning a resolution of that kind?”

A. “Yes, sir, I did, at the next meeting.” ■

“He had hi's book there before him. I never looked at the minute, book. The cashier, H. E. G-ollogher, had the minute book; I know it was a regular meeting; we very seldom had a special meeting — anyway, a special meeting would not. be called for something like that, it would be attended to at a regular meeting.

“As a rule I did not consult the minutes, the minutes were read off by the cashier. I never went through the minute book to examine it leaf for leaf. The notes I had signed, had no writing or anything on them that would distinguish them from a note I gave where I borrowed $26,000 outright.”

“Josiah Hall was one of the directors and I think he knew about this $26,000 worth of notes. There is no question in my mind about it. I wouldn’t say he was at that directors ’ meeting. It was discussed after-wards quite a few times at the directors’ meeting. He wasn’t there as frequently as others — he was poorly. I don’t remember if he was there at the time my transaction was discussed. I never told' him personally the circumstances under which I executed these notes. I don’t know whether anybody else did.

‘ ‘ I am not interested in who should get the proceeds of the sale of the Minnis farm. I was interested in them getting as much as possible for the Minnis farm —-it would be just that much for the benefit of the bank.

Q. “When you say for the benefit of the bank, which bank do you mean, the First National Bank of Chicago or the Millildn Bank of Decatur?”

A. “I mean the John B. Colegrove and Company State Bank.”

“I first ascertained that these notes were not in the possession of the Colegrove Bank, but that some were in the possession of the First National Bank of Chicago, and some were in the possession of the Millikin Bank, the night the bank was closed, Thursday evening.

Q. “You inquired, when the bank closed, concerning your own protection, is that right?

A. “Naturally.”

Prior to that I was worried many times.

Q. “Ton never made any inquiry concerning the status of these notes?

Mr. Hogan: “That is objected-to.”

“Mr. Nicholson nor anyone else in the Auditor’s office knew what was going on when the deal concerning the Minnis land was consummated. They did not know anything of what was contemplated by me or any of the other officers of the bank.

“Mr. Jones made the final examination and Mr. Eodenberg was placed in charge afterwards.' He looked after the assets of the bank until a receiver was appointed. ’ ’

And Patterson corrected his testimony, as follows:

Q. “In answer to a question on cross-examination, as to whether you ever said anything to Mr. Nicholson about these notes amounting to $26,545, I understood you to say you had not talked to him about it; state if you have any explanation to make about that?
A. “I remember this: at one of the board meetings Mr. Nicholson was talking about the financial responsibility of the board of directors, and I told him I was responsible for the amount of money I owed to the bank, which was $380.”
Then I told him that these notes affecting the Minnis farm, that I was doing that for the benefit of the bank, in order to get the real estate out of the" assets. ’ ’

A red, leather-bound book was produced by appellant, the receiver of the bank. It was identified by Patterson as the minute book of the board of directors of the J. B. Colegrove and Company State Bank, kept by H. E. G-ollogher, the cashier; it nowhere contained any resolution such as Exhibit No. 14, and the book contained no record of any transaction as to the “Minnis Farm” or the Patterson notes.

The “Minnis” lands were sold by the receiver for $4,049.43 over and above the amount of the mortgage, and is the amount in dispute. The court found by its decree that the prayer of the intervening petition be granted and that the proceeds derived from the sale of the said real estate, less the amount due on account of said sale, being the sum of $4,049.43, be applied by the receiver to the discharge of the claims of the petitioners in proportion of the amounts of their respective claims.

Appellant, receiver, has brought the record, by appeal, to this court for review.

The Zeigler notes and the sale of the South Dakota lands do not seem to be involved in this proceeding.

Appellees’ contention can better be expressed in their own language: “It is the contention of the appellees that there is no showing of any right whatever of the Colgrove bank or its receiver to the ‘ Minnis Land’ or the proceeds of it, except as a security for the Patterson notes given in relation to the Minnis transaction; that the notes were secured by the deed to the land and therefore when the notes were transferred the security passed with the notes; that, therefore, the balance of the sale price, after the costs of sale and the first and prior lien were discharged, belongs to the innocent holders for value of the notes, namely, the appellees herein as their interest appear.”

In other words, appellees claim an equitable mortgage upon the “Minnis Lands” growing out of the execution of the Patterson notes and Patterson’s conveyance of the lands to the bank, and the agreement Patterson claims to have had with the bank when he made- the conveyance. The claim is made upon the presumption that Patterson did make the escrow agreement as to the deed with the bank. If he made no such escrow agreement as to the deed, no such claim could be made:

The series of notes executed by Patterson, claimed to have been secured by the escrow agreement, were dated June 8, 1928. The conveyance-of the “Minnis Lands” by Patterson to the Colegrove Bank is nowhere shown in the record, but Patterson testified that the conveyance was made March 12,1927, so that there is not shown in the record any connection between the execution of the notes and the execution of the conveyance. The wording of the pretended resolution, Exhibit 14, is also strongly corroborative that no notes were executed until long after the deed was deposited in the bank. The purpose stated in the instrument as a ground for execution, was “as a matter of equity and precaution, .' . . for the purpose of preventing said farm from becoming a part of the estate of said Jesse L. Patterson, who is hereby - understood to be only the nominal record owner thereof. The next clause recites “that the deed heretofore executed shall be held by the cashier of said bank as a delivered deed but which shall not be placed of record unless at the same time all the notes executed to said bank by said Jesse L. Patterson which are in any way an obligation incurred in the acquisition or operation of said W. Gk Minnis farm by him shall be cancelled and delivered to said Jesse L. Patterson, . . . without payment by him, . . . and said Patterson shall have no loss, . . . except his legal obligations as director or stockholder in' said bank.”

All of the resolution and agreement up to this point and from this point to the end, hás no reference whatever to any notes executed by Patterson, other than notes executed by him in “the acquisition and operation of the ‘Minnis Farm.’ ” Patterson’s testimony as to this resolution or agreement is peculiar. He says: “I have seen the document marked Exhibit 14 before. This is a copy of the original filed with the John B. Colegrove and Company State Bank. Of course I don’t remember the date. It was at or about the time I signed certain notes at the bank. It was in connection with these notes that that matter was presented. It was at a board of directors’ meeting.” And over the objection of counsel for appellant the court permitted the witness to testify that the resolution was passed and adopted.

