text:
    City of Harvard, Appellee, v. James J. McCauley, Appellant.
    Gen. No. 7,991.

      Opinion filed May 14, 1929.
    Rehearing denied June 18, 1929.
    James J. McCauley, pro se, Frank J. Maynard and D. T. Smiley, for appellant.
    Paul J. Donovan, City Attorney, for appellee.
   Mr. Justice Boggs

delivered the opinion of the court.

An action in assumpsit was instituted by appellee against appellant to recover for certain sums alleged to have been paid him without authority of law. The declaration consists of the common counts, accompanied by affidavit of claim. To said declaration appellant filed a plea of the general issue, accompanied by affidavit of merit and notice of special matters of defense.

The special matters of defense relied on were that appellant was city attorney until May 1, 1926; that after said date he did not qualify or enter upon the duties of said office; that on May 12, 1926, he was employed by the board of local improvements as attorney in the matter of certain improvements being made by said city, and received as compensation therefor the sum of $3,683.91; that said payments were voluntarily made by the board of local improvements “and without any fraud or mistake of fact”; that the amount so paid was reasonable and just for said services, and was paid to appellant at a time when he was not city attorney, and’that out of the amounts so paid, appellant in compliance with the conditions imposed by said board paid court costs and the services of other attorneys.

A jury was waived, and a trial was had, resulting in a finding and judgment in favor of appellee for $3,683.91. To reverse said judgment, this appeal is prosecuted.

On the trial, it was- stipulated among other things that the City of Harvard has a population of less than 5,000; that on May 1, 1925, appellant was duly appointed city attorney and qualified as such; that the fiscal year of said city ends on May 1 of each succeeding year, “and that all commissions-for appointive offices shall expire May 1 of each year”; that J. G. Maxon was mayor, and J. M. Harris, R. B. Glover, Jerome Crowley, Charles Nieman, Harry Jordan and Fred Hookstadt were the aldermen during the time in question; that by ordinance J. Gr. Maxon, J. M. Harris, R. B. Glover and Jerome Crowley were constituted the board of local improvements of said city; that said board of local, improvements formulated plans, etc., for the paving of certain streets of said city, and that such improvements were divided into districts known as special assessment numbers 18, 19, 20, 21, 22 and 23; that the petitions were filed, the hearings were had and the assessments were confirmed as to special assessments numbers 18,19, 20, 21 and 22 before April 1, 1926, and as to special assessments 23, 24 and 25 before June 30, 1926. Bids were received and contracts let on special assessments 18, 19, 20, 21 and 22 on April 20, 1926.

It was further stipulated that at a meeting of the board of local improvements on May 12, 1926, it was moved and carried that appellant be employed as attorney for said board and that he be empowered to secure the aid of an assistant or such additional attorneys as he may see fit.

At a meeting of said board of local improvements on July 10,1926, vouchers were presented, allowed and ordered paid to appellant, for attorney’s fees, as follows:

“Paving District #18 — dated June 28, $190.64
Paving District #19 — dated June 1, $1069.60
Paving District #20 — dated June 1, $1515.30
Paving District #21 — dated June 1, $107.60
Paving District #22 — dated June 1, $210.14.”
“With the understanding that James J. McCauley will defray all court costs of said improvements, and pay all fees of other attorneys engaged with him in said proceedings.”

On June 20, 1926, vouchers were issued by said board to appellant in special assessment 23 for $224.52; in special assessment 24, $103.20; and in special assessment 25, $100.98.

It was further stipulated that on June 1, 1926, a check, duly signed by the mayor and tested by the clerk was “drawn to pay the salary of said James J. McCauley as city attorney for the city of Harvard for the month of May 1926,” and that said check was delivered on June 1, 1926, to appellant; that on July 1, 1926, a similar check was issued and delivered to appellant to pay his salary for the month of June as city attorney; that ordinance 167 of said city provides: “The city attorney shall receive twenty-five ($25.00) dollars per month. In addition to his duties as city attorney, he shall perform all legal work for the board of local improvements of said city.”

It was further stipulated that the special assessment fees paid to appellant with the accrued interest to March 15, 1927, amounted to $3,683.91. It was stipulated that either of said parties might offer such additional .evidence as they might see fit, subject to objection.

Appellee offered in evidence the appropriations ordinance for the fiscal years ending May 1, 1926, and 1927, neither of which ordinances made any appropriations for expenses of said board of local improvements.

The two checks above mentioned, for $25 each, were offered and admitted in evidence. The following entry in the docket of Charles J. Vierck, justice of the peace of said city, was admitted in evidence:

“July 19, 1926, at 10 o’clock a. m. case is called and defendant is in court with his attorney, L. B. Palmer, J. J. McCauley, City Attorney, appears for the city with T. M. St. John and Dr. J. G. Maxon as cities witnesses. After being duly sworn and examined the defendant pleads guilty to the charge of being drunk and disorderly.”

The minutes of the meeting of May 3,1926, were admitted in evidence, which said minutes contain the following: “The mayor then announced his appointments, as follows: City Attorney, J. J. McCauley. On motion of Alderman Crowley, seconded by Aider-man Harris, the appointments were confirmed by unanimous vote, on call of ayes and nays.”

The above and foregoing is, in substance, all of the evidence offered on the part of appellee.

Appellant testified in his own behalf that he did not take the oath of office or. file any bond, following his appointment as city attorney on May 3, 1926; that he received the two checks in question and cashed the same; that on or about July 1, 1926, he tendered the amounts so received to the city clerk and notified him not to send any further checks. Appellant further testified that he had a conversation with Dr. Maxon, before May 1, 1926, and stated to him that he did not want the office of city attorney after the expiration of the fiscal year, but would like “to get in on that board of local improvement work, as the attorney”; that Dr. Maxon replied “he would have to take it up with the board, and he would see me later about it. The appointments were made after the 1st of May for city attorney, and my name was presented as city attorney and confirmed by the council. I had some further talk with Dr. Maxon about this and I told him, ‘Doctor, I appreciate your appointing me as city attorney, I appreciate the council confirming it, but I don’t want it.’ He said, ‘Well, I didn’t care to make changes,’ and, ‘who are we going to get to take care of it?’ I said to him, ‘I don’t know. If I am employed by the Board and some work comes up and you want somebody to do it, if you will call on me I will be glad to do it. I won’t even make any charge about it, if I get the position because that would pay a good salary. You can always ring me on the phone; if something comes up call me and I will be glad to take care of it.’ After this conversation I did go on several occasions to the city hall and police magistrate’s and take care of certain police court cases at the request of Dr. Maxon, the mayor of Harvard, and I have answered questions that he asked me relative to the city affairs. I did not get pay from the city of Harvard at any time for that kind of service.”

Appellant further testified: “Out of the moneys I received as attorney for the board of local improvement I paid . . . three lawyers around $1,100. I paid court costs, to the clerk of the county court, that I believe was eight cases, filing fee, $80, and whatever the sheriff’s costs or other additional costs may have been there. I received no part of the moneys back that I paid out of my pocket under this agreement of May 12, 1926. There never was any protest by the board of local improvements or the mayor or president of the board of local improvements at the time the money was paid to me on these vouchers. There was no complaint of any kind at any time after the payment of the money on these vouchers as to the work that I had done.”

With reference to the cashing óf the two checks, and as to his services rendered to the city after May 1, 1926, appellant testified: “I want the court to understand that I never accepted those checks, knowing them to he city checks. They got out of my hands inadvertently. ... I realized I had it and I wanted to give it back. I took it back as soon as I realized it. ... I was present at the city council during the fiscal year 1926 two or three times when Dr. Maxon called me and asked if I would go down and be present at council meetings. ... I knew that the city attorney of the city of Harvard had to do the work of the board of local improvements. I knew that ordinance 167 was in existence and that is why I did not want to become city attorney for the next year. I would only be allowed $25 a month. That is one of the reasons I did not qualify.”

The grounds relied on by appellant for a reversal of said judgment may be summarized as follows:

First. That the contract entered into by appellant with said board of local improvements was a valid and binding contract.

Second. That even if said board were not authorized to enter into said contract, having voluntarily paid appellant, without mistake of fact, appellee is estopped to question the same.

Third. That appellee was not the proper party to bring said suit, and that if an action would lie at all, it must have been brought in behalf of the taxpayers.

Fourth. That, even though said board was not authorized to make .said contract, and even though the city is not estopped to question the same, appellant would be entitled to recoup the amount paid for court costs, attorney fees, etc., and for reasonable compensation for the services rendered by him.

There are three answers to appellant’s first proposition; .

(a) The costs and expenses of maintaining the board of local improvements, the payment of salaries to the members of said board, and the expenses of- making and levying special assessments or special taxes and the letting of contracts, and the entire expenses attending the making and return of the assessment rolls, necessary estimates, court costs, etc., “shall be paid by the city, village or town out of its general fund.” Cahill’s St. ch. 24, ¶ 226; Village of DesPlaines v. Winkelman, 270 Ill. 149-154; Bond v. Hoopeston, 168 Ill. App. 617-620; Rieker v. City of Danville, 204 Ill. 191-194.

While admitting the provisions of said statute, appellant insists that said board acted under the proviso, to the effect that in cities having a population of less than 100,000, the ordinance for the assessment may provide not to exceed 6 per cent of the amount of the assessment, to be applied on “expenses and other costs of making and collecting such assessment.”

