author: Mr. Presiding Justice Gridley

text:
    Gus Valulis, Appellant, v. Phillip State Bank and Trust Company, Appellee.
    Gen. No. 35,531.
    Opinion filed April 5, 1932.
    Cooney & Veriioeven, for appellant.
    Irwin Grossman, for appellee; Ben A. Stewart, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

In an action in assumpsit, commenced in the superior court on July 10, 1930, there was a trial without a jury upon a stipulation of facts and certain documentary evidence introduced. On May 2, 1931, the court found the issues for defendant and entered a judgment for costs against plaintiff and he appealed. Each party submitted certain propositions of law which were ruled upon by the court.

Plaintiff’s original declaration consisted of a special count and the common counts. On defendant’s motion, plaintiff also filed a bill of particulars. To the declaration defendant filed a plea of the general issue, and subsequently an additional plea to which plaintiff demurred. On March 16, 1931, plaintiff, by leave of court, filed two additional counts. On the eve of the trial the parties made a stipulation as to the pleadings, whereby plaintiff withdrew his demurrer to defendant’s additional plea to the original declaration and defendant withdrew said plea, and it was agreed that defendant’s plea of the general issue and affidavit of merits to the original declaration should stand to the additional counts, and that defendant be allowed upon the trial to make any and all defenses it might deem proper to all counts.

In the special count plaintiff alleged that on October 13, 1926, defendant was engaged in the banking business in Chicago and received from C. K. Pittas, Nick P. Maliopulos and Marion T. Anderson (hereinafter called the “purchasers”) the sum of $8,000, on account for the purchase of certain real estate (describing it), and executed and delivered to them a certain written agreement, which recited that defendant was acting as trustee under the provisions of a certain “trust agreement,” dated December 22, 1923, and known as “Trust No. 4,” the terms and conditions of which trust agreement were known to defendant but not known to the purchasers or to plaintiff; that the written agreement was on June 2, 1930, assigned by the purchasers to plaintiff by their written assignment, together with all sums of money received by defendant from them (said written agreement is set out in full); that after said assignment defendant received other sums of money from plaintiff on account of said written agreement; that said written agreement “was null and. void” because “it was not a contract between said purchasers, or plaintiff, and any living or artificial person for the purchase of said real estate, but purported to be a contract between said purchasers, or plaintiff, and a written document or chose in action, towit, said trust agreement, dated December 22, 1923, and known as Trust No. 4”; that by reason thereof defendant received all the moneys aforesaid for the use of plaintiff. In his affidavit of claim he alleged that his demand is for moneys received by defendant for his use, and that there is now due to him from defendant, including interest, and after allowing all just credits, deductions and set-offs, the sum of $14,394.

In the first additional count plaintiff alleged that on October 13, 1926, and prior thereto, defendant “was incorporated under the statutes of the State of Illinois as a Banking Corporation and Trust Company, and engaged in a banking and trust business”; that on said date defendant entered into a written agreement with, three named persons,. called the “purchasers” (the same three as mentioned in said special count), to sell to them “certain real estate and lots (describing them) in what is known as the ‘Crawford, Touhy Road Subdivision,’ being a subdivision of lots and blocks which it was then engaged in selling through the ‘Westminster Real Estate Developing Co.,’ its selling agents ’ ’; that defendant did not then have, nor has it since acquired, such title to the land as would enable it to convey the same by good and sufficient warranty deed to purchasers; that the manner in which defendant acquired such title as it claims to have is “contrary to the statute”; and that the written agreement by it to convey the same to said purchasers “was beyond its corporate powers” and is “null and void.” The second additional count is similar to the first.

In defendant’s affidavit of merits it is alleged that at the time of the making of the written agreement of October 13,1926, ‘ ‘ all of the parties thereto were legal entities”; that the agreement “was entered into for a lawful purpose by persons legally competent to contract” ; that thereafter and prior to the commencement of this suit, plaintiff or his assignors made payments to defendant as trustee which were duly credited by it in reduction of the purchase price of the land; that on December 13, 1929, plaintiff and/or his assignors defaulted in the payment of principal and interest, and continued in such default from and after said date and increased the amount of such defaults by failing to pay the principal in the sum of $201 on the 13th day of each and every month thereafter, and also by failing to pay other interest; that on June 15, 1930, defendant notified plaintiff in writing “that, unless said defaults were cured by plaintiff making payments on or before July 25, 1930, it would forfeit plaintiff’s rights in said contract and in said premises”; that said defaults were not cured; that on August 6, 1930, defendant notified plaintiff “that said contract and all of plaintiff’s rights therein had been and were forfeited and determined”; that at the time this suit was commenced said contract was null and void and had ceased to exist from and after August 6, 1930; and that defendant is not indebted to plaintiff in the sum of $14,394, or in any sum.

From the stipulation of facts and the documentary evidence introduced upon the trial the following in substance appears: On December 22, 1923, defendant was, and since has been, a corporation organized under the banking laws of this State, and was and is engaged in the general banking business in Chicago. It also was and still is authorized to accept and execute trusts, and was and still is functioning and doing business as a trust company under the laws of this State. .Title to the land in question was on said date' conveyed by Mary K. Muño, a widow, under a “Warranty Deed in Trust,” to defendant “as trustee under the provisions of a trust agreement, dated December 22, 1923, and known as Trust Number'4.” By the deed full power was given to defendant to deal with the property for trust purposes, and in no case was any person, to whom the land or any part thereof should be conveyed, contracted to be sold, leased or mortgaged, obliged to see to the application of any purchase money, or to see that the terms of the trust were complied with, or be privileged or obliged to inquire into any of the terms of the trust agreement. The deed recited that it was the intention to vest in defendant the entire legal and equitable title in fee to all of the land conveyed, and that the interest of every beneficiary thereunder was to be “personal property,” and to be “in the earnings, avails and proceeds arising from the disposition of the premises.”

To said Trust Agreement No. 4 there were three parties, viz., Pauline C. Rothstein, Alfred Blauspahn, Rose Q-. Kepler and Irwin Grossman of Chicago, first parties, called the “Beneficiaries”; defendant bank, called the “Trustee” when referred to in its capacity as such, and called the “Trust Company” when referred to in its individual capacity, second party; and Edward A. Taiman and Wilbur P. Thiele, copartners as Taiman & Thiele, called the “Managers,” third parties. The land conveyed by the deed was a tract containing approximately 20 acres, which later was subdivided and platted into blocks and lots. This constituted the trust estate. Defendant, in its individual capacity, loaned to itself in its capacity as trustee the sum of $42,000, taking as security a note for said amount, evidencing said indebtedness, maturing December 22, 1926, and bearing interest, payable semiannually. Said trust agreement ‘ provided that said note was to be a first lien on all proceeds received from the sale of lots in the tract, after paying the commissions earned by the managers on sales made by them. The money loaned by defendant in its individual capacity was used as part of the purchase price for the tract acquired by it in its capacity as trustee. The business of selling the lots in the tract was vested exclusively in the managers. They agreed to use their best efforts to sell said lots, to employ all necessary salesmen at their own expense, to pay all costs involved in the selling, including those of printing contracts, advertising, automobile hire and salesmen’s commissions. All contracts for the sale of lots were to be executed by defendant, as trustee. All payments, under said contracts made by purchasers, except a certain percentage of the first payment which said managers were authorized to retain as a part of their commissions, were to be made to defendant, as trustee, which could retain one ■(!%) per cent of the selling price of each lot sold as full compensation for its services as trustee.

On October 13, 1926, defendant as trustee, first party, and plaintiff’s assignors, as second parties, entered into the written agreement, mentioned in plain-, tiff’s declaration and introduced in evidence, wherein and whereby, in consideration of defendant’s promise and agreement as trustee, to convey to plaintiff’s assignors a good and sufficient title to the lots or land therein described, said purchasers agreed to pay to defendant, as trustee, as the purchase price therefor, the sum of $20,100 in the following manner: $5,025 on the signing of said agreement and $201 a month, commencing November 13, 1926, and continuing monthly thereafter until October 13, 1930, when any balance then remaining unpaid would become due and payable ; and they further agreed to pay certain interest monthly on the principal sum remaining from time to time unpaid, and also to pay all taxes and special assessments. And they, and plaintiff as their assignee, made payments under said agreement to defendant, as trustee, on account of said purchase price, up to December 13, 1929; but since said last mentioned date neither the principal remaining due, nor any part thereof, nor any interest, nor any taxes, were paid by plaintiff, or by any one for him.

On July 15, 1930, defendant, as trustee, by its duly authorized agent and attorney, caused to be served upon plaintiff (assignee of said purchasers) a written notice of its intention to declare a forfeiture, as it was provided in said written agreement could be done, on account of said defaults, unless said defaults were cured by plaintiff by not later than July 25, 1930. Such defaults were not cured by plaintiff, or by anyone for him, on July 25, 1930, or thereafter, and on August 6, 1930, defendant, as trustee, caused to be served upon plaintiff its formal written declaration of forfeiture, introduced in evidence, by means of which said written agreement, in accordance with its express terms, was forfeited, determined and canceled, and all right, title and interest of plaintiff in and to said lots or land was forfeited and determined. And defendant, as trustee, thereupon re-entered and took possession of the premises and every part thereof.

