text:
    Robert Strong, Appellee, v. Richard Burden and Mary A. Burden, Appellants.
    Gen. No. 9,574.
    Heard in this court at the October term, 1940.
    Opinion filed July 9, 1941.
    Myron C. Rogers, of Morrison, for appellants.
    Evan A. Gilchrist, of Walnut, for appellee.
   Mr. Justice Dove

delivered the opinion of the court.

A judgment, by confession, in the sum of $1,620.72 was obtained by appellee against appellants in the circuit court of Whiteside county on April 11, 1939. The judgment was based upon three notes executed by appellants, each note being dated September 1, 1931, and each payable to the order of the First National Bank of Erie, Illinois, and each bearing the following endorsement: “October 4, 1938. Without recourse and without warranty, we assign and sell this note to Robert Strong of Earlville, Illinois. The first National Bank of Brie, Illinois, by John A. Thompson, Receiver.” Upon motion of the defendants this judgment was opened up and the issues made by the pleadings were submitted to the court, without a jury, for determination resulting in an order reducing the original judgment in the sum of $68.57 and reinstating it as of the date of its rendition for $1,552.15. To reverse this judgment order the defendants have appealed.

The evidence discloses that prior to April 29, 1935, the comptroller of the currency appointed a receiver for the First Rational Bank of Brie and on that day the receiver so appointed, filed his petition in the circuit court of Whiteside county for an order praying that court to take jurisdiction of said receivership for the purpose of entering petitions and orders authorizing the receiver to sell real and personal property belonging to the bank and to take any other action requiring an order of court of general equity jurisdiction in the administration of such receivership which may be presented to the court by said receiver. On that day an order was entered by the court in accordance with the prayer of said petition, and subsequently, an order was entered recognizing the appointment of John A. Thompson, as successor receiver, and directing that all further petitions and orders therein should be designated under the heading “In the matter of John A. Thompson, as receiver of the First Rational Bank of Brie, Brie, Illinois.” Thompson qualified as receiver and commenced to act as receiver on April 15, 1938 and was acting as receiver at the time of the hearing. On July 28, 1938 he notified the comptroller’s office that the assets remaining in his hands would be offered for sale on September 15, 1938, and he advertised that sale for three successive weeks in a newspaper published weekly in Erie, Illinois. On the day and place as advertised, he, the receiver, announced the terms of the sale and stated that the sale would be subject to the approval of the comptroller and of the court, and at the sale the plaintiff bid $1,259 for all the assets offered and paid the receiver one-third of his bid and received from the receiver a receipt therefor. Thereafter the comptroller of the currency was advised of this proceeding by the receiver and on September 24, 1938, he authorized the receiver to petition the court for an order permitting the receiver to accept not less than $1,259 as the purchase price of the assets included in the sale. On October 3, 1938, such a petition was filed by the receiver in the circuit court of Whiteside county and on the same day an order was entered approving the sale to the plaintiff and directing the receiver to assign and deliver to the plaintiff the assets he had purchased upon the payment to the receiver of the balance of the purchase price. This order, among other things, recited that the remaining assets of the bank had been sold at public auction by the receiver pursuant to notice thereof as directed by the office of the comptroller. Thereafter, the plaintiff paid the receiver the balance of the purchase price, and he delivered to the plaintiff the assets so purchased, among them being the three notes executed by the defendants, upon which judgment was rendered herein on April 11, 1939.

Section 191, Title 12, USCA authorizes the comptroller of the currency whenever he becomes satisfied of the insolvency of a national bank to appoint a receiver who shall proceed to close up the bank and enforce the personal liability of the shareholders as provided by section 192. Section 192 provides: “Such receiver, under the direction of the comptroller, shall take possession of the books, records, and assets of every kind and description of such association, collect all debts, dues and claims belonging to it, and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property of such association, on such terms as the court shall direct; and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders.”

Numerous cases are cited by counsel for appellants to sustain their contention that no valid sale of the notes upon which this judgment is based could be had unless the receiver, prior to the sale, obtains an order of a court of competent jurisdiction authorizing the sale. We have examined all of the cases cited and while expressions are found in some of them so indicating, still none of them decide the question involved herein. For instance, in Tourtelot v. Booker, a case decided by the Texas Court of Civil Appeals and reported in 160 S. W. 293, it appeared that on August 27, 1897, the District Court of North Dakota rendered a judgment in favor of E. C. Tourtelot, receiver of the Grand Forks National Bank of Grand Forks, North Dakota, and against L. E. Booker for $31,261.19. It further appeared that after the judgment was obtained in North Dakota, Tourtelot resigned as receiver and W. B. Wood was appointed as his successor and qualified and thereafter sold said judgment and by due course of assignments the plaintiffs, Tourtelot and Hogan, became the owners thereof and brought suit in the District Court of El Paso county, Texas, to recover thereon. It further appeared that the receiver had presented a petition to, and obtained an order signed by a judge authorizing the receiver to dispose of the remaining assets of the bank, but this petition and order were never filed in the clerk’s office of the court and never became a part of the records of any court. In its opinion affirming a judgment for the defendant, the Texas Court of Civil Appeals referred to the foregoing provisions of the United States Code and stated that before a sale of assets of an insolvent bank is authorized, an order of a court of record of competent jurisdiction must be had and obtained and that such an order is a necessary prerequisite before any sale of the assets of a bank can be made by the receiver. That case, however, is distinguished from the instant case in that in the Tourtelot case there was no attempt to comply with the provisions of the statute. No order was obtained from any court authorizing a. sale to be made, approving a sale that had been made, or directing the receiver to accept an offer which he had received. In none of the other cases cited and relied upon by appellants does it appear, as it does in the instant case, that an order was entered approving and confirming the action of the receiver in receiving bids and directing him to accept the offer and deliver the assets to the purchaser upon full payment of the purchase price.

