author: Mr. .Presiding Justice Scanlan

text:
    Anthony Kulan, Appellant, v. Florence Anderson, Appellee.
    Gen. No. 40,137.
    Opinion filed May 2, 1939.

      Clarence F. Martin, of Chicago, for appellant.
    Harry L. Brin and Albert E. Hallett, Jr., both of Chicago, for appellee; Albert E. Hallett, Jr., of counsel.
   Mr. .Presiding Justice Scanlan

delivered, the opinion of the court.

Anthony Kulan, petitioner (appellant), filed a verified petition for a writ of habeas corpus, in which he alleged that his daughter, Phyllis Emilie Kulan, one month old, was restrained of her liberty by Florence Anderson “for the purpose of retaining custody of said child and having the care, maintenance and education of said child, and for the purpose of depriving your petitioner of the custody, care and maintenance of said child. That your petitioner has demanded of said Florence Anderson the possession of said child, but to no avail.” After the writ issued Florence Anderson, respondent (appellee), filed an unverified answer, signed by her attorney, which denies that the child was restrained of her liberty, and answers that the mother of the child, the sister of respondent, was dead; that the mother asked that-Tingey (Mrs. Alice Tingey, the maternal grandmother of the child) take care of and raise the child; that-Tingey is a nurse and has had considerable experience in the raising of children; that petitioner has no place or home for the child and is unable and unfit to take care of and raise the child, and that it will be to the best-interests of the child to have it remain with “respondents, especially the respondent- Tingey.” Although the writ made Florence Anderson the sole respondent, the answer filed attempts to make Mrs. Alice Tingey a respondent. The cause was tried by the court without a jury and at the conclusion of the hearing an order was entered finding that “the petitioner herein, Anthony Kulan, is a fit person to have the custody of said minor, Phyllis Emilie Kulan. It Is Therefore Ordered that the custody of Phyllis Emilie Kulan be and the same is hereby given to the petitioner, Anthony Kulan, her father. It Is Further Ordered that Florence Anderson, respondent herein, have the custody of the said Phyllis Emilie Kulan from 10:00 o’clock on Saturday morning until 7:00 o’clock Sunday evening on alternate weekends beginning November 13th, 1937, avid continuing until further order of the Coitrt, providing said Florence Anderson shall call for the said Phyllis Emilie Kulan at her place of residence and return said child to said place of residence at the end of the period of custody herein provided for Florence Anderson.” (Italics ours.) Petitioner appeals from that part of the order that we have italicized.

Petitioner contends that a surviving parent has the natural right to have the custody of his child; that as against him, respondent, an aunt of the child, has no natural right to the custody of the child; that as the father of the child he has the rig'ht to her custody as against the world because he has not forfeited in any way his natural right, and it has been adjudged that he is “a fit person to have the custody of said minor.” Petitioner concedes that if (a) he were an unfit person, or (b) his home were unfit, or (c) he had relinquished his right to the custody of the minor to another, or (d) he had abandoned the child, his natural right to the possession of the child would be forfeited.

Respondent, upon the oral argument, conceded that petitioner was a fit and proper person to have the custody of his child and that he had not in any way forfeited Iris right to said custody; that the part of the order that finds that petitioner “is a fit person to have the custody of said minor, Phyllis Emilie Kulan, ’ ’ and “that the custody of Phyllis Emilie Kulan be and the same is hereby given to the petitioner, Anthony Kulan, her father,” was proper; but she contends that under the rule that the best interests of the child should control, the trial judge did not act arbitrarily nor against the legal rights of petitioner in awarding the custody of the child to respondent for a limited period of time on alternate week-ends.

Section 4, ch. 64, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 57.047], reads as follows: “The guardian of a minor shall have, under the direction of the court, the custody, nurture and tuition of his ward, and the care and management of his estate; but the parents of the minor, if living, and in case of the death of either of the parents, the surviving parent, they being respectively competent to transact their own business, and fit persons, shall be entitled to the custody of the person of the minor and the direction of his education. The parents of a minor shall have equal powers, rights and duties concerning the minor. In case the father and mother live apart, the court may, for good reason, award the custody and education of the minor to either parent or to some other person. Whenever any person or persons make a settlement upon or provision for the support or education of any minor child, it shall be competent for the court, in case either the father or the mother of such child be dead, to make such order in relation to the visitation of such minor child by the person or persons so making' such settlement or provision as shall to the court seem meet and proper.”

Stafford v. Stafford, 299 Ill. 438, involved a controversy between the father of a child and his wife’s sister as to the custody of the child, and the charge was made that the father was a habitual drunkard, but the Supreme Court, after holding that the evidence did not support the charge, said (pp. 448, 449): “Under the evidence in the record defendant in error is entitled to the custody, care, control and education of his son as against plaintiff in error. He is its father and has the natural right to have such custody. As against him the plaintiff in error has no right whatever, under the law, to the custody of the child, no more than an absolute stranger, unless it can be shown that he has in some way forfeited his right. ... As father of the child he has the right to its custody as against the world, because there is no showing that he has forfeited such natural right. Sullivan v. People, 224 Ill. 468; Cormack v. Marshall, 211 id. 519; People v. Turner, 55 id. 280; 21 Cyc. 34.” The court further held that the aunt had no natural right to the custody of the child or to visit it.

People ex rel. Good v. Hoxie, 175 Ill. App. 563, involved a controversy over the custody of a child between the father of the child and the maternal grandmother. The parents of the child were divorced upon complaint of the mother, but the divorce decree recognized the fitness of the father to have the custody of the child by decreeing that he should have it part of the time. After the divorce the mother died and Mary J. Hoxie, the maternal grandmother, without the knowledge or consent of the father, procured letters of guardianship of the person of the child to be issued to her from the probate court of Cook county in the estate of the mother. Shortly thereafter the father instituted the habeas corpus proceedings and after a hearing the trial court awarded the custody of the child to the father. One of the contentions of Mrs. Hoxie was that as guardian of the person and estate of the child she was the successor and representative of the mother of the child and as such was entitled to her custody and tuition. The trial court found against this contention and the Appellate Court sustained the trial court in that regard. In its opinion the Appellate Court states (pp. 566, 567): “There is no finding by any court, disclosed by this record, that defendant in error is not competent to transact Ms own business, or is not a fit person to have the custody of his child and to direct her education. Nor was there any evidence offered, so far as this record shows, in either the divorce case, the guardianship matter, or this habeas corpus proceeding, upon which such a finding could be predicated. In the divorce proceeding the court recogmzed the fitness of the father to have the custody of the child by decreeing that he should have it part of the time. In the guardianship proceeding the father was not in court, neither ivas he served with process or notice of the pendency of the petition, and the court was, therefore, powerless in that proceeding to try the question of Ms fitness or want of fitness to have her custody. In this habeas corpus proceeding, while the petition of defendant in error and the return of plaintiff in error were full enough to permit of proof of the want of fitness of defendant in error to have the custody of Kathryn, no such proof was offered, and the court expressly- found that defendant in error was competent to transact Ms own business, and was a fit person to have such custody. The burden of proving unfitness was on plaintiff in error, and the rule is that, unless such unfitness is established by clear evidence, fitness will be presumed and the custody of the child will be awarded to the parent. Cormack v. Marshall, 211 Ill. 519-523; Wohlford v. Burckhardt, 141 Ill. App. 321; In re Thomsen, 1 Neb. (Unoff.) 751; State v. Martin, 95 Minn. 121; Giffin v. Gascoigne, 60 N. J. Eq. 256. The finding of the court was undoubtedly right on the record in this case.” The Appellate Court sustained the judgment of the trial court and the Supreme Court denied a certiorari (see 176 Ill. App. xxvii). Mrs. Hoxie was a woman of great wealth, the father was dependent upon a moderate salary, and it was contended by Mrs. Hoxie that if she were given the custody of the child the latter would have great advantages and would ultimately become her heir, and it was strenuously argued, by able counsel, that the interests of the child would be best served by awarding her custody to Mrs. Hoxie.

Harmon v. Starbody, 219 Ill. App. 603, involved a controversy between the father of a child and his sister over the custody of the child. The Appellate Court, after holding that the father was a fit person to have the custody of his children, said (p. 605): “That a parent has the right to the custody of his children against all the world, unless he has forfeited that right or the welfare of the child demands that he should be deprived of it, is a fundamental principle which has been long and firmly established. The home is the foundation of society and civilization and only in an extreme and special case where the parent is unfit or unable to give the proper care to his children will the court take them from him. Sullivan v. People, 224 Ill. 468; Hohenadel v. Steele, 237 Ill. 229; Cormack v. Marshall, 211 Ill. 519; section 4, ch. 64, Rev. St. (J. & A. Par. 6001); 21 Cyc. 63; Stafford v. Stafford, 217 Ill. App. 548.”