Patterson further testified that the original was left with H. E. Gollogher, the cashier. It was shown by the testimony of one witness that Gollogher was convicted in the same court and sent to the penitentiary. As to the witness Patterson, concerning an instrument which was Ms protection from paying notes in the amount of $26,000, it seems improbable he would be so careless as not to have a copy of his own, not to know the date of the instrument, and not to have someone ’s signature attached to it or, at least, being one of the directors of the bank, not to have seen to it that it was a part of the record of the bank. It is not found in the records of the bank and is nowhere mentioned in the minutes of the meetings of the board of directors. No one, director, president, clerk, cashier, or attaches of the bank, ever saw it, according to the proofs, except Patterson, and the best, in substance, as to the agreement that can be furnished the court is a purported copy of a pretended resolution or agreement said to have been in the custody of a man presumptively in the penitentiary. It is more than probable that on March 12, 1927, when Patterson had secured title to the “Minnis Farm” and reconveyed it to the bank, as he states he did, some such contract, and quite possibly the exact resolution and contract presented, was entered into and agreed to by Patterson and some officer of the bank as to any and all “obligations incurred in the acquisition or operation of said ‘Minnis Farm’ ” but the notes in question were in no manner incurred in either the “acquisition” or “operation” of the farm. There is no pretense that that was the purpose of the notes. The farm was fully acquired in March, 1927, and the notes were not given until June, 1928.

Patterson does not claim he gave the notes in the acquisition of the farm or in the operation of the farm, but he says he gave the notes to help the bank, to make the bank a going concern. If he gave the notes for the acquisition or in the operation of the farm, he did not give the notes to make the bank a “going concern.” The signature to the notes “Jesse L. Patterson” and not “ J. L. Patterson” signifies no more than that Patterson did not give the note for “money loaned” to him. There is no showing that any agreement of escrow or otherwise was made with the bank. Section four of chapter 16% of the Revised Statutes, Cahill’s St. ch. 16a, U 4, provides: “The directors shall cause to be kept suitable books of record of all the transactions of the bank or association.” Also: “The directors of any bank or association organized under the provisions of this. Act, shall hold regular meetings at least once each month,” and there shall be present a quorum, as may be prescribed by the by-laws of such bank or association, etc.

The bank can only be held liable upon contracts for actions taken by its board of directors, of which record must be kept, or by the action of its officers, acting within their authority. (People ex rel. Greenwood v. Board of Supervisors of Madison County, 125 Ill. 334; Village of Bellwood v. Galt, 321 Ill. 504, 508.)

In People ex rel. Greenwood v. Board of Supervisors of Madison County, supra, the court held: “The principles announced seem to be well supported by authority. Where the law requires records to be kept, they are the only lawful evidence of the action to which they refer, and such record cannot be contradicted or supplemented by parol. The whole policy of the law would be defeated if they could rest partly in writing and partly in parol. Stevenson v. Bay City, 26 Mich. 44; Hall v. People, 21 id. 456; Morrison v. City of Lawrence, 98 Mass. 219; Hanneman v. Fire District, 37 Vt. 40; Mayhew v. District of Gay Head, 13 Allen, 129. So where county commissioners and township^ trustees weré required by law to keep a true record of their proceeding’s, it was held that they could ‘only speak by their record’ when legally assembled. (Commissioners of Fayette County v. Chitwood, 8 Ind. 504.) And where school districts are required by law to keep an account of their proceedings by a sworn clerk, such-proceedings can only be proved by the record. Offered parol proof was rejected. (Jordan v. School District, 38 Maine, 164.) ”

In Village of Bellwood v. Galt, supra, the court held: “When a record of its proceedings is required to be kept the record is the only lawful evidence of its action, and it cannot be contradicted or added to by parol. People v. Madison County, 125 Ill. 334; People v. Smith, 149 id. 549; People v. Carr, 231 id. 502; People v. Warren, id. 518; Southworth v. Board of Education, 238 id. 190; City of Belleville v. Miller, 257 id. 244; People v. Toledo, St. Louis and Western Railroad Co., 270 id. 472; People v. Hartquist, 311 id. 127.”

No record is shown of any action taken by the board of directors, and no officer with any authority is shown to have concurred in the resolution or agreement of escrow or an agreement in any form.

It must, therefore, be held as a fact in this case that the record does not show any fact instrument, document, escrow, equity or thing, connecting the notes in question with the “Minnis Farm,” or any part of it, and that the purported resolution and contract, Exhibit 14, had no reference to the notes in question, and that the notes in question were only given in aid of the bank, and to assist in making the bank a “ going-concern. ’ ’

The note, one of the series held by the bank in the hands of the receiver, was of equal force and effect for the benefit of the depositors and creditors, as the notes held by appellees. Golden v. Cervenka, 278 Ill. 409.

We know of no reason why the note held by Josiah Hall is not of the same classification, subject to his liability as a stockholder and director.

The receiver of an insolvent bank, when attempting to marshal the assets of such bank for the benefit of creditors, is in law an innocent holder of such assets .and may maintain an action at law or in equity, even where the bank could not do so. (Golden v. Cervenka, supra; Niblack v. Farley, 286 Ill. 536; Mueller v. Novak, 251 Ill. App. 262, 269.)

It follows that- appellant in this cause was fully within his rights in selling the equity in the “Minnis Farm” lands in question, and preserving the funds received for the creditors of the bank.

Accordingly, the decree of the circuit court of Christian county, upon the -intervening petitions as to the “Minnis Farm” lands, is reversed.

jReversed.


author: Mr. Presiding Justice Hebel

text:
    Madison & Kedzie State Bank, Appellant, v. Cicero-Chicago Corrugating Company et al., Cicero Trust & Savings Bank and Sol Rubin, Appellees.
    Gen. No. 34,997.

      Heard in the third division of this court for the first district at the February term,. 1931.
    Opinion filed March 16, 1932.
    Isaac B. Lipson, for appellant; Randolph Thornton, of counsel.
    Sidney Rubin, Frederick A. Smith and Cheney, Evans & Peterson, for appellees.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