In the instant case, although no petition was filed or any order obtained from a court prior to the time the auction sale was conducted, the provisions of the statute were in fact complied with inasmuch as the receiver, before he endorsed and transferred the notes of appellants to appellee did procure an authorization so to do from the court. All of the authorities are to the effect that Mr. Thompson, the receiver, is not an officer of the circuit court of Whiteside county, but an agent and officer of the executive branch of the government and that an application by him to the court for authority to sell the assets in his hands is an ex parte proceeding in which the court is vested with a discretion to authorize or refuse to authorize a proposed sale by the receiver or to approve or refuse to approve a sale made by him.

In Fifer v. Williams, 5 F. (2d) 286, it appeared that the District Court of Montana, upon the petition of the receiver of the First National Bank of Fergus county, Montana, authorized the receiver to sell all of the assets of that bank to a new national bank to be organized at Lewistown, Montana. Certain creditors prosecuted an appeal to the Circuit Court of Appeals of the Ninth Circuit which court dismissed the appeal, holding that there is no statutory provision authorizing an appeal from an order authorizing the sale of the assets of an insolvent national hank. In its opinion, the court stated that under the authorities a receiver of an insolvent national bank is not the officer of any court, but an agent and officer of the United States, that under the statute, whenever he deems it desirable to sell or compound bad or doubtful debts, it devolves upon him to procure the order of a court of competent jurisdiction, nevertheless, the funds collected are disbursed by the comptroller, and that by making an application to the district court, the receiver did not thereby submit himself and the affairs of the bank to the jurisdiction of that court. The court further stated that the receiver belongs to the executive branch of the government and his custody of the assets is not that of the court, and that the procedure outlined by the statute did not provide for a trial in court, or contemplate that an objecting creditor could litigate with the receiver the questions as to the advisability of disposing of the assets of the insolvent institution. Continuing the court said: “There is no suit; no parties in the legal understanding of the term; no process must issue; no one is authorized to appear on behalf of the receiver or anyone else, or to subpoena witnesses. It is an ex parte proceeding, and, though by the will of congress put under judicial cognizance, is not by its own nature a judicial controversy.” In Armstrong v. Woolley, 89 F. (2d) 295, the court held that where the sale of land by a receiver of an insolvent national bank was not authorized by precedent order of court and was not approved by a subsequent order, an agreement between the receiver and prospective purchaser was not consumated and could not be enforced by the prospective purchaser. To the same effeet is Whelan v. Blankenbeckler, 87 F. (2d) 81, where it is said: “It must be borne in mind that the receiver of an insolvent national bank is an agent whose authority is limited by law. In no event can he sell land without an order of court approving the contract of sale. (Citing cases.) A person dealing with such receiver in his official capacity is presumed to have knowledge of his authority to act. Ellis v. Little, 27 Kan. 707, 41 Am. Rep. 434; Beckham v. Shackelford (Tex. Civ. App.) 29 S.W. 200. The federal District Court where the insolvent bank is located is vested with jurisdiction to approve or disapprove the sale of its real or personal property.”

In Davidson v. Whitfield, 186 Okla. 536, 99 P. (2d) 156, it was insisted that a conveyance by the receiver of the First National Bank of Berwyn, Oklahoma, was void, it having been executed without any previous order of the Federal court having jurisdiction over the sale of the assets of that insolvent bank. The court stated that in view of the conclusion it had arrived at upon another feature of the case, it was not certain that it was necessary for it to determine the sufficiency of the conveyance of the receiver, yet it did so, and in the course of its opinion said: “It is shown that the receiver had authority from the Comptroller of the Currency to dispose of the bank’s assets; the sale was reported to the Federal District Court by petition of the receiver in which he asked for approval of the sale and for an order, which was entered, confirming the sale. On this record the deed was issued in October 1934, nearly four years before the commencement of the present action. Appropriate here is the rule stated in 53 C. J. 216, sections 352, 353: ‘In general confirmation of a receiver’s sale by the court having charge of the receivership cures all defects and irregularities in the sale and in the proceedings preliminary thereto except such as are founded on fraud or want of jurisdiction, and renders the sale final and binding. Confirmation over an objection render's the matter res judicata as to the objecting party. Even though a receiver has made a sale of property of the estate without first procuring authority from the court so to do, confirmation of such sale by the court will ordinarily be regarded as tantamount to a previous authorization or direction. It has been held, however, that where timely objection is made to a sale on the ground that the receiver had no authority to make it, and that it is accordingly void, an order of confirmation made over such objection cannot take the place or answer the purpose of proper authorization or direction in advance.’ Ordinarily the court’s decree confirming all that the receiver has done is equivalent to a previous direction. Richards v. Halliday et al., 3 Cir., 112 F. 86. 50 C. C. A. 133; First National Bank of Tulsa et al. v. Colonial Trust Co. et al., 66. Okla. 106, 167 Pac. 985; Armstrong v. Woolley, 5 Cir., 89 F. 2d 295; Whelan v. Blankenbeckler, 5 Cir., 87 F. 2d 81. The provisions of the National Banking Act, 12 USCA Sec. 21 et seq. providing for the disposition of assets of an insolvent national bank are entitled to liberal interpretation to promote the speedy winding up of the affairs of the bank. Korbly, Receiver v. Springfield Institution for Savings et al., 215 U. S. 330, 38 S. Ct. 88, 62 L. Ed. 326; In re Bank of San Pedro, 1 Cal. 2d 675, 37 P. 2d 80. An examination of authorities on the point submitted by the plaintiff shows that in practically every case there was an absence of an order approving the sale. The cases relied upon are not fairly in point.”