Wohlford v. Burckhardt, 141 Ill. App. 321, involved a controversy between the father and the maternal grandparents of an infant child, over its custody, the child at the time of the trial being in the custody of the grandparents. The Appellate Court, after holding that the father was a fit and proper person to have the custody of the child, said (pp. 324-326): “In the case of Cormack v. Marshall, 211 Ill. 523, the Supreme Court says: ‘We regard the rights of the parent as superior to those of any other person, when that parent is a fit person to have the custody of children and is so circumstanced that he can provide the necessaries of life and administer the requirements of such a charge. ’ This rule is in accordance with a long line of decisions, and there can be no longer any doubt as to the law governing this class of cases. Unless the evidence is clear that the parent of the child is unfit to care for it, the father should have the custody. The mere fact that other relatives or persons might give better care, and spend more time and money upon the child, is no reason for depriving the father of its custody. It is not a question of relative ability of the parents, but is the sole question of whether the father is able and will give the child good care and treatment. The court is only warranted in depriving the father of the custody of the child when the evidence discloses that the child, on his account, is destitute, abandoned or dependent, or that he is living* an immoral life or in vicious or disreputable surroundings, or that he neglects or treats the child unkindly or cruelly, or may do this, or is wanting in good principles, or is illy adapted to the care of the child on account of defects in his mental or physical qualities, which prevent him from being a kind and affectionate father. The evidence in this case fails to establish any of these causes. No definite rule has been laid down as to what constitutes fitness in law that a parent must have to have the control of his child. After a thorough examination of authorities, we think that unfitness is not to be found merely because the father may be in straitened circumstances, or may not be as discreet or judicious as could be wished, nor because other persons of greater means or better social standing are ready and willing to take the child and give it greater advantages. If such were the test, the father’s right would be reduced to a mere shadow, of the most unsubstantial character. But it must appear that the father had so conducted himself, or shown himself to be a person of such description, or is placed in such a position, as to render it not merely better for the children, but essential to their safety or to their welfare, in some very serious and important respect, before his rights should be treated as lost or suspended, or should be superseded or interfered with. Although it may be a hardship to deprive the defendants of the custody of the child after they have cared for it so long and so tenderly, yet it is our duty to follow the law, and there not being sufficient evidence in the record to show that the father should be deprived of the custody of the child, we therefore reverse the judgment and remand the cause. ’ ’

The cases cited by respondent in support of the trial court’s action are distinguishable from the instant one under the facts. In People v. Weeks, 228 Ill. App. 262, an aunt, at the father’s request, had had the child’s (Kathryn’s) custody from her infancy and had supported, maintained and fully provided for her for nearly 10 years. The evidence also tended strongly to show that the father had relinquished to the aunt his right to Kathryn’s custody, and that, at times, he neglected Kathryn during the years she lived with her aunt. He had remarried and had a daughter by the second wife. Kathryn loved her aunt, was very happy with her, and was not happy when, occasionally, she visited her father’s home. Under all the facts and circumstances, the awarding of the custody of the child to the aunt by the trial court was approved by the Appellate Court. Mr. Justice O’Connor, however, dissented from the opinion of the majority in that case. In People v. Porter, 23 Ill. App. 196, the father, after the death of his wife, placed the child, two years old, in charge of the Porters to be cared for and nurtured. He was an invalid and unable to perform manual labor, and about six years after the child was placed with the Porters the father removed to Kansas, where he became so afflicted with inflammatory rheumatism that he was unable to earn a living and was so reduced in circumstances that he could not pay anything for the support of his daughter. He then made an arrangement with the Porters by which they agreed to take care of and support the child until she was grown up and would make no charge to the father for her support, and the father agreed to leave her with them and to say nothing more about taking her away. The Porters were very worthy people, had taken excellent care of the little girl, had great affection for her and were unwilling to part with her, and “the affections of the little girl are attached to them by bonds equally strong.” The father had remarried and at the time of the trial had been separated from the daughter for years. The decision in that case may be justified upon the theory that the father had voluntarily relinquished the custody of the child. People v. Small, 142 Ill. App. 422, was a habeas corpus proceeding that involved a controversy over the custody of the child between the maternal grandparents and the father of the child. The mother of the child sued the father for divorce on the charge of extreme and repeated cruelty. The suit was contested and a jury returned a verdict in favor of complainant, and a decree was entered that granted her a divorce and alimony and awarded her the custody of the child for ten months of the year, the father to have the child for two months of the year. Thereafter the mother petitioned the court to give her the sole control of the child and the father asked that he be given the custody of the child. Upon a hearing the sole custody of the child was given to the mother. The father became largely in arrears in the matter of alimony and professed to be unable to pay it, and the mother was compelled to work to support herself and the child. The mother died, leaving a last will, which was duly probated, by which she appointed her mother guardian of the child. At the time of the hearing of the habeas corpus case the father lived on North Clark street, and his housekeeper, a young widow, had one child. The widow conducted a facial massage parlor for ladies in one of the rooms of the father’s home. The opinion of the Appellate Court states, at some length, the situation surrounding the father’s home, and it is clear that the Appellate Court, in its approval of the decision of the trial court, returning the custody of the child to “the grandmother and testamentary guardian,” was of the opinion that the father’s home, considering its surroundings, was not a fit home for the child. If the child, in the father’s home, would be subjected to bad influences, that was a circumstance that would have a material bearing on the question -as to whether or not he was a fit person to have the custody of the child.

It must be borne in mind that the controversy in the instant case is between the father and an aunt, and that the right of the State to take a child from the parent, or parents, under certain circumstances is not here involved.

In our opinion, the father, under the law of this State and the admitted facts, had the right to the sole custody of the child, and the action of the trial court in ordering that the aunt have the custody of the child for a certain period of time on alternate week-ends was a material abridgment of that right. The rule that a parent has the right to the custody of his child against all the world, unless he has forfeited that right, was born of the natural desire of mankind to create and maintain a home; and, as has been often said, the home is the foundation of society and civilization. Deprive worthy parents of their natural right to the custody of their children, where they have not forfeited that right, and you undermine the home.

That part of the order of the superior court of Cook county wherein it is ordered “that Florence Anderson, respondent herein, have the custody of the said Phyllis Emilie Kulan from 10:00 o ’clock on Saturday morning until 7:00 o ’clock Sunday evening on alternate weekends beginning November 13th, 1937, and continuing until further order of the Court, providing said Florence Anderson shall call for the said Phyllis Emilie Kulan at her place of residence and return said child to said place of residence at the end of the period of custody herein provided for Florence Anderson,” is reversed.

That part of order appealed from reversed.

John J. Sullivan and Friend, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice Scanlan

license: Public Domain

text:
    John S. Feinberg, Appellant, v. Chicago, Burlington & Quincy Railroad Company, Appellee.
    Gen. No. 40,542.

      Opinion filed May 2, 1939.
    Rehearing denied May 20, 1939.
    Krohn & MacDonald, of Chicago, for appellant. Stuart B. Krohn, of conns el.
    Walter McFarland, W. A. Morrow, A. C. Scott, S. F. Blanc and C. W. Krohl, all of Chicago, for appellee ; J. C. James, of Chicago, of counsel.
   Mr. Presiding Justice Scanlan

delivered the opinion of the court.

A suit for damages for personal injuries sustained by plaintiff. At the conclusion of plaintiff’s case defendant made a motion, in writing, for a peremptory instruction, accompanied by an instruction, to find defendant not guilty, which motion and instruction were refused. Defendant offered no evidence, but again moved for a peremptory instruction of not guilty, accompanied by a written instruction to that effect, and the trial court reserved its ruling upon the motion and instruction. The jury returned a verdict finding defondant guilty and assessing plaintiff’s damages in the sum of $9,000. Thereupon defendant filed a motion, in writing, for a judgment in its favor notwithstanding the verdict, and also filed an alternative motion, in writing, for a new trial. The trial court granted the motion for a judgment for defendant notwithstanding the verdict and plaintiff appeals from the judgment entered in favor of defendant.