This is an appeal by the Madison & ICedzie State Bank, as trustee, from a decree entered in the circuit court on December 6, 1930. The decree ordered the appellant bank to pay the sum of $1,683.56 to the Cicero Trust & Savings Bank, and also ordered the Chicago Title & Trust Company as receiver to pay the Cicero Trust & Savings Bank, the sum of. $1,253.28. The Madison & Kedzie State Bank, as trustee, was complainant in the court below, and the Cicero Trust & Savings Bank and Sol Rubin, among others were defendants. Both of these parties held junior mortgages on certain premises upon which the complainant’s mortgage was a prior lien. Various proceedings were had, resulting in a decree of foreclosure and sale entered in the court below on July 3, 1928. Pursuant to the decree, a sale was had by the master, and on August 13, 1928, the master’s report of sale and distribution was filed. On the same day an order was entered by the court approving the same. That order also established a deficiency decree in favor of the complainant and ordered the receiver to continue in possession during the period of redemption for the purpose of collecting rents. No appeal or writ of error was taken from that order. Thereafter on February 14, 1929, the defendant, Sol Eubin, filed a cross-bill, setting forth that he was entitled to a lien on the premises and asking that a deficiency decree be entered in his favor for the amount found due to him in the foreclosure decree and that the receiver be continued in office for the purpose of collecting rents to apply on his deficiency. The defendant, Cicero Trust & Savings Bank, on May 13, 1929, filed its answer and intervening petition to said cross-bill. That petition set forth that the petitioner was entitled to a deficiency decree prior to the lien of Sol Eubin and also set forth that there was a surplus in the hands of the master amounting to $1,683.56, and prayed that an accounting be had and that any money in the hands of the master be paid to the petitioner on account of its deficiency. The complainant, as a cross defendant to that cross-bill and the petition, filed an answer on May 31, 1929. On May 7, 1930, a final decree was entered, in which it was recited that the cause came on for hearing on the cross-bill of Sol Eubin and the answer of the Madison & Kedzie State Bank and the Cicero Trust & Savings Bank as trustee. The decree found that Sol Eubin was entitled to a deficiency decree and that the receiver be continued in office and that any rents collected be applied in satisfaction of said deficiency decree after first paying the moneys due the complainant and the Cicero Trust & Savings Bank. No appeal or writ of error was taken from that decree. Thereafter, on May 7, 1930, the defendant, Sol Eubin, filed a petition, in which he set forth certain objections to the master’s report of sale and distribution which had been filed and approved on August 13, 1928,. and in that petition asked for a rule-upon the complainant to show cause why it should not pay the sum of $1,678.15. A motion was made by the complainant to strike the petition from the files, but it was denied by the court. On December 6, 1930,. the complainant filed its answer to that petition which stood as its answer to the intervening petition of the Cicero Trust & Savings Bank; and on December 6,1930, the order was entered from which this appeal is taken.

The complainant contends that the circuit court was without jurisdiction to enter the order of December 6, 1930; that the master’s report of sale and distribution in this case was approved on August 13, 1928, and that it was final and appealable; that after the close of the term of court at which this order was entered, the order could not be amended, modified or set aside, except upon appeal or writ of error, or by a bill of review, or a bill in the nature of a bill of review. This rule contended for by the complainant is subject to an exception, which is that a court of equity may amend its decree of foreclosure and sale of mortgaged property after the term time in so far as the change affects only the method of enforcemeilt and not the merits of the suit. Sterling Nat. Bank v. Martin, 213 Ill. App. 566.

The question is not raised in the instant case that the court erred in its finding of fact in the order of December 6, 1930, but the question. is raised as to whether it was within the jurisdiction of the court to enter this order.

The court in the case of Sterling Nat. Bank v. Martin, supra, passed upon the question of jurisdiction of the court in that case to set aside its decree, and held that the court at a subsequent term is without jurisdiction to modify or amend the judicatory part of . the decree, but that the court could modify the decree so as justly and equitably to enforce its judgment, and to render to the parties that to which they are entitled. In passing upon that point the court said: “It is true the first decree was a final, appealable decree, and the court had no power to change its findings at a subsequent term, and any attempt to do so should be held entirely ineffective and be disregarded. (Kirby v. Runnals, 140 Ill. 289; Gray v. Ames, 220 Ill. 251; Degrasse v. H. W. Gossard Co., 236 Ill. 73.) It is out of the power of the court to amend or correct a decree in any matter affecting the merits after the adjournment of the term (23 Cyc. 861). But the limitation of the court’s control to the term at which the decree was rendered does not apply to provisions inserted for the purpose of carrying the decree into effect. Such provisions may be amended or inserted at any time. (16 Cyc. 506.)

“In Union Trust Co. of Indianapolis v. Curtis, 182 Ind. 61, 105 N. E. 562, the court said: ‘While the essential judicatory part of a decree may not be changed by a court after the term when it was rendered, those parts which are directory as to the mode of its execution may be; and of such a nature is the amount of money required to be bid for the property. ’ Citing Farmers’ Loan Co. v. Oregon Pac. R. Co., 28 Ore. 44, 40 Pac. 1089; and Royal Trust Co. v. Washburn, B. & I. River R. Co., 113 Fed. 531, and quoting from the latter case: ‘A decree of foreclosure is, in a sense, a final decree, adjudging the rights of the parties as between themselves,. but a decree of foreclosure is something more than that. It is not only a decree adjudging those rights, but it is also a sort of equitable execution, providing the manner in which the decree shall be enforced, and for the assertion of the rights, declared; and the provisions of a foreclosure decree, with respect to the manner and the terms of the sale are part of the terms of the execution of the decree, and not of the decree, so far as adjudging the rights of the parties. ... It is always within the province of the court ... to modify the terms of the decree so as justly and equitably to enforce its judgment, and render to the parties that to which they are entitled. ’ ’ ’

And again the Supreme Court in the case of Church v. English, 81 Ill. 442, held, that a court has the power to amend its own records at a subsequent term, to speak the truth upon notice to the parties in interest, and, as between the original parties, it seems there is no limitation as to the time in which such amendment may be allowed; but rights of parties acquired by persons not parties to the record, previous to any such amendments, are not affected thereby.

In examining the court’s order, it appears that the court passed only upon the question as to the right of the parties to the surplus that was in the hands of the master, and found, in substance, that the master in chancery sold the real estate and premises foreclosed, to the Madison & Kedzie State Bank, the complainant, for the sum of $44,500; that the sale was duly reported to the court by the master, and this report was approved. The court then finds that there was a surplus in the hands of the master in chancery, which was paid over to the complainant, amounting to $1,683.56, and that there was no deficiency due the complainant. And the order further finds that the Chicago Title & Trust Company, the receiver, has in its possession as such receiver, the sum of $1,253.26.

The decretal order of the court is that the Madison & Kedzie State Bank, a corporation, pay the sum of $1,683.56 to the Cicero Trust & Savings Bank, and that the Chicago Title & Trust Company, the receiver, pay to the Cicero Trust & Savings Bank the balance in its hands, amounting to $1,253.26. This, in substance, is the order that is appealed from.

It is clear that the court’s order determines, as between the parties, only the right to a surplus arising from the sale, and is only for the purpose of carrying into effect the terms of the decree and rendering to the parties what they are entitled to under its terms. The rights of third parties have not intervened and the order was properly entered, not only as to the time within which it was filed, but also as to the distribution of the funds to the proper parties.. The decretal order entered on December 6, 1930, is therefore affirmed.

Affirmed.

Friend and Wilson, JJ., concur.


text:
    Chicago Title & Trust Company, Appellee, v. Louis Rubin et al. L. S. Cougill, Appellant.
    Gen. No. 35,102.