The conduct of the receiver in the instant case, as disclosed by this record, must be considered under all the authorities to be equivalent to procuring in advance an order from the court directing a sale. The court was apprised of all the facts. The court had jurisdiction and there was no fraud. The spirit of the applicable statutory provisions was observed and appellants cannot complain.

Nor is there any merit in appellants’ contention that they were deprived of a jury trial. Section 64 of the Civil Practice Act provides that a defendant desiring a trial by jury shall file a demand in writing at the time of filing his appearance. Rule 26 of the Supreme Court provides that issues in a case where a judgment by confession is opened up shall be tried by the court without a jury unless a jury is demanded at the time of the entry of the order opening the judgment.

In the instant case the order opening up the judgment was entered on June 23, 1939. The demand for a jury was filed by appellants on June 28, 1939.

The order appealed from will be affirmed.

Order affirmed.


source: Caselaw Access Project

author: Mr. Presiding Justice Wolfe

license: Public Domain

text:
    Zenith Radio Distributing Corporation, Appellee, v. H. E. Mateer, Appellant.
    Gen. No. 9,684.
    Heard in this court at the May term, 1941.
    Opinion filed August 7, 1941.
    Elwin S. Wadsworth, of Dixon, for appellant.

      Warner & Warner, of Dixon, for appellee; Morey C. Pires, of Dixon, of counsel.
   Mr. Presiding Justice Wolfe

delivered the opinion of the court.

The Zenith Badio Distributing Corporation started a suit before a justice of the peace in Lee county, against II. E. Mateer, to recover a balance due on a promissory note of $236.70. At the hearing before the justice, judgment was entered in favor of the plaintiff. An appeal was taken by the defendant to the circuit court of Lee county, where judgment was again entered in favor of the plaintiff, and against the defendant for $236.70. It is from this judgment that the appeal is prosecuted.

It is not contended that the defendant, H. E. Mateer, was personally liable on the note as a signer of the same, but that this note represented the sale price of goods sold to Bobert A. Conger, and that Bobert A. Conger, in violation of the Bulk Sales Law of the State of Illinois, transferred a one-half interest in and to the business which he was operating, to H. E. Mateer, and that the Bulk Sales Law was not complied with, therefore Mateer was liable to the plaintiff for the balance due in the sale of the merchandise.

The theory upon which the case was tried is stated by the appellee in the second paragraph of their brief, as follows: “This action was brought by the Zenith Badio Distributing Corporation, a creditor of Bobert A. Conger, against Harold E. Mateer as purchaser of one-half of the assets of the business operated by Bobert A. Conger, on the ground that the sale and transfer from Bobert A. Conger to Harold E. Mateer, is fraudulent and void, as against the respondent for failure to comply with the terms of the Bulk Sales Act. ’ ’

The material facts in the case are not in dispute. - The appellant admits that he bought a 50 per cent interest in the business of Conger, but denies that there was a partnership (which is immaterial in this case). He admits that he did not attempt in any manner, to comply with the Bulk Sales Law. However, the appellant seriously insists that the Bulk Sales Law is not applicable in this case, as Mateer, the appellant, did not purchase the major part of Conger’s business.

Paragraph 78, chapter 121½ of Smith-Hurd’s Hlinois Annotated Statutes [Jones Ill. Stats. Ann. 121.01] provides as follows: “That the sale, transfer, or assignment in bulk of the major part or the whole of a stock of merchandise, or merchandise and fixtures or other goods and chattels of the vendor’s business, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the vendor’s business shall be fraudulent and void as against the creditors of the said vendor, unless the said vendee shall, in good faith, at least five (5) days before the consummation of such sale, transfer or assignment demand and receive from the vendor a written statement under oath of the vendor or a duly authorized agent of the vendor having knowledge of the facts, containing a full, accurate and complete list of the creditors of the vendor, their addresses and the amounts owing to each as near as may be ascertained, and if there be no creditors, a written statement under oath to that effect; and unless the said vendee shall at least five days before taking possession of said goods and chattels and at least five days before the payment or delivery of the purchase price, or consideration of [or] any evidence of indebtedness therefor, in good faith, deliver or cause to be delivered or send or cause to be sent personally or by registered letter properly stamped, directed and addressed, a notice in writing to each of the creditors of the vendor named in the said statement or of whom the said vendee shall have knowledge, of the proposed purchase by him of the said goods and chattels and of the price, terms and conditions of such sale: Provided, however, that it shall be lawful for the vendee to pay to the vendor so much of the purchase price as shall be in excess of the total amount of the indebtedness of the vendor, before the expiration of the five days hereinbefore referred to.” It is conceded in this case that there was no attempt made to comply "with the statute, so the question involved is whether the sale of 50 per cent of Conger’s business to Mateer is a major part of Conger’s business. Our attention has not been called to any case where this question has been decided. Both appellant and appellee have cited and rely on the case of Fawver v. Flesher, 208 Ill. App. 21. This question is not decided in the case, but from the language used by the court, it seems to indicate that 50 per cent of a business would not be a major part thereof. The appellee has cited several cases from other jurisdictions to sustain their contention that the sale of 50 per cent of a business is a major part thereof. A reading of these cases discloses that in none of the States where this question was presented to the court, does their statute provide as our statute does in the Sales Act, that when a major part or the whole of the business is sold, the sale is void as to creditors. The Sales Act of Tennessee provides “the sale of any portion shall be void” etc. In West Virginia and Michigan the statutes are practically the same and provide “a sale of part or all” shall be void as to creditors. The Texas statute provides “that all or any portion thereof,” shall be void as to creditors. In Washington the statute provides “any sale or substantial interest therein,” is void as to creditors. Nowhere have we found a statute where it is provided as ours, that when a major part or all of the business is sold, it is void as to creditors.