The first paragraph of the complaint alleges that defendant, on August 27, 1935, owned, operated and controlled a certain line of railroad extending- in a generally northeasterly and southwesterly direction through Lincoln, Nebraska, and upon said line operated,'maintained and controlled trains of cars, both freight and passenger, drawn by locomotives. Paragraph two alleges, in substance, that the depot and freight house of defendant were located on said line so extending through a portion of Lincoln and along and across various intersecting streets o.f said city; that near the said depot and freight house defendant used divers switch tracks, spur tracks, side tracks, and main line tracks, upon which, at all times, there were standing various cars and trains of cars “from which goods and freight were being loaded and unloaded”; that said cars and trains were often left upon said tracks, for convenience, when not used, and some of said cars and trains were frequently moved back and forth by locomotives in switching movements over said tracks ; that at various times said cars, trains and locomotives blocked the progress of pedestrians who were then and there rightfully attempting to cross said line of railroad, so that it became and was necessary for such pedestrians, in order to cross said line of railroad, to pass through gaps between the various cars and trains of cars so blockading said streets, so that on the date aforesaid, under the then existing conditions, defendant might reasonably expect and anticipate pedestrians to be passing- through the various gaps and apertures between the various cars and trains of cars then and there placed and standing upon and along said line, all of which defendant knew, or in the exercise of due and proper care would or should have known; that it thereupon became and was the duty of defendant, in the operation of its said line of railroad, cars, and trains of cars to be conscious of and have due regard to the then surrounding conditions and circumstances and not to wilfully and wantonly operate or move any of its said cars or trains of cars in a wilful, wanton and reckless manner or with conscious indifference and disregard to the then existing conditions and surrounding circumstances so as to injure anyone then and there so passing through said gaps and apertures between said cars and trains of cars. Paragraph three alleges, in substance, that about 9:30 p.m. on August 27, 1935, defendant caused a certain train of cars to be standing for a long time, to wit, two hours, upon one of its main line tracks at the place aforesaid, and caused a certain train of cars to be standing* upon a certain side track immediately adjacent thereto, in such a manner as to completely block the various public highways then and there crossing its said line of railroad at that place and in such a manner that the only means of ingress and egress for pedestrians then and there rightfully traveling upon and along said public highway and desirous of crossing said line of railroad at that time and place were by means of and through the various gaps and apertures so left open by defendant in said two trains of cars then and there standing upon said main line tracks and immediately adjacent switch track of defendant for the express purpose of permitting* pedestrians to cross as aforesaid,* that at said time and place defendant wilfully and wantonly, with conscious indifference to the then existing conditions and surrounding circumstances, caused said train of cars so standing on. said switch track to be suddenly propelled or moved without giving any warning or notice by blowing a whistle, ringing a bell, or otherwise, by means whereof plaintiff, who was then and there attempting to cross, as he lawfully might, said line of railroad through one of said gaps so left in said train of cars standing on said switch track for said express purpose, and being then and there in the exercise of due and ordinary care for his own safety, was run over, struck and thrown beneath the wheels of one of said cars to and upon the ground there. Paragraph four alleges, in substance, that before plaintiff entered said gap there was no locomotive attached to either end of said train of cars and for that reason plaintiff, in the exercise of due and ordinary care for his own safety, well knew that said train* of cars would not and could not be propelled or moved in either direction until a locomotive should be attached to either end thereof, and plaintiff, so knowing, proceeded to cross through said gap in said train, all of which defendant then and there well knew, or in the exercise of due and proper care under the then existing conditions and surrounding circumstances would and should have known; and while plaintiff was in the act of passing through said gap and at a time when he was in between two adjacent cars of said train aforesaid, and thus in a position of peril, which such position of peril on the part of plaintiff was apparent to the servants of defendant, or by the exercise of due and proper care should have been apparent, defendant wantonly and wilfully, with conscious indifference to the then existing conditions and surrounding circumstances, suddenly and without any warning or notice by blowing a whistle, ringing a bell or otherwise, caused a certain locomotive with a car or cars attached thereto, which had been standing upon its main line track immediately adjacent to said switch track on which said train of cars through which plaintiff was then and there passing had been so standing, to be violently and suddenly propelled and moved from said main line track onto said switch track and up to and against said standing trains of cars on said switch track with such force and violence that the entire train of cars so standing on said switch track was moved and propelled forward thereby a distance of, to wit, 15 or 20 feet, and said gap or aperture through which plaintiff was then and there passing as aforesaid, was then and thereby violently and suddenly closed and plaintiff was caught between the ends of the two adjacent cars and crushed thereby and caused to be run over by the wheels of said adjacent car or cars. The fifth paragraph alleges general negligence and that plaintiff and “a group.of pedestrians” were then and there passing through said gaps in said train of cars standing on said switch track, by the express invitation of defendant. On motion of defendant that paragraph was stricken. Plaintiff has not assigned error thereon.

The only witness who testified as to the accident and the locus in quo was plaintiff. His testimony, in substance, is as follows: He lived in Chicago at the time of the accident, August 27,1935, and was then 18 years of age. He and an acquaintance, Joseph Schrimmenti, who was about the same age as plaintiff, decided that they would beat their way on freight trains from Chicago to San Diego, California,, where they expected to see the fair. At the time they left Chicago plaintiff had five dollars and Schrimmenti one dollar. Several days before the accident they started on the trip, and around 9 or 10 o’clock p.m. reached Brookfield, Cook county, Illinois, where they boarded a box car on a freight train and rode on that train until they reached Bock-ford, Illinois, the next morning, where the train stopped. “Bight away” they boarded another freight train and rode “inside an open boxcar” until the train reached Waterloo, Iowa, “after dark the same evening.” They then got off that train, walked into the town, and stopped there three or four hours. They then boarded another freight train and rode inside a box car until the train reached Galena, Illinois, when they alighted and walked to Dubuque, Iowa, where they spent three or four hours. When it became dark they went to the freight yards located there, entered a box car attached to a freight train and rode therein until they reached Council Bluffs, Iowa, where they remained a short time. They then walked over the bridge which crosses the river at that place and reached Omaha on the other side. After a very short stay in Omaha they went to the freight yards located there, got inside a box car on a freight train and rode to Lincoln, Nebraska, arriving there about 3 o’clock p.m. Neither had ever been there before. From the time they left Chicago until they reached Lincoln they obtained food from persons who gave it to them, or they bought it. In Lincoln someone directed them to the “Mission,” which was “quite a ways” from the point where they got off the train. At the Mission they ‘ ‘inquired around if they were doing any hiring or anything in town and they said no”; they “washed up and waited to 6:00 o’clock to get their dinner.” They did not have to pay for the dinner. After eating they sta3red at the Mission a few minutes and then walked toward the railroad tracks. After walking- a few blocks they “came to the stub-end of the street at the railroad track,” and then they “continued on across the railroad track.” On the side of the tracks where the Mission was located “the streets lead up to the right of was there”; “the streets came to an end there.” “1 couldn’t say the exact number of tracks we crossed, there was a lot of them; it seemed about a short block in extent, and we walked across those railroad tracks over to the further side of them; it couldn’t have been later than 6:30 at that time; we were over on the other side of the tracks a couple of hours. I believe I was hit between nine and half past. We were walking around looking at different places to see if we could see anybody still working over there. We saw people but we didn’t see anybody working.” They decided to return to the Mission and walked across the same tracks, but not at the same “spot” where they had first crossed, because they had “walked down a little ways. While we were looking along the other side.” “I am not positive of the direction I walked in.” When they reached about the middle of the tracks they saw “a line of boxcars standing along there,” but could not say how long the line of cars was; “it didn’t seem like there were over 3 or 4 cars; something like that,” in the direction toward Chicago; “I couldn’t say how many there were in the other direction. ’ ’ The freight cars were not all coupled together. There was ‘ ‘ a gap ’ ’ between two of the cars of about four feet. This gap “was just opposite those streets,” and was about half a mile from the depot. They decided to go through the gap. A stranger about the age of plaintiff passed through the gap ahead of plaintiff and his friend. “Q. . . . When you reached the gap, did you see anybody else there besides this boy you told us about, and Joe, and yourself? A. There was a fellow on the other side. Q. On the other side of the track? A. Yes, sir. Q. That is, on the other side of the track these cars were on? A. Yes, sir. Q. All right, what did you notice about him? A. There was a man in overalls with a lantern, he was writing in a book he had there and looking on the freight cars. . . . Q. Now, well, what did this third fellow, the stranger to you, the boy that you didn’t know, what did you see him do there? A. He walked over and he got into a conversation with this fellow with the lantern. Q. Now, where did he have the conversation, I mean, with reference to which side of this string of freight cars did this lad have the conversation with this man with the lantern? A. On the opposite side of us. Q. Had he crossed through the gap ? A. He had gone through it. It was just straight across from us he had gone through. Q. And what did Joe do? A. Joe started to follow through. Q. And did Joe go through the gap? A. Yes, sir.” Plaintiff and his friend “hesitated a while and then we went through.” “Q. How far was he ahead of your pal? A. I would say about twenty feet. Q. And how far were you behind your pal? A. I was right behind him. Q. How close to him? A. I would say about five feet. Q. Now, when you came to this space open between the two cars, your pal walked right through, didn’t he? A. Yes, sir. Q. And you followed right after, five feet behind him? A. No, sir. Q. How far were you behind then? A. Well, it was a little more than that by that time. I guess I didn’t follow him right through, I came through after him, but not immediately after him. Q. What were you doing? A. I was not doing anything. . . . Q. But you were walking right along, weren’t you? A. Yes, sir.” “Q. Now, as you approached that gap, what did you see, if anything? A. Well, I looked up and down to see if there was an engine on these cars, and there wasn’t. Q. All right, what did you see? A. I saw on the other side this train was going down with a couple of cars on it. Q. When you say going down, you mean going away from Chicago or towards Chicago ? A. Away from Chicago. Q. Was that on the track just next to the one these cars were on or not? A. Yes. Q. When you saw that train go on down with those cars and this man there, what did you do then? A. I started to go through then. Q. And as you were going through there, did you notice anything unusual, did anything unusual happen? A. Well, this train was starting to come back again. Q. And had you cleared the gap when you saw this train starting to come back? A. No, I was looking around there at the thing and it started to come back. Q. Were you still in the gap when you saw the train coming? A. Yes, sir. Q. Starting to come back? A. Yes, sir. Q. Was that on this same track that you saw ... it come up on? • A. Yes. Q. That was not on the track that these freight cars were on that you were going through there? A. No. Q. When you say you saw it coming back, was that coming towards Chicago then, when you say you looked out from the gap? A. Yes. Q. Now, then, what was the next thing that happened, as near as you can tell? Just tell us in your own words what you saw. A. Well, these trains that were coming back, these cars, — I was looking down the side like, and all of a sudden I seen it shoot over, . . . Q. When you say ‘shoot over’ which way did they shoot it? A. It started to come over towards this track where I was standing by these cars. . . . ” “The next thing that happened was, as this train was coming back, all of a sudden I saw the cars shoot over and I heard a crash; when I say shoot over, it started to come over from the track it was on toward this track where I was between these cars, and I heard the crash and got knocked down; the side of the freight train knocked me down; it hit me on the side — this shoulder (indicating the right shoulder). I went down and backwards-like and the train rolled over my right leg. I lay there for a while and then I heard them coining; I mean these workers around there; I couldn’t see them very well, but I saw them running around there; they were the only ones around there; I couldn’t see what direction they came from; I was still under the train. ” “ The stranger ran away. I never saw him after that. ’ ’ The witness further testified that railroad people picked him up, took him in an ambulance to St. Elizabeth’s hospital, and that night his leg was amputated.