      Heard in the third division of this court for the first district at the April term, 1931.
    Opinion filed March 16, 1932.
    Rehearing denied and opinion modified March 29, 1932.

      Clark & Clark, for appellant; Russell S. Clark, of counsel.
    Pritzker & Pritzker, for appellee; Arthur J. Goldberg, of counsel.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

L. S. Cougill, one of the defendants, appealed from a decree of foreclosure to .this court. The hill of foreclosure was filed by the complainant in the superior court of Cook county against several defendants therein named, to foreclose a trust deed dated September 1, 1924, and executed by Louis Rubin and Bertha Rubin, his wife, and William Klein and Ada Klein, his wife, conveying certain real estate in the City of Chicago to the complainant as trustee, to secure an indebtedness of $185,000, evidenced by 347 bonds; and also executed by the grantors named in the trust deed. Several of the defendants, including the defendant L. S. Cougill, filed their joint and several answers, and complainant filed its replication. The case was referred to a master in chancery, who, after the taking of testimony, filed his report finding that the material allegations contained in the bill of complaint were proven find that the equities were with the complainant, and recommended that a decree be entered in accordance with the prayer of the bill of complaint. Defendant L. S. Cougill filed his exceptions to the master’s report, which were overruled by the chan-cellor. A decree of foreclosure and sale was signed by the court and entered of record.

The trust deed foreclosed secured a first mortgage bond issue, and provides that in case of default for a period of 30 days in making payments of any of the bbnds secured, then the whole of the principal sum secured should at once, at the option of the owner or holder of any one of the bonds unpaid, become due and payable; that upon such default, upon written application of the holder of any one of the bonds, and receipt by the trustee of good security and indemnity, it shall be lawful for such trustee to institute suit for foreclosure of the trust deed.

It appears from the evidence that bonds Nos. 1 to 7, inclusive, and interest secured by the trust deed were paid and canceled. On March 1, 1928, bonds Nos. 8 to 17, inclusive, aggregating the sum of $6,500, were due and payable. These bonds were deposited at that time with H. 0. Stone & Co., the depositary named in the trust deed. The defendant L. S. Cougill, the owner of the equity of redemption of the real estate described in the trust deed, not being able to pay the maturing bonds and interest, secured a loan from Nathan Cohn, with the understanding that Cohn was to lend Cougill $5,500 for a period of 60 days, said loan to be secured by the bonds, uncanceled, and which were taken up with the money advanced by Cohn. On March 2, 1928, at his lawyer’s office, Cohn delivered to the defendant Cougill a check for $5,500. Cougill indorsed the check and turned it over to a representative of H. O. Stone & Co', together with his own check for $300, and thereupon H. O. Stone & Company’s representative delivered to Cohn uncanceled bonds numbered 8 to 17, inclusive, which had matured on March 1, 1928. At that time the defendant L. S. Cougill executed and delivered a bill of sale dated February 29, 1928, selling to Cohn all the defendant’s right, title and interest in the bonds, and upon the delivery of the bill of sale Cohn executed, and delivered to Cougill a writing dated February 29, 1928, giving an option to Cougill of purchasing the bonds at the price of $6,160, on or before May 1,1928.

On April 30, 1928, for a consideration of $150 paid to Cohn, he extended the time to exercise the option to May 15, 1928, and on May 15, 1928, Cohn granted a further extension to May 25, 1928, upon the payment of $100 to him by Cougill.

On June 27, 1928, the loan not having been repaid to him, Cohn served upon the complainant, the Chicago Title & Trust Company, as trustee, a notice and demand in writing requesting the complainant to institute foreclosure proceedings and deposited with the complainant bonds numbered 8 to 17, held by him, and thereafter the complainant filed its bill of complaint.

It is contended by the defendant L. S. Cougill that Nathan Cohn was not the owner of the bonds in question, and could not direct the trustee to institute foreclosure proceedings; that Cohn could only obtain ownership of the bonds by foreclosure of his lien upon the bonds held by him.

The trust deed in the instant case provides that in case of default in the payment of any bonds or interest, the whole of the principal sum shall, without notice, at the option of the owner or holder of any one of the bonds unpaid, become due and payable. Nathan Cohn at the time of the written request upon the trustee claimed that he was a holder of unpaid bonds. The question then arises, Was Cohn such a holder of these bonds as to enable him to lawfully request the trustee to institute foreclosure proceedings 1 Cohn advanced $5,500 to the defendant Cougill, upon the deposit with Cohn of the uncanceled bonds maturing March 1, 1928, which bonds were given to secure the payment of the amount advanced by him to Cougill, the owner of the real estate covered by the trust deed.

Cougill having failed to pay, the bonds being in default and Cohn being in lawful possession, Cohn as a holder of unpaid bonds, under the terms of the trust deed, may properly request the trustee to institute foreclosure proceedings. To hold otherwise we would have to ignore the agreement of the parties to the trust deed. The trust deed provides that a holder, as well as an. owner of an unpaid bond or interest coupon, due and unpaid after a period of 30 days, is the proper person to request the trustee to institute foreclosure proceedings.

The makers of the bonds are liable for the full amount appearing on the face of the several bonds, and are not -interested in the application of the proceeds of sale from the property under the terms of the decree of foreclosure. Cohn has the right to collect the whole amount due upon these bonds and will hold any surplus above his own debt that may be collected as trustee for his debtor, Cougill. Peacock v. Phillips, 247 Ill. 467.

It is urged by the defendant that the bonds in question secured by the trust deed involved in this proceeding are usurious upon their face; that this loan provides for the payment of seven per cent, and, in addition; that the makers of the paper shall deposit monthly in advance with H. 0. Stone & Co. one-twelfth of the maturities of interest and principal.

This same question was before us and passed upon by this court in the case of Schiele v. Anderson, 252 Ill. App. 390. Nothing that has been called to our attention in the instant case has changed our opinion, and we therefore adhere to the views expressed when we said:

“It is argued by counsel for Rubin that this provision tainted the transaction with usury. The contention is untenable. The provision is not an unusual one. It does not result in any increase of interest to the holders of bonds. It simply provides for additional security to them. Its effect is to obligate the mortgagor to conserve a sufficient amount of the monthly rents, issues and profits to enable him to pay the bonds and coupons as they mature. It is deemed unnecessary to cite authorities to show that the arrangement in question does not result in the payment to the bondholders of interest at an unlawful rate or in the acceleration of payments of either principal or interest. ’ ’

It also appears from the master’s report, which was approved by the chancellor, that

“It is also contended on behalf of Cougill that the loan procured from Cohn was usurious. This said contention is sustained by the evidence, but the master finds that usury cannot be set up as a defense in this foreclosure suit, because there was no usury in the original mortgage loan secured by the trust deed sought to be foreclosed in this proceeding.” This finding of the master is without question correct. Even though the agreement between Cougill and Cohn for a loan was usurious, their agreement cannot affect the original mortgage loan secured by the trust deed in the pending foreclosure proceeding.