It might be observed that the local improvements statute does not provide for said board paying or providing for the payment of attorney’s fees. “The Local Improvement act regulates the entire proceeding without resort to any other act.” Rieker v. City of Danville, supra, 194.

(b) Inasmuch as the expenses incurred by the board of local improvements are to be paid out of the general fund, before a contract can be entered into fixing a liability on a city, the funds necessary to pay the same must have been appropriated prior thereto.- Cahill’s St. ch. 24, art. 7, ¶ 95; Trustees of Lockport v. Gaylord, 61 Ill. 276; May v. City of Chicago, 222 Ill. 595-599; DeKam v. City of Streator, 316 Ill. 123-131; Ferry v. National Motor Underwriters, 244 Ill. App. 241. No such appropriations were made and there was no authority to create a liability against said city therefor.

“While it is true that all local improvements to be paid for by special assessment or special taxation must originate with the board of local improvements, it is equally true that the board of local improvements is but one of the departments or agencies of the city government, and subject to its direction and control. . . . The powers, duties and functions of the board of local improvements in the premises are confined to investigating, recommending and supervising such improvements.” People v. City of Rock Island, 271 Ill. 412-427, citing City of Lincoln v. Harts, 266 Ill. 405. To the same effect is Givins v. City of Chicago, 188 Ill. 348-362; People v. Faherty, 306 Ill. 119-128.

It would therefore follow that, if the city council was not empowered to make said contract, certainly the board of local improvements could not do so.

(c) Prior to May 1, 1926, appellant had been regularly appointed and served as city attorney. Appellant was renominated and confirmed by the city council as city attorney, of which fact he had notice. While he did not file a bond or take the oath as city attorney, he appeared for said city before justices of the peace, and from time to time consulted and advised with the mayor and city council. For the months of May and June he was delivered salary checks which he cashed. About July 1, or shortly thereafter, he tendered the amount received on said checks to the city clerk, stating at that time that he desired that no further checks be mailed him as such city attorney. The record also discloses that practically all of the work in connection with assessments 18, 19, 20, 21 and 22 had been completed prior to May 1,1926, at a time when, concededly, appellant was the city attorney for said city, and that the work on assessments 23, 24 and 25 had been practically completed by July 1, 1926, at a time when appellant was the de facto city attorney of said city. People v. McCann, 247 Ill. 130, 143-145.

The ordinance fixing the right and duties of the city attorney, etc., provided expressly that he should perform “all legal work for the board of local improvements of said city.” Appellant was therefore not in a position to enter into a contract, either with the city or said board, by which he should receive extra compensation for his services. Gathemann v. City of Chicago, 263 Ill. 292; City of Decatur v. Vermillion, 77 Ill. 315. A person dealing with a municipal corporation is charged with knowledge of the limitations of the power of that corporation to make contracts. Snyder v. City of Mt. Pulaski, 176 Ill. 397; City of Danville v. Danville Water Co., 178 Ill. 299, 319; Hope v. City of Alton, 214 Ill. 102; May v. City of Chicago, supra.

Second. Appellant in effect contends that appellee city is estopped from questioning the payment to him, for the reason that the same was voluntarily made without “any mistake of fact.”

Section 3 of article 7, chapter 24, paragraph 94, Ca-hill’s Statute, provides among other things:

“Neither the city council nor the board of trustees nor any department or officer of the corporation shall add to the corporation expenditures in any one year anything over, and above the amount provided for in the annual appropriation bill of that year,” etc.

In DeKam v. City of Streator, supra, the court at page 129 says:

“Section 208 of division I of the Criminal Code was and is as follows: ‘Every person holding any public office (whether State, county or municipal), trust or employment, . . . who shall be guilty of contracting, directly or indirectly, for the expenditure of a greater sum or amount of money than may have been, at the time of the making of the contracts, appropriated or set apart by law . . . shall be fined not exceeding $10,000, and may be removed from his office, trust or employment, ’
“A contract expressly prohibited by a valid statute is void. This proposition has no exception, for the law cannot at the same time prohibit a contract and enforce it. The prohibition of the legislature cannot be disregarded by the courts. (Botkin v. Osborne, 39 Ill. 101; Wells v. People, 71 id. 532; Board of Education v. Arnold, 112 id. 11; Penn v. Bornman, 102 id. 523; Cincinnati Mutual Health Assurance Co. v. Rosenthal, 55 id. 85; Borough of Milford v. Milford Water Co., 124 Pa. 610; Berka v. Woodward, 125 Cal. 119; Levinson v. Boas, 150 id. 185.)”

The court in the same case at page 136, further says:

‘ ‘ The city cannot be estopped to dispute the validity of a contract which it had no power to make, for the reason that it has received the consideration. Every one is presumed to know the extent of the powers of a municipal corporation, and it cannot be estopped to aver its incapacity, which would amount to conferring power to do unauthorized acts simply because it has done them and received the consideration stipulated for. — Stevens v. St. Mary’s Training School, 144 Ill. 336; Hope v. City of Alton, 214 id. 102; May v. City of Chicago, 222 id. 595; People v. Parker, 231 id. 478.’ Eastern Illinois Normal School v. City of Charleston, 271 Ill. 602.”

Third. The fund here sued for belongs to appellee city, and it is the proper party to bring the suit. People v. Holten, 259 Ill. 219-222; People v. Holten, 287 Ill. 225-230; People v. Parker, 231 Ill. 478-480.

Fourth. On the proposition that appellant should be allowed to recoup the amount which he paid for attorney fees, court costs, etc., and on a quantum meruit for the reasonable value of the services performed by him, it is only necessary to say that there is no evidence in the record on which to base said contention. There is no proof of the value of the services rendered, either by appellant or by the attorneys employed by him. Neither is there any sufficient proof with reference to the amount paid by appellant for court costs, etc. There was no error in the ruling of the court in this connection.

For the reasons above set forth, the judgment of the trial court will be affirmed.

,Judgment affirmed.


source: Caselaw Access Project

author: Mr. Justice Boggs

license: Public Domain

text:
    Frances S. Pollock, Administratrix of the Estate of Robert Pollock, Deceased, et al., Appellants, v. Jacob Cantlin, Administrator c. t. a. of the Estate of Montgomery Pollock, Deceased, Appellee.
    Gen. No. 8,021.

      Opinion filed May 14, 1929.
    Rehearing denied June 18, 1929.
    Carl E. Sheldon, for appellants.
    Jacob Cantlin, for appellee.
   Mr. Justice Boggs

delivered the opinion of the court.

Montgomery Pollock, of Whiteside county, died April 29,1923, testate as to a part of his estate, and intestate as to the residue. Appellee Jacob Cantlin was appointed administrator with will annexed of said estate. Said deceased left him surviving several children, including a son, Robert Pollock. On March 5, 1924, Robert Pollock died intestate, leaving him surviving appellant Prances S. Pollock, his widow, and appellants Robert Pollock and Dorothy Pollock Moroff, his children and only heirs at law.

On May 11, 1928, appellee filed his final report in said estate, showing “that the debts and claims against said estate have all been paid,” leaving a balance of $8,550.43 “to be distributed between the heirs lawfully-entitled thereto.” It was further set forth in said report that appellant Frances S. Pollock, as administratrix of the estate of Robert Pollock, deceased, was entitled to a distributive share of $864.35. Appellee prayed that he be allowed to make distribution as set forth in said report, and, upon presentation of receipts therefor, that .he be discharged.

On June 4, 1928, appellee after having made proofs of notice, as provided by statute, moved the court to approve his final report. The court entered an order “that said report be and the same is hereby approved, and distribution ordered as shown by said report.”

On June 8, 1928, appellee filed a supplemental report, setting forth “that in the items of receipts, the administrator failed to include as one of the assets a note of Robert Pollock, now deceased, to said Montgomery Pollock, deceased, in the sum of $581.56, dated November 17, 1917, with interest at 7 per cent per annum, for which note and interest a claim was, on September 13,1924, filed against the estate of said Robert Pollock, deceased; that there was due on said note up to June 4, 1928, the date of the approval of said final report, the sum of $1,011.25, which said sum should be included as assets of said estate in computing the assets on hand for distribution, in so far as the distributive share belonging to the estate of said Robert Pollock, deceased, and payable to Frances S. Pollock, administratrix thereof, will reach.”

Objections to said supplemental report were filed by appellants, on June 14, 1928. Said objections question the power of the court to modify said report and order of distribution on the ground that the approval of the first report, not having been formally set aside at the June term, 1928, was valid and binding and could not be modified at a subsequent term; that, appellee having filed said claim against the estate of Robert Pollock, deceased, the same must be allowed and determined in the administration of said estate of Robert Pollock; also that the distributive share which would otherwise have gone to the estate of Robert Pollock should be administered in his estate, in order that the claims against said estate be classified and paid according to classification.

On June 18, 1928, a hearing was had on the objections to said supplemental report, and the same was taken under advisement. On July 2, 1928, said objections were overruled, and a finding was made that the amount due, as the distributive share of Robert Pollock, deceased, be decreased in the sum of $810.29 on account of said indebtedness, and it was “ordered that an amended final report be filed on or before July 6, 1928.” On July 6,1928, a second supplemental report was filed, pursuant to said ruling as to the amount to be deducted from the distributive share of the estate of Robert Pollock, deceased, which left the sum of $169.38 owing to appellant Frances S. Pollock, as administratrix.