Plaintiff states that the “errors relied upon for reversal” are: “The court erred in entering a judgment in favor of the defendant and against the plaintiff for costs, notwithstanding the verdict of the jury. . . . 1. The plaintiff made out a prima facie case, and there was no evidence at all produced by the defendant to refute it. (a) There was ample evidence from which the jury could reasonably and logically hold the defendant guilty of wanton and wilful conduct, (a1) There was evidence of actual knowledge of the plaintiff’s position of danger on the part of defendant’s servants. (a2) There was evidence of conscious indifference to the then existing conditions and surrounding circumstances, and wanton and wilful disregard thereof, on the part of defendant. (a3) Even if actual knowledge of plaintiff’s position of peril loere lacking, the defendant could still be held guilty of wanton and wilful misconduct, if the evidence showed a conscious indifference to the then existing conditions and surrounding circumstances and a reckless disregard for the safety of the public generally. ’ ’

Defendant contends that “The Court properly entered judgment for defendant notwithstanding the verdict and should have directed a verdict at close of plaintiff’s evidence. (A) Plaintiff failed to prove the allegations of his complaint and failed to prove facts entitling him to recover. (B) There was no evidence of wanton and wilful conduct on part of defendant’s servants. (C) There was no evidence of actual knowledge by defendant’s servants of plaintiff’s position. (D) There was no flying switch nor were the movements made wantonly or wilfully. (E) Plaintiff was a trespasser. . . . (F) The evidence does not show carelessness so gross in its nature as to indicate a mind reckless and regardless of consequences. (Gr) There was no evidence fairly tending to support plaintiff’s claim and the trial Court has not denied plaintiff a right of trial by jury. (H) Plaintiff was himself guilty of wanton and wilful conduct as a matter of law.”

Plaintiff testified that as he and Schrimmenti were walking toward the railroad tracks “the streets lead up to the right of way there”; “the streets came to an end there”; they “came to the stub-end of the street at the railroad track.” There was no proof of any street or path across the tracks, nor was there any evidence that defendant invited or permitted the public to cross the tracks at the locus in quo. Indeed, there is no testimony that anyone, other than plaintiff, his companion, and the stranger ever crossed the tracks at the point of the gap or near that location. There is no evidence in the record tending to show that there were streets on the other side of the tracks. Plaintiff testified that the gap in question was “just opposite those streets referring to the stub-end streets on the Mission side of the tracks. Pie does not claim that he went into the railroad yards upon any business with defendant. He testified that they proceeded across the tracks to where there were loading platforms; that “we were walking around looking at different places to see if we could see anybody still working over there. We saw people but we didn’t see anybody working. We decided to return to the Mission.”

Plaintiff argues that “the evidence fails to show whether he is a trespasser or not, ’ ’ but we find that the evidence conclusively establishes that plaintiff was a trespasser in defendant’s freight yards after nightfall. Defendant insists that when plaintiff’s entire testimony is considered it shows ’ clearly that he and his companion were in the dark freight yards for two hours for the sole purpose of stealing a ride on some freight train that might leave the yards headed for the west. In passing upon the court’s action in entering judgment in favor of defendant notwithstanding the verdict of the jury, we must view the evidence in the most favorable light for plaintiff, and he testified that he and his companion were walking around at different places to see if they “could see anybody still working over there.” Neither counsel asked plaintiff any questions as to whether he and his companion made any effort to ascertain if there' was any freight train that might leave the yards for the west.

In Bremer v. Lake Erie & W. R. R. Co., 318 Ill. 11, it is said (pp. 16, 17, 20, 21):

“In Illinois Central Railroad Co. v. Godfrey, supra, it was held when a trespasser on the track of a railroad company is struck and injured by an engine, the company can be held liable only for wanton or willful injury or such gross negligence as evidences willfulness. It is said in the opinion: ‘It is only for wanton or willful injury that the defendant is here chargeable, or such gross negligence as evidences willfulness. Notwithstanding plaintiff was unlawfully upon defendant’s right of way or not in the exercise of a legal right, and that his own lack of ordinary care exposed him to the risk of injury, yet the defendant might not, with impunity, wantonly or willfully injure him. And if defendant’s servants who were in the management of the engine, after becoming aware of plaintiff’s danger, failed to use ordinary care to avoid injuring him, defendant might be liable. And this, as we conceive, is the only measure of liability to be claimed, under the facts of this case.’ The distinction is clearly made that a defendant owes the duty of ordinary care to a trespasser known to be in danger, to avoid injuring him. If by the exercise of ordinary care injury can be avoided the defendant is liable for the failure to use such care, but to a trespasser whose presence or whose danger is unknown there is no duty to exercise ordinary care, though there is a duty not to injure him willfully or wantonly or by such gross negligence as evidences willfulness. The rule is stated in many of the cases cited that the defendant is not bound to anticipate the presence of trespassers on its property or to keep a lookout for them, and that its duty to exercise care to avoid injury to trespassers begins only when their presence is known. The rule is equally well settled that for an injury occasioned by the willful or wanton act of the defendant, or by such gross negligence as is equivalent to wantonness or willfulness, the defendant is liable. [Cases cited.] . . .

“The duty which a railroad company owes to a trespasser before it has knowledge of his presence or danger is, not to do any willful or wanton act to injure him. This duty, as was said in the Neice case, supra [Neice v. Chicago and Alton Railroad Co., 254 Ill. 595], is owing to the public generally and is applicable to any one of the general public who happens to be in such a position as to be the sufferer by the violation of the duty, and such sufferer will have a right of action for any injury he sustains. The case of East St. Louis Connecting Railway Co. v. O’Hara, supra [150 Ill. 580], is an illustration of this rule, in which it was held that where the defendant was running its engine in wanton and willful disregard of the rights and safety of the public generally, it was not necessary, in order to raise an inference of wanton and willful negligence, to prove that the defendant’s servants were actuated by ill-will directed specifically toward the plaintiff or to have known that he was in such a position as to be likely to be injured.

“If there is any evidence in the record fairly tending to show such a gross want of care as indicates a willful disregard of consequences or a willingness to inflict injury, then it is a question to be determined by the jury whether the negligent conduct of the defendant amounted to wantonness or willfulness. (Walldren Express Co. v. Krug, 291 Ill. 472.) "What degree of negligence the law considers equivalent to a willful or wanton act is as hard to define as negligence itself, and in the nattire of things is so dependent upon the particular circumstances of each case as not to be susceptible of general statement. The gross negligence which will justify the presumption of willfulness or wantonness is such as to imply a disregard of consequences or a willingness to inflict injury. (Lake Shore and Michigan Southern Railway Co. v. Bodemer, supra [139 Ill. 596].) An intentional disregard of a known duty necessary to the safety of the person, and an entire absence of care for the life, the person or the propel^ of others, such as exhibits a conscious indifference to consequences, makes a case of constructive or legal willfulness such as charges the person whose duty it was to exercise care with the consequences of a willful injury. (1 Thompson on Negligence, secs. 20, 22.) ” (Italics ours.)

In the late case of Provenzano v. Illinois C. R. R. Co., 357 Ill. 192, 195, the court said: “In order to constitute willful and wanton misconduct the injury must either have been intentionally inflicted, or produced by acts so grossly negligent as to exhibit a reckless disregard for the safety of others. (Brown v. Illinois Terminal Co., 319 Ill. 326.) ”

It will be noted that plaintiff’s errors relied upon for reversal are based upon the theory that defendant was guilty of wanton and wilful conduct, and the argument is that from plaintiff’s testimony in reference to a man in overalls, with a lantern, writing in a book and looking at the freight cars, it follows that this man then “had actual knowledge: (a) that there was a gap in the string of ears involved opposite a ‘stub-end’ street which provided the only means of egress and ingress to pedestrians desiring to cross the tracks at that point; (b) that pedestrians were actually passing through the gap because he was talking to the first pedestrian as he passed through; and the second one, the friend of the plaintiff, likewise emerged from the gap in full view of him; and the plaintiff was in the act of passing through only 5 feet behind the second pedestrian, (c) Actual knowledge of the switching and correlated movement going on in that immediate vicinity in connection with the string of cars involved. ’ ’ We will assume that the jury might reasonably infer from the evidence that this man was an employee of defendant. The fact that the man carried a lantern shows that it was dark in the yards. Plaintiff’s evidence in reference to this man is that he was engaged in making notations in a book of some information that he was obtaining from the side of railroad cars, but his evidence fails to show that this man saw plaintiff or knew where he was. The mere fact that plaintiff saw a man carrying a lighted lantern does not tend to prove that that man suav plaintiff, aaTlo was then standing in the dark, between íavo freight cars. Plaintiff’s further assumptions that the man wdth the lantern knew that cars were to be moved from one track to the other and that he had the porver to control the movements of the switch engine are not warranted by the evidence. Plaintiff does not contend that the engine crew had any knowledge that plaintiff was standing* betAveen the two freight cars at the time the engine and cars attached to it started to come back. Indeed, the evidence fails to sIioav that the engine crew had any knowledge or reason to believe that plaintiff was standing in the gap between the two freight cars at any time. When the testimony of plaintiff as to all that he saw while he was standing in the gap is carefully considered, it is difficult to understand why he remained there. If defendant, under the facts, were held guilty of wilful and wanton conduct it would amount to a holding that defendant, in making up its freight trains in its freight yard at night and at a place where there was no street or passageway across the tracks, would be bound to take extraordinary care to avoid injuring" trespassers who might be standing between cars and whose presence there was unknown to the servants of defendant.