The defendant Cougill insists that the order of the chancellor appointing a receiver in the case at bar was based upon an unverified bill of complaint which was filed without notice to this defendant, and was therefore erroneous. It appears from the record that the court had before it and considered the bill of complaint in making the appointment of the receiver, which was not verified. Notice of the application was not given to Cougill, the owner of equity of redemption of certain real estate, the subject of this foreclosure proceeding. Cougill did make a motion to set aside and vacate the order of appointment and in support of this motion filed and presented his affidavit. The court, after a consideration of the facts set forth in the affidavit, denied the defendant’s motion. A further motion was entered but not by Cougill to vacate' the appointment of the receiver. This motion is still pending. The order appointing the receiver is an interlocutory order, and Cougill could have taken an appeal from this order, but did not perfect one within the time allowed for such an appeal. However, the defendant had a hearing on the motion. This served the purpose of notice in the first instance, Hancock v. American Bonding & Trust Co., 86 Ill. App. 630, and the chancellor considered the facts offered by defendant’s affidavit, and passed upon the merits when the motion was denied.

It has been suggested that this court consider and dispose of the pending motion, but we know of no reason why this court should assume that burden. Failure of the parties to act and dispose of this motion will not warrant the court in assuming other than appellate jurisdiction.

Complaint is made by the defendant that the court erred in allowing the complainant $750 for it’s services as trustee under the terms of the trust deed. The trust deed provides for a reasonable allowance for a trustee’s fee. The master found in his report that $750 was a fair and reasonable charge for the services rendered by the complainant as trustee, and this was incorporated in the decree entered by the court.

There is no reason why this court should disregard the agreement made by Louis Rubin and Bertha Rubin, his wife, and William Klein and Ada Klein, his wife, when they executed the trust deed which contained the provision for the trustee’s compensation.

It also complained that the chancellor allowed an appeal upon the defendants’ filing a bond of $30,000, and that this amount was excessive. The defendant furnished the required bond, and there is nothing for this court, at this time, to consider with reference thereto.

There being no error in. the record, the decree entered in this case is affirmed.

Decree affirmed.


author: Mr. Justice Friend

text:
    Lake View Avenue Building Corporation, Appellant, v. R. L. McFarland, Appellee.
    Gen. No. 35,105.
    Heard in the third division of this court for the first district at the April term, 1931.
    Opinion filed March 16, 1932.
    Pruitt & Grealis, for appellant.

      Rubens, Fischer, Mosser & Barnum, for appellee; Kenneth V. McFarland, of counsel.
   Mr. Justice Friend

delivered the opinion of the court.

Plaintiff obtained judgment by confession in the municipal court of Chicago against defendant in the sum of $325, for rental alleged to be due under a written indenture of léase. This judgment was subsequently opened on defendant’s motion and leave was given him to appear and defend. Trial was had by jury, resulting in a verdict and judgment for defendant, from which this appeal is prosecuted.

It appears from the evidence that plaintiff demised to defendant an apartment on the top floor of its building located at 2440 Lake View avenue in Chicago for a term of three years commencing October 1, 1927, at a stipulated monthly rental of $295. Defendant was allowed free occupancy of the demised premises for a period of five months and occupied the same until July, 1928, when he vacated the same because the landlord failed to repair a defective roof which caused water to drip through the ceiling of his apartment after every rainfall. The judgment by confession was rendered for rental alleged to be due for August, 1928, the month following defendant’s removal from said premises.

Defendant’s affidavit of merit avers among other things, “that at the time said lease was made plaintiff knew that the roof of said apartment was defective and dangerous, but suppressed its knowledge of the condition; that defendant could not discover the dangerous and defective condition of the said roof by reason of the character of its-construction; that during the defendant’s occupation of the premises, by reason of the defective condition of the said roof the said premises and the furniture and, other property of the defendant were damaged by the flooding of water and rain through said roof upon at least ten different occasions; that upon each such occurrence the defendant promptly notified the plaintiff and the plaintiff promised the defendant to repair the said defective roof; and the defendant, relying upon the plaintiff’s promise to repair the said defective roof, and believing that the plaintiff was engaged in making such repairs as would prevent the recurrence of such flooding of the defendant’s premises, remained in possession of said premises; that the defendant believed that the plaintiff had performed his promises to make the necessary repairs to the roof; that, when the defendant’s premises were again flooded by water and rain, the lighting fixtures in the dining room became rusted and filled with water and particles of plaster fell from the ceiling in the dining room and one of the bedrooms; that when the defendant called the plaintiff’s attention to these matters, the plaintiff said that the nature of the defect had not been previously understood, but that such repairs would immediately be made, that there would be no further trouble; that notwithstanding this assurance by the plaintiff and further similar promises and representations by the plaintiff upon subsequent occasions, the plaintiff took no action remedying said intolerable conditions; that on July 28, 1928, the defendant ceasing to rely upon and have confidence in the promises of the plaintiff, removed from said premises together with his household goods and other belongings.”

Considerable evidence was adduced at the hearing upon the salient question of fact relating to the leakage of water through the ceiling of the demised premises. Grace McFarland, wife of defendant testified that “the water came through in the dining room, all over the ceiling. It got so bad it dropped rusty water out of the chandelier. It stayed wet so long that the plaster flaked and fell down. It was that way during the ten months we lived there. The leak occurred every time it rained. I can remember putting down pails and buckets at least a dozen times. The chandelier was a sort of urn shape and I noticed it dripped out of that drop by drop and it was very rusty. I had Joe (meaning Joe Simon, engineer of the building) come up and empty it and he poured out a gallon of water into a pail. He did that a good many times.” Defendant’s testimony was to like effect.

Joe Simon, the engineer in charge of the premises, testified that his attention was called to the leak in the ceiling and he observed water coming through the center fixture, but that he “couldn’t do anything about the leak. I guess Mr. McFarland put a pan under the leak or something. I couldn’t find out where the water was coming from.” When asked whether he had talked to defendant on more than one occasion regarding the leak in the roof, Simon stated he did not remember but “maybe I did. I do remember one occasion.” From an examination of the evidence, the fact of the leakage and its continuance during the entire period of occupancy seems to have been definitely established, the only conflict being as to the extent and cause thereof.

