author: Mr. Justice Huffman

text:
    Riley E. Roberts, Administrator of Estate of John Edward Roberts, Deceased, Appellant, v. City of Rockford, Appellee.
    Gen. No. 9,331.

      Opinion filed August 30, 1938.
    Clark & Prather and Ryan & Hood, both of Rockford, for appellant.
    North, Gibboney & North and Carroll H. Nelson, both of Rockford, and A. V. Essington, Corporation Counsel, for appellee; Frank P. North, of Rockford, of counsel.
   Mr. Justice Huffman

delivered the opinion of the court.

This was a suit by appellant administrator for the death of his minor child, age 6, occasioned by being struck by a motor truck of appellee, then being operated by Hans Anderson, an employee of appellee. The accident occurred near the place where Tenth avenue enters Kishwaukee street, in the city of Rockford, at about 30 minutes past noon on May 19, 1936. The case was tried before the court without a jury, and a judgment rendered in favor of the defendant. Appellant has prosecuted this appeal therefrom.

Appellant contends that the judgment is against the law and the manifest weight of the evidence. The driver of the truck was proceeding south on Kishwaukee street. Tenth avenue stops at Kishwaukee street, entering the same from the east. Kishwaukee street slopes toward the south at the above place. Cars approaching from the south are thus proceeding uphill and cars from the north, downhill. It appears that plaintiff’s intestate was standing on the southeast corner of Kishwaukee street and Tenth avenue. Oars were coming' north on this street approaching the corner where the deceased was standing. The first car in the line of traffic which was coming north up the hill on Kishwaukee street, was being driven by David Stenholm, who had been a resident of Bockford for 50 years. He states that as he approached the place on Kishwaukee street, where Tenth avenue begins and runs east, that he saw a young boy running across the street in front of his car; that he applied the brakes, stopped the car, killing the engine; that he saw the boy continue running across the street to a place where he was struck by the bumper on the front end of the truck, knocked to the pavement, the front wheel passing over his body. Several passenger cars were in the lane of traffic behind the car driven by Mr. Stenholm. They brought their cars to a sudden stop, due to the fact their lane of traffic was obstructed by the car of Mr. Stenholm. Mr. Cleveland was proceeding up Kishwaukee street several cars behind the car driven by Mr. Stenholm. He states that he saw the deceased on the curb apparently trying to decide whether to cross the street or wait for the traffic to pass. He further states that the boy apparently decided to cross the street, and left the curb on the run. He could not see him immediately after he left the curb, but he did see him just as he appeared to the left of the cars in front of this witness, and just as he ran directly in the path of the truck. He. states the front bumper struck, the boy in the chest or stomach. He did not go to the scene of the accident. From this witness’s testimony it is reasonable to infer that the boy when he started running across the street in front of the cars approaching from the south, did not see the truck coming from the north, and that after he reached the center portion of the street and saw the truck, he attempted to run in front of it, in order to reach the west side of Kishwaukee street.

A number of witnesses testified for plaintiff regarding the place of the accident, and concerning the accident after it occurred. They consisted of people who were in the near vicinity, whose attention was attracted by the noise made by the application of brakes in the sudden stopping of cars. They then saw the situation as it existed after the accident. None of them saw the boy leave the curb and attempt to run across the street, except Mr. Chappel, who was driving his car in the lane of traffic behind Mr. Stenholm. This witness states that as he was driving north up Kishwaukee street, he saw the boy standing on the east curb; that he had a feeling that the boy was about to run into the street; that he was at that time about 100 yards south of him; that the boy did run into the street and he saw the truck collide with the deceased. This witness further states that he travels Kishwaukee street, that it is a through street, and carries heavy north and south traffic.

The testimony of the truck driver was to the effect that he had been driving this truck for about a year and a half; that it was in good mechanical condition and had new brakes, which had been installed a few weeks previous; that he had lanterns and flares in the truck, which he was taking to a place on Kishwaukee street where some excavating was being done; that he did not see the boy prior to the accident; that after the accident he stopped the truck, got out, and found the boy lying behind it; that he picked him up, gave him to a man, and asked him to take him to the hospital. This was done, where the boy later died from the injuries received.

A frequent source of accidents arise in cases where children, in response to their childish impulses, attempt to run across a street in front of approaching traffic, when there is neither time nor space enough to enable them to cross or to enable the driver of motor vehicles to avoid running into them. The fact that such an accident occurs, should not of itself create an inference of negligence on the part of the driver, since the fact is just as consistent with the conclusion that the injury took place through the indiscretion of the child as through the negligence of the driver. In such cases to justify a recovery, there must be evidence of negligence, furnished by the testimony of eyewitnesses, or fairly deducible from the circumstances under which the accident took place. Where a driver appears to have been proceeding in his own traffic lane and in a lawful and orderly manner, he should not be held liable for injuries received by a child who suddenly runs in front of the machine so that the driver is powerless to avoid the injury. Morrison v. Flowers, 308 Ill. 189, 197; Zink v. Breese Grain Co., 260 Ill. App. 281, 283; annotations 65 A. L. R. p. 211.

It was the duty of the trial court in this case to weigh the evidence and decide the issues as he thought proper under the law and the evidence. He saw and heard the witnesses and came to his conclusion with respect to the disposition of the case. The question before the court was, did the evidence tend to show negligence on the part of the driver of the truck. The evidence was conflicting and judgment might have been rendered either way, but the fact there was conflicting evidence does not render the case any different from other cases involving controverted questions of fact. In order for this court to reverse and remand this case it would be necessary to hold that the judgment was against the manifest weight of the evidence. This we do not think the record justifies. The judgment is therefore affirmed.

Judgment affirmed.


source: Caselaw Access Project

author: Mr. Justice Wolfe

license: Public Domain

text:
    Jessie O. Cooney, Individually and as Administratrix of Estate of Earl T. Cooney, Deceased, Appellee, v. F. Landon Cartage Company, Appellant.
    Gen. No. 9,276.
    Opinion filed August 30, 1938.
    Lord, Lloyd & Bissell, of Chicago, and Hadley, Weaver & Woodward, of Wheaton, for appellant; C. H. G. Heinfelden and Gordon R. Close,, both of Chicago, and Harry G. Weaver, of counsel.
    Sidney F. Blano and Thomas J. Lawless, both of Chicago, and Alschuler, Putnam & Johnson, of Aurora, for appellee; Edward F. Streit, of Aurora, of counsel.
   Mr. Justice Wolfe

delivered the opinion of the court.

Jessie 0. Cooney, individually and as administratrix of the estate of Earl T. C°oney, deceased, filed an action for damages against the defendant, F. Landon Cartage Company, a corporation, for the death of her husband and damages to her automobile. The declaration consists of four counts. Count one alleges that the plaintiff’s intestate, while in the exercise of due care and caution for his own safety, was driving an automobile along the hard road, State Route No. 64 in DuPage county near the city of Wheaton, and ran into and collided with the rear of the defendant’s truck and received injuries from which he died. The specific '.charge of negligence in the first count of the petition is as follows: “While said Earl T. Cooney was driving said automobile of plaintiff along said highway, as aforesaid, the defendant at said time and place, to-wit, in the night time, caused and permitted its said motor truck to stop and stand on the said highway without leaving any persons in charge thereof or with or about the same, and then and there carelessly and negligently and in violation of Section 41 (d) of the Motor Vehicle Act of the State of Illinois, failed and neglected to give warning thereof by displaying and burning flares or portable lights in the immediate vicinity of his said motor truck. The said motor truck was not stopped, as aforesaid, for the purpose of taking on or discharging passengers or complying with the traffic regulations requirements.”

Count two is practically the same as count one, and charges: “While said Earl T. Cooney was driving said automobile of the plaintiff along said highway as aforesaid, the defendant at said time and place carelessly and negligently caused and permitted its said motor truck to be and stand upon said highway without leaving any person in charge thereof, or with or about the same, and with defective and insufficient lights thereon, and with no lights or other warning about the said motor truck to indicate its presence on the said highway.” The first and second counts of the petition allege that by reason of the carelessness and negligence of the defendant, the said Earl T. Cooney, while so driving along said highway with due care for his own safety, collided with said motor truck of the defendant, sustaining injuries which resulted in his death. Plaintiff asks damages in the sum of $10,000. The third and fourth counts of the petition are the same as the first and second counts with the exception that plaintiff asks for damages to her automobile in the sum of $800.

The defendant filed its answers which admitted the ownership of the truck in question but denied any negligence on the part of itself or its agent or servant who was driving the truck. In their answer they specifically charge the plaintiff’s intestate was, at the time and place in question, guilty of contributory negligence that was the proximate cause of his death. The case was tried before a jury that rendered a verdict in favor of the plaintiff and assessed her damages at $7,000 for the death of her husband and $550 for damages to her automobile. The defendant entered a motion for judgment notwithstanding the verdict, which was overruled. A written motion was entered stating specific reasons for a new trial, which was overruled, and judgment was entered on the verdict. It is from this judgment that an appeal is prosecuted to this court.