It is contended by plaintiff’s counsel that the judgment appealed from is erroneous, because the written agreement of October 13, 1926, between plaintiff’s assignors (the purchasers) and defendant, “as Trustee under the provisions of a Trust Agreement, dated December 22, 1923, and known as Trust No. 4,” is void for want of mutuality, in that it was not a contract between said purchasers and any living or artificial person, but purported to be a contract between said purchasers “and a written document or chose in action.” The contention is without merit. In Weissbrodt v. H. W. Elmore & Co., 262 Ill. App. 1 (opinion filed in May, 1931, certiorari denied by the Supreme Court in October, 1931), the same contention was made under similar facts, and it was decided that the similar contract there involved for the purchase of land was not void for want of mutuality.

The main contention of plaintiff’s counsel is in substance that defendant, chartered as a bank to do a banking business in this State and also authorized to accept and execute trusts, is without power as a trustee to take title to land in fee, to subdivide and plat it into blocks and lots, to enter into contracts for the sale of the lots to third persons, to sell and dispose of them through agents or brokers, and to turn over the proceeds of the sales, less expenses, etc., to those persons beneficially entitled thereto; that such acts are ultra vires such bank, contrary to law and against public policy; and that a purchaser (or his assignee) of parcels of the land, under a written agreement to purchase the same on deferred payments, may at any time treat the contract as void, repudiate it and recover back such payments as he has made to such bank as trustee, with legal interest, in an action for money had and received.

When plaintiff filed his original declaration in the present suit, the Weissbrodt case, supra, had not been decided. While the suit was pending this division of this Appellate Court rendered its opinion on December 16, 3930, in the case of Tietke v. Union Bank of Chicago, 259 Ill. App. 341. During March, 3.931, plaintiff’s attorneys, evidently relying upon the holdings in that case, filed the two additional counts in the present suit. In the Tietke case, under its facts, it was held that the defendant bank was without power to enter into the particular contracts with the plaintiff for the conveyance of certain lots to him after full payment had been made of the purchase price in deferred instalments, that the contracts were void, and that the plaintiff was entitled to a judgment for the total amount, with certain interest, of all moneys which had been paid to the bank under the contracts. Accordingly a judgment for a specified sum was entered in this court against the appellee bank, and in April, 1931, our Supreme Court denied a writ of certiorari. (259 Ill. App. XV.) The facts in the Tietke case, however, are different from those in the present suit. There it appeared that, although the appellee bank was incorporated to do a banking business under the statutes of Illinois and also was qualified to do business as a trust company, the title to the land involved was not vested in the bank as trustee, but in a different trust company (Chicago Title & Trust Co.), and that the bank, when it made the contracts with the plaintiff for the conveyance of the lots, had not received any authority from the last named trust company to execute said contracts. We said in the opinion (p. 344) after mentioning section 9 of our General Banking Act (Cahill’s St. eh. 16a, 1f 9):

“But appellee seeks to sustain its authority to execute the contracts in question on the ground that it is qualified to do business as a trust company. To be sure, under the trust companies statute (Cahill’s St. ch. 32, ]f 345) it may as a corporation execute trusts and be appointed trustee by deed. But there is nothing in the stipulated facts which confer upon defendant any such trust relation as contemplated by said Act. The only power conferred upon it in the trust agreement to which it was a party is that of collecting and distributing money. It held no trust relation to deal with the title of real estate. It was given no title to the lots involved or power as trustee, agent or otherwise, to sell them or contract for their sale, hence its contract was ultra vires as outside the scope of any power it possessed and unenforceable by either party to the contract.”

In the present case the defendant bank was vested with both the legal and equitable title to the land, and we are of the opinion that it was fully authorized under said “warranty deed in trust,” and said “trust agreement” known as “Trust No. 4,” to execute just such an agreement as it did execute with plaintiff’s assignors in its capacity as trustee. In section 1 of the Banking Act (Cahill’s St. 1931, ch. 16a, if 1, p. 167) it is stated that the banks and banking associations formed thereunder “shall have the power to loan money on personal and real estate security, and to accept and execute trusts, and shall be subject to all of the provisions of this Act.” In section 9 of said Act, Cahill’s St. ch. 16a, if 9, it is provided that “Associations organized under this Act shall be bodies corporate and politic, . . . may sue and be sued, . /. may own, possess, and may carry as assets the real estate necessary in which to do its- banking business, and such other real estate to which it may obtain title in the collection of its debts, but shall not carry in its assets any real estate except its banking house for the period of more than five years after acquiring title to the same.” It does not appear from the facts of the present case that the land in question ever was carried by defendant bank “in its assets,” but was acquired and carried by it in the capacity of trustee for others. Furthermore, in section 1 of our “Trust Companies Act” (Cahill’s St. 1931, ch. 32, ff 345, p. 792), it is provided: “That any corporation which has or shall be incorporated under the general incorporation laws of this State, . . . for the purpose of accepting and executing trusts, and any corporation now or hereafter authorized by law to accept or execute trusts, may be appointed assignee or trustee by deed, and executor, guardian or trustee by will, and such appointment shall be of like force as in case of appointment of a natural person. ’ ’ It appears from the facts of the present case that defendant corporation was authorized to act in two capacities, viz., (1) as a bank organized under said Banking Act, and (2) as a trust company doing business under said Trust Companies Act. In 7 Corpus Juris, p. 881, sec. 970, it is said: ‘ ‘ The distinction between a bank and a trust company is well defined. The powers of the trust company depend on the terms of its charter, of course, but they are not banicing- powers. The trust company, like the savings bank, pays interest on deposits, but its deposits are strictly loans, not subject to check. It cannot issue its own notes for circulation, nor does it buy or sell exchange in the ordinary course of its dealings. In directions that are not akin to banking, its powers are much broader and extend outside the monetary realm into real estate transactions, trusteeships, and the conduct of property interests of all kinds.” In the recent case of Walsh v. Stock Yards Trust and Savings Bank, 345 Ill. 265, our Supreme Court said (pp. 267-8): “Originally banking power was very limited and consisted of receiving money, in exchange for which promissory notes were given, payable to the bearer on demand. . . . Modern bankers have extended their operations far beyond the original scope of banking powers. Banks frequently act as trustees by appointment of courts, or under wills or deeds, and the right of banks in this State to act as such trustees is recognized in Wedesweiler v. Brundage, 297 Ill. 228. Section 1 of the Banking Act specifically gives to banks the power to accept and execute trusts.” (See, also, People v. Brady, 271 Ill. 100, 110.)

Under the stipulated facts of the present case (in-eluding the documents introduced), and in view of the statutes and authorities above referred to, we are of the opinion that there is no merit in plaintiff’s connsel’s main contention above' mentioned and that the trial court was right in entering the judgment against plaintiff. Accordingly, the judgment is affirmed.

Affirmed.

Keener and Scanlan, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice G-ridley

license: Public Domain

text:
    Duell Gabbert, Appellee, v. A. E. Antonsen, Trading as Antonsen Motor Sales, Appellant.
    Gen. No. 35,559.
    Opinion filed April 5, 1932.
    Benjamin F. Fohrman, for appellant; Nathan Schwartz, of counsel.
    Alfred Rot Hulbert, for appellee.
   Mr. Presiding Justice G-ridley

delivered the opinion of the court.

On January 9, 1931, an action in replevin was commenced in the municipal court against defendant to recover the possession of a Nash automobile of the claimed value of $750. The bailiff was unable to find the car and returned the writ as served upon defendant but “unexecuted as to the property.” Subsequently, by leave of court, plaintiff filed a statement of claim in trover in which he alleged that on November 14, 1930, he was lawfully possessed of and owned the car and casually lost it, and that it came into defendant’s possession, who unlawfully converted to his own use, etc. Defendant entered his appearance. On June 26, 1931, on a second trial without a jury, the court found defendant “guilty in trover of converting the property” and assessed plaintiff’s damages at $475. Judgment was entered upon the finding and defendant appealed.

On the trial the following facts appeared: On and prior to December 1, 1928, defendant, as Antonsen Motor Sales, was engaged in the automobile business at 6716-18 S. Western avenue, Chicago. He sold Hash automobiles, bought and sold used cars of various kinds and repaired automobiles. On December 1,1928, he sold and delivered the Hash car in question (then new) to Herbert Scott, at the price of $1,535, taking title and possession of an used Chevrolet car, then owned by Scott, at the agreed price of $625 as a “down payment” on the Hash car. On the same day Scott and his wife, Hattie, executed and delivered their judgment note for $1,127.16, payable to defendant’s order at the office of Hational Bond & Investment Co., Chicago, in instalments of $62.62 a month, commencing on January 1,1929, with interest at 7 per cent per annum after maturity. It is stated on its face that it “is given in conformity with the provisions of a conditional sale contract executed by the makers.” In the contract, on an usual printed form, dated December 1, 1928, and signed by defendant and by Scott and wife, it is stated that, in consideration of the sum of $625 paid by Scott, as “purchaser,” and of the further sum of $1,127.16 to be paid, defendant, as “seller,” agrees to sell and deliver to Scott said Hash car; that the purdhaser agrees to make the deferred payments in accordance with the terms of a note of even date for $1,127.16; and that “to induce the seller to deliver possession of the car to the purchaser,” he agrees and warrants that'“the title to the above described automobile shall not pass to the purchaser until all of the instalments of the note are paid in full, and until such payments shall have been made the automobile shall remain the property of the seller.” On the same day defendant indorsed the note, without recourse, to the order of the National Bond & Investment Co., and also signed a certain “assignment,” printed on the back of the contract, as follows: “For value received, the within contract and all right, title and interest of the seller, therein and thereunder and to the property therein described, are hereby sold, assigned and transferred to National Bond & Investment Co., Chicago, and to its successors and assigns, this December 1, 1928.” On the completion of the transaction Scott drove away the car and thereafter used it, and defendant on the same day delivered said note, so indorsed, and said contract, so assigned, to the Investment Co.