The defense interposed to the payment of rent is twofold; it is averred that plaintiff had knowledge of the defective and dangerous condition of the roof, but withheld this information from defendant; and facts are also alleged upon which the defense of a constructive eviction might be predicated. With reference to the first of these defenses, plaintiff insists that the evidence fails to sustain the charge that the leakage was caused by a defective roof, and also that no proof was offered to show knowledge of the defect and suppression of such knowledge by plaintiff. While it is true that the precise cause of the leakage through the ceiling of the demised premises was not known or explained at the hearing, there is abundant evidence that water dripped through the ceiling following every rainfall during the entire period of occupancy, and it is a fair inference that the dripping came from the roof through the ceiling into defendant’s apartment. The roof being no part of the demised premises, it was the landlord’s duty to maintain the same in good repair.

Plaintiff urges several grounds for reversal, but the controlling question is whether the continued leakage of water through the ceiling of the apartment during the period of occupancy, together with the fact that plaintiff, with knowledge of this condition, failed to remedy the defect, constituted an omission of duty on the part of plaintiff which deprived defendant of the enjoyment of the demised premises, and rendered them unfit for occupancy to such an extent as to constitute a constructive eviction as a matter of law.

Plaintiff relies chiefly on the early cases of Keating v. Springer, 146 Ill. 481, and Barrett v. Boddie, 158 Ill. 479, wherein the court held that to constitute eviction there must be something of a grave and permanent character done by the landlord, for the purpose and with the intention of depriving the tenant of the enjoyment of the demised premises. However, our Supreme Court has apparently modified the doctrine enunciated in the foregoing cases in its later decisions, for in Gibbons v. Hoefeld, 299 Ill. 455, they stated in the course of their opinion that “we do not understand the law to be that an omission of duty by the landlord which has the effect of depriving the tenant of the enjoyment of the demised premises must be shown to have been with the intent that such should be the effect of the omission. ’ ’

The cases of Gibbons v. Hoefeld, supra, and Kinsey v. Zimmerman, 329 Ill. 75, seem to enunciate the principles governing the present rule applicable to constructive eviction. In the former case, Hoefeld entered into a lease with Gibbons for premises to be used in connection with his business, which provided, among other things, that the taking of possession by the lessee should be conclusive that the premises were in good repair and also requiring the lessee to make such repairs about the premises as might be necessary. Before entering the demised premises, Hoefeld inspected the same and found moisture about the walls of the basement. The landlord’s attention was called to this, and he thereupon promised to waterproof the basement walls and make them water-tight. The tenant, relying upon the promise, took possession of the premises and fitted the basement up as a salesroom containing merchandise of various kinds. Shortly after taking possession, the tenant found that whenever it rained water would seep through the basement walls and onto the floor of the salesroom, sometimes to the extent of an inch or an inch and a half in depth, making it necessary to constantly mop the floor and occasionally suspend business there until the salesroom had been made dry and usable. The landlord, when apprised of this condition, tried to remedy the defect, but was unsuccessful. Notwithstanding the efforts made in good faith by the landlord to render the basement walls water-tight, the court held that the tenant was justified in vacating the premises upon the theory that he had been constructively evicted therefrom, and in the course of its opinion laid down the rule heretofore quoted, eliminating the question of intent as a necessary factor in cases of this kind.

In the more recent case of Kinsey v. Zimmerman, supra, a judgment by confession was entered in the municipal court, as here, which was later set aside and defendant given leave to appear and defend. The defense interposed to the action for rent was that of constructive eviction. Defendants were architects occupying the entire front of the top floor of the Steinway Hall Building in Chicago. A portion of the demised premises was used as a drafting room, containing tables at which five or six people were constantly employed. Over a part of these tables, and several inches from the ceiling, there extended for a distance of several feet an iron pipe, one end of which was so connected with the roof as to permit the drainage of water from the roof, and the other end of the pipe extended into a shaft which connected with the sewer in the basement. A leakage occurred in a portion of this pipe, causing the water to drip down upon the tables where the draftsmen were at work. Defendant complained of this condition and plaintiff agreed to remedy the defect. Some temporary repairs were in fact made, but the pipe continued to leak. Defendants thereafter continued to complain of the condition and. finally advised the landlord that unless the leak was stopped they would be obliged to seek other quarters. The landlord did nothing further to remedy the defect and defendants vacated the premises. The trial court entered a judgment on the jury’s verdict in favor of the landlord. The Appellate Court, in reversing the judgment, held as a matter of law that the defects complained of were insufficient to justify the trial court in submitting the case to the jury on the question of constructive eviction, and there being no dispute as to the amount of the judgment, reversed and remanded the cause with directions to confirm the judgment entered by confession. In the course of its opinion, the Supreme Court, following the rule laid down in Gibbons v. Hoefeld, stated that the landlord without being guilty of actual disturbance of the tenant’s possession, may yet do such acts as will justify or warrant the tenant in leaving the premises, and if he does, the circumstances which justify such abandonment, taken in connection with the act of abandonment itself, will support a plea of eviction as against an action for rent, and that the question of constructive eviction is one of fact, depending upon the circumstances of the particular case, to be determined by the jury. Indeed, the cases generally, including Barrett v. Boddie and Keating v. Springer, upon which plaintiff relies, enunciate the rule that the question is always one of fact to be determined by the jury.

In the instant case the evidence is very scant as to whether plaintiff made any effort to repair the defect which caused the leakage, although it is apparent from the record that defendant complained constantly. In both the Hoefeld and Kinsey cases, and especially in the former, the landlord tried to remedy the defect, but failed, thereby eliminating from the cases the element of intent to deprive the tenant of the use of the premises. Notwithstanding this fact the courts held in both instances that there was a constructive eviction. We therefore conclude that the element of intention which was laid down as a necessary factor in the earlier decisions seems to have been removed as a necessary element to constructive eviction by recent decisions, and that continued neglect on the part of the landlord to remedy a defect, which makes the demised premises or a part thereof, unfit for occupancy, is sufficient to justify a .submission of the question to the jury.

Plaintiff by its brief devotes considerable argument to the question of agency, it being contended that there was no proof showing the authority of the engineer,, the manager of the building and others, to bind the corporation. The only purpose for which the question of agency became pertinent was to show that the plaintiff corporation through its agents had knowledge of the condition of the roof. Obviously, these individuals were in charge of the building for the purpose of leasing, receiving complaints and otherwise, and their knowledge would, of course, be imputed to the building corporation whom they represented.

Error is further assigned for failure of the court to submit certain instructions offered by plaintiff. One of these embodied the element of intent enunciated in the case of Barrett v. Boddie, and for the reasons already stated, we believe this instruction was properly refused. Another told the jury that plaintiff was not liable for defects in the roof of said premises when the lease was made, unless they were latent defects, and plaintiff had been guilty of fraud or actual deceit in concealing or not informing the defendant of such defects; As heretofore stated, we are of the opinion that it was the landlord’s burden to repair the roof and defendant was required to prove only that the landlord knowingly failed in his duty in that regard. Whether such failure was caused by fraud, deceit, carelessness or otherwise, is entirely immaterial. Two other instructions related to the question of agency, which has already been discussed, and for the reasons stated, we believe the court properly refused these instructions.