The Bulk Sales Act is in derogation of the common law and penal in nature, must be strictly construed. (Coon v. Doss, 361 Ill. 515, page 516.) The word major has a clear and definite meaning and the court in interpreting this statute must give this word the ordinary meaning, which is defined to be, “greater or larger.” Giving the word major, its accepted meaning in the present case, the sale of 50 per cent of Conger’s business to the appellant, was not the major part of the business.

The sale of 50 per cent of the business in the present case was not in violation of the Bulk Sales Law. The judgment of the trial court is hereby reversed.

Judgment reversed.


author: Mr. Justice Dove

text:
    Harry McGuire, Appellant, v. Outdoor Life Publishing Company, et al., Appellees.
    Gen. No. 9,593.

      Heard in this court at the October term, 1940.
    Opinion filed August 7, 1941.
    Hall & Dusher, of Rockford, for appellant.
    Karl C. Williams, of Rockford, for appellees.
   Mr. Justice Dove

delivered the opinion of the court.

On November 12, 1937 a complaint was filed by Harry McGuire in the circuit court of Winnebago county against Outdoor Life Publishing Company, a corporation, and certain individuals who were directors of said corporation, seeking to recover damages for an alleged breach of a written contract of employment between the plaintiff and the defendant corporation.

Upon filing the complaint and pursuant to request, a summons was issued and returned showing service on the corporate defendant by serving J. W. Watt, its president, and further showing service upon all the individual defendants except W. A. Mueller who was not served. The corporate defendant and each of the individual defendants who had been served entered a special and limited appearance and filed a motion to dismiss the complaint, alleging that the court had no jurisdiction of the person of the defendants or of the subject matter of the suit. The motion to dismiss set forth as reasons therefor that the individual defendants were residents of the county of Ogle and that the transaction out of which the cause of action is alleged to have arisen did not occur in Winnebago county, and that the principal office of the corporate defendant was not in Winnebago county, Illinois, that it was not doing business in Winnebago county, Illinois before and at the time of the commencement of the action, and that the alleged transaction out of which the cause of action arose, nor any part thereof, occurred in Winnebago county, Illinois. The plaintiff thereupon filed his cross motion asking that in event it was found that the venue of the cause was not properly in Winnebago county, that the court order the venue changed to Ogle county. Upon a hearing, the motion of the defendants to dismiss the suit was overruled, and the plaintiff’s cross motion for change of venue to Ogle county was sustained and the cause was transferred to Ogle county, where the defendants were ordered to plead or answer.

The Outdoor Life Publishing Company, by J. W. Watt, its president, the corporate defendant and also the several individual defendants again entered a special and limited appearance in the circuit court of Ogle county, and moved the court to dismiss the complaint as to the individual defendants; first, because the cause of action set forth in the complaint purports to be founded upon a written contract of employment entered into between the plaintiff and the Outdoor Life Publishing Company, a Colorado corporation, which contract was executed in the State of Colorado; and, second, because there are no allegations in the complaint to the effect that any of the individual defendants undertook any personal obligation with respect to the employment of the plaintiff. While this motion was pending, the corporation defendant, by its attorney, filed a demand for a jury trial. Thereafter this corporate defendant filed its motion to quash the summons on the ground that it was a foreign corporation, not licensed to do business in Illinois, and that J. W. Watt was never the registered or authorized process agent of said corporation in Illinois, and that said corporation was not doing business in the State of Illinois at the time of the service of summons or at the time of the commencement of the suit or for three years prior thereto. This motion purported to limit the appearance of this defendant for the purpose of the motion only. Attached to this motion was an affidavit of Watt, stating that the corporation had sold all its assets to another foreign corporation on or about May 1, 1934, since which time it had done no business in this State; that it was doing no business in Illinois at the time the summons was served and had not for three years prior thereto; and that the corporation never had any certificate of authority to do business in Illinois, nor any registered or designated agent for service of process in this State. The plaintiff then filed a verified motion in opposition to the motion to quash, traversing certain allegations therein and alleging facts in support of Ms claim that the service was legal. A hearing was had, resulting in the motion to quash being sustained and an order entered abating and dismissing the suit. To reverse this order, the plaintiff has appealed.

The complaint avers the directors adopted a resolution on May 9, 1931, in the State of Colorado, to the effect that appellant was employed as editor of the magazine “Outdoor Life” for a period of five years beginning January 1, 1932, at a salary of $8,000 per annum, and a bonus under certain conditions; that the corporation communicated the offer to him by letter directed to Paris, France; that he accepted the offer by telegram and by letter, mailed at Gunnison, Colorado, directed to the corporation at Mt. Morris, Illinois; that on January 1, 1932 he entered upon his duties under the contract and continued to fulfill such duties according to the contract until July 1, 1934, when he was discharged without legal reason; that his services were availed of by the corporation and the individual defendants in this State, where they were unlawfully carrying on the business of the corporation; that such services were performed by their di rection; and that he first learned on October 1, 1937 that the corporation was not authorized to do business in this State. The complaint sets out the official capacities of the individual defendants in connection with the corporation, and alleges their liability on account of their having been parties to and assisting in carrying on the business in this State without the corporation being authorized to do business in Illinois and that it has an office in Mt. Morris, from which it transacts business.