About a week later the car was badly damaged in an accident and Scott brought it to defendant’s shop for the purpose of having it repaired. Defendant agreed to repair it, performed labor and furnished materials thereon to the claimed value of $265, and rendered an itemized bill, dated December 11, 1928 (introduced in evidence) to Scott for said amount. Scott did not pay the bill and defendant presented to him for his signature a claimed second conditional sale contract and a judgment note for $265 (both introduced in evidence by defendant), and Scott signed them and drove the car away. In said second contract, dated December 11, 1928, Scott, called the “purchaser,” acknowledges delivery and acceptance of the automobile (describing it) “which purchaser buys and seller (defendant) sells on the following terms and conditions: The time purchase price for which is $ — -,' Of which $-on or before the delivery of car has been paid in cash, and/or $-allowed for another car traded in, and a balance of $265 is owing and for which a note, of even date payable in 4 equal monthly instalments, commencing one month from date, has been given to seller as evidence but not as payment. Title to said car shall remain in seller until all amounts due hereunder are fully paid in cash. Said note or this contract may be negotiated or assigned, or the payment thereof renewed or extended without passing title of said car to purchaser,” etc. By the note Scott promised to pay to the order of defendant $265, “in four instalments of $66.25, every three months, . . . together with interest after maturity at the highest legal contract rate, ’ ’ etc. This contract and note thereafter remained in defendant’s possession. Scott did not pay to him thereafter any of the instalments of the note or any money for said repairs.

On August 15, 1929, Scott and wife, for a consideration paid to them by plaintiff, assigned in writing to plaintiff all their interest in the car and in the first conditional sale contract. And plaintiff paid to the National Bond & Investment Co. all that remained due on said contract and, with the consent of the Investment Co., took possession of the car as owner. Plaintiff did not know, nor was any notice given to him, until November, 1930, that defendant had in his possession the Scott note for $265 or the so-called second conditional sale contract, or that defendant claimed any interest in the car. On November 14, 1930, defendant, relying solely upon said second conditional sale contract, and possibly believing he had title to the car and the right to its possession, instructed the “Finance Service Corporation” to take the car from plaintiff’s possession. It did so and delivered the car to defendant, who thereafter sold it for $400 and converted the money to his own use. While the evidence is conflicting as to the reasonable value of the car at the time it was taken from plaintiff’s possession, no point is made that the finding and judgment against defendant are excessive.

Defendant’s counsel here contend that the judgment against defendant is contrary to the evidence and the law. They state their theory of defense in their printed brief as follows: “That the plaintiff took the automobile by way of assignment from Scott and wife, and, therefore, subject to any lien, or reservation of title, still outstanding against the automobile,” and that, defendant “had reserved title to himself under the second conditional sale contract, executed to him on December 11, 1928, which debt had been contracted for repairs on the automobile.” In support of their contention and theory they cite, among others, the case of Sherer-Gillett Co. v. Long, 318 Ill. 432, 434, where it is decided (following the language of section 23 of our Uniform Sales Act, Cahill’s St. 1931, ch. 121a, H 26, p. 2473) that “where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.” We cannot agree with counsels’ contention or theory. It is clear that when, on December 1, 1928, defendant indorsed the Scott note for $1,127.16, without recourse, to the Investment Co., and also assigned in writing all his title and interest in the first conditional sale contract and in the automobile described therein to the Investment Co., defendant disposed of all the title and interest which he had therein. When during December, 1928, Scott brought the car to defendant for the purpose of having defendant make repairs upon it, the title to the car was in the Investment Co., by virtue of said first conditional sale contract, assigned by defendant to it, and defendant then had no interest in said contract or car. The fact that defendant made repairs on the car at Scott’s request, to the claimed value of $265, did not cause defendant to become such an owner of the car as to be considered as a “seller” of it, as stated in the second contract. He could not again conditionally sell a chattel, the title to which, by his said assignment on the first contract, he had already transferred for a consideration to the Investment Co. On December 11, 1928, after he had made the repairs he possibly had a lien upon the car for the reasonable value of such repairs, by virtue of section 1 of the act of 1921, providing for a “lien for labor on or storage of chattels” (Cahill’s St. 1931, ch. 82, Ü 45, p. 1806), but that lien expired 60 days thereafter, it not appearing in the present transcript that defendant ever attempted to comply with section 2 of said act. And when on August 15, 1929 (about 8 months after December 11, 1928) plaintiff, in good faith and for value and without notice that defendant had any claim on or interest in the car, received it from the Investment Co., and paid to the Investment Co. all that was due on the original Scott note for $1,127.16 and on the fi,rst conditional sale contract, we are of the opinion that plaintiff acquired good title to, and right to the continued possession of, the car, free and clear of all claims of defendant because of the so-called second contract with Scott, or because of the claimed lien for repairs made by defendant for Scott. After August 15, 1929, the repairs not having been paid for by Scott, the only remedy that then was open to defendant for the recovery of the amount of said repairs, as it appears to us, was to proceed against Scott on his judgment note for $265. Under all the facts in evidence he should be precluded from claiming that he had any title to the car because of the so-called second conditional sale contract. (See Gordon Motor Finance Co. v. Aetna Acceptance Co., 261 Ill. App. 536, 541.) And we think it is clear that on November 14, 1930, defendant had no lawful right to cause the car to be taken from plaintiff and delivered to him, and that when he thereafter sold it and retained the proceeds he was guilty of unlawfully converting plaintiff’s property to his own use.

The judgment of the municipal court should be affirmed and it is so ordered.

Affirmed.

Keener and Scanlan, JJ., concur.


text:
    The People of the State of Illinois, Appellee, v. Melvin L. Straus et al., Defendants. Melvin L. Straus and Argyle-Lake Shore Building Corporation, Appellants.
    Gen. No. 35,699.
    Opinion filed April 5, 1932.
    Rehearing denied April 18, 1932.
    Gottlieb & Schwartz, for appellants; Ulysses S. Schwartz, Claude A. Both and Harry E. Smoot, of counsel.
    Henry M. Ashton, for appellee; William Capesius and Edward M. Winston, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

This is an appeal from an interlocutory order of the superior court of Cook county, entered October 24, 1931, appointing a receiver of certain improved premises in Chicago, in a tax foreclosure suit brought under section 253 of the Revenue Act, Cahill’s St. ch. 120, 11268.

The bill of complaint, filed September 17, 1931, is signed in the name of the People “by Henry M. Ash-ton, their attorney and solicitor,” and is sworn to by him. It prays for an accounting, a foreclosure and the appointment of a receiver pendente lite to collect the rents and profits of the premises, “until the right to redeem said premises from any sale thereof to be made by virtue of this proceeding shall have expired, and that such rents and profits shall be applied toward the payment of the indebtedness and the costs of this foreclosure suit.”

In the bill it is stated that the People, “upon order of the Board of County Commissioners of Cook County,” respectfully represent that “the taxes levied in and for the several years of 1924, 1925, 1926 and 1927, and the taxes, penalties, interest and costs which have accrued thereon, remain and are due and unpaid” upon lots 16 and 17 in a certain subdivision (describing it) and that said taxes, etc., as shown and described in the collector’s books, “are now a prior and first lien upon the property”; that the lots “are and remain forfeited to the State of Illinois upon the same description for the taxes of two or more years, to wit, the years 1924, 1925, 1926 and 1927”; that the taxes for the year 1928 have been paid; that the full amount now due and unpaid upon the lots for said taxes, penalties, etc., including said forfeitures for said years, “is the sum of $193,838.88 (not including taxes for the year 1929)”; that the present owners of the property are the Argyle-Lake Shore Building Corporation and George K. Spoor; that on November 1, 1922, title to the property, upon which an apartment building was erected, was in the Aquitania Building Corporation, and that on that day it executed a trust deed to Melvin L. Straus, as trustee, securing a bond issue of $1,200,000 on lot 17; that George K. Spoor is the owner of lot 16; and that he and members of his family are the owners of a majority of the stock of both corporations. And it is alleged, upon information and belief, that both of said corporations are insolvent. And it is further alleged that Melvin L. Straus, as trustee in the trust deed, has filed a bill in the circuit court (case No. B-220251) to foreclose said trust deed, — stating that said corporations are in default as to said bond issue; that the City of Chicago and the county of Cook are wholly without adequate funds to pay their running expenses, so that teachers in the Chicago schools must go without their pay, and that a financial crisis exists in the city and county, due to the withholding of taxes by property holders; that the same condition exists as to other taxing bodies in the county, and that “it would be inequitable to permit the owners of said lots to collect the rents and profits from said building during the pendency of this proceeding without compelling them to pay such rents and profits towards the satisfaction of the claim of the State of Illinois”; that the owners of the building or some of the defendants, after paying all operating expenses, retired bonds in the amount of $206,250, from November 1, 1925 to November 1, 1930, and from November, 1922 to November, 1930, also paid out of the earnings of the building the sum of approximately $500,000, or a total of $706,250, and that “notwithstanding said income during the years 1924, 1925, 1926 and 1927, the owners or some of them permitted the property to be forfeited for nonpayment of taxes”; that according to the records the owner of the property for several years has been the Arg’yle-Lake Shore Building Corporation, that neither it nor George IC. Spoor is now in possession, but that “possession has been surrendered to Melvin L. Straus, trustee under said trust deed, and either he or his agents are collecting the rents for the benefit of the bondholders and are not paying the taxes due to the People”; that the building on lot 17 . consists of 83 apartments, all occupied and producing a gross income of approximately $15,000 a month; and that “if this cause is prosecuted to a decree and the property offered for sale, the purchaser at such foreclosure sale would be required to deposit the full amount of said bill, and, in case redemption were made within two years as provided by law, he would receive the money paid out by him plus interest thereon at the legal rate, and that for this reason there is no probability, if the property were exposed for sale or foreclosure, that it would be bought by anyone, and the money due as taxes would not be paid to the public treasurer, and therefore complainant states that the property is insufficient security for the amount of taxes and penalties due thereon.”