Objections were filed to said second supplemental report by appellants, raising the same points, in substance, as were raised against the first supplemental report. Said objections were overruled and distribution was ordered as set forth in said second supplemental report, and an appeal was granted to the circuit court.

On the trial in the circuit court, a jury was waived and a stipulation was entered into, setting forth among other things: that on September 13, 1924, a claim was filed against the estate of Robert Pollock, deceased, by appellee as such administrator, for the amount owing on said above-mentioned note; the disallowance of said claim on July 2, 1928; that a widow’s award of $500 was allowed appellant Frances S. Pollock in the estate of Robert Pollock; that certain other claims, giving their classification, had been allowed and that the estate of Robert Pollock was insolvent; that appellee “through mistake and oversight, failed to include in his final report . . . the note and claim filed against the estate of Robert Pollock, deceased; that ... at the same term of court in which order of approval and distribution was made and entered, said Jacob Cantlin filed his supplemental report, set forth in the transcript; that said omission from said first final report was not made by said administrator willfully or intentionally, but through error and mistake.”

The objections filed to said report by the appellants were overruled and an order was entered by the circuit court, approving said report and ordering distribution and entering judgment against appellants for costs. To reverse said judgment, this appeal is prosecuted.

Numerous errors were assigned by appellants on the record, which, in the argument, were reduced to six propositions.

Appellants first contend that the order approving said original report, was never set aside and, the term at which “it was entered having passed, it became a final, binding order and judgment, and that any subsequent orders approving other and different reports were’nullities.”

The first supplemental report was filed on June 8, four days after said order approving the original report, and before distribution had been made. The objections filed to said supplemental report were heard at said June term, and were taken under advisement. On July 2, an order was entered, overruling said objections and finding that the distributive share of Robert Pollock should be decreased by reason of the indebtedness on said note, $810.29, leaving a balance owing to said estate of $169.38, and ordering an amended supplemental report to be filed accordingly. The objections to the amended supplemental report were passed on by the court on July 9, 1928, and the report was approved and distribution ordered.- The supplemental report filed on June 8 by appellee, with the motion accompanying the same, was sufficient to give the court jurisdiction at the July term following, to allow the amendment to said report and to modify the order of distribution.

County or probate courts in the settlement of estates are vested with equitable as well as legal powers and in thé adjustment of the accounts of executors, administrators and guardians, the county court has equitable jurisdiction and may adopt equitable forms of procedure. Millard v. Harris, 119 Ill. 185-198; Spencer v. Boardman, 118 Ill. 553-558; Shepard v. Speer, 140 Ill. 238-245; Heppe v. Szczepanski, 209 Ill. 88-98.

The authority of the county court to amend or set aside its orders, on motions made at the term in which they were entered, has frequently been recognized and approved. Griswold v. Smith, 221 Ill. 341-350; Schlink v. Maxton, 153 Ill. 447-448; Strauss v. Phillips, 189 Ill. 9-25; Millard v. Harris, supra; Heppe v. Szczepanski, supra, 99. See also Marshall v. Coleman, 187 Ill. 556; Tanton v. Keller, 167 Ill. 129, 144; Wright v. Simpson, 200 Ill. 56.

In Schlink v. Maxton, supra, the court at page 448, quoting from the opinion of the Appellate Court, "says:

“The argument is, that the allowance of the claim was a judgment, which could not be opened by the county court for any cause after the close of the July term. It is not insisted that that judgment could not be opened by a court of equity for fraud or mistake, but that the county court had no power to grant such relief. We are of opinion that the county court has such equitable jurisdiction in respect to all matters pertaining to the settlement of estates; that it may, in a proper case, set aside an allowance and require the parties to proceed de novo. Such a case would be presented when it appeared that fraud or mistake had intervened, so that a court of equity, if the facts were before it in a bill to set aside a judgment, would entertain jurisdiction. ... So here, although the term of court at which an allowance was made has passed, it may, for such cause as would move a court of equity upon a bill filed, entertain a motion to set aside the allowance. ”

In the same case, at page 453, the court further says:

“The county court is a court of general and unlimited jurisdiction in matters of administration. (Propst v. Meadows, 13 Ill. 157; Reynolds v. People, 55 id. 328.) In the settlement of the estates of deceased persons it exercises an equitable jurisdiction adapted to its organization and modes of proceeding. Moore v. Rogers, 19 Ill. 347; Dixon v. Buell, 21 id. 203; In re Steele, 65 id. 322; Brandon v. Brown, 106 id. 519.
“It is urged that even if the county court, sitting as a court of probate, is invested with equitable jurisdiction, yet it has no power, at a subsequent term, to set aside its own order, judgment or decree except upon a formal bill filed for that specific purpose. We do not so understand the practice in the probate courts.”

It was stipulated in this case that appellee, “through mistake and oversight, failed to include in his final report, on which order of approval was entered and distribution ordered, the note filed in the claim against the estate of Robert Pollock, deceased,” and that said omission from said final report was not made by said administrator “willfully or intentionally; but through error and mistake.”

It follows as a logical conclusion that said county court had jurisdiction at the July term to permit appellee to amend his former report, and the court had jurisdiction to modify its order of distribution in keeping therewith. Millard v. Harris, supra, 199.

On the proposition that the law provides a method which must he followed in the administration of estates, it is only necessary to say that the county court followed such method.

It is next contended that the estate of Montgomery Pollock was not entitled to a preference- or priority over other creditors of the estate of Robert Pollock, deceased. . That question does not arise in this case.

It is next contended that appellee, in filing his claim against the estate of Robert Pollock, deceased, elected his remedy and was bound thereby. There is no election of remedies, except where the remedies are inconsistent. The remedies in this character of case were not inconsistent. It is the duty of an administrator, holding a claim against another estate, to file the same as provided by statute. It is also his duty to charge such debtor estate with the amount of such claim in making distribution where such debtor estate is entitled to a distributive share. In other words, if the claim which he has filed against the debtor estate has not been paid at the time of final distribution in the estate represented by him, it is his duty to treat the estate of such heir or legatee as having already received such amount on its distributive share. Jeffers v. Jeffers, 139 Ill. 368-376; Esmond v. Esmond 154 Ill. App. 357-360, 361; Toller on Executors, 338.

In Esmond v. Esmond, supra, this court at page 360 said:

“Executors have the right and it is their duty to retain a sum equal to the indebtedness of the distributee of an estate, 'and to apply the same in paypient thereof before paying any money on his distributive share. Jeffers v. Jeffers, 139 Ill. 368. Probate courts have original jurisdiction in the settlement of estates and may exercise equitable as well as legal forms of procedure. Spencer v. Boardman, 118 Ill. 553; Shepard v. Speer, 140 Ill. 238; Bliss v. Seaman, 165 Ill. 422; Heppe v. Szczepanski, 209 Ill. 88. The probate court has jurisdiction to settle all questions in determining the distribution of estates, including advancements and indebtedness of legatees and distributees. Spencer v. Boardman, supra; Shepard v. Speer, supra; Hayward v. Loper, 147 Ill. 44; Ames v. Ames, 148 Ill. 321; Blake v. People, 161 Ill. 74. They have that right even if the indebtedness is barred by the statute of limitations. Hurd’s R. S. sec. 17, chap. 83; 1908; Jeffers v. Jeffers, supra; Steere v. Brownell, 124 Ill. 27.
“We hold the court has authority to determine the amount of appellant’s indebtedness to the estate, and authorize the executors to deduct such amount from his distributive share.”

What we have said in this connection will also cover the fifth proposition contended for, viz., that the note of Bobert Pollock cannot be set off against the distributive share from the Montgomery Pollock estate.

Lastly, it is contended that the court erred in not awarding a jury trial of said cause. On the trial in the circuit court, from which this appeal is taken, the jury was waived. Even if a jury trial was a matter of right in the county court, it was not asked for, and was waived. Esmond v. Esmond, supra; Heacock v. Hosmer, 109 Ill. 245.

For the reasons above set forth, the judgment of the trial court will be affirmed.

Judgment affirmed.


author: Mr. Presiding Justice Jones

text:
    Jacob Y. Mayhew, Appellant, v. Burt Craig, Appellee.
    Gen. No. 7,959.
    Opinion filed May 21, 1929.

      Sttjrtz & Ewan and Thomas J. Welch, for appellant.
    Martin E. O’Connor and James H. Andrews, for appellee.
   Mr. Presiding Justice Jones

delivered the opinion . of the court.

This is an action of assumpsit instituted by Jacob T. Mayhew against Burt Craig to recover approximately $1,511 as one-half the value of certain drayage tools and equipment which Mayhew claims to have contributed in excess of the equipment furnished by Craig, in the formation of a partnership about to be consummated between them. A general and special demurrer was sustained to the first amended additional count of the declaration. Plaintiff elected to stand by his count, and there being no further count in the declaration, the court entered a judgment on the pleadings in favor of the defendant and for costs. This appeal is from that judgment.