Finding no reversible error, the judgment of the municipal court will be affirmed.

Affirmed.

Hebel, P. J., and Wilson, J., concur.


author: Mr. Justice Friend Hebel, P. J.,

text:
    Florence Kraus, a Minor, by Robert Kraus, Her Father and Next Friend, Appellee, v. Becker, Ryan & Company and Blecker Beauty Shops, Inc., Appellants.
    Gen. No. 35,243.

      Heard in the third division of this court for the first district at the June term, 1931.
    Opinion filed March 16, 1932.
    Miller, Gorham & Wales and R. W. Marrow, for appellants.
    Michael F. Mulcahy and Charles A. Scott, for appellee; Stuart B. Krohn, of counsel.
   Mr. Justice Friend

delivered the opinion of the court.

Florence Kraus, a minor, by Bobert Kraus, her father and next friend, brought an action of trespass on the case against the defendants to recover damages for injuries alleged to have been sustained by her while undergoing treatment in a beauty parlor conducted by defendants. The jury returned a verdict in favor of plaintiff for $7,500 against both defendants, upon which judgment was duly entered. This appeal is prosecuted by defendant, Becker, Ryan & Company, a corporation.

The declaration, consisting of one count, charged that Becker, Ryan & Company owned and maintained a department store, and in connection with the defendant, Blecker Beauty Shops, Inc., owned, maintained and operated in said store and building a certain beauty shop, and maintained diverse machinery and curling irons which were used for curling women’s hair and giving other treatments; that on December 12, 1929, plaintiff entered the department store of the defendant, Becker, Ryan & Company and the beauty shop for the purpose of having certain waves and other treatment given to her hair; that she was sitting in a seat provided by the defendants for the purpose of having said work performed upon her hair, and was in the exercise of ordinary care for her own safety before and during the time that treatments were being performed upon her; that in connection with said work, defendants attached various curling irons and other apparatus to her hair, which were heated by electricity, and were under the sole and exclusive control of defendant ; that it was the duty of defendant to exercise reasonable care and caution in handling, operating and manipulating said curling irons and other apparatus, but that defendant made default and carelessly, negligently, improperly and recklessly operated, controlled and handled said curling irons and other apparatus so that they became very hot and dangerous and burned plaintiff’s hair, scalp and head, causing severe injuries. To this declaration the defendants interposed pleas of the general issue, and Becker, Ryan & Company filed an additional special plea of non-ownership and non-operation.

The essential facts disclose that plaintiff, a girl 17 years of age at the time of the accident, went to the beauty shop of the defendants about 7:45 o’clock p. m. on the evening in question for the purpose of having a “finger wave” in her hair. This was accomplished by manipulation of the operator’s fingers on the hair after first wetting the same with a water and flaxseed solution. Thereafter a bowl shaped electric lamp was suspended in close proximity to plaintiff’s head, and the current was turned on in the lamp to dry her hair. After adjusting the electric drier and turning on the current, the operator in charge left plaintiff sitting there alone and proceeded to attend another customer. After a lapse of about five minutes, during all of which time the operator was absent from the plaintiff, someone in the shop called the operator’s attention to the fact that plaintiff had slumped in her chair, and was apparently unconscious. The operator thereupon administered cold towels, but failing to restore consciousness, called the manager of the shop, who summoned Dr. Walter A. Sittler, a physician. Plaintiff’s father was then summoned, and upon his arrival, found plaintiff reclining on a couch attended by the doctor. As the doctor was unable to revive plaintiff, he and the father carried plaintiff to a cab in which she was taken home and put to bed, where she remained unconscious until the following day.

Plaintiff’s father testified that when he arrived at the beauty shop, his daughter’s head was wringing wet; that he felt her head and observed a big red spot that looked like a silver dollar on the left side of her head. Plaintiff testified that after she had sat under the drier for a while she remembered nothing until the next evening, when she regained consciousness, and then felt a scab on her head. She stated, however, that it was-on the right side of her head and not on the left side, as testified to by her father. To controvert this evidence, Dr. Sittler testified that he examined plaintiff when he called, but observed no burn or other objective symptoms.

Plaintiff remained in bed for several days, and on January 3, 1930, approximately three weeks after the accident, Dr. Thorpe, the family physician was summoned. He found plaintiff suffering from a third degree burn on her head, located on the right hand anterior portion of the skull. The burn had an area of about 2% inches, was circular in shape, the scalp was burned to the bone and the odor was very obnoxious. He shaved plaintiff’s head, removed all the dead particles of flesh, and applied antiseptic dressings. Within three days after this visit, Dr. Thorpe left for an extended trip to the Orient, and did not again visit plaintiff.

On January 7, 1930, Dr. V. E. G-onda was called and examined plaintiff. According to his testimony, he found a wound over the left frontal bone near the function of the hairy part of the head. The wound was covered with a scab and emitted an obnoxious odor. He applied oily dressings which finally removed the scab, and then observed that the wound had penetrated to the bone. Later he observed that the bony substance of the skull was also involved, and this condition lasted for about two weeks until the wound healed. Dr. Gonda regularly treated plaintiff during this period. He testified that she did not complain much about the local wound, but was easily excitable, and could not sleep nights. He also examined her for evidence of nervous disorders and found the reflexes were exaggerated; that there was a Bomberg sign, meaning that the patient could not stand with her eyes closed without swaying. He also observed a sort of dermagraphia, which means that when the patient’s skin was struck slightly, there was a marked reaction in the form of a red line, which appeared and stayed longer than" in a normal person. Plaintiff had a pulse of over 100. The witness testified that she came to his office three times weekly for the first three months, and then twice weekly for about three months longer. Plaintiff showed fair progress at first, and was advised to return to work,' but during the following summer she became subject-to frequent fainting spells, loss of weight, and appeared pale and weak. In reply to a hypothetical question, Dr. Gonda testified that plaintiff’s, condition might be the result of a burn such as was described in the question.

Leila Swing testified on behalf of the defendants that she was the operator in charge of plaintiff on the evening in-question; that she first wet plaintiff’s hait with a solution of water and flaxseed, then made the wave in plaintiff’s hair with her fingers and a comb, placed a towel around plaintiff’s neck, sat her in an ordinary cane chair, adjusted the drier and turned on the electric current.; that no attachment or apparatus was fastened to the hair during the process; that the .round metal cap or bowl at the bottom of the drier never gets hot enough to burn the hands; that she did not see any fire, flash, smoke, or explosion in, around, or near the drier that evening, and that the drier was in perfect working order. Witness also testified that she had been a licensed operator for more than seven years, and that the apparatus used on plaintiff was the usual and customary form of drier then used in beauty shops. .