In the joint and several answer of three of the defendants, Argyle-Lake Shore Building Corporation, S. W. Straus & Co., and Melvin L. Straus, as trustee, filed October 1, 1931, they denied some of the allegations of the bill, and alleged that said Ashton was without the right or power to represent the People in the present litigation or to file the present bill, and that he had not received any proper authority from the board of commissioners of Cook county, by its resolution of May 22, 1931, or otherwise, to institute or prosecute the suit in the name of the People. On the same day they filed a written motion, accompanied by certain affidavits, that the bill be dismissed. Subsequently, and after George K. Spoor had filed his answer to the bill, there was a hearing upon defendants’ motion to dismiss and upon complainant’s motion for the appointment of a receiver pendente lite. During the hearing there was read an affidavit of said Ashton, as was also the said resolution of the board of county commissioners of May 22,1931, and the said Straus, as trustee, made a written tender as to future payment of taxes by him.

On October 24, 1931, the court, after considering the sworn bill of complaint, the answers and all affidavits, and having heard arguments of counsel, entered the order appealed from, wherein Frank J. Spencer was appointed receiver of the premises until the further order of the court, upon his filing within 2 days a bond with surety in the sum of $50,000. It was further ordered that said receiver, as to all funds collected by him, keep the same “in a separate account as trust funds”; that he have full power and authority to operate and manage the premises, to find tenants, to make leases, to collect all rents, to keep the premises insured and in good repair, etc.; and that “for good cause shown the complainant herein be excused from filing a bond.”

In the order the court made the following findings: (1) That it has jurisdiction of the subject matter and of the parties; (2) that the board of commissioners of Cook county “has the right to bring this suit in the name of the People” and that it “had the right to employ an attorney, other than the State’s Attorney of Coolc county, to represent them in this suit”; (3) that upon the real estate in question “there is and has been since 1923, an apartment building consisting of 83 apartments, known as the Aquitania Building, situated at 832 Argyle street, Chicago, and valued at, to-wit, $800,000”; (4) that according to the allegations of the bill, the taxes for the years 1924, 1925, 1926 and 1927 remain unpaid on the property, so that “there is due in taxes alone, exclusive of penalties, for the years enumerated, the sum of $112,611.99, and that the total sum of taxes and penalties due on said property amounts to $193,838.88”; (5) that said taxes, together with all penalties, interests and costs, “are a prior and first lien on the property”; (6) that complainant “has a prior and first lien on all rights and privileges belonging to or in any wise pertaining to said real estate and building, including the right of the owner, or party in possession, to collect rent or income from said building, and that the income from said building is subject to complainant’s first lien for the unpaid taxes”; (7) that the owner of the building, Argyle-Lake Shore Building Corporation, has surrendered possession of it to said Melvin L. Straus, as trustee, who is now collecting the rents and operating the building; (8) that said Straus is the same person who is named as trustee in a trust deed made on November 1, 1922, securing a bond issue on the building of $1,200,000 ; and that “it is necessary for the proper preservation of the premises and for the benefit of all liens and bondholders that a receiver be appointed for the premises.”

In said resolution adopted by the board of commissioners of Cook county on May 22, 1931, it is stated inter alia that the statutes of the State impose upon the board the duty of collecting taxes for the taxing bodies within Cook county; that upwards of $16,500,000 are now due in taxes on real estate in the county that has been forfeited; that the forfeited property is worth much more than the accumulated taxes and penalties; that during the past few months the number of forfeitures for nonpayment of taxes has greatly increased and the work of their collection has multiplied, “thus creating an emergency situation with reference to revenue”; that the regular appropriation for the current year to the State’s attorney “is entirely inadequate to enable him to defray the costs of performing the necessary work contemplated by action of this board”; and that in order to collect the taxes now due on forfeited property “a great deal of work is necessary, which can only be performed by someone especially familiar with the subject and devoting undivided time to that purpose.” It is then “resolved” that said Ashton, an attorney at law, “be retained and employed to prosecute foreclosure suits and other suits deemed desirable to collect the. revenue now due the State and other taxing bodies from forfeited real estate in Cook county,” and that he “is authorized and empowered for and in behalf of and to represent the People of the State of Illinois and the County of Cook in all such suits as their attorney and solicitor.” The compensation to be paid to Ashton for said work is then set forth at length, and it is further stated that the contract with him “shall be effective as of May 15, 1931, and shall terminate on November 30, 1932, unless renewed.” And it appears from the journal of the board’s proceedings that, after the resolution had been adopted, Ashton accepted the terms of the resolution and “stated that he would proceed at once with the work.”

In the written tender of Melvin L. Straus, as trustee, he states that, pursuant to his offer heretofore made to the board of commissioners, “he will pay, to apply upon the taxes referred to in complainant’s bill, the sum of 80 per cent of all moneys which he now has in his possession as trustee, reserving the balance of 20 per cent as a necessary operating fund needed for the operation of said property”; that he will likewise apply on taxes “80 per cent of the net future sums received by him from the operation of the property, reserving therefrom 20 per cent for an operating fund, or, if such operating fund shall appear to be too large, then only such sum shall be reserved as the court may find to be proper, the balance to be applied on taxes”; and that he, as trustee, “offers to the court and to complainant the sum of $25,419.06, representing 80 per cent of the moneys he has on hand, and tenders herewith a check for that amount; and, in addition, will give bond, in such reasonable amount as may be determined by the court, to account to this court and to complainant for all moneys which may come into his hands by reason of the operation of the property, in lieu of the appointment of a receiver.”

In urging a reversal of the order appealed from, it is first contended by appellants-’ counsel in substance that, as Ashton was neither the State’s attorney of Cook county, nor the attorney general of Illinois, and as it does not appear that the State’s attorney was ill or incapacitated to act, he (Ashton) had no right or authority to represent the People in the present suit, and that the resolution of the board of commissioners of Cook county of May 22, 1931, employing him for the purposes therein stated, is ultra vires and void. Opposing counsel on the contrary contend that the board had the right and power to employ an attorney or solicitor, other than the State’s attorney, to commence and prosecute such a tax foreclosure proceeding as the present one, which is brought under section 253 of the Illinois Revenue Act, Cahill’s .St. ch. 120, If 268, as amended in 1881.

Prior to the amendment the section read: “The taxes assessed upon real property shall be a lien thereon from and including the first day of May in the year in which they are levied, until the same are paid.” (Hurd’s Stat. 1880, ch. 120, p. 912.) By act of the legislature, approved May 30,1881 (Laws 1881, p. 130), the section was amended to read as follows (and remains the same today, Cahill’s St. 1931, ch. 120, If 268, p. 2359):

“ § 253. The taxes upon real property, together with all penalties, interest and costs that may accrue thereon, shall he a prior and first lien on such real property, superior to all other liens and incumbrances, from and including the first day of May in the year in which the taxes are levied until the same are paid; which lien may be foreclosed in equity, in any court of competent jurisdiction, in the name of the People of the State of Illinois, whenever taxes for two or more years, upon the same description of property, shall have been forfeited to the State, and may be sold under the order of the court by the person having authority to receive State and county taxes, with the same notice to interested parties and right of redemption from said sale as is now provided by law, and in conformity with sections four (4) and five (5) of article IX, of the Constitution of this State. In proceedings to foreclose the tax lien on any real property, the amount due on the collector’s books against the said property shall be prima facie evidence of the amount of taxes against the real property. When any taxes are collected in any such foreclosure proceedings, they shall be paid to the county collector, to be distributed by him to the respective authorities entitled thereto.”

In section 5 of chapter 14, it is in part provided (Cahill’s St. 1931, ch. 14, ff 5, p. 159):

“ § 5. The duty of each State’s attorney shall be—

“First. To commence and prosecute all actions, suits, indictments and prosecutions, civil and criminal, in any court of record in his county, in which the People of the State or county may be concerned.