The principal question involved is whether the averments of the declaration are sufficient to support an action at law, or whether the cause of action therein set forth involves such partnership transactions as are cognizable only by a court of equity.

The count in question avers in substance that on a certain date the parties entered into an oral agreement to form a partnership for the purpose of conducting a drayage and transfer business; that each of them was then the owner of a drayage and transfer business, which they agreed to merge; that each agreed to contribute all his respective equipment to the partnership business; that the equipment and articles furnished by defendant should be set off against like articles furnished by plaintiff, article for article, horse for horse, etc., irrespective of value, and that if the defendant did not have sufficient equipment and articles to meet and set off the equipment and articles furnished by plaintiff, then defendant agreed to pay plaintiff one-half the then value of such equipment and articles so furnished by plaintiff in excess of those furnished by defendant. It is then averred that in pursuance of the agreement defendant did so contribute certain enumerated articles and equipment, which were set off by certain enumerated articles and. equipment furnished by plaintiff, and that in addition to such articles contributed by plaintiff, he also, under and in accordance with said agreement, contributed certain other specific equipment and articles, also enumerated, of the value of $3,023.57.

It is a general rule that so long as a partnership continues one partner cannot maintain an action at law against his copartner on account of a matter connected with the partnership, until there is a settlement of the accounts and a balance struck. Tet it will lie for the breach of an agreement to enter into a partnership, or of an agreement to furnish capital or property, or to do some act antecedent to the formation of the partnership, and which forms no part of the firm’s affairs. (30 Cyc., Partnership, 465.)

There is an obvious distinction between a partnership already entered into between two parties and an agreement to form a partnership. (Doyle v. Bailey, 75 Ill. 418.) It is to be observed that the action in the case at bar is based upon an agreement to enter into a partnership, and not upon any affair growing out of the partnership subsequent to its formation. By the averments of the declaration, the contract on which the action is based was made prior to the formation of the partnership, and relates exclusively to the property which should make up the capital of the partnership when formed. None of the partnership affairs are included in the scope of the averments of the declaration, either directly or by necessary intendment. The action is based wholly upon the preliminary contract

The principal reasons for requiring an accounting and settlement "between copartners, as a condition precedent to an action at law by one against another upon partnership claims and transactions are: (1) a dispute of this nature ordinarily involves the taking of a partnership account, for, until that is taken, it cannot be known that plaintiff is not liable to refund even more than he claims in the particular suit; (2) in partnership transactions a partner does not as a rule become a creditor or the debtor of a copartner, but of the firm. (30 Cyc., Partnership, 463.) But the jurisdiction of equity in matters of partnership is not exclusive, and an action at law will lie on a covenant or stipulation in partnership articles, unless such suit would involve the accounts of the firm and could not be determined without a general settlement of those accounts. (20 R. C. L., Partnership, 927.)

It has been held that an action at law lies to enforce a covenant to advance a certain sum as capital irrespective of whether or not the accounts have been settled. If there is an agreement that each party shall contribute equally to the capital of the firm and one contributes more than his share, the excess may be treated as money paid and advanced to the other’s use and therefore recoverable in an action at law. The test seems to be that if the damages resulting- from a breach of a partnership agreement by one partner belong exclusively to the other partner, and not to the firm, and can be assessed wdthout taking an account of the partnership business, then covenant or assumpsit may be maintained by the injured partner against the other for such damages. (20 R. C. L., Partnership, 928; Tichenor v. Newman, 186 Ill. 264.) The judicial determination of the controversy at bar does not involve any examination into and adjustment of the partnership accounts or inquiry as to the profits or losses or expenses of the firm, or the adjustment of any claims arising out of the business. The reason of the rule that one partner cannot sue another at law, except for a balance struck and a promise to pay, does ¡not exist here and the rule therefore has no application. |The obligation which is admitted by the demurrer was personal to plaintiff: and its nonperformance vested a right of action in him — not in the firm. Any amount collected under the contract in question would not constitute assets of the partnership but would belong to plaintiff individually. (Tichenor v. Newman, supra.)

We are of the opinion that an action at law will lie for the alleged breach of the agreement and that the declaration states a cause of action.

¡ The trial court erred in sustaining the demurrer. The judgment is reversed and the cause remanded with directions to overrule the demurrer.

Reversed and remanded with directions.


text:
    Empire Manufacturing Company, Appellee, v. Paul Ginsburg, Appellant.
    Gen. No. 7,981.

      Opinion filed May 21, 1929.
    A. Philip Smith and Williston E. Beckhow, for appellant; Alexander Kleinman, of counsel.
    Knight & Swenson, for appellee; James A. Penny, of counsel.
   Mr. Presiding Justice Jones

delivered the opinion of the court.

An action on the case was instituted in the circuit court of Winnebago county by appellee, Empire Manufacturing Company, against Paul Ginsburg and Sam Ginsburg. The latter was not served with process and the suit proceeded against appellant only. The declaration averred fraud and deceit in procuring credit for merchandise sold by appellee to appellant. A verified plea in abatement was filed by appellant, setting forth in substance that before and at the time of the commencement of the suit he was and still is a resident of Cook county; that he had entered into a contract with appellee for the purchase of certain finished furniture ; that the same was not finished in accordance with the contract and was returned by him to appellee; that afterward a claim for such furniture was placed with Burns & Burns of Chicago for collection; that this firm took up the matter with appellant; that thereafter E. O. Burns, a member of such firm, notified appellant that one Mitchell, an agent of appellee, was in Chicago and desired to see him with a view 'of settling the controversy; that appellant was not able to see Mitchell, and later on the same day Burns informed appellant that Mitchell desired that he come to Rockford on the following day to settle the controversy; that appellant informed Burns he could not go to Rockford on the following day but, upon the invitation of Mitchell, would go on February 22, 1927, for the purpose of making a settlement; that Burns' stated he would write appellee and Mitchell to that effect; that Burns afterward notified appellant that the date was satisfactory and that he, .Burns, would accompany appellant for the purpose of effecting such settlement; that on said date, appellant, accompanied by Burns, arrived in Rockford by railroad shortly before noon; that they were met at the train by Mitchell, who told them he had an automobile on the other side of the station and would take them to appellee’s office, where the matter could be talked over with the president of appellee company; that upon arriving at the automobile, appellant observed a man unknown to him sitting on the back seat, and was asked by Mitchell to sit next to such man; that as appellant took such seat, another man whom he afterward learned was one of appellee’s attorneys, followed him and stood in the doorway of the automobile; that immediately thereafter the man seated in the automobile, who was a deputy sheriff of Winnebago county, served appellant-with summons in this cause; that appellant had no business in Rockford, except the settlement of the matter in controversy, and transacted no other business there on that date; that he came to Rockford for that express purpose and no other, and only upon the invitation of appellee extended through its agents; that he would not have gone to Rockford except for such invitation and request; that he had no knowledge or intimation that suit had been or was to be commenced against him; that such suit was instituted on February 18,1927; that'during all the time of said controversy, Mitchell and Burns were and are yet the agents of appellee, and acting in its behalf, and neither of them were at any time acting on behalf of appellant; and that appellant’s presence in Rockford was procured by fraud, and by trick or artifice of appellee and its said agents for the purpose of serving him with summons in this cause.

A demurrer was sustained to the plea in abatement and judgment of quod respondeat ouster was entered. Thereupon appellant filed the general issue and a trial was had by a jury resulting in a verdict and judgment against appellant.

Section 6 of the Practice Act (Cahill’s St. ch. 110, ¶ 6), provides that it shall not be lawful for any plaintiff to sue any defendant out of the county where the latter resides or may be found, except in local actions, and except that in every species of personal actions where there is more than one defendant, etc. Under this statute it has been held that where a defendant is within a county by reason of some fraud, artifice or trick on the part of the plaintiff, he is not properly found there within the meaning of the statute. (Greer v. Young, 120 Ill. 184; Cassem v. Galvin, 158 Ill. 30; McNab v. Bennett, 66 Ill. 157; Willard v. Zehr, 215 Ill. 148; Brya v. Thomas, 186 Ill. App. 281.)

In Greer v. Young, supra, it was held that a citizen of Missouri who came into this State for the purpose of taking depositions to be used in a suit pending in Missouri was not exempt from civil process, but the court in the opinion pointed out that he came to this State voluntarily and it was not claimed or shown that service was obtained by any artifice, trick or fraud.

In Wanzer v. Bright, 52 Ill. 35, appellee, Bright, was engaged in the commission business and in the sale of agricultural implements in the State of Wisconsin. Appellants were engaged in the same kind of business in the City of Chicago, and had furnished Bright with implements for sale on commission. There was an unsettled account between them, which was placed in the hands of appellants’ attorneys for collection. Bright was enticed into the jurisdiction of Cook county by letters emanating from the office of appellants’ attorneys, purporting to have been written by a prospective purchaser of a patent owned by Bright. The letters requested him to come to Chicago concerning the sale of the patent. Upon Bright’s arrival in Chicago, he was arrested on a capias at the suit of appellants. Thereafter he instituted an action on the case against appellants on account of the illegal arrest. In affirming a judgment for damages against appellants, the court said: “It is a firmly established rule of practice that courts will never permit the fraudulent use of their process. And when it is attempted, the court will promptly interfere to prevent its process from being made the instrument for effectuating the fraud, by setting it aside. It can never be tolerated that such process shall be debased to the purpose of fraud and oppression. The pure, fountains of justice can never be so polluted. The courts were created for the administration of justice, and they and their process can never be used for the purpose of oppression and to perpetrate fraud and wrong, or their process fraudulently obtained and employed to enforce a right, however just and legal. ... It has been repeatedly held in this country that no court will take jurisdiction of a party where it is obtained by fraud. Nor is a defendant amenable to process unless he is in, or comes • voluntarily within the territorial jurisdiction of the court. . „ . No. rule of law is more uniformly recognized and enforced than that a valid and lawful, act cannot be accomplished by unlawful means, and in such cases, courts will restore the injured party to his rights or compensate him for the wrong.”