The appellant has assigned numerous errors why the judgment of the lower court should not stand and the judgment be reversed. It is insisted by the appellant that the argument of counsel to the jury was improper and calculated to appeal to the passion and prejudice of the jurors and to influence them in returning a verdict for the plaintiff. The abstract and record contains parts of the argument which is as follows: “Mr. Weaver, when he was examining you gentlemen as to your qualifications to determine whether or not you were qualified to act as jurors, told every one of you he was very sorry and the Landon Cartage Company was very sorry that this happened. Why shouldn’t they be sorry? But why are they sorry? Are they sorry for themselves or for the widow? Isn’t it considerable consolation to this widow, after she has followed the body of her husband and placed it underground, in the grave, to know that the Landon Cartage Company is sorry? When she awakens in the morning all alone and faces the cold and cheerless prospect of a lonely day, isn’t it some consolation to her to know that the truck driver thought the shoulder of the road was too soft and he could not run over it? Isn’t it some consolation to her to know that the Landon Cartage Company had a rule about this and that that was not lived up to, but they are sorry?

“If she is successful enough to get a job and she spends her time day in and day out working at that job at woman’s low wages . . .

“Mr. Johnson: I can stand for a lot of things in a lawsuit, but I cannot stand for this proposition of Mr. Heinfelden coming in here and deliberately, gentlemen, misquoting this evidence. I can stand for most anything but that. Here is what he is trying to whip this evidence around to mean to you: talking about this Highway 64, Officer Thielen was here testifying and we took him right up to Villa Park to show that in that portion of Villa Park it is marked for a 45 miles an hour zone, and that is the only 45 miles an hour zone there is between St. Charles and Villa Park; but now this gentleman says that Thielen said that the 45 miles an hour zone applied at the point where this accident occurred. Of all the nerve. After all, gentlemen, I understand it to be the duty of the lawyers to come in here and assist the jury, help you in arriving at what the just and true verdict in the case ought to be. That is what I felt it my duty to do. I brought into you every witness I could find so you would have every scrap of testimony there is to this matter, so you could perform this solemn duty that you have thrust upon you when you enter upon jury service. This gentleman, not only does he produce no one; not one witness does he bring to you; not one scrap of information does he bring to you; and then on top of that deliberately gets up before you and misquotes the evidence.

“Mr. Heinpelden: Now, your Honor, I object to that statement, that I deliberately misquoted the evidence.

“The Court: I rather think that is a pretty serious charge. I think a lawyer might draw his own inferences.

“Mr. Johnson: Here is Cooney traveling at 60 miles an hour. Let’s say that. Divide that into 5280 feet and you will find that every second you are traveling 88 feet. He would not be able to see this truck driving along there until he got within a few hundred feet of it, and this whole thing- happened in a split second; two or three seconds and this thing is all over. During- that two or three seconds Mr. Heinfelden would have Cooney doing, oh, just everything. Getting off the road, or anywhere; do not get anywhere near this road if the Landon Cartage Company is on it. They do not have flares; they do not have kerosene lamps, they do not have anything. They come out on the highway and they are in full possession of it; and then these gentlemen come before you and say, ‘ do not have a prejudice against us.’ My God, gentlemen, before I came in here yesterday in this lawsuit I did not feel prejudiced against truck companies, but I am today. I am prejudiced against people who flaunt the law as they do. I am prejudiced against a company that has a lawyer in it and does not see that the men working for it obey the law. I am prejudiced against that kind of outfit. I am prejudiced against an outfit that will take a great big- truck like that and put it out on the highway and not have it properly protected, or see that the driver does not put his flares out if he does have to stop.

“Gentlemen, I have tried a lot of these cases, but I must confess to you that the negligence in this case on the part of this truck company is the worst I have ever seen. It is the worst. Why, look here. How could this accident have been avoided? If there were flares on that truck, there would have been no accident. They did not have flares; and if they were looking* to have an unusual situation there was nothing to stop them from having the whole back end outlined with red lights like a lot of these trucks do and by companies that want to make some compliance with the law and who want to give the public some protection while out on the hig’hway.

“Mr. Heineelden: I object to that statement.

“Mr. Johnson: All right.

“Mr. Heineelden: Just a moment.

“The Court: I presume your inference will have to be based on the evidence.

“Mr. Johnson: I think it is a reasonable inference, your Honor.

“Mr. Heineelden: No, it is not. This truck had lights all over the back end to comply with the law, and all around the side.

“The Court: I think that is a proper objection.

“Mr. Heineelden: I ask the Court to instruct the jury to disregard that statement.

“The Court: They may disregard it.

“Mr. Johnson : After this gentleman got out there, when he did not have his flares, when the truck began to sputter, then the accident could have been avoided. All he needed to do, unless he was worried about getting the tires dirty, would have been to pull off on that shoulder; and he came here and testified before you, he told you that the truck sputtered and it ran 30 or 40 feet. That is far enough to get off on the shoulder and get out of the way, and if he had done that there would have been no accident. After he got out of his truck, instead of wandering up and down the highway like a chicken with his head off, he could have flagged somebody down; I think somebody would have helped him in his emergency and help protect people lawfully on the highway; but he does none of these things. And then a little later on he told you he walked west and then he come back and walked east and he got up to a tavern and then he heard a crash; but what is a crash or two among friends ? He heard a crash and it came from around the truck somewhere, yet the truck driver did not pay any attention to the crash; the next thing he did was to go into the tavern and get a fellow to take him to get some gas. Somebody might be dying on the highway; he mig’ht be able to help, but what is a crash or two? "What does he care? Gentlemen, they do not seem to care at all how they operate. They are negligent here. They are just the limit.”

We find nothing in the abstract or record that justifies such argument to the jury. Practically the only question in the case for the jury to decide was whether the plaintiff’s intestate, just before and at the time of the accident, was in the exercise of ordinary care for his own safety. Such argument could in no way be beneficial or helpful to a jury in solving this question. The Supreme and Appellate Courts have reversed cases for less objectionable arguments than in this case. Bishop v. Chicago Junction Ry. Co., 289 Ill. 63; Wabash Ry. Co. v. Billings, 212 Ill. 37; Chicago & Alton Ry. Co. v. Scott, 232 Ill. 419; McCarthy v. Spring Valley Coal Co., 332 Ill. 473.

The trial court, when the objection was made to this, inflammatory argument, properly sustained the objection to the same and admonished the jury to disregard it. Whether the attorney influenced the jurors or prejudiced them against the truck company, as he said he was prejudiced, no one has any way of knowing. We find nothing in the abstract or record of any remark at the examination of the jurors that would call for such argument as indulged in by the attorney in regard to the sympathy of the defendant for the plaintiff. We find nothing in the record to sustain the argument that the defendant’s attorney had deliberately misquoted the evidence in regard to the speed at which the plaintiff’s intestate was driving at the time of the accident. It appears to this court that this argument was solely for the purpose of appealing to the prejudices of the jurors and was wholly improper.

Complaint is made in regard to several instructions that the court gave on behalf of the plaintiff. We have examined these instructions and we think they fairly state the law and were admissible under the pleadings in the case. It is also assigned as error that the court refused to give several of the defendant’s tendered instructions. We find no serious objection to these instructions, but they were covered by other given instructions in the case, and on the whole we find that the jury was fairly instructed. We do not attempt to pass on the merits of the case as disclosed by the evidence but on account of the inflammatory nature of the argument to the jury the case will be reversed and the cause remanded.

Reversed and remanded.


text:
    C. E. White, Appellee, v. H. S. Hiatt et al., Appellants.
    Gen. No. 9,294.
    Opinion filed August 30, 1938.
    Poppenhusen, Johnston, Thompson & Raymond, of Chicago, for appellants; Albert E. Jenner, Jr. and Samuel W. Block, both of Chicago, of counsel.
    E. R. Nadelhoffer, of Joliet, and E. P. Harney, of Momence, for appellee.
   Mr. Justice Wolfe

delivered the opinion of the court.

C. E. White brought a suit at law against the school directors of District No. 182, defendants and appellants, to recover damages for his wrongful discharge as a teacher. He claimed he was hired to act as principal of the Beecher schools from September, 1934, to May, 1935, at a salary of $1,500. The case was heard before the court without a jury. The court found there was a valid contract and that White was illegally discharged. White was given a judgment for $1,600. It is from this judgment that the appeal is prosecuted.

The complaint alleges that on the 16th day of April, 1934, and for several years prior thereto, the plaintiff was a teacher by profession and duly qualified under the laws of the State of Illinois to teach in the public schools of said State; that the plaintiff has been the principal of the schools for the defendants for the year beginning September, 1933, and ending in June, 1934; that on April 16, 1934, said defendants, the school board directors of said district, duly met; that all the directors were present and the following motion was passed: “Motion by Walter Hoppensteadt, seconded by H. S. Hiatt, that Professor C. E. White be reemployed at his present salary at $1,500.00 for the next school year. Motion carried. Walter Hoppensteadt and H. S. Hiatt voting aye and M. R. Miley voting no.”

The complainant further alleges that on the 18th day of April, 1934, the plaintiff received the following notice from said defendants by M. R. Miley, clerk of the School Board:

“Beecher, Illinois, April 17, 1934.
“Prof. C. E. White,
Beecher, Illinois.
“Dear sir:
“The School Board of District No. 182 has authorized me to notify you that you was reengaged as Principal for the next year at your present salary of Fifteen Hundred Dollars ($1500) for the School year of nine months.
“Very truly yours, (Signed) M. D. Miley, M, D.
Clerk.”