“Second. To prosecute ... all actions and proceedings for the recovery of debts, revenues, moneys, fines, penalties and forfeitures accruing to the State or his county. . . .

“Eleventh. To appear in all proceedings by collectors of taxes against delinquent tax-payers for judgments to sell real estate, and see that all the necessary preliminary steps have been legally taken to make the judgment legal and binding.”

In section 6 of said chapter 14, Cahill’s St. ch. 14, If 6, it is provided :

“§ 6. Whenever the State’s attorney is sick or absent or unable to attend, or is interested in any cause or proceeding, civil or criminal, which it is or may be his duty to prosecute or defend, the court in which such cause or proceeding is pending shall request the Attorney General to prosecute or defend such cause or proceeding, and in the event the Attorney General is sick or absent or unable to attend, or is interested in any such cause or proceeding, civil or criminal, which he may be thus requested to prosecute or defend, or when the Attorney General fails or declines for any cause to respond to such request, the court in which such cause or proceeding is pending may appoint some competent attorney to prosecute or defend such cause or proceeding; and the attorney so appointed shall have'the same power and authority, in relation to such cause or proceeding, as the Attorney General or State’s attorney would have had if present and attending to the same.”

In section 33 of chapter 34, entitled “Counties,” it is provided (Cahill’s St. 1931, ch. 34, ff 36, p. 858):

“ § 33. It shall be the duty of the county boards of each of the counties of this State to take and order suitable and proper measures for the prosecuting and defending of all suits to be brought by or against their respective counties, and all suits which it may become necessary to prosecute or defend to enforce the collection of all taxes charged on the State assessment.”

In section 230 of the Revenue Act (Cahill’s St. 1931, ch. 120, If 245, p. 2355) it is in part provided:

“§ 230. The county board may, at any time, institute suit in an action of debt in the name of the People of the State of Illinois in any court of competent jurisdiction for the whole amount due for taxes and special assessments on forfeited property; or any county, city, town, school district or other municipal corporation to which any such tax or special assessment may be due, may, at any time, institute suit in an action of debt in its own name, before any court of competent jurisdiction, for the amount of such tax or special assessment due any such corporation on forfeited property, and prosecute the same to final judgment. The county board may also, at any time, institute suit in an action of debt in the name of the People of the State of Illinois, in any court of competent jurisdiction, against any person, firm or corporation, for the recovery of any personal property tax due from such person, firm or corporation. . . .”

In Ward v. City of Alton and County of Madison, 23 Ill. App. 475 (a case arising after the amendment of 1881 of said section 253), plaintiff, a clerk of a court, claimed certain costs were due to him by reason of certain tax foreclosure suits which had been commenced and subsequently dismissed. It was held inter alia (1) that the State’s attorney is the proper officer to file the bill to foreclose a tax lien under said section 253, but that the county board also has the authority to institute proceedings to enforce such lien, and (2) that, whether such proceeding is instituted by the State’s attorney or the county board, it must be in the name of the People, and that, if it is unsuccessful, neither the People nor the county can be required to pay costs. In the course of the opinion, after commenting upon section 253 and upon the second paragraph of' section 5 of chapter 14 of our statutes, relative to the duties of State’s attorneys (above quoted), the Appellate Court for the fourth district said (pp. 478-9):

“While the primary duty of prosecuting such action (a tax foreclosure suit) is cast upon him (the State’s attorney), the collection of the public revenues is of such vast importance to the State and all its political subdivisions, that the Legislature has seen proper to also impose the duty upon the County Board of taking all proper measures that may be necessary to enforce the collection of all taxes charged upon the State assessment. Sec. 33, chap. 34, R. S. Under this provision, if the State’s attorney should neglect to perform his duty in foreclosing such lien, the County Board could order such proceeding commenced by him, and if for any reason he could not properly prosecute it, measures could be taken by the Board to call into exercise the power of the court to appoint some other attorney to prosecute such case. But whether commenced by the State’s attorney upon his own motion, or by order of the County Board, the bill must be filed in the name of the People of the State of Illinois as complainants, for such is the clear command of the statute; ...”

In Ottawa Gas Light & Coke Co. v. People, 138 Ill. 336, an action was commenced, by virtue of section 230 of the Revenue Act, Cahill’s St. ch. 120, 245, in the circuit court of LaSalle county, in the name of the People, to recover from the company the sum of $3,043.89, for taxes claimed to be due and unpaid on its capital stock and personal property for the years 1881 to 1887, inclusive. The declaration was signed “M. T. Moloney, County Attorney.” The company interposed a motion, supported by affidavits, to dismiss the suit because instituted without authority of law and by an attorney not authorized by law to begin or prosecute the same. It appeared from the affidavits that Moloney was not the State’s attorney of LaSalle county but that one George Blake was such official; that the court records failed to disclose any appointment of Moloney to prosecute the cause; that Blake as State’s attorney had neither been requested to prosecute it nor had he been sick, absent or unable to attend to it; and that Blake was not interested in the subject matter of the suit. It was contended that the action was one which the State’s attorney alone, in the absence of disabilities, was authorized to begin and prosecute, and that Moloney had no legal authority so to do. The affidavit of Moloney, however, disclosed that, by resolution of the county board, he had been authorized and directed to begin and prosecute the suit. The motion to dismiss was denied. On appeal to the Supreme Court it was urged that the circuit court erred in not granting the motion, but the Supreme Court held that the ruling was correct. In discussing the question the court said (p. 343):

“It is contended, however, that while the authority of the county board to cause the institution of suit for unpaid taxes is ample, it is not at liberty to select counsel, but must act by and through the State’s attorney of the county, and that if the State’s attorney is disqualified, by interest, sickness, absence or other inability, the court alone can appoint another attorney to act. (The court then refers to sections 5 and 6 of chapter 14 of the statutes, above quoted.) It would be perfectly competent for the county board to direct the State’s attorney to institute suits to recover delinquent and unpaid taxes, and to prosecute the same, and in such case it would be the manifest duty of the State’s attorney to act; and if, in obedience to such direction, he should institute a suit, and thereafter become disqualified from acting, the court in which the cause was pending might appoint another competent attorney to act in his stead. We are not disposed, however, to hold that the county board is, by the statute defining the duties of the State’s attorney, denied the power and authority to select and empower any competent attorney to represent the People in beginning and prosecuting suits to recover delinquent taxes. Notwithstanding the statute last referred to, it is manifest that the State’s attorney could not, of his own motion, begin and carry forward proceedings of this character. Whether or not resort shall be had to proceedings at law to recover of property owners the overdue and unpaid taxes levied thereon, rests in the discretion of the county board; and we have no doubt that under the general power of the county board, as the fiscal agent of the county, it has the inherent right to direct the course of the proceeding, and select the persons and agencies through whom it will act. ’ ’

We do not find that in any subsequent decisions our Supreme Court has departed from the decision in this Ottawa Gas Co. case. Appellants’ counsel, however, contend that the decision has in effect been overruled by the cases of Stevens v. County of Henry, 218 Ill. 468, 475-6, and Fergus v. Russel, 270 Ill. 304, 342. We cannot agree with the contention, notwithstanding the holdings of the Appellate Court for the third district in Abbott v. County of Adams, 214 Ill. App. 201, 206-7, where it is said in part: “What is said in Gillett v. Board of Sup’rs Logan Co., 67 Ill. 256, . . . Ottawa Gas Light & Coke Co. v. People, 138 Ill. 336, ... in apparent conflict with the views here expressed, we un: derstand to be overruled by Stevens v. Henry County, supra, and Fergus v. Russel, supra.These two cases, in our opinion, are much different from the Ottawa Gas Co. case and do not in terms or in effect overrule the holdings in the last named case. And we agree with what the attorney general of this State said in an opinion rendered by him on May 22, 1928 (Opinions Attorney General, 1928, pp. .240-1), in answer to the question “May the county commissioners employ legal assistance other than the State’s attorney to collect delinquent taxes 1 ’ ’ viz.:

“An examination of the cases of Abbott v. County of Adams, supra, Stevens v. Henry County, supra, and Fergus v. Russel, supra, shows that neither of these cases are the same as Ottawa Gas Light Co., supra. Inasmuch as the Supreme Court has not reversed the

rule stated in the case of Ottawa Gas Light Co., supra, it is my opinion that the county board may employ a competent attorney other than the State’s attorney to represent the People in beginning and prosecuting suits to recover delinquent taxes under the provisions of section 230 of the Revenue Act, . . . ” In view of the statutes above quoted, the holdings in the Ottawa Gas Co. case, the allegations of complainant’s bill, and the resolution of the board of commissioners of Cook county employing Ashton, we are of the opinion that appellants’ counsels’ first contention is without substantial merit and that the superior court did not err in refusing appellants’ motion (made and considered at the same time as complainant’s motion for the appointment of a receiver pendente lite) to dismiss the bill.

It is secondly contended by appellants’ counsel that the court was without power to enter the order appealed from, appointing a receiver pendente lite, with the powers mentioned. Counsel argue that neither by section 253 of the Revenue Act, Cahill’s St. ch. 120, ft 268, nor in any other sections of that act is authority given for such an appointment in a tax foreclosure proceeding.