The proofs under the motion to quash and the cross motion show the office and business of the corporation, was moved in 1931 from Denver, Colorado, to Mt. Morris, Illinois, where the magazine had been printed since 1924 or 1925. J. W. Watt was elected president in February 1934. There has been no election of officers since that time. On May 31, 1934, the corporation sold its property, except office furniture, accounts and notes receivable, premiums and book inventories, to Popular Science Publishing Company. This was one month prior to appellant’s discharge. There was no subsequent meeting of the board of directors. The corporation last published the magazine in June or July 1934, gave up its office in Mt. Morris on September 1, 1934, and Watt testified it had no other offices; that its bank account in Mt. Morris was closed on December 13, 1935, and it had no bank account outside this State; that the last time he wrote a letter on behalf of the corporation or used its letter head was in 1934 or 1935; that he had some of the corporation’s books in his office and the account books were in the hands of auditors who had been auditing the books; that other books were either in the hands of the corporation’s Chicago attorney or had been sent by him to the attorney conducting the trial and that the books and records of the corporation had been in this State since the company started doing -business. The record further discloses that on May 19, 1937, the corporation, by its vice-president and its secretary, made a report at Mt. Morris, Illinois to the Secretary of State of Colorado, which was filed June 8, 1937. This report contained a statenient of the amount of the capital stock of the company, named the officers and directors, gave their addresses as Mt. Morris, Illinois, and stated that the corporation was not engaged in active business in Colorado or elsewhere, and had not engaged in business for more than two years. It showed an accompanying payment of $44.52 license and penalty tax for the years 1936 and 1937, but the source of the payment is not shown by the testimony. The report named Cyril Shraiberg as the Colorado agent upon whom process could be served.

When the corporation alleged in its motion to quash that it was not doing business in Illinois at the time the summons was served, it assumed the burden of proving that affirmative defense. While the testimony shows some things the corporation did and some things the president did not do, it also shows the account books of the corporation were in the hands of auditors who did that kind of business for the corporation. Their possession of the books is not explained. Although the corporation sold the major portion of its assets on May 31, 1934 to another foreign corporation, it was still doing corporate business in Illinois by making the report to the Secretary of State of the State of Colorado less than six months before this suit was started. No showing was made as to whether the notes and bills receivable had all been collected or were in process of collection, but it does appear that the office furniture, accounts and notes receivable were not disposed of but were retained by the appellee corporation. By its contract of sale to the Popular Science Publishing Company, the corporate appellee agreed to protect its vendee from all of its liabilities, which were not specifically assumed by the vendee as part of the purchase price and its alleged liability to appellant was not specifically assumed. Nobody testified the corporation had not done any business since making the report to the Colorado Secretary of State, or that it was not doing any business in this State at the time the summons was served. In our opinion, the corporation did not meet the burden of proof imposed upon it.

First, then, we will consider the alleged liability of the individual defendants. In Joseph T. Ryerson & Sons Co. v. Shaw, 277 Ill. 524, it .was held that the directors,' officers and agents of either a domestic or foreign corporation which has not complied with the law authorizing it to do business in this State are personally liable for debts incurred in carrying on the business of the corporation. Appellees argue that this is no longer the law in this State since the enactment of section 124 of the Business Corporation Act of 1933 (Ill. Rev. Stat. 1939, ch. 32, par. 157.125 [Jones Ill. Stats. Ann. 32.128]), which provides in part: “No foreign corporation transacting business in this State without a certificate of authority shall be permitted to maintain an action at law or in equity in any court of this State, until such corporation shall have obtained a certificate of authority .... The failure of a foreign corporation to obtain a certificate of authority to transact business in this State shall not impair the validity of any contract or act of such corporation, and shall not prevent such corporation from defending any action at law or suit in equity in any court of this State.”

Prior to the enactment of the Business Corporation Act, section 149 of the Corporation Act of 1919 (Ill. Rev. Stat. 1931, ch. 32, par. 149, provided: “If any person or persons being, or pretending to be, an officer or agent or board of directors of any corporation . . . sháll assume to exercise corporate powers or use the name of such corporation . . . before it has been authorized to do business, under the laws of this State, then they shall be jointly and severally liable for all debts and liabilities made by them and contracted in the name of such corporation . . . and suits at law may be prosecuted therefor by creditors individually.” Appellant’s contract with the corporation was made while this section was in force.

The Ryerson case, supra, was decided before section 149 of the 1919 Corporation Act was enacted. At that time section 18 of the prior Corporation Act of 1872 (J. & A. Anno. Stat. par. 2435) provided: “If any person or persons being, or pretending* to .be, an officer or agent, or board of directors, of any stock corporation . . . shall assume to exercise corporate powers, or use the name of any such corporation . . . without complying with the provisions of this Act, before all stock named in the articles of incorporation shall be subscribed in good faith, then they shall be jointly and severally liable for all debts and liabilities made my them, and contracted in the name of such corporation. ...” The Corporation Act of 1872 was repealed by the 1919 Corporation Act.

In Van Ameringen v. Cohen, 254 Ill. App. 576, relied upon by appellee, decided in 1929, while section 149, supra was in force, it was held that officers of a New York corporation not licensed to do business in Illinois, were not liable on trade acceptances executed in this State to replace prior evidence of indebtedness executed in New York for debts contracted by the corporation in the latter State. The opinion says section 149 is analogous to section 18 of the prior act, and that the courts held section 18 was highly penal in its provisions and should therefore, be strictly construed, citing M. H. Vestal Co. v. Robertson, 277 Ill. 425, and Inter-Ocean Newspaper Co. v. Robertson, 296 Id. 92; that under such construction the defendants were not liable for the reason that the obligation upon which the suit was brought was not “made by them,” and under a strict construction of the statute the creation of the indebtedness was a condition precedent to liability; and that, on the other hand, if the question was considered on common-law principles such as were followed in the Ryerson case, supra, the same conclusion must be arrived at since the obligation was created in New York by a New York corporation which had a perfect right to contract and was duly bound by its contract, exercising its powers within the State under whose statutes it came into existence.