Complainant further alleges that on the 21st day of May, 1934, the plaintiff formally accepted in writing, in substance as follows:

“Dr. H. S. Hiatt Dr. M. R Miley
President Secretary
Mrs. Tillie Bielfeldt Member School Board Beecher Public Schools C. E. White, Superintendent
Beecher, Illinois, May 21, 1934.
“Dr. M. R Miley Beecher, Illinois Clerk District No. 182 Will County, Illinois.
“Dear Sir:
“This is to formally notify you as Clerk of School District No. 182 that I hereby accept the principalship of your schools for the school year 1934^5. I had previously told Dr. Hiatt and Mr. Hoppenstedt that I would accept and this notice is sent so that it will appear on your official records.
“Respectfully,
C. E. WTdte. ’ ’

The complainant further alleges that during the school year 1934 and 1935, the plaintiff was ready, able, and willing at all times to perform the duties as principal for said schools, but the defendants wrongfully refused to permit the plaintiff to perform his duties as principal and wrongfully employed another person to perform said duties; that the plaintiff has used all reasonable efforts to secure other employment during the said year but was unable to do so; that as a result of said breach of contract the plaintiff has been damaged to the extent of the salary of $1,500 a year, and that he had lost the interest thereon at 5 per cent or a total of $1,600.

The defendants filed their answer and admitted that the first four paragraphs were true; that they passed a resolution as set forth in the complaint to hire the plaintiff, but say that it was a mere offer to re-engage the plaintiff as principal, and before it was accepted by the plaintiff it was modified or changed by the defendants. They deny that there was ever a hiring of the plaintiff by the defendants, but allege that one of the conditions of the hiring was that the plaintiff should satisfy the board that he would have the co-operation of the other teachers of the Beecher school if he was employed, but that he could not get the co-operation of the other teachers and therefore the contract was never consummated. The answer further alleges misconduct and incompetency on the part of the plaintiff of such a nature that they were justified in canceling the contract between the plaintiff and the defendant.

The plaintiff introduced evidence to sustain the allegations that he was a regularly licensed school teacher in the State of Illinois; that he had been practicing his profession for quite a number of years, and presented a certificate showing his qualifications as such teacher. He also introduced a letter from M. R. Miley, the clerk of the school board of directors, notifying him of the action of the board of education in engaging him as principal of the Beecher schools, and a letter addressed to Mr. M. R. Miley, clerk of the school board, and signed by C. E. White; also the proceedings of the board of directors of District No. 182 pertaining to the employment of the plaintiff by the defendants as principal for their schools for the year 1934 to 1935. Plaintiff’s Exhibit No. 4 is as follows:

“Beecher, Illinois, May 8, 1934.
“Prof. C. E. White,
Beecher, Illinois.
“Dear Sir:
“Please send me a list of your High School Graduates with names exactly as they wish them to appear on their diplomas; also state the date of . graduation so that I can order their diplomas and have them here in time for Commencement Evening.
“The Board of Directors, at the regular meeting last evening, instructed me to repeat its offer of retaining you as principal for next year at your present salary of $1500. for the school year of nine months.
.“If the offer is not accepted within 2 weeks other applications will be considered.
“Very truly yours,
M. B. Miley, M. D.
Clerk of School Board.”

In addition to the exhibits the plaintiff testified that he had talked to Dr. Hiatt, one of the members of the school board, and told him that he would accept the position as principal for the schools for the ensuing year; that this conversation took place the day after he received the letter from Dr. Miley notifying him that the board had passed a resolution to employ him for another year. The appellee further testified that at the beginning of the school year in the fall of 1934, he presented himself to the Beecher school ready to take up his duties as principal of said school, but found that they had employed another teacher in his place; that he tried to procure other employment in other schools but was unsuccessful; that he was unable to get any school or any employment until the next spring; that during the month of November he applied for and received relief.

The defendants then introduced evidence both documentary and oral tending to show that the board had acted in good faith in discharging the plaintiff; that he was incompetent as a teacher and that he did not cooperate with the other teachers; that he was morose, sullen, and used profane language and did not treat the other teachers with respect. The records put in evidence contain the minutes of a purported meeting of the hoard held on May 10, 1934, in which charges were preferred and complaint was made in regard to the conduct of the plaintiff; that he was notified by the board at that time; that before they would hire him for the ensuing year he would have to have the co-operation of all the other teachers of the school, to which ■ the plaintiff replied that he could get such co-operation. It is conceded that this record was made on March 4, 1935, and amended nunc pro tunc as of May 1, 1934 to show correctly the business transacted at the meeting on said date. It will be observed that this suit was commenced September 26, 1934, and the amendment was made approximately five and one-half months after the suit was started.

The abstract contains the finding of the court in which he states his reasons for giving credence to certain testimony and little credence to others. He concludes that there was a valid offer and acceptance of a contract of employment between plaintiff and the defendants: He gives his reasons for placing little reliance upon the minutes of the board of May 10, 1934. He also finds that the evidence of Mr. White’s misconduct was not such as to justify the charge of incompetency or lack of co-operation, and the evidence tending to establish these facts was of a petty and trifling nature. The trial court has given a clear and good analysis of the evidence as disclosed by this record.

It is our conclusion that the trial court properly found that there was a valid and existing contract of employment between the plaintiff and the defendants for the plaintiff to teach the Beecher schools for the year 1934 to 1935, and the evidence does not sustain the charge of misconduct or incompetency of the plaintiff to be such as to justify his discharge as such teacher.

The judgment of the trial court of Will county is hereby affirmed.

Judgment affirmed.


author: Mr. Justice Wolee

text:
    American Surety Company of New York, Appellant, v. Robert Lewis Van Osdol, Administrator with the Will Annexed of Estate of Frank A. Van Osdol, Deceased, et al., Appellees.
    Gen. No. 9,305.
    Opinion filed August 30, 1938.

      Warner & Warner, of Dixon, for appellant; Henry C. Warner and Morey C. Pires, of Dixon, of counsel.
    Jacob Cantlin and Samuel Rubin, both of Rock Falls, for appellees.
   Mr. Justice Wolee

delivered the opinion of the court.

The estate of Frank A. Van Osdol, deceased, is being administered in the county court of Whiteside county. On May 27, 1935, the administrator filed an inventory in which he listed as an ostensible asset of the estate, an item of $2,431.06 in his possession. Statements in the inventory are to the effect that the money is the property of one Mary H. Smith, an insane person. On November 8, 1935, the claim of the American Surety Company of New York of $12,661.22 was allowed against the estate as a claim of the fifth class. The surety company filed objections in the county court against the inventory, based on the contention that the $2,431.06 is in fact an asset of the estate of the decedent.

That part of the inventory now in question is as follows: “Paine, Webber & Company — proceeds of account turned over by C. W. McCall, administrator to collect (after deduction of $100.00 fees allowed him by the court) — $2,431.06. This money apparently should not have been turned over to this administrator with the will annexed for the reason that it represents the trading account had by the decedent with said Paine, Webber, & Company, brokers, which account was secured by certain collateral pledged with said Paine, Webber & Company by decedent, said collateral including’ four Fourth Liberty Loan bonds belonging to the estate of Mary H. Smith, insane, of which decedent was conservator at the time of said pledging and at the time of this death, and by reason thereof, said bonds in the aggregate amount of $3,000.00 were the property of and belonged to said insane ward and not to said decedent.”

The part of the objections to the inventory called to our attention is as follows: “ (2) The item of property listed in the sum of Twenty-four Hundred Thirty-one and 6/100 Dollars ($2,431.06) turned over to the administrator to collect, by Paine, Webber & Company, recites that said sum was derived from the sale of collateral including Fourth Liberty Loan bonds belonging to the estate of Mary H. Smith, of which said decedent was the conservator at the time of said pledging, while numerous other Fourth Liberty Loan bonds in the possession of the said Frank A. Van Osdol, as trustee, were also sold by Paine, Webber & Company, and the exact bonds from which said sum of Twenty-four Hundred Thirty-one and 6/100 dollars ($2,431.06) was derived cannot be ascertained.”

The administrator is a mere stakeholder in this proceeding awaiting the determination of the question of the ownership of the $2,431.06. The objection to the inventory is being contested by Ethelyn Van Osdol and John A. Riordon who are sureties on the bond of Frank A. Van Osdol, the decedent, as the former conservator of Mary H. Smith and such conservator at the time of his death. It is not questioned that Ethelyn Van Osdol and John A. Riordon have made good the default of their principal resulting from a conversion of the bonds of Mary H. Smith to the amount of $3,063.76.

Implicated in the recitals in the inventory that the $2,431.06 is the property of Mary H. Smith are the following circumstances related in the statements of facts of the surety company filed in this court. 1 ‘ Frank A. Van Osdol had been speculating in the purchase and sale of stocks and grain through the firm of Paine, Webber & Company. Two separate accounts were kept by the company with him, a securities (stock) account and a grain account. On October 1, 1934, Van Osdol was indebted to these brokers in the sum of $82.73 on his stock account and at the same time had a credit of $2,953.07 in his grain account. Paine, Webber & Company decided that his grain account needed additional margin, and called Van Osdol on October 1, 1934, for such additional margin in the sum of $600.00. On October 3, 1934, Mr. Van Osdol was sent a sellout letter. In response to the threat of sell-out, Van Osdol sent in the four United States Fourth Liberty Loan bonds belonging to the Smith estate. These bonds were received by Paine, Webber & Company on October 8, 1934. The firm cashed the interest coupons on October 15, 1934, for $63.76 and the bonds on October 17, 1934, for $3,000.00 and credited the total proceeds of $3,063.76 to Van Osdol’s stock account.”