It is almost universally held in other jurisdictions that if a person is induced by artifice, trick or fraud to come within the jurisdiction of a court for the purpose of obtaining service of process upon him, and process in an action brought against him in such court is there served, it is an abuse of legal process, void, and will be set aside. (32 Cyc., Process, 448; 21 R. C. L., Process, 1275; Toof v. Foley, 87 Iowa 8, 54 N. W. 59; Cavanagh v. Manhattan Transit Co., 133 Fed. 818; Ex parte Taylor, 29 R. I. 129; Bernstein v. Hakim, 126 N. Y. Misc. 582, 214 N. Y. Supp. 82; Townsend v. Smith, 47 Wis. 623; Miami Powder Co. v. Griswold, 5 Ohio Dec. 532.)

The rule is applicable'whether the fraud was perpetrated by plaintiff or those acting in his behalf. (Crandall v. Trowbridge, 170 Iowa 155.) It was held in Miami Powder Co. v. Griswold, supra, that where a defendant was induced to come into the jurisdiction by plaintiff’s agent to consult over their controversy, and while there was served with a summons, such service was void.

We are of the opinion that the averments of the plea in abatement filed in this cause sufficiently charge that defendant was enticed into the jurisdiction of the trial court by artifice, trick or fraud for the purpose of serving him with summons. If such averments were proved, it is well settled that the service was void and should be quashed. The trial court erred in sustaining the demurrer to the plea.

The judgment for plaintiff upon demurrer to the plea in abatement was only interlocutory, quod respondeat ouster. Defendant, by pleading in bar of the action, after a demurrer had been sustained to such a plea, did not thereby waive his rights under the plea in abatement but could assign for error the decision of the court sustaining the demurrer. (Weld v. Hubbard, 11 Ill. 573, 574; Brotherhood of Locomotive Firemen v. Cramer, 164 Ill. 9; Delahay v. Clement, 3 Scam. 201; Earl Mfg. Co. v. Summit Lumber Co., 125 Ill. App. 391; Miller v. Grand Lodge Brotherhood of Railroad Trainmen, 206 Ill. App. 241.) It was unnecessary and would have been improper to include in the bill of exceptions any question raised on the demurrer to the plea in abatement. The point saves itself as a part of the record. (Hawk v. McCullough, 21 Ill. 220; Chase v. DeWolf, 69 Ill. 47.)

Because of the error in sustaining the demurrer to the plea in abatement, it is unnecessary to consider any of the other assignments of error. The cause is reversed and remanded with directions to the trial court to set aside the judgment and also the order sustaining the demurrer to the plea in abatement, to overrule said demurrer and to allow such further proceedings herein as may be consistent with this opinion.

Reversed and remanded with directions.


author: Mr. Justice Jett

text:
    Dell Hutchins, trading as “Main 203 Tire Service,” Appellee, v. N. H. Mendenhall, Appellant.
    Gen. No. 7,966.

      Opinion filed May 21, 1929.
    Rehearing denied June 18, 1929.
    B. A. Knight, for appellant.
    Hall & Dusher, for appellee.
   Mr. Justice Jett

delivered the opinion of the court.

This is an appeal from a judgment obtained in the circuit court of Winnebago county, by Dell Hutchins, doing business as “Main 203 Tire Service,” appellee, against 1ST. H. Mendenhall, appellant, for $52.23.

For convenience appellee will be called plaintiff, and appellant, defendant. The plaintiff, Hutchins, conducted an automobile accessory business known as “Main 203 Tire Service,” in the City of Rockford. The defendant, Mendenhall, owned and operated a cleaning and pressing business in the said City of Bockford. The business of the plaintiff was managed by a man by the name of Noble. Noble went to Mendenhall and solicited business from him; he proposed to Mendenhall that the latter buy accessories from “Main 203 Tire Service,” and that he would trade out the. amount with Mendenhall. The suggestion of Noble was accepted by the defendant, and pursuant to the arrangement entered into, Mendenhall traded at the Tire Service place of business to the extent of $52.23, which was charged on the books against him. Noble traded at Mendenhall’s to the extent of $74.52.

The record discloses that Hutchins conducted other similar tire business establishments, but was at the “Main 203 Tire Service” shop almost daily, and spent one or more hours there.

The attention of Hutchins was called to the Mendenhall account, and he asked the latter to come to his place of business. Hutchins and Mendenhall met, and Mendenhall explained the agreement he had with Noble. Hutchins protested against Noble’s action, and upon the refusal of Mendenhall to pay his account, suit was instituted against him.

The defendant undertook to have his account set off in the suit brought against him by plaintiff, and he complained of the ruling of the court in refusing to admit certain evidence offered by him.

It is insisted by the defendant that the court erred in refusing to allow a set-off of his claim against the account of the plaintiff; that under the pleadings the defendant.was entitled to have heard the proof offered in support of his plea of set-off, and that he should have a judgment against the plaintiff for $22.29, being the difference between the account of the plaintiff and the sum of $74.52, the amount of work Noble had had done with the defendant. Upon the objection of the plaintiff, the court refused to admit his testimony bearing upon the question of set-off, and directed the jury to return a verdict in favor of the plaintiff for the amount of his claim, and judgment was entered accordingly.

The defendant claims he did not know who was the owner of. the store, but presumed Noble was the owner. He made no investigation or inquiry to ascertain to whom the business belonged. The defendant knew the business was conducted in the name of “Main 203 Tire Service”; this was notice to him that some one owned the business and that “Main 203 Tire Service” was not the name of a man; it was either the name of a corporation or some one doing business under that name.

The point involved is whether an agent, being gen•eral manager of his principal’s store, may sell the goods of his principal without his knowledge and consent, to a third person, and thereby pay his own debt?

The action of the court in refusing to allow the defendant to make proof under his plea of set-off, we think, was correct. The defendant. could not be permitted to make proof of his alleged set-off, unless he established the authority of Noble, the manager of the business, for the plaintiff, to make the arrangement contended for and relied upon by him.

Where it is claimed an arrangement with an agent amounted to payment, the burden is upon-the person claiming payment, not only, to prove the arrangement, but also to prove that the agent had authority from his principal to receive payment in the manner claimed. United States Wringer Co. v. Cooney, 214 Ill. 520-526.

Where a defendant contends that an amount has been paid to an agent of the plaintiff, this is an affirmative defense, and it is necessary for the defendant, not only to show payment to the alleged agent, but to show also that the agent had authority from his principal to receive payment in the manner the defendant claims he paid, or that the principal has knowingly ratified the arrangement, and upon this issue the burden is upon the party claiming payment. United States Wringer Co. v. Cooney, supra.

The defendant cites a number" of authorities as bearing upon his contention, but in view of the facts, as disclosed by the record, they are not applicable.

It must be kept in mind that the question here is whether or not Noble had authority to pay his own debt by a sale of the goods of his principal? There is no question involved of ratifying a sale, for Noble had authority in the beginning to make the sale. That is what he was employed to do. He was not employed, however, to pay his own debt by a sale of the property of his principal. There is no element of enforcing a contract involved in this proceeding, as is suggested by the defendant.

The fact is the defendant got wares and merchandise belonging to the plaintiff, and this suit is to compel him to pay what they were reasonably worth.

We conclude, therefore, that the court committed no reversible error in the trial of the case, and the judgment of the circuit court of Winnebago county is affirmed.

Judgment affirmed.


text:
    T. H. Kennell, Sr., Plaintiff in Error, v. Alva E. Herbert et al., Defendants in Error.
    Gen. No. 7,975.

      Opinion filed May 21, 1929.
    E. Waite Joslyn, for plaintiff in error.
    William E. Perce and Egbert L. Kemler, for defendants in error.
   Mr. Justice Jett

delivered the opinion of the court.

•This is a hill brought by T. H. Kennell, Sr., plaintiff in error, against Alva E. Herbert, Mattie Herbert, Sam T. Peterson, trustee, Mary Kruse and Clifford A. Thomas, defendants in error, to foreclose a certain trust deed, dated October 18, 1919, executed by Alva E. Herbert and Mattie Herbert, his wife, to secure four promissory notes of even date, aggregating the sum of $1,700, each due five years after date, and each payable to the order of themselves, and bearing interest at 6 per cent per annum, both principal and interest payable at.the office of Charles Rippberger Company, at Elgin, Illinois. The bill is drawn in the usual form to foreclose a mortgage, alleging that there has been a default in the payment of both principal and interest. Exceptions were filed to the bill and plaintiff in error asked for and obtained leave, and filed an amendment to the bill of complaint by which he charges that on the 16th day of April, 1921, a certain sum of money was paid to the Charles Rippberger Company for the alleged purpose of liquidating the $1,700, in notes, held by the complainant; that the said money was received by and credited on the books of the Rippberger Company to Alva E. Herbert, and wife; that thereafter Sam T. Peterson, trustee, executed and delivered to Walter Rippberger a release, purporting to release the trust deed in question; that the release deed was delivered by Rippberger to Mary Kruse.