As has been frequently stated, “A willful or wanton act is as hard to define as negligence itself, and in the nature of things is so dependent upon the particular circumstances of each case as not to be susceptible of general statement.” (Bremer v. L. E. & W. R. R. Co., supra, pp. 20, 21.) The following cases cited by plaintiff do not support his contention that defendant, under the evidence, was guilty of wilful and wanton negligence : In Lerette v. Director General, 306 Ill. 348, the accident occurred at a point where a public street, in the city of LaSalle, crosses the tracks of the Chicago, Burlington and Quincy Railroad Company. In Heidenreich v. Bremner, 260 Ill. 439, the plaintiff, a girl 13 years of age, was crossing Center avenue on a crosswalk of 18th street, in a thickly populated business section of Chicago, when she was knocked down by a team of horses driven by an employee of defendant. In Lund v. Osborne, 200 Ill. App. 457, plaintiff, á pedestrian, was struck by an electric car on a public crossing in the city of Highland Park, Illinois. The opinion states (pp. 461, 462): “It is clearly the duty of those in control of street cars to exercise a greater degree of care and watchfulness when approaching a street crossing or intersection than at other places along their route. (Heidenreich v. Bremner, 260 Ill. 439, and cases there cited.) This duty is particularly emphasized when the crossing or intersection is a busy one and much frequented. (Chicago City Ry. Co. v. Tuohy, 196 Ill. 410; Chicago City Ry. Co. v. Fennimore, 199 Ill. 9.) ” In Jeneary v. Chicago & I. Traction Co., 306 Ill. 392, plaintiff was a foreman "of a switching crew working for the New York Central Railroad Company. The accident occurred at the intersection of South street and Schuyler avenue, in Bradley. The tracks of the defendant, an interurban company, are laid in Schuyler avenue. The opinion states (p. 397): “Whether the injuries were willfully and wantonly inflicted was, under the facts in this case, a question for the jury. The motorman knew that he was approaching a grade crossing over which a train might be expected to pass. The crossing was in a closely built-up portion of the village and a view of the same was somewhat obstructed by the surrounding buildings. It was a place where the interurban car was expected to stop, and yet the motorman approached the crossing on slippery tracks at such a high rate of speed that he was unable to stop in time to avoid the collision.” In Gannon v. Kiel, 252 Ill. App. 550, plaintiff was struck by an automobile as he was crossing the crosswalk of a busy street intersection in East St. Louis. The last case cited, Brown v. Illinois Terminal Co., 319 Ill. 326, also involved an accident at a public crossing.

Plaintiff insists that whether the personal injury sustained by plaintiff was caused by the gross or wanton negligence of defendant was a question of fact that the jury had a right to determine, and that to hold otherwise would be to deprive plaintiff of the right of trial by jury. “While the question of willful or wanton conduct is usually a question of fact for the jury, yet where all the evidence, viewed in its most favorable light for the plaintiff, does not tend to show a willful and wanton act done without regard to the safety of others, the jury should be directed to find a verdict for the defendant. Such is the case here.” (Morgan v. New York Central R. R. Co., 327 Ill. 339, 346.) Testing the action of the trial court in entering a judgment for defendant notwithstanding the verdict of the jury in the light of the above well-established rule, we feel satisfied that the court’s action was fully justified by the proof. "Whether or not defendant, at the time and place, was guilty of ordinary negligence is a question not before us for consideration; but we feel impelled to say that if such question were presented we would not hesitate to hold that a jury would not be justified in finding, under the particular circumstances of this case, that defendant was guilty of ordinary negligence. These two young men were still attending school, and, so far as the record shows, were entirely unfamiliar with the manner in which freight trains were made up and moved in freight yards. When the way in which they intended to make the long trip to San Diego is considered, it is apparent that they were facing grave dangers at every step of the road. Viewing the evidence in the most favorable light for plaintiff, it seems apparent to us that the unfortunate accident to plaintiff was due solely to his own negligence.

The judgment of the circuit court of Cook county is affirmed.

Judgment affirmed.

John J. Sullivan and Friend, JJ., concur.


author: Mr. Justice Friend

text:
    The People of the State of Illinois ex rel. Edward J. Barrett, Plaintiff, v. Central Republic Trust Company, Defendant. Mary Barbara Brauer, Appellant, v. Charles H. Albers, Appellee.
    Gen. No. 40,327.

      Opinion filed May 2, 1939.
    Campbell, Clithero & Fischer, of Chicago, for appellant.
    William J. Flaherty, of Chicago, for appellee; John F. Cashen, Jr., and J. Raymond McGeean, both of Chicago, of counsel.
   Mr. Justice Friend

delivered the opinion of the court.

Plaintiff, Mary Barbara Brauer, filed her claim in the liquidation proceeding of the Central Republic Trust Company, based on the alleged misconduct of the bank in the sale of securities to her and in administering trusts for the holders of such securities. The master to whom the claim had been referred for hearing recommended that it be disallowed, and the court after overruling claimant’s exceptions to the master’s report dismissed her claim for want of equity. This appeal is prosecuted to review the order or decree thus entered.

Claimant is the widow of Paul Brauer, who died in 1924, leaving her a considerable estate including- an interest in Cafe Brauer, some 228 shares of stock in the Central Republic Trust Company, and various other securities. While alive her husband advised her as to all her investments, and after his death she frequently sought the advice of William G. Sturm, an assistant vice president of the Central Republic Trust Company, to whom her husband had introduced her. For more than 29 years she had been dealing with the bank in the purchase of bonds and mortgages, and maintained there a checldng and savings account. Her total investments and reinvestments over this period were in excess of $200,000. The bank never charged her for servicing the bonds and mortgages she purchased. Although claimant’s counsel say that she never had any business experience, except clerking in a millinery store prior to her marriage, it is evident that over these many years she purchased and sold securities of considerable value from time to time and had attended to her own financial affairs. After her husband’s death she maintained an interest in Cafe Brauer, and although she took no active part in the management thereof, she received money from profits earned by the cafe.

In August, 1928, Mrs. Brauer purchased mortgages on two separate properties which constitute part of the subject matter of her claim. These purchases are referred to as the Ogren and Katzman mortgages, the first for $15,000 and the second for $16,000. The facts leading to the purchase of these mortgages are substantially the same. She had received circulars describing each of these properties, giving the location, the description of the land and buildings, the type of security and directions for reaching the property, and both circulars contained a statement that the bank’s funds had been placed in the mortgages. Before these mortgages were purchased, claimant had told Sturm that she wanted small mortgages. He had none of that kind but told her of the Ogren and Katzman properties, and advised her to go out and look at them. She said she would try to do so but would rely upon him as she did not know much about values. The prospectuses relating to these mortgages fixed the bank appraiser’s valuation at $30,000. Claimant’s real estate expert testified that the Ogren property was valued at $20,000 in August, 1928, the bank’s expert" valued the property at $28,500, and Sturm testified that the real estate loan department of the bank valued the property at $30,000, and that he knew the property was worth that much from personal knowledge of real estate values in this particular vicinity. The assessor’s valuation on the Ogren property was $9,075. Similar evidence was introduced with reference to the Katzman mortgage. The assessor’s valuation on that property was $10,509.

In November, 1930, when the Katzman mortgage matured, Mrs. Brauer arranged for a renewal thereof through Sturm, after conferring with him. The extended mortgage matured in November, 1932. Claimant accepted $3,900 in Home Owners’ Loan Corporation bonds and $215 cash for this mortgage in November, 1935. The property was then worth approximately $8,000, and was subject to unpaid taxes and penalties amounting to some $4,400. These taxes were paid out of the proceeds of the H.O.L.C. loan, and her principal loss on this investment of $16,000 was $11,885, for which she sought allowance as a general claim in the liquidation proceeding.

The Ogren mortgage, representing an investment of $15,000, was foreclosed by claimant. She bought in the property at the master’s sale, leaving a deficiency of $5,635.51, and received a master’s certificate which she tendered back to the receiver of the bank before filing her claim. The tender was refused. The unpaid taxes then amounted to some $4,400, leaving a net value of approximately $4,700. She sought to have the loss on this property amounting to $10,309.46 allowed as a general claim in the liquidation proceeding.

With reference to the purchase of these two mortgages it is contended that claimant reposed special trust and confidence in the bank in connection with the selection of investments and that a fiduciary relation existed between her and the bank; that the bank made false representations as to the material facts to induce claimant to buy these securities and that she did so in reliance upon the good faith and truthfulness of the bank’s representations. The master found that no fiduciary relationship existed between the bank and claimant, but only the relationship of vendor and vendee; and that claimant failed to maintain the burden of proving fraud and deceit on the part of the bank as charged by claimant, and that these claims should therefore be dismissed for want of equity.