It is conceded by the parties hereto that Walter Brunton, a representative of Paine, Webber & Company, testified substantially as follows: “This credit of $3,063.37 in the stock account was used as follows: To pay a pre-existing debit in the stock account of $82.73; to pay a draft for $1,000.00 drawn by Van Osdol on Paine, Webber & Company on October 8, 1934, the date the bonds were received; to pay a debit in his stock account of $1,200.00 resulting from a transfer to his grain account on October 8,1934, the date the bonds were received; to pay a draft for $700.00 drawn by Van Osdol on October 25, 1934; and to apply the balance of $81.03 upon a transfer of $150.00 on October 23, 1934, from his stock account to his grain' account.”

On the day of his death, January 17, 1935, Frank A. Van Osdol authorized Paine, Webber & Company by letter to transfer his account to his wife, Ethelyn Van Osdol. On February 8,1935, Ethelyn Van Osdol made a written assignment of all her interest in her account with Paine, Webber & Company to Charles W. McCall (administrator to collect), of the estate of Frank A. Van Osdol, deceased. On February 14, 1935, Paine, Webber & Company paid the sum of $2,531.06 comprising the balance of $2,355.34 in the grain account and $175.72 in the stock account, to C. W. McCall, administrator to collect of the estate of Frank A. Van Osdol, deceased.

The parties hereto agree that the foregoing is a fair statement of the basic facts giving rise to the conflicting claims made in the proceeding as to the ownership of the $2,431.06 listed in the inventory. The objections to the inventory in the county court, and on appeal to the circuit court of Whiteside county, were tested on the right to follow trust funds on the theory that the title to the money existed in Mary H. Smith, the ward during the lifetime of Frank A. Van Osdol, her conservator. It is a question of ownership or title to the money, and not one of preference. An effort is being made to trace trust funds and to impress a trust on the money now in the hands of the administrator of the insolvent estate of Frank A. Van Osdol, deceased, to the amount of the bonds converted by Frank A. Van Osdol as conservator of Mary H. Smith. It is not disputed that the conservator held the bonds as a trustee in his capacity as conservator.

Referring to the statement of facts filed by the surety company, we state that it is conceded by the claimants Ethelyn Van Osdol and John A. Riordon, that the witness Walter Brunton testified in substance as stated in the statement of facts. However, the claimants contend that his testimony should be interpreted under the rule that where trust money is blended by the trustee into an account with money of the trustee, it will be presumed that sums withdrawn from the account by the trustee were monies belonging to the trustee personally, and that the balance remaining in the account includes the trust funds the trustee had no right to use. (People v. People’s State Bank of Maywood, 354 Ill. 519.)

The stock account and the grain account of Frank A. Van Osdol with Paine, Webber & Company were introduced in evidence. It appears therefrom that on October 3,1934, Van Osdol was indebted to Paine, Webber & Company in his stock account to the amount of $82.73. On that day his stock account was charged with a debit of $1,000 to pay Van Osdol’s New York draft of that amount drawn on Paine, Webber & Company; and also charged with $1,200 for margin in Van Osdol’s grain account. The stock account on that date as a result of these charges showed a debit of $2,282.73. On October 8,1934, Paine, Webber & Company received from Van Osdol the four U. S. Liberty Loan Bonds, the property of his ward, Mary H. Smith, aggregating in principal amount, $3,000. The bonds were coupon bonds and they had been called for payment. Paine, Webber & Company had no notice of the trust. On October 15, 1934, Paine, Webber & Company received the cash for the bonds to the amount of $3,000 principal and $63.76 interest. This amount of $3,063.76 was credited to the stock account of Van Osdol leaving to his credit in that account $781.03, being the difference between the indebtedness of Van Osdol in that account of $2,282.73, on October 3, 1934, and the $3,063.76 cash received from the bonds.

On October 25,1934, Van Osdol drew out of his stock account by draft in cash the sum of $700, leaving his credit balance in the stock account $81.03. On the same day Van Osdol’s grain account was given a credit as margin of $150 being in part the credit balance of $81.03 in his stock account and in part a debit charge in his stock account of the difference, $68.97. When the stock account was debited with $1,200 on October 3, 1934, for margin in the grain account, the grain account was not credited with the amount of $1,200 nor any other sum on that date. However, when the bonds were cashed Paine, Webber & Company credited the' grain account with $1,200 as margin. As before stated, $81.03 of the amount realized from the bonds was also placed in the grain account as margin. Thus, $1,281.03 of the proceeds of the bonds of Mary H. Smith was placed into the grain account. The debit of $1,200 in the stock account as entered on October 3, 1934, and its inclusion in the general debit in that account and the crediting of the $3,063.76 in that account and the actual cash credit of $1,281.03 placed in the grain account, so far as the stock account is concerned, was a mere matter of bookkeeping. The stock account was not increased by the transaction of disposing of the cash received from the bonds, but resulted in a debit in that account of $68.97.

Before the conversion of the bonds, Van Osdol’s stock account carried 60 shares of stock of the Chicago & Northwestern Railroad Oo., being the individual property of Van Osdol. After the entries were made in the accounts showing the disposition of the proceeds of the bonds, the stock account remained inactive, excepting that it was charged with small items of interest and a credit of $200 transferred from the grain account as excess grain margins. On November 26, 1934, Van Osdol drew out in cash from his stock account the $200, being the last item of credit mentioned, leaving in that account a debit of $72.37. The 60 shares of stock of the Chicago and Northwestern Railroad Company were sold on February 14, 1935, for $260.79, leaving in the stock account when it was closed a net credit of $175.72 after the deduction of a debit of $85.07.

The money received by Van Osdol on the New York draft of $1,000; the $700 received by him on his other draft and the $200 withdrawn by him in cash — all taken from the stock account after the bonds were misappropriated — have not been traced and in particular they have not been traced into the hands of the administrator of the estate of Frank A. Van Osdol as assets of his estate. The proceeds of the drafts and the sum so withdrawn by Van Osdol from his stock account must be considered as dissipated and lost to the trust estate. The $175.72 received by the administrator was the net credit balance in the stock account and it is the proceeds of the Chicago and Northwestern Railroad stock, less indebtedness in that account, when the account was closed, to Paine, Webber & Company. There was nothing in the stock account belonging to the trust estate.

A part of the funds of Mary H. Smith has been traced to the grain account. There was a preservation of the distinctness of the trust fund to the amount of $1,281.03. (Woodhouse v. Crandall, 197 Ill. 104; People v. Bates, 351 Ill. 439.)

Before the $1,281.03, part of the proceeds of the bonds of Mary H. Smith, was placed to the credit of Van Osdol in his grain account by Paine, Webber & Company to raise the margin in that account, Van Osdol had a credit in that account of $2,953.07. His net credit balance in that account never fell below $1,281.03 after the conversion of the bonds. On January 12, 1935, Van Osdol drew in cash from his grain account, $300. We presume that this amount was the property of Van Osdol and not part of the trust funds. (People v. People’s State Bank of Maywood, supra.)

Owing to dealings of the Van Osdols in grain margins there was a gain in the grain account on February 11, 1935, of $98.71 and losses from January 12,1935 to February11,1935, of $1,447.73, leaving, however, a net balance of $2,355.34 in the grain account (after deducting the $300 withdrawn in cash by Van Osdol) when the account was closed and the $2,355.34 was paid to the administrator to collect of the estate of Van Osdol. As before stated, the net credit balance in the grain account during the currency of the mingled fund was never less than $1,281.03. We presume therefore, that the amounts lost or dissipated in the grain account by the Van Osdols ’ dealings on the grain market were the funds of Van Osdol or Ethelyn Van Osdol and not those of the trust estate. After the bonds were misappropriated by Van Osdol, the grain account was not increased by any amount as additional margin. It is reasonable to believe that if the margin in the grain account at any time fell below the amount required for transactions involved in so-called dealings in “futures” in grain, the broker would have called for additional margin or would have “sold out” the account. It is not therefore, to be presumed that the Van Osdols were not able during the currency of the mingled account to draw out the net credit balance in the grain account.

The objections of the Surety Company to the inventory filed in the estate of Frank A. Van Osdol were overruled by the county court and the administrator of the estate was ordered to pay the $2,531.06, being the total of the net credits in the stock account and the grain account when they were closed, to the conservator of Mary H. Smith. On appeal to the circuit court from the order of the county court, the circuit court entered an order sustaining- the objections to the inventory as to the sum of $167.30 and overruling the objections as to the sum of $2,363.76 and directing- the administrator to pay the sum of $2,363.76 to the conservator of Mary H. Smith.

We observe that the administrator to collect in the estate of Frank A. Van Osdol was allowed the sum of $100 fees and expenses for collecting the $2,531.06 from Paine, Webber & Company. This cost of $100 must be charged to the assets of the estate of Frank A. Van Osdol and not to the trust funds. It was an expense to collect the assets of the decedent’s estate.

The order of the circuit court of Whiteside county is reversed and the cause remanded to that court with directions to enter an order finding that the trust funds of Mary H. Smith have been traced to the grain account of Frank A. Van Osdol, deceased, to the amount of $1,281.03 and directing the administrator of his estate to pay out of the money now in his hands as shown in the inventory filed in the estate of Frank A. Van Osdol, deceased, as herein before set forth, the sum of $1,281.03 to the present conservator of Mary H. Smith, insane, and to account for the balance of said money, so mentioned in said inventory, in the due course of administration in the county court of said county.

The costs of this appeal are taxed one-half thereof to the American Surety Company and one-half thereof to Ethelyn Van Osdol and John A. Biordon and to the two last mentioned jointly and severally for their part.