The amendment to the bill also charges that the obtaining of the release deed was fraudulent and unauthorized by the plaintiff in error; that at the time of the execution and delivery of the release deed, the Rippberger Company was insolvent; that Peterson, as trustee, and Rippberger conspired together to secure said money by wrongfully and fraudulently giving the release deed, all of which was unknown to" the complainant, and that the plaintiff in error has not received the principal due on said notes.

To the amended bill answers were filed by the defendants Alva E. Herbert and Mary Kruse, a hearing was had upon the amended bill and the answers thereto, and the chancellor dismissed the bill for want of equity. The plaintiff in" error sued out this writ of error to have the action of the chancellor reviewed.

The record shows that on October 18, 1919, Alva E. Herbert aitd wife applied for a loan from Charles Rippberger Company, in the sum of $1,700, and executed the notes described in the bill and trust deed, securing the same, which was recorded in the recorder’s office of Kane county, October 24, 1919; that the Charles Rippberger Company was a copartnership consisting of Sam T. Peterson, the trustee named in said trust deed, Walter O. Rippberger and Sophia Rippberger; that they had been engaged for a number of years prior to the transaction in question in loaning money in the City of Elgin; that Alva E. Herbert and wife indorsed the notes in question in blank, and after receiving the $1,700 left the notes at the Rippberger office in the custody of Peterson, the trustee; that some time thereafter plaintiff in error purchased the notes from the trustee, and the name of the complainant was placed upon each of the notes as indorsee thereof, by either the plaintiff in error himself, or some one at the Rippberger office; that on the 3rd day of February, 1921, Alva E. Herbert and wife executed an agreement to sell the premises free and clear of incumbrances to William Kruse and Mary Kruse for the sum of $3,500; that $500 in cash was paid by Kruse and wife to Herbert, which Herbert paid to the trustee on February 4,1921; that thereafter during the month of March, 1921, the abstract was delivered to Kruse, and he found the title subject to the trust deed securing said $1,700; that Herbert was notified that before the transaction could be completed he would be required to obtain a release deed from the trustee, releasing the trust deed in question, to the end that Herbert and wife would convey the property to Kruse free and clear of incumbrances in compliance with the terms of the written contract; that Herbert communicated with Peterson, the trustee, and Peterson advised that before he could execute the release deed he would either have to pay the principal of $1,700 and interest thereon, or execute other papers secured by the property of Herbert, known as the MeClue avenue property; that on the 16th day of April, 1921, Herbert executed his four promissory notes aggregating $2,000, secured by a trust deed on the McClue avenue property, to-Peterson as trustee; that said $2,000.in notes were given to pay off the $1,700 in notes and interest, and the balance of his book account at the Eippberger Company office; that after the execution of said $2,000 in notes the said Peterson, as trustee, executed a release, dated April 19, 1921, duly acknowledged by him in the usual form, releasing the trust deed first hereinabove mentioned, and delivered the same to Herbert; a day or two thereafter Herbert delivered the release deed, together with warranty deed, executed by himself and wife to the said premises, free and clear of all incumbrance, to the said William Kruse and Mary Kruse; that thereupon William and Mary Kruse paid to the said Herbert the balance of the purchase price in full, being $3,500, less the said $500 that was paid at the time of entering into the contract, and less certain deductions relating’ to revenue stamps, insurance premiums, and recording charges.

The evidence further shows that the plaintiff in error authorized his son, T. H. Kennell, Jr., to transact any and all business with reference to the $1,700 in notes; that the plaintiff in error and his son, T. H. Kennell, Jr., were acquainted with Herbert and his wife, and saw them from time to time while the plaintiff in error held the $1,700 in notes; that the interest upon said notes was paid to plaintiff in error by the trustee, by a Eippberger check; that neither plaintiff in error nor his son ever advised Herbert or his wife that he had possession of or claimed to own the notes in question; neither Herbert nor his wife knew that the plaintiff in error held or claimed to have any interest in the notes, Herbert believing that the notes were held by Peterson, the trustee, at the Eippberger office, until December, 1925, after the trustee and his copartners filed a petition in bankruptcy, when Kennell, for the first time, called upon Herbert and demanded payment of the notes in question.

It is further disclosed that the Bippberger Company filed a petition in bankruptcy in December, 1925; that a day or two after the filing of the petition, Kennell, Jr., acting for his father, called upon Herbert at his home, and advised him that he held the notes and wanted to know what was to be done with reference to the same; that Herbert advised him that he had paid the notes long since, and inquired of Kennell why he had never spoken to him about the matter before. The next day Kennell called upon Herbert personally, and Herbert again explained that he had paid the notes in full in 1921.

The evidence further shows that Kennell, Jr., on two or three occasions, called at the Bippberger office and consulted Peterson, the trustee, and Walter Bippberger, prior to the bankruptcy proceedings, demanding payment of the principal and interest; that the notes were past due, and finally Kennell told Bippberger that if they were not paid p 'omptly, he would start legal proceedings to collect the same.

It is insisted by plaintiff in error that because the release deed, executed by Peterson, the trustee, was in fact executed and delivered to Herbert before the maturity of the notes in question, that William and Mary Kruse, who were the purchasers of the property from Herbert, were in duty bound to obtain the canceled notes, so executed to Herbert and wife, or at least to make inquiry if the notes had, in fact, been paid. In order to determine the questions involved in this proceeding, it is necessary to keep in mind that on October 18, 1919, Alva E. Herbert and Mattie Herbert executed and delivered four promissory notes, aggregating the sum of $1,700, payable to themselves, five years after date, with interest at 6 per cent per annum, principal and interest payable at the office of Charles Rippberger Company, Elgin, Illinois; that said notes were indorsed on the back thereof, “Payable to the order of T. H. Kennell, Sr.”; that Herbert and wife made their deed of trust to Peterson, trustee, conveying lots 3, 4, 5 and 6, in Block 2, of Illinois Park Addition to Elgin, Kane county, Illinois, in trust, for the payment of said four notes; that Herbert contracted to sell the property mentioned and described in the trust deed, free and clear of incumbrance, to William Kruse and Mary Kruse; 'that Herbert paid the notes in question by executing and delivering to Peterson, as trustee, $2,000 in notes, secured by trust deed upon what is known as the McClue avenue property; that after executing the notes and trust deed last mentioned, Peterson, the trustee, executed and delivered a release deed to Herbert, releasing the trust deed sought to be foreclosed in this cause; that a few days thereafter Herbert delivered the release deed to the attorney for William and Mary Kruse, together with his warranty deed, conveying the premises to William and Mary Kruse, and thereupon William and Mary Kruse paid to Herbert the purchase price in full, in accordance with the terms of the contract entered into by Herbert and William and Mary Kruse. There is nothing in this record to show that the assignee of the notes, secured by the trust deed, ever filed anything of record, showing that he was the holder of the notes secured by the trust deed, sought to be foreclosed in this proceeding.

It has long been the settled rule in this State that a mortgage or trust deed is non-negotiable, even though given to secure negotiable notes, so that the assignee of a .mortgage or trust deed takes subject to all the infirmities to which it is liable in the hands of the mortgagee. Olds v. Cummings, 31 Ill. 188; Hirsh v. Arnold, 318 Ill. 28; Doster v. Oulvey, 233 Ill. App. 468; Daniels v. Carr, 233 Ill. App. 531. In Hirsh v. Arnold, supra, at page 43, the court, among other things, said: “Nevertheless, a purchaser of a mortgage or trust deed takes it subject to all the infirmities to which it is liable in the hands of the mortgagee, and in equity the mortgagor -is entitled to every defense against the assignee which he could have made against the original mortgagee.”

As has been shown, the record is clear and convincing, and undisputed, that Herbert had neither actual nor constructive notice that the notes in question were held by appellant.

In McAuliffe v. Reuter, 166 Ill. 491, it appears that McAuliffe applied to one Neihoff for a loan, and executed his note for $1,000 payable to himself, indorsed in blank, and delivered to Neihoff, and executed a deed of trust to Neihoff, as trustee; Neihoff sold the note to Reuter, collected the interest, and paid the same to Reuter, the holder; McAuliffe, not knowing that Reuter held the note, paid on the principal from time to time, to Neihoff, the trustee; Neihoff failed, and Reuter brought a bill to foreclose for the entire principal of the note, having received none of the payments made on the principal by McAuliffe to Neihoff, the trustee; the trial court entered a decree of foreclosure, which, upon appeal, was reversed. The court, in deciding the case, at page 498 said: “By virtue of the transaction certain equities arose in favor of the mortgagor to have said deposits applied to the extinguishment of his debt, which clearly could have been enforced by him had the bill to foreclose been filed by Neihoff.” On page 499, the court further said:

“We are satisfied that the case at bar falls within the general rule, and not within any exception to it, established in this State. Besides, upon principle, an assignment of a chose in action, other than a negotiable instrument, is not perfect, so as to protect the assignee as against equities between the original parties, without notice of the assignment to the debtor, This is the general rule, and, unless mortgages and deeds of trust are to be treated as exceptions, the rule must be applied to them. Thus it is said in 2 Am. & Eng. Ency. of Law (2nd Ed.) 1079: ‘The assignee of a chose in action stands exactly in the shoes of his assignor. He succeeds to all of his rights and privileges, but acquires no greater right than his assignor had in the thing assigned.’ If the assignee would protect himself, he should give notice of the assignment to the debtor. If the business of the commercial world requires that mortgages shall pass, with the negotiable paper secured by them, free from the infirmities of non-negotiable contracts, the G-eneral Assembly has full power to so provide.”