We have hereinabove set forth section 253, as it existed prior to the amendment of 1881. It will be noticed that no provision was made therein for the foreclosure of the given tax lien. In People v. Biggins, 96 Ill. 481, decided in November, 1880, it appears that a bill in equity in the name of the People was filed in the circuit court of Madison county to foreclose the tax lien given by the statute on certain land for unpaid taxes for the years 1871 to 1878, inclusive, amounting to $9,000; that Biggins’ demurrer to the bill was sustained and the bill dismissed for want of equity; and that the Appellate Court for the fourth district affirmed the decree. On further appeal to the Supreme Court the judgment of the Appellate Court was affirmed. From the opinion of the Supreme Court (p. 482) it further appears that a single question was presented by the record for decision, and that was “Whether a court of equity has jurisdiction of a proceeding by bill, for the collection of taxes delinquent on real estate, ’ ’ by virtue of said section 253 as it then existed. This question the court answered in the negative. And the court made the following holdings in substance: (a) That the tax lien given by the section is purely legal in its character, the creature of the statute and not arising upon contract: (b) that it can only be enforced in the mode provided by the law of its creation; (c) that if the revenue law be defective in respect to the remedy provided for enforcing such a lien, “it is the duty and business of the legislature to amend it”; (d) that the courts “cannot make, but can only construe, laws after they are made by the legislature”; and (e) that “the officers of the State, in the collection of revenue, are as much bound to observe the law and proceed in the mode pointed out by the statute as an individual is required to observe the law in the enforcement of any right.” And the court said in conclusion (pp. 486-7): “If it is wise and proper that our revenue should be collected by bill in chancery, which we by no means concede, then the legislature should confer the jurisdiction upon that court; but until that is done, we perceive no ground upon which we can hold that resort can be had to that tribunal.” (See, also, Gauen v. Moredock & Ivy Landing Drainage Dist., 131 Ill. 446, 462.)

In Clark v. Zaleski, 253 Ill. 63, 76, it is said: “At the next session of the legislature after the decision in the Biggins case (supra), section 253 was amended so as to provide, as said section now does, for the foreclosure of such tax lien in equity. (Laws of 1881, p. 130.) After the section ivas amended another bill was filed against Biggins, and a decree foreclosing the .lien was affirmed by this (Supreme) court in Biggins v. People, 106 Ill. 270.” In this second Biggins case, it was decided that section 253 (making not only the taxes, but also “all penalties, interest and costs” a lien on the land) did not create a new lien, but that it limited the remedy in equity for the collection of taxes by foreclosure to cases where the “taxes for two or more years, upon the same description of property, shall have been forfeited to the State.”

It will be noticed that section 253 as amended, in addition to providing for the foreclosure in equity of the tax lien under the mentioned conditions, also provides for a sale “under the order of the court by the person having authority to receive state and county taxes, with the same notice to interested parties and right of redemption from said sale as is now provided by law, and in conformity with sections four (4)-and five (5) of article IX of the Constitution of this State.” Nowhere in the section, or in any other section of the act, is provision made for the appointment of a receiver pendente lite in aid of the collection of taxes, etc., dne. In People v. Sears, 344 Ill. 189, it is said (p. 191): “The obligation of the citizen to pay taxes is purely a statutory creation, and taxes can be levied, assessed and collected only in the mode pointed out by express statute.” And the court further said (p. 193): “Such statutes imposing a tax, in case of doubt, are construed most strongly against the government and in favor of the citizen.” Our attention has not been directed to any decision of our Supreme Court, holding that a receiver pendente lite may be appointed in a tax foreclosure proceeding, and we have found none. There are decisions in somewhat analogous cases under special statutes to the contrary. In Stone v. Tyler, 173 Ill. 147,155, it is said: “The Mechanics’ Lien Law of 1874, together with the amendments thereto passed in' 1887, did not authorize the appointment of a receiver. In the absence of any statutory provision authorizing it to be done, the complainant, in an action for the foreclosure of a mechanic’s lien, is not entitled to a receiver of the rents and profits of the property pendente lite.” In State Investment & Insurance Co. v. Superior Court of San Francisco, 101 Cal. 135, 35 Pac. 549, it is decided by the Supreme Court of California, in an action brought by the People against the Investment Co. under certain sections of the Political Code, that the trial court on decreeing the dissolution of a corporation has no power to appoint a receiver, or assume control of its affairs. The court says (p. 553): “The jurisdiction of the superior court to decree a dissolution of any corporation exists only by virtue of statutory authority. It does not possess this authority by virtue of its inherent general jurisdiction in equity (citing cases), either at the suit of an individual ... or at the suit of the State . . . ; and, as its jurisdiction is derived from the statute, it is limited by the provisions of the statute, both as to the conditions under which it may be invoked and the extent of the judgment which it may make in the exercise of this jurisdiction.” In Coquard v. National Linseed Oil Co., 171 Ill. 480, 485, it is said: “Courts of chancery have no general power to appoint receivers of corporations and can only appoint them where expressly authorized by the statute.” In Young v. Rutan, 69 Ill. App. 513, 517, it is said: “It is no slight matter for a court of chancery to lay its hands upon large business enterprises, take them out of the control of capacity and experience, and charge them with expenses and commissions.” In People v. Cant, 260 Ill. 497, 500, a tax foreclosure proceeding, it is said that said section 253, as amended, “enlarged the jurisdiction of equity so as to include the foreclosure of tax liens” and that “the usual practice in enforcing liens is to decree a sale, for cash, to the highest bidder.”

Counsel for the People, in their argument on this branch of the case, seem to treat the liability of the appellant corporation for the taxes in question as if it were'5'an indebtedness arising upon a contract. Such is not the case. In Loeber v. Leininger, 175 Ill. 484, 490, it is said: “A tax is not a debt, in the ordinary sense of that term. It is an exaction or forced contribution from property demanded by the taxing power or sovereignty for the purpose of enabling the government to execute and discharge its functions. It is to be collected in Illinois, not by the ordinary actions at law, but by remedies specifically provided by the statute.” (See also Dunlap v. County of Gallatin, 15 Ill. 7, 9; Jack v. Weiennett, 115 Ill. 105, 109.) In Lane County v. Oregon, 7 Wall. (U. S.) 71, 80, the court, quoting the language of the Supreme Court of New Jersey in a cited case, says: “A tax, in its essential characteristics, is not a debt nor in the nature of a debt. A tax is an impost levied by authority of government upon its citizens, or subjects, for the support of the State. It is not founded on contract or agreement. It operates in invitum. ...”

After considering the quoted statutes, the cited decisions and particularly the holdings and principles enunciated in the Biggins case (96 Ill. 481), we are of the opinion that appellants’ counsels’ second contention is sound, and that the chancellor was without statutory power or authority to enter the order appealed from, appointing the receiver. Shortly after the decision had been made in said Biggins case our legislature amended section 253, enlarging the jurisdiction of equity so as to include the foreclosure of tax liens. The law making body, however, made no provision for the appointment of a receiver pending such foreclosure proceedings. As said in the Cant case, supra (p. 499), the section as amended “contained no procedural directions, except that the same notice and right of redemption as were then required by law, and conformity with sections 4 and 5 of article 9 of the constitution, were required. ’ ’ If the legislature had deemed it wise that, pending such foreclosure proceedings, the ''court might appoint a receiver, it could easily have so provided by appropriate language.

Other contentions are made by appellants’ counsel as grounds for a reversal of the order appealed from. One is that it does not sufficiently appear from the allegations of the bill or from the court’s findings that the amount of the taxes due cannot be realized from the foreclosure sale. It is undisputed that the value of the premises is about $800,000, while the amount of the taxes due, including penalties, is about $194,000. And counsel in support of the contention cite the case of Chicago Real Estate Loan & Trust Co. v. People, 104 Ill. App. 290, 293-4, where an order of the circuit court of Cook county, appointing a receiver pendente lite in a tax foreclosure proceeding, was reversed. While counsels ’ contention is not without force, still we deem it unnecessary to pass upon it or upon their other contentions.

Our conclusion is that the interlocutory order of the superior court of October 24, 1931, appointing Frank J. Spencer as receiver of the premises, etc., should be reversed and it is so ordered.

Reversed.

Keener and Scanlan, JJ., concur.


author: Mr. Justice Kerner

text:
    Grace B. McDermott, Appellee, v. A. B. C. Oil Burner Sales Corporation and Automatic Burner Corporation, Appellants.
    Gen. No. 35,434.

      Opinion filed April 5, 1932.
    SoNNENSCHEIN, BeRICSON, LiAUTMANN, LeVINSON & Morse, for appellants; .Ernest D. MacDougall and Isaac E. Ferguson, of counsel.
    Finn & Miller, for appellee; Robert S. Cook, of counsel.
   Mr. Justice Kerner

delivered the opinion of the court.

This appeal is prosecuted by defendants to reverse a judgment for $4,000, rendered in favor of plaintiff for damages to her real estate by the destruction of four large trees and other vegetation.