Fred D. Yigel testified that he was-supervisor of the Blecker Beauty Shops in December, 1929, and in the presence of the jury demonstrated the hair drier and described the apparatus as an aluminum shaped cap or bowl, which may be raised, lowered and tilted so as to be- adjustable to a person’s head. In the rear of the aluminum cap and attached thereto is a switch controlled motor giving three degrees of temperature, cold, warm and hot. The top of the bowl contains a 100-watt electric bulb. The rear part of the bowl contains a wire coil which generates heat through the electric current from the motor, and a fan which diffuses the heat from the coil and electric light bulb over the patient’s head. Both the coil and the fail are separated from the main bowl by a wire meshed guard, to prevent contact of the person’s head and hair with the fan and coil located behind the wire guard.

Michael Grordus, an electrician, testified that he had approximately ten years of practical experience with electrical equipment of all kinds. When shown the drier, which is an exhibit in the case, he stated that no short circuit of ordinary city current would heat up the coil back of the screen sufficiently to cause a burn on a person’s head because the fan keeps the coil continuously cool; that the coil carries a certain amount of heat, but the air from the fan is always sufficient to keep it cool; that when a wire or coil is overloaded it may become hot, but in that event the fuse will blow; that it would be impossible to overload the coil in this type of machine because the coil is designed to take care of the voltage applied on the line.

Plaintiff proceeds upon the theory that the evidence adduced by her was sufficient to justify the court in submitting the cause to the jury under the charge of general negligence alleged in the declaration, even though no specific negligence was averred or shown upon the hearing, and in support of her contention she relies on authority enunciating the well known rule that where there is some evidence in the record which fairly tends to prove the allegations of the declaration, the verdict of the jury should not be disturbed. The rule thus stated has ample support in this State, but the fallacy of plaintiff’s contention lies in the application thereof to the instant case. Plaintiff offered no explanation as to the manner in which this injury was sustained. She does not contend that it resulted from contact of her head or hair with the heated coil or bulb contained in the electric drier or with the aluminum cap suspended over her head. Neither does she say that it resulted from a direct electrical current due to defective apparatus or to an improper adjustment of the cap by the operator to plaintiff’s head. These various contingencies are vaguely suggested as possible causes of the injury by the circumstances of the case, but are purely conjectural and not based on any facts from which negligence on the part of defendants may be inferred.

From the averment contained in plaintiff’s declaration that “the curling irons and apparatus . . . were under the sole and exclusive control of defendants,” and the lack of any specific charge or proof of negligence by plaintiff, it would seem that she seeks to invoke the doctrine of res ipsa loquitur, without expressly relying thereon. Under this doctrine, whenever a thing which produces an injury is shown to have been under the control and management of the defendant, and the occurrence is such as in the ordinary course of events does not happen if due care has been exercised, the fact of injury itself will be deemed to afford prima facie evidence to support a recovery in the absence of any explanation by the defendant tending to show that the injury was not due to his want or care. Bollenbach v. Bloomenthal, 341 Ill. 539. To the extent that this doctrine may be invoked as a substitute for specific proof of negligence, it is a variance or exception to the general rule that negligence must be specifically alleged and proved. The reason for the rule rests upon the presumption that in view of the surrounding circumstances the accident would not have happened had the defendant used ordinary care, and therefore, when the surrounding circumstances leave room for a different presumption, the reason for the rule fails. McGowan v. Nelson, 36 Mont. 67.

In well considered cases resting upon the application of the doctrine of res ipsa loquitur, as tending to establish prima facie evidence, and where liability was upheld, it will be invariably found that in every instance there was an essential element present, that is proof of the existence of the cause or thing which was alleged to have been the negligent act which produced the injury, or proof of such facts from which the existence of such cause or thing constituting the alleged negligent act was the only reasonable inference that could be properly drawn. Conover v. Delaware, G. & W. R. Co., 92 N. J. L. 602. Thus in Benedick v. Potts, 88 Md. 52, 41 L. R. A. 478, plaintiff was riding as a passenger in a roller coaster conducted in an amusement park by the defendant, and he was picked up in an unconscious condition in one of the tunnels through which the roller coaster had passed with a wound or bruise on his forehead, but with no evidence of any agency which might or could have caused the injury. The court held that there was no evidence sustaining the cause of action, and in the course of its opinion said:

“The maxim does not go to the extent of implying that you may, from the mere fact of an injury, infer what physical act produced that injury; but it means that when the physical act has been shown, or is apparent, and is not explained by the defendant, the conclusion that negligence superinduced it may be drawn, as a legitimate deduction of fact. It permits an inference that the known act which produced the injury was a negligent act, but it does not permit an inference as to what act did produce the injury.” In seeking to differentiate the foregoing case from that before us, plaintiff in her brief says that in the instant case the undisputed evidence is that plaintiff was put under an electric device which “if not properly administered” and in close proximity to the scalp of plaintiff, which was soaking wet at the time, could readily produce the burn sustained by plaintiff. If there were any evidence in the record to sustain the contention that the electric device was not properly administered, that fact would afford a basis for explaining the cause of plaintiff’s injury and would amount to negligence, but we find no evidence whatever in the record on which such a conclusion might be based, and therefore regard the Potts case and authorities to like effect as applicable.

In our opinion this is not a case of res ipsa loquitur. It was therefore incumbent upon plaintiff to allege and prove negligence on the part of defendants. The declaration, although inartistically drawn, is not defective; it charges general negligence in handling, operating and controlling the apparatus under defendants’ control. The proof, however, fails to support the charge and no negligence is shown. Therefore, the judgment cannot stand.

Defendants urge other grounds for reversal, but in view of our conclusion upon the main point in the case, we consider it unnecessary to discuss the other assignments of error.

For the reason stated, the judgment of the superior court will be reversed and the cause remanded.

Reversed and remanded.

Wilson, J., concurs.

Hebel, P. J.,

dissents.

Since filing our opinion herein, appellee has filed a motion to modify the remanding portion of the order and to enter an order in lieu thereof reversing said cause without remanding, and in support of said motion appellee has filed suggestions admitting of record that upon any future proceeding or trial of said cause appellee would be unable to produce or introduce any further, different or additional evidence as to the manner in which the accident in question occurred. No counter suggestions or objections having been made to this motion, our original order of March 16, 1932, is, therefore, modified in accordance with appellee’s suggestions and admissions, and the judgment of the circuit court of Cook county is herewith reversed without remanding.

Reversed.

Wilson, J., concurs.

Hebel, P. J., concurs in the modification.