An examination of the opinion-in the Vestal case discloses the decision is not based upon a strict construction of section 18 as highly penal. In that case the stock of a corporation had been subscribed and the certificate of incorporation had been issued but never recorded. The suit was against an officer of the corporation to recover the balance due on printing materials furnished the corporation. The question was whether the suit was to recover a statutory penalty, governed by the two-years statute of limitations, or was a suit on an implied contract or statutory liability, to which the five-years statute applied. In discussing section 18 and holding that the two-years statute of limitations applied, the court said: “It cannot be said that the legislature intended thereby to grant creditors a remedy for the recovery of their claims which the common law does not give them. They had a right of action against the corporators as partners. (Bigelow v. Gregory, 73 Ill. 197.) That remedy has been in no way changed or taken away by the enactment of said section 18. (Loverin v. McLaughlin, supra; Richardson Fueling Co. v. Seymour, 235 Ill. 319.) The reading of said section indicates a legislative intent to create a liability against the officers and agents of a corporation, jointly and severally, for the general protection of the public. The words, ‘shall be jointly and severally liable for all debts and liabilities made by them,’ were not intended as the basis for establishing a contractual relation between the officers and the creditors, but were used for the purpose of holding each set of officers and directors responsible only for the wrongs and omissions occurring while they are in control and imposing a like responsibility and liability on their successors in office. The liability thus created is imposed upon the officers, directors and agents because they permit business to be commenced and liabilities to be incurred in violation of their duty. . . . The conclusion is irresistible that said section 18 is a penal statute and that the right of action thereunder may be barred by the two year Statute of Limitations.” The statute was not held highly penal nor given a strict construction. On the contrary, although the statute purported to apply to corporations where all the stock had not been subscribed, it was held that the officers, agents and directors would be liable thereunder, although it appeared in that case that the only defect in the corporate organization was a failure to record the certificate. The holding of nonliability was based upon the two-year statute of limitations and not upon a strict construction of the statute. The holding in the Inter-Ocean case, supra, is merely that section 18 is not applicable to stockholders.

In consonance with the Vestal case, the Ryerson case, supra, holds that the statutory penalty of not less than $1,000 nor more than $10,000 for failure or neglect to comply with the provisions of the act, might be enforced against the corporation, but the liability of the corporation to pay the penalty did not affect the question whether individual rights might be enforced against directors, officers and agents who incur liabilities or make contracts in the name of the corporation. It mentions the fact that there was no statute in this State imposing a liability upon officers or agents of a corporation not permitted to transact business in this State, and holds the liability arose through application of the rules of law under like conditions, which amounts to imposing a common-law liability.

The Business Corporation Act repeals the Corporation Act of 1919, which was in force when appellant’s contract was entered into. Section 163 of the act provides: “The repeal of a law by this Act shall not affect any right accrued or established, or any liability or penalty incurred, under the provisions of such law, prior to the repeal thereof.” The Business Corporation Act does not provide for any recovery against officers, agents or directors of a corporation not authorized to do business in this State, but it still contains a penalty by prohibiting such a corporation from maintaining any suit. While it permits such a corporation to defend a suit against it, there is nothing in the act which indicates a legislative intention to bar creditors from a remedy against its officers, agents or directors.

The argument that the contract was made in Colorado between the corporation and appellant, and that the individual defendants were not parties thereto, and did not incur any liability thereunder, is beside the mark. This is not a suit to recover for services performed under the contract, but is directed at the action of all the defendants in discharging appellant. That is the time and the method by which the liability is alleged to have been incurred, and is the basis of the action.

Whether the saving clause in section 163 preserves appellant’s rights under the 1919 law, or did not do so because the breach occurred after the 1919 act was repealed, is of no controlling effect in this case. If it preserved them, the liability, if any, was under the 1919 act. If it did not, the liability was at common law, because the Business Corporation Act makes no provision in relation thereto. The language of section 149 of the 1919 act as to liabilities “made by them” is analogous to the language in section 18 of the prior act of 1872. The Van Ameringen case, supra, is not persuasive here, and section 125 of the Business Corporation Act does not bar any remedy of appellant. Parker-Holladay Co. v. Bokum, 252 Ill. App. 135, holding the rule in the Ryerson case is a harsh one and should not be extended unless the law is plain, has no application. Under the holdings in the Ryerson case, and in the Vestal case construing the meaning of the words “made by them” we are of the opinion the court erred in dismissing the individual defendants.

Whether the service upon the corporation, by serving its president, was or was not sufficient, the demand for a jury trial and its motion to quash the service were each made by its attorneys. Under the settled law this was a general appearance. Pleas to the jurisdiction must be pleaded in person if the party desires to limit his appearance for that purpose. (Pratt v. Harris, 295 Ill. 504; Mineral Point R. Co. v. Keep, 22 Id. 9; Audretsch v. Hurst, 126 Mich. 301, 85 N. W. 746; 4 C. J. Appearances 1333, sec. 27.) Moreover, the service was in compliance with section 17 of the Civil Practice Act (Ill. Rev. Stat. 1939, ch. 110, par. 141 [Jones Ill. Stats. Ann. 104.017].) Section 111 of the Business Corporation Act does not purport to cover cases like this where the corporation was neither authorized to do business in this State, nor had a registered agent.

The order dismissing the individual defendants and the order abating and dismissing the suit are reversed and the cause is remanded to the circuit court of Ogle county with directions to overrule the respective motions of appellees to dismiss the individual defendants and to quash the service and to enter an order directing appellees to answer.