The A. B. C. Oil Burner Sales Corporation will hereafter be referred to as the Sales Corporation, and the Automatic Burner Corporation as the Automatic Corporation. The declaration consists of three counts. The first count charges in substance that on September 29, 1928, each of the defendants was carrying on its business of manufacturing, buying, selling and installing oil burner heaters with" all accessories and adjuncts thereto, and that Sales Corporation entered into a written contract with John A. McDermott, husband of plaintiff, to sell and install on plaintiff’s premises an oil burner heater, a tank for the storage of oil, and additional equipment listed in the contract for $734; that John A. McDermott paid $734 to Sales Corporation and complied with the terms of said contract; that Sales Corporation employed Automatic Corporation as its agent to put into and take out of said tank, and to handle on plaintiff’s premises, oil and other liquids, to install said tank and assist in the performance of the obligations assumed under said contract by Sales Corporation; that it was the duty of the defendants to exercise due care and diligence for the safety of plaintiff’s premises in building and installing said oil burner, etc.; that defendants and each of them, acting through their officers, agents and employees, negligently and carelessly put into, took out of said tank, oil, and carelessly scattered and spread said oil and allowed it to leak and spread from said tank upon plaintiff’s premises on or about March 14, 1929. The second count charges that defendants and each of them, acting through their agents and employees, negligently and carelessly installed and built said tank and negligently performed other obligations assumed under said contract, so that oil was allowed to leak and spread from said tank upon plaintiff’s premises on March 14, 1929. The third count charges trespass vi et armis. Each count alleged that plaintiff was at all times in the exercise of due care. The defendants filed pleas of the general issue as to the first and second counts and a special plea of leave and license as to the third count.

The undisputed controlling facts, as disclosed by the evidence, are that the Automatic Corporation is a corporation organized prior to 1923, engaged in the manufacture of oil burners at 1823 Carroll avenue, Chicago. It sells its burners to the Sales Corporation, as well as to any other dealer. F. J. Hirsch is its president and Edward A. Weil its secretary and treasurer. A part of its capital stock is owned by F. J. Hirsch, Edward A. Weil and Claude E. Smith, but it does not appear who are the other owners or what proportion of the capital stock is owned by others.

The Sales Corporation was organized in 1925, and has its place of business at 123 .East Oak street, Chicago, and is engaged in the business of selling automatic oil burners manufactured by the Automatic Corporation, but that is not all of its business, the relation between the two corporations being that of buyer and seller, the Sales Corporation buying wholesale from the Automatic Corporation and selling at retail prices to its customers, and each of the companies paying its own employees, with no accounting by the Sales Corporation to the Automatic Corporation for its receipts or profits, its profits being paid to the stockholders of the Sales Corporation. Edward A. Weil is president and F. J. Hirsch is secretary of the Sales Corporation, who with Claude E. Smith are its directors. All of the capital stock of the Sales Corporation is owned by F. J. Hirsch, Edward A. Weil, Claude E. Smith and the Automatic Corporation.

September 29, 1928, the Sales Corporation entered into a written contract with John A. McDermott, husband of plaintiff, in and by which the Sales Corporation agreed to furnish and install as part of the heating apparatus in a building located at Glencoe, Illinois, one Heatking oil burner as per manufacturer’s specifications. In addition to the Heatking oil burner manufactured by the Automatic Corporation, the Sales Corporation agreed to furnish a Teesdale automatic oil pump; one double throw switch and aquastat, and one steel storage tank or 1,500-gallon capacity to be buried in the ground, together with filling and supply lines and connections, for all of which McDermott agreed to pay to the Sales Corporation $734. The tank was installed about November 10 or 12, 1928, by Crosair Tank Company under a contract with the Sales Corporation. November 16, two employees of the Sales Corporation went upon the premises and pumped 700 gallons of water into the tank to keep it from floating. November 17,1928, McDermott ordered oil to be delivered and placed in the tank, and when the employees of the oil company pumped out the 700 gallons of water the tank floated and the attempt to deliver the oil was abandoned. November 18, the tank was reset by the employees of the Crosair Tank Company. November 21, 1,562 gallons of oil were delivered and pumped into the tank. The day after the oil was delivered, the connecting pipes, which had been cut off in the process of resetting the tank, were replaced by the employees of the Crosair Tank Company.

The work of installing the oil burner by the employees of the Sales Corporation and putting it into operation began March 14, and was completed March 17, 1929. Upon the completion of the installation it was discovered that there was water in the oil tank and about 280 gallons of the contents of the tank were pumped out on the ground, thereby infusing the surrounding soil with oil.

Three of the trees in question died in July, 1929, and the fourth a year later. During June, 1931, samples of soil were taken from nine different portions of the lot and subjected to chemical tests, all showing more or less oil contents.

It also appears from the record that on October 1, 1930, on a letterhead of the Automatic Corporation, the Sales Corporation wrote a letter to John A. Mc-Dermott, signed by Edward A. Weil as secretary-treasurer of the Automatic Corporation; that on October 11, 1930, the Sales Corporation, on a letterhead of the Automatic Corporation, addressed a letter to McDermott, ahd on November 5, 1930, the Sales Corporation wrote a letter on the letterhead of the Automatic Corporation to plaintiff’s attorney, signed by Edward A. Weil as president of the Sales Corporation, all three of these letters pertaining to a possible settlement of the case.

At the outset it is contended by plaintiff’s counsel that since the Automatic Corporation pleaded only the general issue, plaintiff was not required to prove that the Automatic Corporation participated in the transaction between the plaintiff and the Sales Corporation. The point is not well taken. Plaintiff’s claim is founded upon and the declaration charges that the two defendants committed a tort, the Sales Corporation as principal and the Automatic Corporation as agent, or that the two corporations acted in concert as joint feasors. It has always been the law that where two or more defendants are jointly charged with the commission of a tort the joint action of the defendants is negatived by a plea of not guilty. (Yeazel v. Alexander, 58 Ill. 254; Peters v. Howard, 206 Ill. App. 610; McHale v. McQuigg, 236 Ill. App. 295, 298; Blade v. Site of Ft. Dearborn Bldg. Corp., 245 Ill. App. 484, 489.)

Plaintiff’s counsel further contends that the foregoing facts establish that the defendant corporations were not separate entities, but are one and identical, and that in legal effect both acted in the matter of the sale and installation of the tank, burner and equipment, or that the Sales Corporation was the agent of the Automatic Corporation.

Assuming, but not deciding, that there was sufficient evidence upon which to base a finding and judgment against the Sales Corporation, we shall consider only the question of whether there was any proof establishing liability on the part, of the Automatic Corporation.

It is ■ an elementary and fundamental principle of corporation law that a corporation is an entity sep-

arate and distinct from its stockholders and from other corporations with which it may be connected. The fact that the stockholders of two corporations are identical, that one owns shares in another, and that they have mutual dealings, will not, as a general rule, merge them into one corporation. However, the legal fiction of distinct corporate existence will be disregarded when necessary to circumvent fraud, or where the corporation is so organized and controlled, and its affairs so conducted as to make it merely an instrumentality of another corporation. (In re Watertown Paper Co., 169 Fed. 252.) The mere fact that the stockholders in two or more corporations are the same, or that one corporation exercises a control over the other through ownership of its stock or through identity of its stockholders, does not make either the agent of the other, nor does it merge them into one, so as to make a contract of one corporation binding upon the other, where each corporation is separately organized under a distinct charter. (Pittsburgh & Buffalo Co. v. Duncan, 232 Fed. 584.) In Berkey v. Third Ave. R. Co., 244 N. Y. 84, 87, Mr. Justice Cardozo held that stock ownership alone would be insufficient to charge a dominant company with liability for the torts of a subsidiary. See also Costan v. Manila Electric Co., 24 Fed. (2d) 383; Owl Fumigating Corp. v. California Cyanide Co., 24 Fed. (2d) 718; Kingston Dry Dock Co. v. Lake Champlain Transp. Co., 31 Fed. (2d) 265. The mere fact that two corporations have the same officers and stockholders does not render one of the corporations liable for torts committed by the other. (Great Salt Lake Amusement Co. v. Lagoon Amusement Co. (Utah), 294 Pac. 301.) In New York Trust Co. v. Carpenter, 250 Fed. 668, 674, it was said:

“From an examination, of many decisions, we venture to say that no corporation acting within its powers has been held liable for the debts of another corporation legally organized, because it controlled such corporation by reason of ownership of its stock, or otherwise, except by reason of contract or on grounds of agency, or of estoppel, or because the controlled corporation has been used in such a way that the maintenance of its character as a separate and distinct entity would work injustice. ’ ’

In First Nat. Bank v. Walton, 146 Wash. 367, the Clear Lake Lumber Company, a corporation, was engaged in logging and sawmill operation business, and those in charge of its affairs conceived the idea of organizing an independent sales corporation. The Lumber Company subscribed for 2,494 shares and the remaining shares of the capital stock were subscribed by those who became officers of the sales corporation. The court, at p. 374, said: “It is not enough to call for adjudicating two corporations to be in legal effect one, that it merely appear that one is the owner of practically all of the stock of the other, and that they are very intimately related in jointly carrying on their business for the purpose of mutual benefit.” See also General Motors Corp. v. Moffett, 27 Ohio App. 219, 160 N. E. 878; Louisville Gas & Electric Co. v. Moore, 215 Ky. 273; Perry v. Ohio Valley Elec. Ry. Co., 70 W. Va. 697; Pullman’s Palace Car Co. v. Missouri Pac. Ry. Co., 115 U. S. 587, 596; Peterson v. Chicago, R. I. & P. R. Co., 205 U. S. 364; Cannon Mfg. Co. v. Cudahy Packing Co., 267 U. S. 333, 335; Chicago Hydraulic Press Brick Co. v. Campbell, 116 Ill. App. 322. In Davis v. John R. Thompson Co., 239 Ill. App. 469, 475, the court said: “Even in cases where a corporation sued owned the whole or practically all of the stock of the corporation which caused an injury, and where such corporation, through the election of its board of directors, had the practical control of the corporation causing the injury, still, unless the corporation sued actually possessed or operated, through its board of directors, the corporation that caused the injury, or there was a joint or partnership operation, the corporation sued has been held not liable.” . . . Continuing, the court said on p. 477; “The mere fact that two corporations may have certain persons who are managing officers in both corporations, in and of itself, will not render one corporation liable for injuries caused by the other.”