Reversed and remanded with directions.


author: Mr. Justice Denis E. Sullivan

text:
    People of the State of Illinois ex rel. Oscar Nelson, Complainant, v. Chicago Bank of Commerce, Defendant. Herman S. Strauss, First National Bank and Trust Company of Minneapolis and J. E. Lehman, Appellees, v. Charles Albers, Appellant.
    Gen. No. 39,715.

      Opinion filed March 16, 1938.
    Rehearing opinion filed June 29, 1938.
    Rehearing denied September 23, 1938.
    Schuyler & Hennessy, of Chicago, for appellant; Jack S. Morris and C. Ernest Heaton, both of Chicago, of counsel.
    Louis H. Silver and Maurice L. Davis, both of Chicago, for appellees.
   Mr. Justice Denis E. Sullivan

delivered the opinion of the court.

A decree was entered on May 10, 1937, in the circuit court, after sustaining exceptions to a report by the master. The decree found in favor of Herman S. Strauss, intervening petitioner, in the sum of $107,900.90, collected by the Chicago Bank of Commerce as successor to Straus Brothers Investment Company; that said claim is entitled to the benefits of the Trust Companies Act and the securities deposited. The claim of said Herman S. Strauss was made payable proratably together with all other creditors of like class and nature out of the securities deposited by said bank with the auditor of public accounts. The respondent Charles H. Albers, the receiver of the Chicago Bank of Commerce, brings this appeal.

The pleadings are the intervening petition of Herman S. Strauss, First National Bank and Trust Company of Minneapolis and J. E. Lehman, as trustees under 41 trust deeds listed in schedule “A” thereto attached, amendment thereto, supplemental petition of Herman S. Strauss, individually, successor to said bank as successor to Straus Brothers Investment Company, as depositary, paying agent, registrar and withholding agent under said trust deeds and the answers thereto of the receiver and of Edward J. Barrett, auditor of public accounts of the State of Illinois.

The issue raised by said pleadings is whether the claim of Herman S. Strauss, as aforesaid, for $107,900.90, collected by said bank as successor to Straus Brothers Investment Company is entitled to the benefits of the Trust Companies Act and the securities deposited by said bank thereunder.

The said decree allowed Herman S. Strauss, as aforesaid, $107,900.90, as a claim against the Chicago Bank of Commerce in the capacity of such bank as a trust company qualified under the Trust Companies Act.

The theory of the intervening petitioners, as shown by their pleadings, is that they, as trustees in the trust deeds listed in schedule “A,” appointed Chicago Bank of Commerce to succeed Straus Brothers Investment Company as the “ depositary, paying agent, registrar and withholding agent” theretofore designated in said trust deeds; that as such trustees, they directed the mortgagors who executed said trust deeds, to make any and all payments for and on account of the principal of or interest on any of the bonds or coupons secured by said trust deeds, as well as income tax payments, to said bank as so appointed to be placed by said bank, as they contend, in segregated and separately identified trust accounts and disbursed by the trust department of the bank to the bond or coupon holders upon presentation for payment; that therefore the aggregate sum of $107,900.90, so on deposit at the time of the receivership on June 28, 1932, is a trust fund within the meaning of the Trust Companies Act; that the supplemental intervening petitioner, Herman S. Strauss, individually, who was appointed by said trustees the successor to said bank as “depositary, paying agent, registrar and withholding agent” should be held to be a creditor of said bank in the capacity of a trust company entitled to a first and prior lien to said amount of $107,900.90 against securities valued at $500,000 deposited by said bank under sections 6, 7 and 8 of said statute (Ill. Rev. Stat. 1937, ch. 32, § § 292, 293, 294; Jones Ill. Stats. Ann. 135.25, 135.26,135.27).

The theory of the respondent, in defense, is that the bank merely accepted the duties of Straus Brothers Investment Company, which company was designated in and by the terms of the trust deeds listed in schedule “A” as depositary and paying agent for certain moneys to be paid from time to time by the mortgagors in said trust deeds under the provisions thereof, as such duties were theretofore vested in and exercised by said Straus Brothers Investment Company under said trust deeds, a company which was not shown by the intervening petitioners to have been qualified under the Trust Companies Act; that as successor “depositary, paying agent, registrar and withholding agent” the bank was not a trust company within the Trust Companies Act; that the intervening petitioners are not trust creditors of said bank within the provisions and purview of the Trust Companies Act; that the deposit by said bank of securities valued at $500,000 under the Trust Companies Act was not made for the protection of a “depositary, paying agent, registrar and withholding agent”; that intervening petitioners are not trust creditors entitled to the benefit of the deposit made by said bank of securities under the Trust Companies Act; that there was no declaration of trust in the designation of the bank as successor “depositary, paying agent, registrar and withholding agent”; that it does not appear from the evidence that the bank at the time of the creation of the alleged trust received any directions or instructions as to the terms and conditions of the supposed trust, the manner of the performance of its duties as successor “depositary, paying agent, registrar and withholding agent,” or the administration thereof; that the subject matter of the supposed trust has not been properly described, nor have the beneficiaries been sufficiently identified, nor has the object of the supposed trust been declared; that the bank was merely to act as custodian of certain funds and that such funds constituted a special deposit; that said bank did not act as trustee as contemplated by the Trust Companies Act; that the bank, as successor “depositary, paying agent, registrar and withholding agent,” in receiving moneys from the mortgagors was exercising such power as a bank commonly exercised without qualifying under the Trust Companies Act; that the transactions herein shown could be carried on legally by the bank without becoming qualified as a trust company as provided in the Trust Companies Act.

There does not appear to be any issue as to the facts in this case and they are substantially as follows:

The intervening petitioners, Herman S. Strauss, as trustee, First National Bank & Trust Company of Minneapolis, as trustee, J. E. Lehman, as trustee, and Herman S. Strauss, individually, are the' respective trustees under the trust deeds or mortgages on 41 properties, securing various serial and sinking- fund bond issues. Straus Brothers Investment Company was in 1928 designated as “depositary, paying agent, registrar and withholding agent” in each of said trust deeds.

On June 6, 1931, Straus Brothers Investment Company, went into receivership. On August 15, 1931, Chicago Bank of Commerce was appointed by said mortgage trustees successor to Straus Brothers Investment Company, as “depositary, paying agent, registrar and withholding agent” under each of said trust deeds, which said appointment was duly accepted by said bank, whereby said bank became “entitled to exercise all of the rights, powers, privileges and duties theretofore vested in Straus Brothers Investment Company under the provisions of said trust deeds and to make any and all payments for and on account of the principal of or interest on any of the bonds or coupons secured by said trust deeds,” as well as any and all payments for or on account of income tax. Notice of the appointment of said bank as aforesaid was given to the various mortgagors in the trust deed and these mortgagors were authorized and directed by the mortgage trustees to make and did make any and all payments on account of the principal or interest on bonds or coupons secured by said trust deeds as well as all payments on account of income tax to said Chicago Bank of Commerce. In each of said trust deeds there was a pledge of the rents, issues and profits arising from the real estate described therein and such rents, issues and profits were deposited by the mortgagors with said bank and held by said bank as “depositary, paying agent, registrar and withholding agent” to the extent of $107,900.90, which sum was in the hands of the bank at the time it was closed. About 6 months thereafter Alfred K. Foreman, who was appointed as receiver of the bank, resigned on behalf of the bank as successor to Straus Brothers Investment Company as “depositary, paying agent, registrar and withholding agent” under each of said trust deeds.

Since the filing of their intervening petition on January 9, 1934, the trustees under said trust deeds appointed Herman S. Strauss, individually, the supplemental petitioner, to succeed said bank as successor to Straus Brothers Investment Company as “depositary, paying agent, registrar and withholding agent” under all of said trust deeds. Prior to its said appointment as successor “depositary, paying agent, registrar and withholding agent,” the bank deposited securities with the auditor of public accounts in the aggregate principal amount of $500,000 and thereby became qualified as a trust company under the Trust Companies Act.

Each mortgage listed in schedule “A” was handled as a separate sinking fund account and was given a trust account number for identification by the bank in its trust department. For instance, as an illustration of the plan used by the bank, we cite the case known as Haskell Park Properties of Rockford, Illinois, wherein the mortgage was designated as trust account No. 250. That account was not shown as a separate liability to the trust department, but the total of all the accounts was carried into a commercial account as a liability to the trust department. Monthly deposits were made by the mortgagors in those accounts until a 6 months’ interest payment under the mortgages was accumulated. There was no interest credit given on those deposits to any one. Those deposits were then transferred to disbursement accounts known as the “coupon accounts” which were labeled with the same identification numbers. The bank was compensated as successor “depositary, paying agent, registrar and withholding agent,” but not by the petitioners.

It was agreed by counsel that the use of the term “trust” by opposing counsel and the witnesses is not intended to bind the respondent to a conclusion that each of these accounts was a “trust” account within the meaning of the Trust Companies Act.

Although the transactions heretofore set forth are quite involved, we think there is only one question before us for decision, namely: Was the Chicago Bank of Commerce such a trustee as contemplated by the statute commonly known as the Trust Companies Act!