Reversed and remanded with directions.


text:
    In re Estate of David A. Miller, Deceased. Grace T. Johnson, Formerly Grace T. Miller, Administratrix of Estate of David A. Miller, Deceased, Appellee, v. Alvin Miller et al. Amanda Adams, Applicant to Intervene, Appellant.
    Gen. No. 9,631.

      Heard in this court at the February term, 1941.
    Opinion filed August 7, 1941.
    Merville L. Brown, of Princeton, for appellant.
    J. L. Spaulding, Arthur H. Ellis and L. D. Spaulding, Jr., all of Princeton, for appellee; Arthur H. Ellis and L. D. Spaulding, Jr., both of Princeton, of counsel.
   Mr. Justice Dove

delivered the opinion of the court.

On April 9, 1940 appellee, as administratrix of the Estate of David A. Miller, deceased, filed in the county court of Bureau county, her petition to sell certain real estate described in the petition which she alleged belonged to her intestate for the purpose of paying the debts and claims probated against Ms estate. All the defendants either waived service and entered their appearances in the proceeding or were duly served with process.

On May 7, 1940, Amanda Adams filed her petition supported by her affidavit, for leave to intervene and be made a party defendant and for leave to file an answer to said petition. Upon a hearing .of this application and objections thereto by the administratrix, an order was entered denying the application for leave to intervene and refusing her leave to become a party defendant and to file an answer. The cause proceeded thereafter to a decree. Prom the order, however, denying her leave to intervene, Amanda Adams prosecuted an appeal to the Supreme Court and that court transferred the cause to this court.

The application and affidavit of appellant set forth that she is the legal owner of all the real estate described in appellee’s petition; that she acquired title thereto for a valuable consideration by virtue of certain deeds from the said David A. Miller and others; that pursuant to the execution and delivery of said deeds to her, she entered into and took possession of all of said real estate described in the petition, and is the legal owner thereof; that she has a direct interest in this proceeding and any order or judgment entered by the court in this proceeding will directly affect her right, title and interest in the real estate which is sought to be subjected to the payment of the debts of the said David A. Miller, deceased. The petition also set forth that on July 18, 1938 the petitioner in this proceeding, as administratrix, filed her petition in the probate court of Bureau county alleging, among other things, that appellant had in' her possession and control certain papers and evidences of title to the land belonging to the estate of David A. Miller, deceased and praying for a citation; that this petition was afterwards amended, and as amended prayed for an order requiring appellant to convey to the widow and heirs at law of said David A. Miller, the property in her possession and control which belonged to David A. Miller; that a hearing was had upon said amended petition and an order entered by the county court finding that David A. Miller owned the real estate involved herein at the time of his death; that appellant controverts said title and has obtained color-able title thereto and wrongfully claims the same and wrongfully seeks to hold and does hold said real estate to the prejudice of said widow, heirs and creditors of said estate and has converted said real estate to her own use; that the order further found that appellant has no title or interest in the real estate sought to be sold by the petitioner herein and the order purports to vest the title to said real estate in the widow and heirs of David A. Miller, deceased and directed appellant to convey said real estate to the widow and children of David A. Miller, deceased, within 30 days after the entry of the order, and in casé of her failure so to do, that the master in chancery of the circuit court, as special commissioner, was directed to make such conveyance. The intervening petition further alleged that in obedience to such order, the master did execute a conveyance as directed by said order. Upon the hearing of the intervening petition of appellant, the petition for citation, the amendment thereto, and the order entered by the county court were admitted in evidence, and it was the contention of appellant that the county court in that proceeding was without jurisdiction to enter such an order and that the order and decree and the deed by the special commissioner were all void and of no effect.

In order to sustain the order of the trial court in refusing leave to appellant to intervene, counsel for appellee insist, first; that no facts are set forth in the petition but all the allegations therein are conclusions of the pleader, and second; that it appears from the petition that the former order of the county court in the citation proceeding which directed a conveyance by appellant to the widow and children of David A. Miller, deceased, was a valid order and cannot be collaterally attacked or impeached in this proceeding.

In our opinion, there is no merit in either of these contentions. The allegations of the petition and affidavit in support thereof are not all conclusions. The affidavit states that appellant, for a valuable consideration, acquired title to the real estate involved in this proceeding by virtue of certain deeds executed by David A. Miller and others, and that, pursuant to the execution and delivery of those deeds, appellant entered into and took possession of said real estate. The allegations are also that the order of December 17, 1938 entered in the citation proceeding found that appellant had colorable title to the premises herein involved ; that she was wrongfully holding said premises and directed her to convey them to the widow, children and heirs at law of David A. Miller, deceased.

The applicable statutory provisions relative to the sale of real estate to pay debts provide that when there is insufficient personal estate of a decedent to pay expenses of administration and the claims against the estate, that then, by leave of the probate court and upon such terms as the court may direct, the administrator may sell the real estate or interest therein to which the decedent had claim or title; that the petition shall be verified and shall, among other things, contain a description of the real estate, the approximate value thereof, the interest of the decedent therein and the nature and extent of all liens upon and other interests, if any in said real estate so far as known to the petitioner, and that all persons holding liens against or having an interest in the real estate or in any part thereof, in possession, inchoate or otherwise shall be made parties defendant. (Ch. 3, secs. 379-384. Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 110.476-110.481] Smith-Hurd Ann. St. (Probate Act).)

From the averments of appellant’s intervening petition and affidavit in support thereof, it appears that appellant was in possession of the lands described in the petition of appellee and claiming title thereto. Appellee should, therefore, have made her a party defendant in that proceeding, and not having done so, appellant had a right to call the court’s attention to that fact and should have been granted leave to intervene and file an answer.