The question as to when a fiduciary relationship exists has frequently received the attention of courts in this State. In one of the leading cases, Winkleman v. Winkleman, 307 Ill. 249, an appeal was prosecuted from a decree declaring a constructive trust in certain real estate conveyed to Laura M. Winkleman by her father, Frederick Winkleman and his wife, Elmira. The Winklemans had three children, two of whom were not living* at home with their parents when the deed was executed. Laura was and always had lived with them and continued to do so until after their death. The property conveyed by the deed was valued at $100,000. Laura Winkleman, the grantee, was unmarried, and was employed as a teacher at the Lewis Institute in Chicago, and had always lived with her parents. When the conveyance was made the father was 77 years of age and had for months been sick and feeble in body and mind, and as the bill alleged he was easily susceptible to the influence and persuasions of his daughter, Laura. The evidence disclosed that she had attended to all his business transactions over a period of years, and that he relied on her in business matters and in the management and disposition of his property. The conveyance to Laura by her father and mother was made in reliance upon her promise to dispose of the property after their death — one-third to each of the three children, and a decree was entered upon evidence which the master and chancellor believed constituted a fiduciary relationship between the grantors and grantee. Nevertheless, the Supreme Court after reviewing the circumstances in detail reached the conclusion that the proof was insufficient to justify a decree finding that a fiduciary relationship existed. Although the court found that it was very clear that Laura’s father had great devotion for her and trusted her implicitly, and that during his illness she had attended to business matters for him and had access to his safety deposit box, collected checks for rents and deposited the money to her account in the bank, paid the household expenses and did other things of a similar character, nevertheless it was held that the proof did not show that the father was “subject to the domination and control of his daughter, ’ ’ without which a fiduciary relationship would not exist. Rubin v. Midlinsky, 321 Ill. 436; Duvall v. Chicago Trust Co., 284 Ill. App. 647 (Abst.); Johnson v. Lane, 369 Ill. 135, and Byerly v. Byerly, 363 Ill. 517, are all cases dealing with this subject. The courts have invariably held that a fiduciary relationship exists only when confidence is reposed on one side and there is a resulting superiority and influence on the other side. It is not sufficient that confidence be reposed by one party, but the confidence must be actually accepted by the other party in order to constitute a fiduciary relationship.

Applying these principles of law to the facts relating to the claim on the Ogren and Katzman properties, the record discloses that claimant was a person of intelligence, that she had made purchases from the bank over a long period of years and had attended to her own affairs; that although she sought and received Sturm’s advice from time to time there is no evidence to indicate that he exercised a resulting superiority or dominating influence on her, but merely conferred with her and tendered his advice and recommendations as to the purchase of securities as in the ordinary case of vendor and vendee.

The descriptive circulars claimant had before she made these purchases set forth the address of the properties, the width and depth of the lots, type of improvement on each, directions as to how to reach the properties, and in each instance Sturm advised her to go out and examine the property. Although there is a conflict in the evidence as to the fair appraised values of these properties at the time of the purchase of the mortgages, Sturm testified that they were fairly worth $30,000, and real estate experts testifying pro and con valued them at between $20,000 and $28,000. There was nothing to preclude claimant from making an independent investigation, and after a careful examination of the evidence we have reached the conclusion that the court properly overruled plaintiff’s exceptions as to these two items of her claim and approved the master’s conclusions that no fiduciary relationship existed between claimant and the bank, and that claimant failed in maintaining the burden of proving her allegations of fraud and deceit on the part of the bank.

The balance of Mrs. Brauer’s claim presents a different situation, however. In September, 1930, she held funds in reserve to pay a possible liability. The bank sent her a letter signed by Mr. Sturm as its assistant vice president suggesting that she consider investing this money in a “gilt edge investment loan for about eleven months and paying you 6% interest,” offered by the bank. On receipt of this letter claimant had a talk with Sturm who told her about the 1106 Lake Shore Drive Building Corporation bonds, which he characterized “as good as gold.” He told her that there were five very wealthy men back of them and gave her a circular containing descriptive information about the bonds. On the bank’s recommendation she purchased $10,000 of these bonds at par plus accrued interest. These bonds were, part of a $450,000 issue the bank had underwritten and issued September 3,1929. As to this claim claimant likewise contends there were representations of fact with reference to the value of the property, the wealth of the five individuals who had guaranteed the bonds, the uses to which the building could be put, the margin of security and other circumstances claimant’s counsel say were all material, but untrue. As to these bonds claimant seeks a preferred claim in the liquidation proceeding against the securities deposited with the State auditor to secure trust creditors.

Aside from the contention that these bonds were purchased pursuant to misrepresentations made by the bank, it is also urged that the bank as trustee for the benefit of claimant as holder of bonds was guilty of such breaches of trust as to justify the allowance of her claim. The salient facts relating to this phase of the controversy may be summarized briefly as follows: These bonds were secured by trust deed conveying real estate to the bank as trustee, and it is admitted that the bank was trustee of express trusts for the benefit of claimant and others holding bonds in the 1106 Lake Shore Drive Building Corporation. The bank continued to act as such trustee until September 26, 1933, and as trustee it was the obligee of the written guarantee agreement entered into by the five individuals interested in the property. The bank in its individual capacity owned many of these bonds. They became due September 3, 1931. The 1929 taxes on the property amounted to $11,792.76. $40 was paid on account of these taxes May 19, 1931. The balance had become delinquent May 15,1931. (Ill. Rev. Stat. 1937, ch. 120, par. 165, sec. 177, p. 2648 [Jones Ill. Stats. Ann. 119.200].) The balance of the 1929 taxes and taxes for every subsequent year were unpaid and no deposit was made with the bank as trustee to secure the unpaid taxes. Shortly before the bonds matured claimant received a letter from the bank dated August 29, 1931, advising her that the bond issue of $450,000 would mature on September 3, 1931; that payment of $150,000 on account of principal, together with interest due September 3, would, be deposited with the bank before the latter date providing arrangements could be made for the extension of $300,000 of the bonds for three years, interest at 6 per cent, the payment of principal and interest on the extension to be guaranteed by the same parties that were guarantors in the original loan. The letter gave the description of the property, the nse to which it was put, and stated that it had been acquired two years previously for a cash consideration of $720,000, and concluded by stating that “because of the excellent record of this bond issue, and the fact that $150,000 is to be paid on account of the principal at this time, we can thoroughly recommend that our holders retain their bonds for the extended term. We suggest that you forward your bonds to us immediately, using the enclosed transmittal blank for that purpose, and we will promptly send you a receipt for the same, . . . .” This letter was signed by Mr. Sturm as vice president. On receipt of the letter claimant proceeded to the bank where she had a conversation with Sturm which is disclosed by her undisputed testimony as follows: “I asked Mr. Sturm to see to it that my bonds were paid at that time, and he said that they could not pay it. On or about August 29, 1931, I asked Mr. Sturm if the $10,000 would be paid for the bonds', but it didn’t do me any good. He said that two of the men had lost all their money and three of them were holding back. I said, ‘If that is the thing to do, to renew it, all right. ’ He said that three of the men were very reliable, but that two of them had lost all of their money. I consented to the extension of the bonds and received interest for a short time. Then they defaulted again. I was never told during* the conversations at about the time these bonds were extended, that $150,000 of the bonds had been paid, nor that taxes were in default.” At the time of this conversation the bank owned $28,500 in principal amount of these bonds and $40,500 of them stood in the name of Eugene V. R. Thayer, who had shortly prior thereto been executive vice president and was still a director of the bank, Sturm did not tell Mrs. Brauer that the bank and its officer, Thayer, owned bonds of this issue which they had no intention of extending. Accordingly, claimant signed a consent to the extension dated December 5,1931. Five days later the bank received a payment of $173,342.54 as trustee for this bond issue. Out of these funds the bank paid itself $15,000 principal on bonds which it held, and paid $40,500 bonds outstanding in the name of Thayer in full. The bank also paid itself a commission of $9,000 for its services in extending the maturity of the bonds held by claimant and others. In September, 1932, four of the guarantors paid 55 per cent of the current interest. The balance was never paid. The bank in its capacity as trustee sued the fifth guarantor for $4,134 representing his pro rata share of this interest instalment. It never brought the suit to trial and this was the only action the bank ever took to collect the bonds or interest thereon. When claimant’s counsel discovered these facts they tendered the bonds in the sum of $10,000 to the receiver. Their fair value according to the stipulation of the parties was then $4,500. Claimant’s loss was therefore $5,500.

Two principal legal propositions are advanced with reference to the facts hereinbefore set forth: (1) It is urged that the trustee of choses in action is obligated to use reasonable diligence to promptly collect all funds owing thereon, and in the event that he does not proceed promptly the burden is upon the trustee to prove that collection was impossible, and in the absence of such proof the trustee will be charged with the total loss sustained; and (2) the bank’s action in using funds which it received in its capacity as trustee to pay bonds owned by the bank and its officer, to the exclusion of the claimant and other bondholders, was a breach of trust to the extent of the funds retained by the bank and its officers.

With reference to the first contention it is evident that the building corporation defaulted in payment of 1929 taxes in excess of $11,750, which became delinquent in May, 1931. No deposit to secure their payment was made with the trustee, as required by the trust deed, in the event that the mortgagors, “in good faith,” should contest the taxes. The deposit of $40 certainly did not represent a fair tax liability on property the bank had represented as being worth $720,000, and it cannot fairly be argued that the deposit of that sum complied with the good faith provision of the trust deed. In 1932 only 55 per cent of the September interest instalment was paid and the bank sued one of the guarantors for the balance, but took no steps to bring the suit to trial. Afterward a full instalment of interest was defaulted in March, 1933, but again the bank took no legal action to collect it, nor to collect the principal or interest after succeeding defaults. After 1931, when the first tax default occurred, the real estate continued to decline in value and it was incumbent upon the trustee to take some reasonable steps to enforce the collection of these various items as provided in the trust deed. Nevertheless, substantially no steps were taken by the bank, and under the circumstances we think the trustee failed to use the reasonable diligence which the law imposed upon it. (Bern v. Kellogg, 54 Neb. 560; Omaha National Bank v. Kiper, 60 Neb. 33; In re Reinboth (C. C. A. 2d), 157 Fed. 672; Waterman v. Alden, 144 Ill. 90.)