The evidence shows that the certificate of appointment from Herman S. Strauss as trustee, to the Chicago Bank of Commerce, provides as follows:

“Now, Therefore, the undersigned, Herman S. Strauss, Trustee, has elected to and does hereby exercise Ms right, power and privilege of appointment in Mm vested, and duly appoints and designates the Chicago Bank of Commerce of Chicago, Illinois, to succeed the said Straus Brothers Investment Company as Depositary, Paying Agent, Registrar and Withholding Agent under the provisions of the Trust Deed and Chattel Mortgage above mentioned, and said Chicago Bank of Commerce will, by virtue of its appointment by the undersigned Trustee, be entitled to exercise all of the rights, powers, privileges and duties heretofore vested in said Straus Brothers Investment Company under the provisions of the aforesaid Trust Deed and Chattel Mortgage.
“By reason of the appointment herein by the undersigned Trustee, and the acceptance of such appointment by the said Chicago Bank of Commerce, the mortgagor is authorized and directed to make any and all payments for and on account of principal of or interest on any of the bonds and/or coupons secured by the aforesaid Indenture, as well as any and all payments for and on account of income tax payments, which Said principal and/or interest or income tax payments may be due now or hereafter accruing, to said Chicago Bank of Commerce of Chicago, Illinois. ’ ’

The document from which we have just quoted was signed, “Herman S. Strauss, Trustee.”

To that document the Chicago Bank of Commerce issued its acceptance in the following words:

“The Undersigned, Chicago Bank of Commerce of Chicago, Illinois, does hereby accept the appointment as Depositary, Paying Agent, Registrar and Withholding Agent made by the Trustee in the within instrument pursuant to the provisions of the Trust Deed and Chattel Mortgage from Haskell Park Building Corporation, Mortgagor, to Herman S. Strauss, Trustee. ...”

The above acceptance was signed, “Chicago Bank of Commerce, by Frederic Pope, Vice President.”

• It will be noted by the foregoing written appointment and acceptance thereof that said bank was entitled to “exercise all of the rights, powers, privileges and duties heretofore vested in said Straus Brothers Investment Company under the provisions of the aforesaid Trust Deed and Chattel Mortgage.” Inasmuch as Straus Brothers Investment Company was not incorporated under the Trust Companies Act, the powers granted to the Chicago Bank of Commerce were limited to those of a corporation other than a trust company.

It will be noted that in the inception of this transaction between these parties there was no indication that a trust relation was intended. The evidence shows that after the appointment of the bank was made, the mortgagors were notified, authorized and directed to make to said bank any and all payments for and on account of the principal or interest of any of the bonds and/or coupons secured by the aforesaid trust deeds, as well as any and all payments for and on account of the income tax payments.

The evidence further shows that the bank had collected $107,900.90, as income from the various properties aforesaid; that this sum was in the possession of the Chicago Bank of Commerce at the time it closed its doors and a receiver was appointed; that in each of the trust deeds on the property [as was alleged in the brief of the intervening petitioners] there was a pledge of the rents, issues and profits arising from the real estate and that such rents, issues and profits were deposited by the mortgagor with the Chicago Bank of Commerce as successor “depositary, paying agent, registrar and withholding agent” under the appointment heretofore mentioned. The trust deeds are not in the record so we do not know what provisions they contain.

The evidence further shows that the Chicago Bank of Commerce kept separate accounts as to each parcel of land referred to and these were designated as sinking fund accounts under various trust numbers identifying the particular property involved; that the total amounts received on all these properties mentioned were carried in a commercial account as a liability to the trust department; that monthly deposits were made as to each and every one of the properties until these accumulated for a 6 months’ interest payment and they were then transferred by the bank to a disbursement or coupon account known as the “Coupon Account” and each disbursement or coupon account was labeled with a trust number and was so designated on the books of the trust department of the Chicago Bank of Commerce, and that as to each parcel of property involved herein, the bank had one account for the receipt of moneys, and a like account for the disbursement of moneys.

The evidence further shows that the Chicago Bank of Commerce was compensated for its services as successor ‘ ‘ depositary, paying agent, registrar and withholding agent” in various amounts, and that said payments were made through deductions from the amounts disbursed to the beneficiary.

If the transactions between the trustees named in the trust deeds and the Chicago Bank of Commerce were entitled to be protected by the Trust Companies Act, it must appear and be shown that the Chicago Bank of Commerce became an “assignee or a trustee by deed” as provided by statute.

There are certain essentials necessary to the creation of a trust that the declaration regarding same must make reasonably certain its material terms and that these terms must include:

1st. The subject matter or property embraced within the trust;

2nd. The beneficiaries or persons in whose behalf the trust is created;

3rd. The nature and quantity of the interests which they are to have; and

4th. The manner in which the trust is to be performed.

If any of these necessary elements is not described with certainty no trust is created. Orr v. Yates, 209 Ill. 222; Snyder v. Snyder, 280 Ill. 467, and cases therein cited.

One has but to apply this rule to the so-called deed of appointment to find that the same does not measure up to the requirements of the law as heretofore quoted. It is to be noted that the word, “trustee” is not used in said articles of appointment or acceptance, but the Chicago Bank of Commerce was named as successor depositary, paying agent, registrar and withholding agent, and also its status was limited to that of suecessor to Straus Brothers Investment Company, which latter company was not organized under the Trust Companies Act. Nowhere in the documents nor in the evidence does it appear as to what were the terms and conditions of the trust. Nowhere in the record does it appear as to who were the beneficiaries in whose behalf the trust was created or the nature or the quantity of the interest of the beneficiaries nor how the trust was to have been performed. It does not appear from the so-called declaration of trust or from the evidence that the bank received any directions or instructions as to the manner of the performance of its duties or what was the object of the trust.

We do not believe this transaction between Herman S. Strauss, as trustee, and the Chicago Bank of Commerce was in any sense a trust under the statute and does not come within the purview of the Trust Companies Act. Therefore, this claim is not entitled to the benefit and protection of the funds on deposit with the State auditor of public accounts. As we view the situation and from the language used in the certificate of appointment, as well as the evidence in support thereof, we are of the opinion that the Chicago Bank of Commerce acted merely as custodian of certain funds entrusted to it and not as such trustee as provided by statute which would entitle the intervening petitioners to a preferred claim against the securities deposited with the State auditor and, therefore, this claim is disallowed.

For the reasons herein given the decree of the circuit court is reversed and the cause is remanded with directions to enter a decree in harmony with this opinion.

Decree reversed and cause remanded with directions.

Hebel, P. J., and Hall, J., concur.

On Rehearihg.

Our attention has been called to a certain sentence which appears on page 7 of the opinion filed by this court on March 16, 1938, in the above entitled cause. That sentence reads as follows: “Inasmuch as

Straus Brothers Investment Company was not incorporated under the Trust Companies . Act, the powers granted to the Chicago Bank of Commerce were limited to those of a corporation other than a trust company.”

Inasmuch as the Trust Companies Act does not provide for incorporation, but merely permits qualification under the terms of said act, it is obvious the court intended to use the word “qualified” and that sentence is hereby changed to read: “Inasmuch as Straus

Brothers Investment Company was not qualified under the Trust Companies Act, the powers granted to the Chicago Bank of Commerce were limited to those of a corporation other than a trust company.”

After the time had expired within which motions for rehearings could have been made, pursuant to the rules of this court, a written motion on behalf of appellees was made without permission, asldng that additional evidence of the appellees be presented in this court. In the same motion counsel for appellees states that the said evidence is already in the record by admission in the pleadings. This would render any further evidence unnecessary.

The above correction having been made, the former opinion filed by this court in the above entitled cause on March 16, 1938, stands as the opinion of this court.

Decree reversed and cause remanded with directions.

Hebel, P. J., and Hall, J., concur.


author: Mr. Presiding Justioe Dove

text:
    Anton E. Sundquist, Trading as Sundquist and Son, Appellee, v. Hardware Mutual Fire Insurance Company of Minnesota et al., Appellants.
    Gen. No. 9,302.

      Opinion filed August 16, 1938.
    Opinion modified and rehearing denied October 4, 1938.
    Clausen, Hirsh & Miller, of Chicago, and Shurtleee & Niehaus, of Peoria, for appellants.
    F. B. Brian, of Toulon, and Andrews & Young, of Kewanee, for appellee.
   Mr. Presiding Justioe Dove

delivered the opinion of the court.