A person buying a mortgage takes it subject to all the infirmities to which it is liable in the hands of the mortgagee, and in equity the mortgagor is entitled to every defense against the assignee which he could have made against the mortgagee himself. Pittsburgh Plate Glass Co. v. Kransz, 291 Ill. 84-91; Doster v. Oulvey, 233 Ill. App. 468-473. Where the assignee of a mortgage had failed to notify the mortgagor of the acquisition of the mortgage, such mortgagor is entitled, in the absence of knowledge of the transfer of the security, to show, as against the assignee, all payments made upon the mortgage, after the assignment to the mortgagee. Bensley v. Bartholf, 137 Ill. App. 420; McAuliffe v. Reuter, 166 Ill. 491; Doster v. Oulvey, supra.

Furthermore, the general rule is that when the assignee of a mortgage fails to notify the mortgagor of his acquisition of the mortgage, such mortgagor is -entitled, in the absence of knowledge of the transfer of the security, to show in equity, as against the assignee, the payment made upon the mortgage after the assignment to the mortgagee. Daniels v. Carr, 233 Ill. App. 531-532; Bensley v. Bartholf, 137 Ill. App. 420, aff’d 234 Ill. 336; McAuliffe v. Reuter, 166 Ill. 491.

The assignee, to protect himself from payments made to the mortgagee, must give notice to the mortgagor of the assignment. Gemkow v. Link, 225 Ill. 21; Daniels v. Carr, supra. The doctrine of innocent purchaser, for value, which applies to commercial paper, has no application to a mortgage. The assignee of a mortgage knows that it is not assignable at common law, but only in equity, and that he takes it subject to existing equities in favor of the mortgagor. King v. Harpster, 306 Ill. 202-209. That being true, he stands in the same position, whether he purchased the mortgage before or after maturity. Daniels v. Carr, supra. Since the law necessarily arises out of the facts in each particular case, the authorities relied upon by the plaintiff in error are not controlling in this case.

From an examination of the authorities, we have reached the conclusion that the rule of law in this State is that an unauthorized release of a trust deed, by the trustee, before maturity, in payment of the notes, will not release the lien, but where the notes have, in fact, been paid to the person authorized to receive payment, the trust deed will be discharged, even though the notes had been assigned before payments were made, provided, however, that the person liable on the notes did not have notice of such assignment.

It is insisted that the fact the release and deed were not promptly recorded should defeat the contention of defendants in error. The attorney for Kruse received the trust deed and placed it among his papers and failed to return it to Herbert or Kruse, so that it might be entered of record. The evidence shows it was merely an oversight on the part of McNerney, attorney for William and Mary Kruse, in failing to have the release and deed recorded; it was no fault of Kruse, his wife, nor Herbert’s. The status, however, between Kennell and William and Mary Kruse was determined and fixed at the time the release deed was delivered to Herbert, and the failure to record the release deed did not change that status.

We conclude, therefore, that the chancellor was correct in dismissing the bill for the want of equity, and the decree of the circuit court of Kane county will be affirmed.

Decree affirmed.


author: Mr. Justice Scanlan

text:
    National Bond & Investment Company, Appellant, v. Henry Lanners, Appellee.

    Gen. No. 32,722.

      Opinion filed November 27, 1928.
    John W. Creekmur and D. E. Hoopingarner, for appellant; Cynthia R Kelly, of counsel.
    O’Connell, Herr & Arvey, for appellee; Clarence A. Samuel, of counsel.

       The opinion in this case which was originally published as an abstract in 250 Ill. App. 648, is now, by the court’s direction, reported in full

   Mr. Justice Scanlan

delivered the opinion of the court.

This is an appeal by the plaintiff, National Bond & Investment Company, a corporation, from a judgment of the municipal court of Chicago in favor of the defendant, Henry Banners.

On a promissory note, the plaintiff obtained a judgment by confession against the defendant for the sum of $1,259.34. Thereafter the defendant moved to have the judgment vacated and set aside and filed an affidavit in support of the motion. Plaintiff filed its counter-affidavit and the court entered an order that the judgment be opened and leave given the defendant to appear and defend the suit. Subsequently, per order of court, the defendant filed an affidavit of merits that averred (inter alia) that at the time the defendant executed the said ‘note there was attached to it a conditional sales contract, that the plaintiff detached the contract without the authority, knowledge or consent of the defendant and that the note was thereby materially altered, and that the judgment entered upon the same was void; that the note and contract were executed by the defendant in consideration of the purchase by him of an automobile from the Highland Park Auto Sales Company; that the automobile delivered to the defendant under the terms of the contract was defective and that the defendant, within a reasonable time, returned it to the Sales Company; that the latter promised to replace defective parts in the automobile and that it failed and neglected so to do and never returned the automobile to the defendant, and that there was therefore a total failure of consideration for the execution of the note and contract. In the plaintiff’s statement of claim no mention is made of the conditional sales contract.

The cause was tried before the court without a jury and the issues were found against the plaintiff, and a judgment was entered that the judgment in favor of the plaintiff and against the defendant be vacated and set aside and that the plaintiff take nothing by its suit and that the defendant have and recover of the plaintiff his costs.

The plaintiff is engaged in the business of buying from authorized automobile dealers promissory notes obtained by it from purchasers of cars on the instalment plan. These notes áre secured by mortgages and conditional sales contracts. On July 19, 1927, the plaintiff bought from the Highland Park Auto Sales Company the promissory note in question. It reads as follows:

“Illinois Conditional Sale Contract Note
R & L
$1144.86 Highland Park Auto Sales, Illinois, July 19, 1927.
“For value received I promise to pay to the order of Highland Park Auto Sales (Seller) Eleven hundred forty-four 86/100 Dollars ($1144.86) at office of National Bond & Investment Co., 160 North LaSalle Street, Chicago, Illinois, in installments as follows, viz.: Sixty-three 61/100 Dollars ($63.61) on the 19 day of August, 1927 and a like amount on the 19 day of each month thereafter until the entire sum is paid, together with interest thereon at the rate of seven per cent per annum after maturity until paid.
“And the undersigned and each of them hereby authorize irrevocably any Attorney of any Court of Record to appear for the undersigned and each or any of them in such Court in term time or vacation after any installments of this note becomes due, and confess a judgment without process in favor of the holder hereof, for the amount then due hereon, together with costs of suit and 10% attorney’s fees and to release and waive all errors that may intervene and consent to immediate execution thereon.
“The endorsers and guarantors hereon hereby severally waive presentment for payment, notice of nonpayment, protest, and notice of protest, and diligence in bringing suit against any party hereto, and consent that time of payment may be extended after maturity from time to time without notice thereof,
“This note is given in conformity with the provisions of a conditional sale contract executed by the maker of this note on the date hereof.
L 48828
Mail Address Waukegan Bd. Box 197A
Town Lake Forest, Ill. Illinois
Henry Lanners
(Purchaser)
Lanners
(Purchaser)
(B & L Time Payment Plan) 13.Nio. 13”

At the time of the execution of -the note there was attached to the same the following contract:

“Illinois Conditional Sale Contract
Original Only — Not to be Acknowledged or Becorded Send to National Bond & Investment Company B & L ,

In Consideration of the sum of Four hundred Sixty-nine Dollars ($469.00), (Down Payment) in hand paid on the date hereof by Henry Lanners (Purchaser) of Waukegan Boad, Lake Forest, Lake County, Illinois, Purchaser, and the further sum of Eleven hundred forty-four 86/100 Dollars ($1144.86) to be paid as hereinafter specified, Highland Park Auto Sales (Seller) of 111 No. St. Johns Street, Highland Park, Lake County, Illinois, Seller, agrees to sell and deliver to the Purchaser the following described property, to-wit:

Make of Automobile, Oakland; Model; Year, 27; Motor Number, L-168005; Serial Number, 166472-54; Cylinders, 6; Type of Body, Landow

“Said Purchaser agrees to make said deferred payments in accordance with the terms of a certain promissory note of the face value of Eleven hundred forty-four 86/100 Dollars ($1144.86) of even date herewith executed by said Purchaser and made payable to the Seller in monthly installments, beginning one month after the date hereof.