As to the contention that the bank as trustee was guilty of fraud in using funds it received in its trust capacity to pay bonds owned by the bank and its officers to the exclusion of claimant and other bondholders, the evidence is clear that claimant, after advising Sturm that she wanted her bonds paid rather than extended, was met with evasions which led her to believe that there was no possibility of collecting her bonds, as a result of which she consented to the extension. She was not told at the time that the bank and one of its officers held bonds on which they expected to receive payment. These statements were made to her by an officer of the trustee under a trust deed which.specifically provided that “all moneys so deposited shall be held by the trustees as a special fund in trust for the payment of such bonds and coupons . . .,” and under these circumstances it would be a departure from the fundamental law of trusts, which requires a trustee to disclose fully and fairly to the beneficiary all the facts upon which the beneficiary is required to exercise judgment, and which impose a most rigid duty on the trustee to deal fairly with the beneficiary in matters relating to the trust. Numerous cases are cited by claimant to support this requirement of the law, the earliest of which is Thorp v. Mc-Cullum, 6 Ill. 614, wherein the fundamental duty of the trustee is defined as follows (p. 626): “Indeed it is too sound a rule of policy, although arbitrary and inflexible, and too well supported by reasons deduced from observation and experience, to yield to particular cases of hardship. The temptation of self interest is too powerful and insinuating to be trusted. Man cannot serve two masters; he will foresake the one and cleave to. the other. Between two conflicting interests, it is easy to foresee, and all experience has shown, whose interests will be neglected and sacrificed. The temptation to neglect the interest of those thus confided must be removed by taking away the right to hold, however fair the purchase, or full the consideration paid; for it would be impossible, in many cases, to ferret out the secret knowledge of facts and advantages of the purchaser, known to the trustee or others acting in the like character. The best and only safe antidote is in the extraction of the sting; by denying the right to hold, the temptation and power to do wrong is destroyed.”

One of the fundamental principles of the law of trusts is that a trustee will not be permitted to retain any personal advantage received through dealings with the trust property (Bennett v. Weber, 323 Ill. 283, 293, 294; Joliet Trust & Savings Bank v. Ingalls, 276 Ill. App. 445, 451) and where a trustee has come into a position where his interests as an individual conflict with the best interests of the trust, and the trust sustains a loss from transactions growing out of such conflicting interests the trustee will be required to reimburse the trust. The courts have said that this requirement is dictated by considerations of public policy and is not governed by the facts of any particular case. This principle of law is applied to all cases where a trustee permits his individual or personal interest to influence his conduct as trustee. (People v. Canton Nat. Bank, 288 Ill. App. 418; Mehaffy v. Roscoe Farmers’ Savings Bank, 210 la. 116.) And the trustee’s duty not to place himself in a position where his personal interests conflict with those of his beneficiary, likewise applies to the officers of corporate trustees. (Bogert on Trusts and Trustees, 1935, vol. 3, sec. 543.)

The remaining contentions apply to the commission of $9,000 received by the trustee for extending the bonds held by claimant and others. In White v. Sherman, 168 Ill. 589, a trustee received commissions in connection with insurance written for the trust, and the court required him to refund these commissions to the beneficiary, saying (p. 611) : “The fact, that he was receiving commissions, might have subjected him to a temptation to place a larger line of insurance than was necessary on the trust property. It is not essential, that the estate has suffered a loss from what he has done; it is sufficient that he has gained a profit. ’ ’ In the case at bar the bank received a commission for extending bonds by reason of which it was able to receive payment on bonds owned by itself and its officer, and this no doubt caused the bank to induce claimant and other bondholders to extend their bonds so as to make possible the payment of $150,000 in the event that the extension of $300,000 in bonds could be obtained by the trustee. No doubt the bank yielded to this temptation and recommended the extension by claimant and others, “because of the excellent record of this bond issue,” at a time when a serious default had already occurred in payment of taxes. We are therefore impelled to hold that it would be inequitable to permit the bank to retain the $9,000 commission thus obtained.

Lastly, it is urged by claimant that the court erred in taxing $625 master’s fees against her. It is argued that because this was merely one of many claims in liquidation, the costs should have been charged against the receivership as an expense of liquidation. Claimant says that it was the receiver rather than the claimant that was responsible for the fact that the hearing of this claim took more time than it should have taken. We are not disposed to pass upon that fact, and since Mrs. Brauer’s claim is allowed in part and disallowed in part, we think it would be proper for her to share in the expense incurred. Therefore the master’s costs and expenses, including his statutory fees, are apportioned equally between the receiver and claimant.

It is therefore ordered that the decree of the circuit court be affirmed as to the dismissal of Mrs. Brauer’s claim relative to the Ogren and Katzman mortgages, reversed as to her claim relative to the 1106 Lake Shore Drive Building Corporation bonds and also reversed as to the question of costs, and the cause is remanded with directions to enter a decree in her favor in conformance with the views herein expressed, and to tax the master’s costs and expenses, including his statutory fees, one-half against appellant and one-half against appellee.

Decree affirmed in part and reversed in part and cause remanded in part with directions.

Scanlan, P. J., and John J. Sullivan, J., concur.


text:
    Harry Roth et al., Plaintiffs, v. Harry Ahrensfeld et al., Defendants. Harry Roth et al., Appellants, v. W. A. Jones Foundry & Machine Company, Appellee.
    Gen. No. 40,389.

      Opinion filed May 2, 1939.
    Rehearing denied May 20, 1939.
    Ernest W. Clark and Edelson & Paullin, all of Chicago, for appellants; Sidney W. Mandel and Albert Langeluttig, both of Chicago, of counsel.
    George A. Bosomburg, of Chicago, for appellee.
   Mr. Justice Friend

delivered the opinion of the court.

Plaintiffs filed a complaint in equity on behalf of themselves and all other creditors of the Crawford State Savings Bank by which they sought to enforce the constitutional liability of the stockholders of the bank. This appeal involves solely the question whether W. A. Jones Foundry & Machine Company, hereinafter referred to as defendant, is liable upon certain stock standing in its name upon the books of the bank on the date it was closed by the auditor of public accounts. The cause was referred generally to a master in chancery, who filed a special report with reference to the liability of defendant, recommending that a decree be entered in favor of plaintiffs and assessing defendant’s liability in the sum of. $10,000. Plaintiffs appeal from an order of the court sustaining exceptions to the master’s report and dismissing the complaint for want of equity as to this defendant.

Upon the hearing counsel entered into a stipulation as to the essential facts. From this stipulation and evidence adduced before the master, it appears that Warren Gr. Jones had been the owner of 172 shares of the stock of the Crawford State Savings Bank. He also was a director of the bank. December 31, 1930, he transferred 100 of these shares to defendant, W. A. Jones Foundry & Machine Company. Among the records of the bank was found a stock certificate stub, showing that defendant was a stockholder of the bank from December 31,1930, to the date of the trial. Jones was president and general manager of defendant, and owned 19,480 of the 23,000 outstanding shares of defendant’s common stock and had voting control of defendant company. Most of the preferred shares were held by others. The company was substantially a family corporation and Jones was commonly known and referred to.as the “boss.” He operated the company and was its directing head. When Jones effected the transfer of 100 of his shares of the bank stock to defendant December 31, 1930, he directed the bookkeeper to set up a credit on its books in his favor of $20,000, and proper entries were immediately made on defendant’s books, evidencing the acquisition by it of the 100 shares of bank stock.

The bank was closed by the auditor of public accounts January 15, 1931. Thereafter this suit was instituted and defendant was subsequently joined as a party to the proceeding and summons was served on it January 12,1932. It was not until almost six months after the service of summons, namely, July 1, 1932, that a resolution was passed with the unanimous consent of the directors, including Jones, reciting that the transfer had been made without the knowledge, authority or approval of the board of directors; that it had not been ratified by the board; that it was outside the scope of the corporation’s powers; and accordingly rescinding the credit of $20,000 theretofore given Jones on the books of the company as of December 31, 1930, by cancellation of a corresponding charge against him for the same amount. After the transfer of the stock by Jones to defendant, liabilities accrued in favor of the creditors of the bank in the amount of $276,289.49, all of which remained unsatisfied at the time the bank was closed, and it is urged that these deposits were made on the strength, in part, of defendant’s stock holdings of record.

Although 25 separate exceptions were filed to the report of the master and sustained by the court, it will serve no useful purpose to discuss them in detail. The salient question presented is whether the transfer of shares as between Jones and his company may be set aside as against innocent creditors of the bank, who in depositing their funds had the right to rely on defendant’s ownership of 100 shares of the bank stock.