On December 18, 1935 the defendants issued to the plaintiff Anton E. Sundquist a policy of insurance by the provisions of which the defendants insured the plaintiff against loss or damage by fire to the amount of $8,000 from January 5, 1936 to January 5, 1937 on plaintiff’s stock of merchandise consisting chiefly of furniture and contained in a one-story brick, metal roof, building, located at No. 315 and No. 317 Market street in Calva, Illinois. On August 27, 1936, the defendants also issued to the plaintiff another policy of insurance also insuring plaintiff against loss or damage by fire to the amount of $1,000 from August 24, 1936 to August 24, 1937 on the same merchandise contained in the same building. Under the provisions of the policies, each defendant became severally liable to pay one-third of any loss sustained under the policies. "While the policies were both in effect and on the evening of December 24,1936 the property covered by said policies of insurance was destroyed by fire. Proofs of loss were furnished the companies but payment having been refused, the plaintiff on May 8,1937 instituted this suit. The complaint alleged the issuance of the policies and the destruction by fire of the property insured, alleged that the. value of the property insured, at the time of the fire, was $20,000, that the plaintiff was the owner thereof and had in all respects complied with the provisions of the policy on his part to be performed and praying for judgment against the defendants for $9,000 with 5 per cent interest from February 25, 1937. The answer of the several defendants admitted the issuance and deliverance of the policies declared upon and admitted a destruction of the property by fire on December 24, 1936 but denied that the plaintiff was damaged to the extent of $20,000 and denied that his goods, merchandise, furniture and fixtures were worth at the time of the fire said sum of $20,000. The answer further alleged that each of the policies of insurance contained the following provisions: “This policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof or if the interest of the insured in the property be not truly stated herein, or in case of any fraud or false swearing* by the insured, touching any matter relating to this insurance or the subject thereof, whether before or after a loss.” The answer then alleged that the plaintiff violated this provision of the policies in the following particulars, viz: First, by representing to the defendants, after the fire, that the cause of the fire was unknown while in truth and in fact plaintiff well knew that it was incendiary ; Second, by rendering to the defendants on February 6,1937 certain documents purporting to be sworn statements in his proof of loss, which were signed and sworn to by the plaintiff in which he swore that the cause and origin of the fire was unknown to him when in truth and in fact the plaintiff well knew that the fire was of incendiary origin; Third, that in said proof of loss plaintiff swore that the cash value of the property insured under the policies was $20,117.42, whereas in truth and in fact the value of the merchandise insured was less than $5,000 ; Fourth, that plaintiff also swore in his proof of loss that the whole loss and damage to his merchandise was $20,117.42, whereas in truth and in fact the whole loss and damage to said merchandise was less than $5,000 as the plaintiff then and there well knew; Fifth, that in his proof of loss the plaintiff also represented that certain property claimed to have been insured by the defendants had been damaged and destroyed, which in truth and in fact had not been damaged or destroyed by fire and was not in the building at the time of the fire as the plaintiff then and there well knew. The answer further alleged that all of said false and fraudulent statements related to material facts and circumstances concerning the insurance in question, that they were wilfully made by the plaintiff with the intention to cheat and defraud the defendants and that the plaintiff wilfully and maliciously set fire to or caused fire to be set to the building and property described in the policy of insurance and that by reason thereof and by reason of said false and fraudulent statements made in the proof of loss defendants are not liable under either of the said policies of insurance. In his reply plaintiff denied the several charges made against him by the defendants in their answer and the issues were submitted to a court and jury, resulting in a general verdict finding the issues for the plaintiff and assessing his damages at $9,259.95 and apportioning one-third of said amount against each defendant. There were also submitted to the jury six special interrogatories. By the first the jury especially found that the actual cash value of the plaintiff’s stock of merchandise covered by the policies of insurance sued on immediately prior to the fire was $18,165.21. By the second special interrogatory the jury found the actual cash value of plaintiff’s furniture and fixtures covered by the policies sued on immediately prior to the fire was $1,952.21. Special interrogatory No. 3 is as follows: “In his proofs of loss signed and sworn to by him, did the plaintiff falsely and fraudulently, with the wilful purpose of cheating and defrauding the defendants, swear that the cash value of the property covered by the policies of insurance sued on at the time of the fire was greater than the actual cash value thereof?” Special interrogatory No. 4 was: “In his proofs of loss signed and sworn to by him did the plaintiff falsely and fraudulently, with the wilful purpose of cheating and defrauding the defendants, swear that the amount of the whole loss and damage sustained under the policies of insurance sued on in the fire in question was greater than he actually sustained?” Special interrogatory No. 5 was: “In his proofs of loss signed and sworn to by him, did the plaintiff falsely and fraudulently, with the wilful purpose of cheating* and defrauding* the defendant, swear that the origin of the fire in question was unknown to the plaintiff when in truth and in fact the plaintiff then knew that the said fire was of incendiary origin?” Special interrogatory No. 6 was: “In his proofs of loss signed and sworn to by him, did the plaintiff falsely and fraudulently, with the wilful purpose of cheating* and defrauding* the defendants, swear that more property had been damaged and destroyed by the fire in question than was actually damaged and destroyed by said fire?” The jury answered each of these special interrogatories in the negative and after overruling a motion for a new trial, the court rendered appropriate judgments upon the verdict and the defendants have prosecuted this appeal.

From the pleadings and the evidence it appears that prior to 1922 William E. Emery conducted a retail furniture business at said No. 315 and No. 317 Market street in Galva, that he was adjudicated a bankrupt and his stock of merchandise consisting of furniture, rugs, house furnishings, phonographs, records, pianos, piano players and music was duly appraised at $9,621.20 and on January 24, 1922 sold at public sale by his trustee under the direction of the United States District Court for the Northern Division of the Southern District of Illinois, to appellee for $6,500. From that time until the building and contents were destroyed by fire on the evening of December 24, 1936, appellee conducted a retail furniture store at this address. At the time of the trial appellee testified that he was 59 years of age, lived in Toulon and had lived there all his life, where he also conducted a furniture store. At the time of the fire, insurance aggregating $18,500 was being carried by appellee upon the property destroyed. Elwin E. Bartlett was an insurance salesman and represented appellants and testified that he had known appellee for four years and that appellee had been paying appellants between 80 and 100 dollars a year for insurance for some time. That on August 24, 1936 Bartlett called upon appellee at his store in Galva and discussed insurance with him in his office, which was located in the back part of the store, that appellee advised him that he was then carrying $17,500 upon his stock of merchandise which he, appellee, valued at $22,000 but stated he might increase it. That Bartlett then told him about the 80 per cent coinsurance clause and advised him that as his stock was valued at $23,000, 80 per cent thereof would he $18,400 and in order to obtain the 15 per cent discount upon his premium, which he would receive if he carried 80 per cent of the value of his stock in insurance, he should increase his insurance $1,000, which was done and the $1,000 policy involved in this proceeding was afterward executed and delivered to appellee. Bartlett further testified that upon this visit appellee advised him that he had $5,000 windstorm insurance upon his stock of goods and that he, Bartlett, then wrote appellee an additional $13,500, making the fire and windstorm insurance which he carried each aggregate $18,500.

Between 9:30 and 10:30 o’clock on the evening of December 24, 1936, appellee closed his store and went to the G-alva Cafe located four or five doors west of his store and there ate a bowl of soup. While there, O. M. Peterson, an employee of appellee, who did janitor work for him and who had fixed the fire in the furnace and left appellee’s store about 9:30 o’clock that evening, came into the cafe and informed appellee that some ceiling lights controlled by a switch just inside the front door had been left burning in the store and appellee, after he finished his soup, returned to the store, unlocked the door, turned the switch, thereby turning off the lights, locked the door and entered his car which was parked near by and drove to Toulon. About 11 o’clock that evening Charles K. Hilton, the night patrolman, discovered smoke coming from the lower windows just beneath the plate glass windows at the front of the store and about the same time Howard F. Reed, the chief of police, who was about 100 feet west of the rear of the building*, also noticed dark smoke coming out of the east cellar door. The fire apparently originated in the basement and practically the entire stock of goods and fixtures of appellee were destroyed. During the course of the fire an explosion occurred which blew the front plate glass windows and portions of the front of the building “halfway across the eighty foot pavement” as one witness described it. In digging into the debris after the fire some burlap and a portion of a porch swing were found about 30 feet from the rear end of the building and near the east basement wall, which according to the testimony smelled like kerosene or coal oil and some of this burlap and some of the pieces of wood from the swing* were offered in evidence at the trial and have been transmitted to this court and have been examined by us.

Upon blanks, appellee on February 6, 1937 submitted to appellants his sworn statement in connection with his proof of loss, in which he stated that the total amount of insurance which he carried upon the property covered by appellants’ policies at the time of the fire amounted to $18,500, that the cash value of the property insured at the time of the fire was $20,117.42, that the loss and damage which he sustained amounted to the same sum, that he claimed the full amount of-the policies aggregating $9,000 and that the loss did not originate by any act, design or procurement of appellee. The evidence is that in May, 1936 appellee took an inventory of his stock of merchandise and the proof of loss which he furnished appellants on February 6, 1937 was made from this inventory, that his inventory disclosed that to the actual cost price of each article appellee added the freight and in computing the value of his stock of merchandise at the time of the fire he added to the aggregate amount so shown by the inventory the sum of $995.37, being* the cost of merchandise purchased by him from May 1st to the date of the fire, and deducted therefrom a depreciation of 15 per cent on his stock and 25 per cent on his fixtures and then deducted $1,381.32 therefrom, being the amount of his cash and credit sales from May 1, 1936 to the date of the fire, less an average profit thereon of 33per cent.