“To induce the seller to deliver possession of said car to the purchaser, the purchaser hereby agrees, convenants and warrants as follows, viz.:

“(1) The title to the above described automobile shall not pass to the Purchaser until all installments of said note are paid in full and until such payments shall have been made, said automobile shall remain the property of the Seller. Said automobile shall not be sold by the Purchaser or taken out of the State of Illinois, without the written consent of the Seller until all of the payments shall have been made and title vested in the Purchaser.
“(2) The Purchaser shall keep all the taxes and legal assessments against said automobile paid, and. he shall not use or permit said automobile to be used for or in connection with the transportation, sale, barter, or gift of intoxicating liquor or other substance in violation of any law or ordinance, State, Federal or Municipal.
“(3) If the Purchaser fails to make the aforesaid payments when due, or to observe or perform any of the conditions and agreements herein by the Purchaser to be observed or performed, or if the Purchaser shall be adjudged a bankrupt or if a receiver shall be appointed for the Purchaser’s business or property, or if the Purchaser shall make an assignment for the benefit of creditors, or if said automobile shall be stolen, or damaged by accident, fire or otherwise, or wrongfully disposed of by the Purchaser, or if the Seller shall feel insecure or fear removal of said automobile, then the Seller, at his option (1) may declare the entire sum remaining unpaid hereunder to be immediately due and payable, and elect to sue for the amount due, thereby vesting the absolute title of said automobile in the Purchaser; or (2) the Seller may enter, with or without legal process, and using such force as may be necessary, into or upon the premises where the said automobile may be or is believed to be, and take possession thereof and thereafter hold it absolutely free from all claims from the Purchaser, and retain all payments made by the Purchaser hereunder as and for reasonable rental of said automobile and for the use, wear and tear thereof.
“It is expressly agreed that this contract shall not be countermanded, that it covers all agreements between the parties relative to this transaction, and that all the terms and conditions of this contract shall apply to and be binding upon the Purchaser and the personal representatives, successors and assigns of the Purchaser, and shall inure to the benefit of said Seller, and to the personal representatives, successors and assigns of said Seller. The execution of said note shall be conclusive proof of the delivery of said automobile to said Purchaser.
Executed and delivered this 19th day of July, 1927
Highland Park Auto Sales (Seal)
(Seller)
By Fred Zehn L48828
President
Signed, sealed and delivered Henry Banners (Seal) in presence of: (Purchaser)
(Witness) (Seal)
........................... (Purchaser)
(Witness)
36 13.Col.13
(R & B Time Payment Plan) ”

The promissory note and the contract were printed on the same sheet of paper, the promissory note appearing below the sale contract, and between the note and the contract there was a perforated line across the sheet. It is undisputed that the plaintiff purchased the note from the Sales Company 0:1 July 19,1927, and that it had no notice of any agreement or understanding existing between the defendant and the Sales Company save, that set out in the promissory note and the conditional sales contract. The contract was also sold and assigned to the plaintiff by the Sales Company. No payments were ever made by the defendant on the note and the car was not repossessed by the plaintiff.

The defendant, over the objection of the plaintiff, testified that after he received the car from the Sales Company he discovered defects in it and in August, 1927, he called the attention of the Sales Company to the defects and left the car with that company with the statement: “Take it back and bring me a new car or put that engine in good shape,” and that the Sales Company received the car and gave him a receipt for it; that he never received the car back from that company; that on August 8 he received a letter from the Sales Company informing him that the car had been placed in the Highland Park garage at his expense ; that he had made no payments on either the note or the contract and that he did not intend to do so until he got his car from the Sales Company. It is not contended that the plaintiff had any notice of the claimed imperfections of the car or of any dealings or agreements between the defendant and the Sales Company subsequent to the execution of the note and contract. The evidence, to which objection was made, was admitted by the trial court on the theory that the note and conditional sales contract formed one contract, and that the note was not a negotiable instrument and that therefore the defendant had the right to show, even as to the plaintiff in the instant case, that there was a failure of consideration.

The contention of the defendant is “that the note and conditional sales contract having been executed at the same time, must be construed together and considered as forming but one contract and was, therefore, not a negotiable instrument, but a special contract.” The defendant also contends that the plaintiff, by detaching the conditional sales contract from the note, without the knowledge, authority or consent of the defendant, materially changed the legal effect of the note and thereby vitiated it.

The claim of the plaintiff is that the promissory note in question is a negotiable instrument whether it be considered alone or as though the conditional sales contract was still attached to it and that the court erred in admitting, over its objection, the evidence as to the alleged want of consideration for the note; that under the competent facts and the law the frial court should have found the issues for the plaintiff, and that the court erred in finding the issues for the defendant and in entering judgment thereon, and it asks that the judgment of the trial court be reversed and that judgment for the plaintiff be entered -in this court for $1,259.34.

In the instant ease thé question as to whether the note in question is negotiable or not must be determined by an examination of the note itself. (See Continental Guaranty Corp. v. People’s Bus Line (Del.), 117 Atl. 275; International Finance Co. v. Northwestern Drug Co., 282 Fed. 920.) As stated in the last-mentioned case, a departure from this rule would throw the whole law of commercial paper into confusion.

If the promissory note in question is negotiable in form it is not rendered non-negotiable merely because it was printed on the same sheet as the contract. (See Morgan v. Mulcahey (Kan.), 298 S. W. 242, 244.) In such a case each is to lie considered and interpreted as a complete entity. The part constituting a promissory note is governed by the Negotiable Instrument Act, Cahill’s St. ch. 98, ¶ 21 et seq., and the other by the laws that apply to it. The form used by the Sales Company in the present case seems to be a common one in transactions of this character and it will be noted that a perforated line ran between the sales contract and the note. This fact indicates that the manner in which the note and the sales contract were printed was merely a matter of convenience, and that the intent was that the note and the sales contract might be separated.

The question for our decision is whether or not the instrument sued upon is a negotiable note within the meaning of paragraph 21 of the Negotiable Instrument Act, Cahill’s St. ch. 98, of this State. This provision reads in part: “An instrument payable in money, to be negotiated, must . . . contain an unconditional promise or order to pay a sum certain in money.” The defendant contends that the words: “This note is given in conformity with the provisions of a conditional sale contract executed by the maker of this note on the date hereof,” in the body of the note, made the payment of the same conditional upon the terms of the sale contract and that the negotiable character of the note was thereby destroyed. In Continental Guaranty Corp. v. People’s Bus Line, supra, the court cites a number of cases in which it has been held that like words in a note would not render it non-negotiable. (See also Doyle v. Considine, 195 Ill. App. 311; Weber v. Keith Ry. Equipment Co., 248 Ill. App. 258; Standard Trust & Sav. Bank v. Cherry, 249 Ill. App. 653.) Moreover, section 3 of paragraph 23 of the Negotiable Instrument Act, Cahill’s St. ch. 98, ¶ 23, provides that “an unqualified order or promise to pay is unconditional within the meaning of this Act, though coupled with ... 2. A statement of the transaction which gives rise to the instrument.”

In support of his contention that the note in question was not a negotiable instrument the defendant cites Page v. Wooster, 213 Ill. App. 239, and Midwest Collection Bureau v. Greenwald, 214 Ill. App. 468. The form of the alleged promissory note is the same in. these cases and it is clear from a reading of the opinions filed therein that the cases, because of the character of the instruments involved, can have no weight in the decision of the instant contention.

In our opinion the words in the note upon which the defendant relies in support of his present contention, refer merely to the transaction out of which the note arose, and they do not modify nor make uncertain the negotiable character of the note.

The defendant contends that the plaintiff by detaching the conditional sale contract from the note, without the knowledge, authority or consent of the defendant, gave the note a different legal effect and thereby vitiated it. Paragraph 145, sec. 123, of the Negotiable Instrument Act, Cahill’s St. ch. 98, ¶ 145, provides in part: “Where a negotiable instrument is fraudulently or materially altered by the holder without the assent of all the parties liable thereon, it is avoided except as against a party who has himself made, authorized or assented to the alteration and subsequent indorsers.” Paragraph 146 reads as follows: “What alterations are material.) § 124. Any alteration which changes: 1. The date. 2. The sum payable, either for principal or interest. 3. The time or place of payment. 4. The number and the relations of the parties. 5. The medium or currency in which payment is to be made. Or which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect, is a material alteration. ’ ’ The defendant, in his argument on the present contention, utterly fails to state how he thinks the detaching of the note from the conditional sales contract fraudulently or materially altered the negotiable instrument. Disregarding the evidence that tends to show that the plaintiff had .the right to detach the contract from the note, nevertheless, we find nothing in the contract that modified or in anywise made uncertain the negotiable character of the promissory note. In our judgment the note would still be a negotiable instrument if it had never been detached from the. contract. The present contention of the defendant is without merit.

If we are correct in our conclusion that the note in question is a negotiable instrument, it was reversible error to admit, as between the parties to the .present suit, evidence tending to show failure of consideration. That the plaintiff made out a prima facie case is not disputed, and it follows that if the plaintiff be entitled to recover, the amount of the judgment should be $1,259.34. As the defendant failed to rebut in any way by competent evidence the clear prima facie case made out by the plaintiff, the trial court, at the conclusion of all the evidence, should have found, as a matter of law, the issues for the plaintiff and assessed its damages at the sum of $1,259.34 and entered judgment thereon.

The judgment of the municipal court of Chicago is reversed, and judgment is entered in this court in favor of the plaintiff and against the defendant for $1,259.34, and the defendant will be required to pay the costs in this court.

Reversed and judgment here.

G-ridley, P. J., and Barnes, J., concur.