Section 6 of Article XI of the Constitution of this State (Ill. Rev. Stat. 1937, p. 57 [Jones Ill. Stats. Ann. Vol. 1, p. 473]), under which plaintiffs seek to charge defendant, provides: “Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors, over and above the amount of stock by him or her held, to an amount equal to his or her respective shares so held, for all its liabilities accruing while he or she remains such stockholder.” Golden v. Ellwood, 299 Ill. 73, holds that “no one but an actual stockholder can be held to such liability.” The authorities are also in accord in holding that the relation of a stockholder to a corporation is one of contract, either express or implied (Rosenfeld v. Horwich, 221 Ill. App. 304, 311, 319), and is read into the contract of purchase by operation of law whenever a share of stock is acquired. (Heine v. Degen, 362 Ill. 357.) In reliance upon these general principles of law, defendant takes the position that it never became a stockholder and could not have acquired this stock without the knowledge and consent of its board of directors ; that the directors were unaware of the transfer and never consented thereto or ratified the transaction; that Jones had never before transferred any stocks or bonds to the defendant; that the market price of the stock at the time of the transfer was approximately $150 a share, and that the directors would not knowingly have consented to the transfer of 100 shares of stock to the corporation at $200 a share, when they could have bought the stock if they had desired to acquire it at a substantially lower figure; that Jones’s action in transferring the 100 shares of the bank stock to defendant was improper, and having been afterward set aside as between Jones and the corporation plaintiffs cannot hold defendant liable as a stockholder of the bank.

It appears from the testimony of some of the directors that although the stock transferred by Jones to defendant appeared on the records of the company immediately upon its consummation, and continuously thereafter until the transaction was rescinded, the directors paid no attention to the books of the company and did not take cognizance of the transfer until July, 1932. The master found, however, that because of certain pertinent evidence adduced before him the directors and officers of the corporation are deemed to be conclusively bound by the entries of its record books, and that it was their duty to examine them so as to become familiar with the same, and that plaintiffs had the right to rely implicitly on the books of the bank and to enforce a constitutional liability against those persons disclosed by the regularly kept books of the bank to be its stockholders.

The pertinent circumstances upon which plaintiffs base their contention that defendant’s directors must be presumed to have known of the stock transferred by Jones to the company may be briefly summarized as follows: Aside from the actual transfer of the stock by Jones to the corporation, an entry was made in defendant’s journal book debiting and charging' the account known as “Stocks and Bonds,” with the sum of $20,000, and crediting the account of “W. G. Jones, Accounts Receivable, ’ ’ in a like sum. The books contain also an extension to support these entries, as follows: “100 shares Crawford Bank Stock taken over from W. G. J. at $200 per share, and credited to W. G. J. per his order. ’ The master found from uncontradicted evidence that defendant’s balance sheet as of December 31, 1930, appended to its federal income tax report for that year, was examined by a qualified auditor who testified that one item thereof, indicating ownership of defendant’s stocks and bonds, bears a statement to the effect that it includes 100 shares of Crawford Bank stock. This auditor’s examination further discloses that as of June 30, 1932, an entry was made in defendant’s journal crediting the account labeled, “Reserve for Crawford Bank Items,” and debiting the “Earned Surplus Account.” This entry bears the following supporting extension: “To set up reserve against Crawford Bank items except for the 20% dividend on deposit account.” As explanatory of this last item, it appears from the record that defendant caused to be filed in the liquidation proceeding of the Crawford State Savings Bank, General No. B-214832, its certain claim for moneys held on deposit by it in the bank. An order was entered in that cause March 4, 1931, enjoining William J. Rathje, receiver, from paying any dividends upon the accounts of any stockholders of the bank. Thereafter, July 8, 1932, pursuant to defendant’s verified petition filed in the bank liquidation proceeding, an order was entered directing the receiver to pay defendant a present dividend of 20 per cent, as well as all future dividends that might be declared, and the order provided that these things should be done “without prejudice to the question as to the proper ownership of a certain certificate of one hundred (100) shares of common stock of the Crawford State Savings Bank that appears to have been issued to W. A. Jones Foundry & Machinery Company on, to-wit, the 31st day of December, A. D. 1930.” It thus appears that in addition to the entries made on defendant’s books immediately after the transfer of the stock, recognition of the transaction is found both in the corporation’s audit reports for 1930 and 1931, and in subsequent entries in defendant’s books, and it is difficult to believe that the directors, who are charged with the responsibility for conducting defendant’s affairs, could have been entirely ignorant of the fact that the company’s records showed ownership of 100 shares of the bank stock from December 31, 1930, continuously until July 1,1932, and that its audits and books treated that stock as belonging to defendant during this entire period.

The disclaimer of the directors of any knowledge of the transaction until July, 1932, is extremely difficult of contradiction by competent evidence, for as plaintiffs argue strangers are never invited to the meetings of directors and stockholders, and when a corporation seeks to avoid liability through proceedings enacted within the confines of its own directors’ meetings, third persons have no way of disproving the lack of knowledge of individual members of the board. It is for this reason that courts have generally held that corporate directors are in duty bound to inform themselves of the company’s affairs, and are presumed to know the condition of the corporation, its business, receipts, expenditures and the general facts which reflect the condition of the business as shown by entries on its record books.

In Mamerow v. National Lead Co., 206 Ill. 626, the question arose as .to whether directors who were also guarantors on moneys and obligations which might become due from the corporation to its creditors in the course of trade were chargeable with notice of the financial condition of the company, and the court held that where the guarantors had notice and information through an independent source, or where it is their duty under the law to take notice, a creditor is not required to serve notice of default on the guarantors because as directors it was their duty to know the liability and financial condition of the company and they were charged with notice of default. Runt v. Rosenbaum Grain Corp., 355 Ill. 504; Hill Co. v. Barmore, 220 Ill. App. 222, 230, are to the same effect.

In the case at bar defendant’s books promptly reflected the transaction concerning this stock, and the directors, who are presumed to have known of the transaction because of the circumstances hereinbefore set forth, stood by and did nothing until defendant was sued, more than a year later. We are not called upon to decide whether defendant might have avoided the transaction as to plaintiffs if it had acted promptly, because the evidence discloses that it did not act promptly or diligently, and under the circumstances we think the continued silence of the directors amounts to a ratification.

There are numerous decisions in this State and other jurisdictions which clearly establish the proposition that one who has been induced by fraud, either of the bank, its officers or third persons, to become stockholders of the bank, cannot avoid his liability to creditors of the bank on that ground. (Mundell v. Cravens, 267 Ill. App. 447, 451; Lewis v. State ex rel. Schull, 177 Okla. 399; Scott v. Deweese, 181 U. S. 202.) Plaintiffs argue with considerable force that it would follow a fortiori, that where the fraud claimed by defendant was not participated in by the. bank, its officers or any other person than the one whom defendant has vested with the title and powers of president and general manager of the company, the defendant cannot avoid responsibility to innocent third persons.

The law is well settled that one who becomes a stockholder involuntarily or through some fraud practiced upon him “is nevertheless estopped as against creditors to deny that he is a shareholder, if, at the time the rights of creditors accrued, he voluntarily occupied and was accorded the rights appertaining to that relation. ... A very different rule of diligence is required between him and the creditors than is required as between him and the corporation. It is his duty to use a high degree of care and diligence to see that creditors are not misled by his conduct.” (Bartlett v. Stephens, 137 Minn. 213, and numerous other cases reviewed in Rosenfeld v. Horwich, 221 Ill. App. 304.) In the Stephens case, the court suggested that a stockholder might relieve himself from liability if he “takes seasonable steps, while the corporation is a going concern, to rescind and to purge the corporation records of his name as a stockholder,” (citing numerous cases). Undoubtedly, if the directors had acted promptly when they learned that Jones had transferred this stock to the corporation, as they say, without their knowledge and consent, this proceeding would have presented an entirely different aspect, but under the circumstances hereinbefore set forth we are impelled to hold that they must have had actual knowledge that as a matter of law they are presumed to have been familiar with the records of the company as' reflected in its audits and books, and that their silence for more than a year and until summons was served upon the company amounted to a ratification.

Aside from the principal question involved in this proceeding, it is urged by defendant that the acquisition of the bank stock by defendant was ultra vires, and that inasmuch as the transaction took place prior to the enactment of the business corporation law in 1933, defendant should be allowed to set up the defense of ultra vires. This position is untenable because, as the master found, the General Corporation Act (ch. 32, sec. 1, et seq., Cahill’s Ill. St. 1931) which became effective in 1919, was in full force and effect at the time of this transaction. By section 7 of that act domestic corporations are given the right to hold stock in other corporations.

The only other point urged by defendant is that it was error for the master, after rendering his general report, to complete the hearing pending* before him concerning the liability of defendant. The record discloses that the master filed his general report in July, 1935, and an order was entered therein August 3,1935. There had been a general order of reference covering the question of defendant’s liability, and in the decree entered on the latter date it was recited that all evidence had not been heard by the master on the prior reference as to certain defendants, and the decree contains a specific statement referring- to the claim against W. A. Jones Foundry & Machine Co. and provides that the court retain jurisdiction to entertain further proceeding’s and orders pertaining to this defendant. In view of the record the argument of defendant that the master lacked jurisdiction to hold any further hearings and to make a supplemental report without re-reference or authority from the court is untenable. Moreover, defendant proceeded to a hearing, and if there was any validity to the objection it has waived the same.

During the pendency of this cause defendant moved to dismiss the appeal. That motion was reserved to the hearing and it is herewith denied.

From what has been said we are of the opinion that the master properly found and recommended a decree fixing the liability of defendant at $10,000, and that the court erred in sustaining defendant’s exceptions to the master’s report. Therefore the decree of the superior court is reversed and the cause is remanded with directions to enter a decree in accordance "with the recommendations contained in the master’s report.

Decree reversed and cause remanded with directions.

Soanlan, P. J., and John J. Sullivan, J., concur.