One of the issues of fact raised by the pleadings was whether appellee set fire to the insured property. The jury found he did not and counsel for appellants concede that under the evidence the finding of the jury was justified. Counsel insist, however, that there were some suspicious circumstances shown by the evidence with reference to the origin of the fire, which the jury should have taken into consideration in passing upon the issue raised by the pleadings as to the value of appellee’s stock of merchandise and the amount of loss he sustained and that these circumstances together with the evidence which tended to prove that appellee made certain false statements under oath for the purpose of establishing an excessive valuation upon his stock of merchandise and fixtures should be held to have avoided the policy and appellee thereby precluded from asserting any claim thereunder. The suspicious circumstances referred to by counsel is the finding of the burlap and portion of the porch swing’ which contained the odor or kerosene, the statement of appellee, testified to by the'fire marshall, that he, appellee, purchased a gallon of kerosene two weeks before the fire to be used in a sweeping compound, which conflicts with his testimony at the trial which was to the effect that he used the kerosene to pour down a sink drain to destroy the odor of gas. Also the testimony of the fire marshall to the effect that appellee stated to him that other than the kerosene there were no other inflammables in the store while on the trial of the cause appellee testified there was a 10-gallon can containing roofing paint and a 5-gallon can half full of cylinder oil in the basement at the time of the fire. Appellee testified this roofing paint was acquired by him at the time he bought the store in 1922 while Emery, the former owner, denied that he had any paint in the store while he operated it and Peterson, an employee of appellee, testified he had not seen the .can of roofing paint referred to. Counsel also call our attention to the testimony of appellee and statements made by him wherein he stated at one time that he left the store about 9:40 o’clock the evening of the fire, at another time he said he thought it might have been close to 10 o’clock and again said it was perhaps 10 minutes after 10 o’clock, and to the evidence which discloses that appellee at the time of the fire was indebted to the owner of the building for rent and other testimony which tended to show that he was in some financial difficulty. The false statements to which counsel refer are these. First: appellee testified at the trial upon cross-examination that as he remembered the transaction in 1922, he purchased this stock of merchandise and paid therefor between $14,000 and $16,000. In rebuttal appellee testified that what he meant when he testified that he purchased the stock of merchandise and paid therefor a sum between $14,000 and $16,000 was that the inventoried value of the entire stock when he opened up for business in Calva was that sum. Second : That on February 23, 1937, appellee executed an affidavit to appellants ’ adjuster in which he stated that he had purchased the entire stock of Will Emery of Calva, Illinois in 1922 and that the stock consisted chiefly of furniture, stoves, sewing machines and victrolas and did not contain any pianos and that he paid therefor between fifteen and sixteen thousand dollars to the First National Bank of Calva, Illinois, who were receivers of this stock. Third: In an examination before the trial, appellee was asked: “You remember what you paid for that bankruptcy stock?” and he replied: “I know I borrowed $10,000.00 of Mr. Dewey, and I paid somewhere between twelve and fourteen thousand dollars: I guess it was nearly sixteen thousand dollars.” Appellee then testified that he bought the stock at a trustee’s sale and that he gave a check therefor on the day of the sale for the amount thereof. Fourth: That upon the trial appellee was asked: “Now, in these sixteen sheets (referring to the schedule of merchandise which appellee claimed was in the store at the time of the fire) is there anything you had in that store more than three years ? ” to which appellee replied: “Not as I remember.” Fifth: That his testimony as to when he purchased his fixtures and also certain pianos and the price he paid therefor was untrue as was also his testimony on tho question of turnover. The facts are that the stock was not bought from Will Emery but from A. E. Bergland, his trustees in bankruptcy, that appellee did not pay therefor between $14,000 and $16,000 to the First National Bank of Calva but did pay therefor $6,500 to said trustee Bergland to whom he paid $650 on the day of the sale and the balance upon the approval thereof. The evidence also tends to show that the stock as originally purchased contained some pianos, that some of them were in the building when destroyed by fire and from the volume of sales to which appellee testified, it is apparent that he did not turn over his stock of merchandise as frequently as his testimony would indicate.

Counsel for appellants concede that ordinarily the question of fraud and false swearing as to valuation are questions of fact to be determined by the jury but argue that under the express provisions of these policies there was such fraud and false swearing as to preclude a recovery and cite Ledford v. Hartford Fire Ins. Co., 161 Ill. App. 233; Kavooras v. Insurance Co. of Ill., 167 Ill. App. 220; Butler v. Security Ins. Co., 244 Ill. App. 379 and several other cases from other jurisdictions. In the Ledford case, supra, the court held that a provision in the policy similar to the provisions which the policies here contained was a reasonable one and that where it appeared false statements under oath were knowingly and purposely made by the assured for the purpose of procuring falsely excessive valuation of the property lost, that then the assured could not recover. In the Kavooras case, supra, it appeared that the assured by false representations as to the amount and value of his stock of goods obtained a $3,000 policy of insurance upon a stock valued at not to exceed $1,500 and the court held that these false representations, together with the fact that assured was guilty of wilful false swearing upon the trial, rendered the policy void and precluded a recovery thereon. In Butler v. Security Ins. Co., supra, it appeared that in his proofs of loss the assured placed a value of $1,496 upon an item that had been used for 35 years and never had a value to exceed $400 and that he listed and swore to other articles on a similar basis and the court held that from all the evidence the finding of the jury that the plaintiff had sustained a loss in the sum of $5,000 was manifestly against the weight of the testimony.

The facts in these cases relied upon by appellants are clearly distinguishable from the facts as found in this record. Appellee presented to appellant a detailed and itemized proof of loss and the inventory of May 1, 1936 gave the quantity, description and value of each item of merchandise and covers fourteen pag’es of the abstract, together with the inventory of appellee’s furniture and fixtures, which covers an additional page of the abstract. This proof of loss and inventory were offered and admitted in evidence. Elwood B. Kroos, an insurance adjuster employed by appellee two or three weeks after the fire, and who had examined appellee’s inventory, journal, ledger, record of cash sales, statements of account and invoices from wholesalers and manufacturers with whom appellee dealt, and who had seen appellee’s stock before the fire, together with several other witnesses who had been in appellee’s store and were familiar with his stock of merchandise testified at length on behalf of appellee. There was also some evidence on behalf of appellant to the effect that the pianos, radios, talking machine and music were not as valuable as the testimony of appellee and his witnesses would indicate. The record contains more than 750 pages and we have read the abstract of the testimony and while, as said in Weininger v. Metropolitan Fire Ins. Co., 359 Ill. 584, appellee was naturally interested in the amount of his recovery and by reason of his interest and bias may have testified to greater values than other witnesses, still it does not necessarily follow that his testimony was false within the meaning of the terms of the policy. False swearing in a proof of loss in order to avoid the insurance policy must be wilful and with intent to deceive and defraud the insurer. Weininger v. Metropolitan Fire Ins. Co., supra. In some jurisdictions it has been held that false swearing in proofs of loss cannot be made available as a defense unless shown to have been made with intent to deceive and also that prejudice or injury resulted. Dalton v. Milwaukee Mechanics’ Ins. Co., 126 Iowa 377, 102 N. E. 120 and other cases cited with approval in Young v. California Ins. Co., 55 Idaho 682 at pages 690, 691. In the instant case it is conceded that appellee sustained a loss and that he furnished proofs of loss as required and while the defense is predicated upon what transpired thereafter, it is well to bear in mind that appellants’ representative was in appellee’s store less than four months before the fire. Appellee did not send for him but he came in the course of his regular work. He observed appellee’s stock of goods. He advised appellee how he should carry his insurance in the most economical manner. Appellee then advised him of the value he placed on his stock and it was at the suggestion of the agent, not appellee, that the additional $1,000 insuranee was written. Appellee’s inventory of May 1, 1936 disclosed the value of his stock and fixtures to be $22,813.31. His proof of loss stated the value to be $20,117.42. The jury heard all the evidence and specifically found the actual cash value of the stock and fixtures to be $20,117.42 and specifically found that appellee did not know that the fire was of incendiary origin and did not misrepresent to appellants the value of his property or the amount of his loss or that more property was damaged or destroyed than was actually damaged and destroyed. ■ The evidence, found in this record sustains these several findings and the trial court having approved them, we would not be justified in disturbing the judgment rendered thereon.

It is insisted that the trial court erred in permitting the witness Kroos to give to the jury his estimate of the gross value of appellee’s furniture immediately prior to the fire, basing his estimate upon the invoices, examination of the invoices and his examination of the inventory and other books of appellee. Kroos placed a value of $22,822.56 thereon. He was then asked what deductions he made from that amount before presenting any statements to the adjusters for appellants and replied that he deducted the sales for cash and credit from the time the inventory was made to the date of the fire, deducted not only the average profit thereon but also a further deduction of 25 per cent on the furniture and fixtures and 15 per cent on the stock for depreciation. The ruling of the court was harmless conceding it was erroneous because the record shows that plaintiff’s Exhibit E was admitted in evidence without objection and this exhibit contains a summary of appellee’s loss and damage to his stock which is given at $18,165.21 and to his furniture and fixtures at $1,952.21 or a total of $20,117.42. It is also insisted that the court erred in permitting Cyrus Kelly, a resident of Galva and who was familiar with appellee’s stock of merchandise, to testify in answer to a question as to the character of the merchandise as it appeared to him, whether it was new, marketable or otherwise, that it was new and was marketable. The record discloses that no objection was made by counsel for appellant to this question. Another witness, Guy Baltimore, an agent for one of the other insurance companies which carried insurance upon this stock and who had frequently been in appellee’s store and testified that he made a casual examination of the stock in September, 1936 was permitted to state that the store appeared to him at that time to be “about as full as he (appellee) could get it of up to date furniture.” In view of the other evidence found in the record, we do not believe appellant was prejudiced by the trial court’s refusal to strike this answer.

It is finally insisted that the court erred in refusing to charge the jury that if they believed from a preponderance or greater weight of the evidence that the plaintiff, with intent to cheat and defraud the defendants, wilfully and maliciously set fire to or caused to be set fire to, or burned or caused to be burned, the property described in the policies of insurance sued on, then your verdict should be for the defendants. There was no error in refusing this instruction. Where a felony is charged in the pleading’s in a civil case, the offense must be proved beyond a reasonable doubt. McConnel v. Delaware Mut. Safety Ins. Co., 18 Ill. 228; Rost v. Noble & Co., 316 Ill. 357; Kuhl v. Clark, 261 Ill. App. 491; Wargo v. Buske, 273 Ill. App. 28; Gannon v. Kiel, 252 Ill. App. 550.

The evidence conclusively shows the loss of the property insured and while appellee was not required to prove the cause of the fire, the record contains evidence from which the jury might have inferred that it was caused by gas escaping into appellee’s basement. This record is not free from all error but from the competent evidence therein, we are of the opinion the jury were justified in returning the general verdict it did and the several special findings. The judgment will therefore be affirmed.

Judgment affirmed.