It is not claimed there was any fraud, actual or constructive, in the organization of the Sales Corporation, and there is no evidence that the Automatic Corporation participated in the affairs of the Sales Corporation except in the normal and usual manner of a stockholder; on the contrary, the business of the two corporations is entirely separate and distinct, and we have been unable to discover any evidence which would warrant disregarding the corporate entity existing between the two corporations on the ground of agency or estoppel, or because justice required it. Under such circumstances, the evidence is insufficient to sustain a judgment against the Automatic Corporation.

It is unavoidable, though regrettable, that the judgment as to both defendants must be reversed, as a judgment against two defendants is a unit, and if it must be reversed for error against one, it must be reversed as to both. (South Side El. R. Co. v. Nesvig, 214 Ill. 463, 469; Livak v. Chicago & Erie R. Co., 299 Ill. 218, 226, and Singer v. Cross, 257 Ill. App. 41, 44.)

The judgment of the superior court is reversed and the cause remanded.

Reversed and remanded.

Gridley, P. J., and Scartlau, J., concur.


author: Mr. Justice Keener

text:
    Louis Rosenzweig, Appellant, v. Jacob Roitman et al., Defendants. Liberty Trust & Savings Bank and Harry L. DeGraff, Appellees.
    Gen. No. 35,547.

      Opinion filed April 5, 1932.
    Aaron Soble and William Feldman, for appellant.
    Ringer, Wilhartz & Hirsoh, for appellee Liberty Trust & Savings Bank; Samuel E. Hirsoh and J. R. Cohler, of counsel.
    Blech & Hebson, for appellee Harry L. DeGraff; Herman Herson, of counsel.
   Mr. Justice Keener

delivered the opinion of the court.

August 7, 1931, complainant, holder of a $500 bond out of an issue aggregating $120,000, secured by a trust deed to Liberty Trust and Savings Bank as trustee, filed his bill seeking the appointment of a receiver and the foreclosure of the trust deed. August 12,1931, the bill was dismissed for want of equity. From this decree complainant appealed, and the ruling of the court in dismissing the bill is assigned as error.

The pertinent material allegations of the bill are that on June 1,1928, the defendants, Joseph Roitman and Esther Roitman, his wife, being indebted in the aggregate in the principal sum of $120,000 made and delivered their 280 bonds aggregating $120,000, and to secure the same made and delivered to Liberty Trust and Savings Bank as trustee, their deed of trust; that complainant is the owner of one of said bonds in the sum of $500; that in case of default in the payment of principal or in the payment of interest and the continuance of such default for a period of 20 days, then the whole of said principal sum and interest shall at once become due and payable, and the trustee may, in its discretion, enter upon and take possession of the mortgaged premises, and collect the rents therefrom; that in lieu of or in addition to the right of entry the trustee may, in case of default and the continuance thereof in the payment of principal or interest, and upon-the written request of the holder of any one or more of the then outstanding bonds, and upon being indemnified to its satisfaction, shall in case of default either cause said trust deed to be foreclosed upon, and the mortgaged property to be sold, or proceed to protect and enforce the rights of the trustee and bondholders thereunder, by appropriate proceedings, at law or in equity, and in case of default the trustee may on the request of the holders of not less than 20 per cent of the then outstanding bonds, and upon being indemnified to its satisfaction, cause said trust deed to be foreclosed, or. take such other proceedings to enforce or protect the right of the trustee and the bondholders thereunder; that no remedy conferred upon or reserved to the trustee is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given under said trust deed, or existing in law or in equity, or by statute.

The bill further alleges that on August 6, 1931, a notice with a letter of indemnity was served upon the Liberty Trust and Savings Bank as trustee, that complainant is the legal holder and owner of bond No. 20, due June 1, 1931, for $500 and interest, and that default has been made in the payment of the principal and interest due June 1, 1931, and that because of said default, complainant had elected to declare and does declare immediately due and payable the entire principal indebtedness secured by said trust deed, and requesting the said trustee to foreclose the trust deed in order to satisfy the indebtedness secured thereby; that said trustee refused to act in accordance with said demand, and left complainant to such relief as he may obtain under the provisions of the trust deed and complainant had the right to institute proceedings and declare the entire indebtedness due and owing because of the refusal on the part of the trustee to act.

The bill further alleges that the defendant, Harry L. DeGraff, is the record title holder of the premises sought to be foreclosed; that the premises in question are known as the Dorette apartments, located at 1539-43 South Avers avenue, Chicago, and consist of 30 flats; that the monthly rental therefrom is approximately $1,500; that the property is scant security in that the value of the same has depreciated and that the same is not worth in excess of $120,000; that unless a receiver is forthwith appointed, with the usual powers of receivers in chancery, to collect the rents, issues and profits, the bondholders will realize less than the amount of the bonds outstanding, to their irreparable loss and damage.

August 8, 1931, Harry L. DeGraff was served with notice that complainant would move the appointment of a receiver, which motion was continued to August 12, 1931, at which time the appellees moved to dismiss the bill.

The question for determination is, Did the chancellor err in dismissing the bill? Complainant concedes, as indeed he must, that under our chancery practice, a motion to dismiss a bill may be properly made by the defendants upon the ground that there is no equity apparent upon the face of the bill, and in such case the motion is treated as a general demurrer, admitting all the facts well pleaded by the bill, and that such a bill will be dismissed if it is clear that no amendment can help it. It was so stated in Grimes v. Grimes, 143 Ill. 550, 555; Leonard v. Arnold, 244 Ill. 429, 433. The effect of a demurrer in equity is to admit the truth of all facts properly pleaded as distinguished from conclusions, but it does not admit inferences of law drawn from those facts, and every allegation is to be taken most strongly against the pleader. The charge that the complainant was left to such relief as he might obtain under the provisions of the trust deed and that he had the right to institute foreclosure proceedings, was not admitted by the demurrer, as it was only the pleader’s conclusion. Moreover, there is no equity apparent upon the face of the bill, and no amendment can aid it. The complainant, in his bill, under oath alleges that he specifically requested the trustee to foreclose the trust deed. By the terms of the trust deed the trustee is not required to foreclose the trust deed upon demand of a single bondholder. The trust deed provides that upon request of a single bondholder the trustee shall either foreclose the trust deed or proceed to protect and enforce the rights of the trustee and bondholders by appropriate proceedings, at law or in equity. It is not alleged that the trustee refused to proceed to protect and enforce the rights of the trustee and bondholders by appropriate proceedings at law or in equity, other than by institution of foreclosure proceedings. The provisions of the trust deed limiting the right of a single bondholder to foreclose are valid. (Seibert v. Minneapolis & St. Louis Ry. Co., 52 Minn. 148, 53 N. W. 1134, 1136; Chicago, Danville & Vincennes R. Co. v. Fosdick, 106 U. S. 47, 77; Muren v. Southern Coal & Mining Co., 177 Mo. App. 600, 160 S. W. 835; Pearlman & Co. v. Lincoln-Belmont Bldg. Corp., 251 Ill. App. 135, 137; Belleville Savings Bank v. Mercantile Trust Co., 194 Ill. App. 175; Romberg v. Interstate Independent Telephone Telegraph Co., 200 Ill. App. 509.)

In the order dismissing the bill for want of equity it is recited: “That the complainant did not at any time prior to the filing of the bill of complaint herein demand, in accordance with the terms and provisions of the Trust Deed sought to be foreclosed, that the said Liberty Trust and Savings Bank, as Trustee, institute a suit for the foreclosure of the said Trust Deed, and that the said Liberty Trust and Savings Bank did not at any time prior to the filing of the bill of complaint herein refuse to institute a suit for the foreclosure of the said Trust Deed, and that the said bill of complaint was prematurely filed herein.” The bill was properly dismissed for want of equity, but the order of dismissal should not have included in it a finding of facts (Hibbard v. Mallers, 184 Ill. App. 474; Vannatta v. Lindley, 198 Ill. 40; Prather v. Lewis, 287 Ill. 304). The decree will be modified by striking out the finding of facts, and as modified will be affirmed. Each party will pay one-half the costs in this court. (See Thurber Art Galleries v. Rienzi Garage, 288 Ill. 35, 39.)

Decree modified and as modified affirmed; each party to pay one-half the costs in this court.

Gridley, P. J., and Scanlah, J., concur.