It is insisted, however, by counsel for appellee, that the order entered in 1938 in the citation proceeding was a valid order and that it and the master’s deed issued in pursuance thereof divested appellant of all her right, title and interest in the real estate involved in this proceeding, and, therefore, she was not either a necessary or proper party to the instant proceeding. Counsel very frankly states that they have found no authority to sustain this contention. They argue, however, that in the settlement of estates the county court does have full and complete jurisdiction and counsel insists that simply because this question is new and no authority found to support the order of the county court, that it does not follow that the county court did not have jurisdiction to enter the order it did.

In Johnson v. Nelson, 341 Ill. 119, in construing sections 81 and 82 of the Administration Act under which the citation proceeding referred to in appellant’s application for leave to intervene was brought, the Supreme Court said: “These sections provided a summary method for the recovery of property of the character defined in Section 81, which belonged to a decedent at the time of his death, but had come into the possession of a third party prior thereto, and which that party either retained in his possession or had concealed or embezzled.” The court then referred to the 1925 amendments to these sections and stated that these amendments enlarged the provisions of section 81 to include property belonging to the executor or administrator of the estate of any deceased person and conferred upon the court the power to determine, upon a trial by jury if demanded by either party, questions of title and rights of property. Continuing, the court said: “Notwithstanding these additions, the purpose of the section, as amended, apart from the recovery of books of account, papers or instruments of title, and the obtaining of information, is to recover possession of specific property, or if converted, its proceeds or value.”

In Wilson v. Prochnow, 359 Ill. 148 the court again said, referring to said sections 81 and 82 of the Administration Act: “Their purpose is to provide a summary method for the recovery of certain defined property which belonged to the decedent at his death, but which had come into the possession of a third party prior thereto, and which that party either retained in his possession or had concealed or embezzled.”

The petition for citation which forms the basis for the order finding that appellant had no title to the lands in question was filed under the purported authority provided by sections 81 and 82 of the Administration Act as amended in 1925 and in force and effect in 1938 when the petition was filed. The subject matter of said petition was not “goods, chattels, moneys or effects, books of accounts, papers or any evidences of debt whatever, or titles to land belonging to any deceased person or the executor or administrator or the estate of any deceased person.” The order was not authorized by the statute. The remedy provided by these statutory provisions is for the recovery of specific personal property, books of account, papers or instruments of title and the obtaining of information concerning any indebtedness, or evidences of indebtedness, or property, titles or effects belonging to any deceased person, or to the executor or administrator, or the estate of any deceased person and does not purport to confer upon probate courts general equity jurisdiction which general equity jurisdiction probate courts do not possess. In re Estate of Shanks, 282 Ill. App. 1; Dixon v. Nefstead, 285 Ill. App. 463.

The order appealed from is reversed and the cause remanded to the county court with directions to that court to sustain appellant’s application for leave to become a party defendant and to grant her a reasonable time in which to'file an answer to appellee’s petition to sell real estate to pay debts.

Reversed and remanded with directions.


text:
    Illinois National Bank and Trust Company, Appellee, v. W. F. Holmes, Appellant.
    Gen. No. 9,673.

      Heard in this court at the May term, 1941.
    Opinion filed August 7, 1941.
    Hall, Mitchell & Petz, of La Salle, for appellant.
    C. A. Pedderson, of Rockford, for appellee.
   Mr. Justice Dove

delivered the opinion of the court.

In a proceeding to try the right of property in certain livestock seized by virtue of an execution issued out of ‘ the circuit court of Stephenson county in favor of W. F. Holmes and against Wm. R. Lewis, the county court found the right of property in the Illinois National Bank and Trust Company of Rockford and that it had a superior lien by virtue of a chattel mortgage which it held, and from an order so finding and releasing the property levied upon from the lien of the execution and adjudging the costs against W. F. Holmes, the execution creditor, he, the said Holmes has prosecuted this appeal.

The evidence discloses that Wm. R. Lewis was indebted to appellee in the sum of $1,344.10 and evidencing that indebtedness he signed two notes, each note payable to the order of appellee and due six months after date. To secure the payment of these notes, Lewis signed a chattel mortgage upon the livestock levied upon. These notes and mortgage, and the certificate of acknowledgment of said mortgage all bear the date of July 11, 1940, but were, in fact, signed, acknowledged and delivered by Lewis to appellee on July 20, 1940, and the mortgage was filed for record on July 23, 1940. The record further discloses that on October 14,1940 appellant recovered a judgment in the circuit court of Stephenson county against the said Wm. R. Lewis, upon which an execution duly issued and a levy made by the Sheriff upon the livestock described in appellee’s chattel mortgage.

The question presented for determination requires an interpretation of sec. 4, ch. 95, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 83.04] which provides: “No mortgage, trust deed or conveyance of personal property having the effect of a mortgage or lien upon such property hereafter executed shall be valid as against the creditors of the mortgagor, even though admitted to record, as hereinafter provided, unless it shall be deposited for filing or recording in the office of the recorder of deeds of the proper county within ten days of its execution, and any such mortgage, trust deed or conveyance of personal property not deposited for filing or recording within ten days of the execution thereof shall be fraudulent and void as to such creditors. ”

Counsel for both parties agree that under the foregoing provisions a chattel mortgage to be valid as to third parties must be recorded or filed within 10 days of its execution and that the statute with reference to the execution and recordation of chattel mortgages is in derogation of the common law and must be strictly construed. Counsel for appellant insist that this chattel mortgage was, in fact, executed on July 11, 1940, the date it bears, and not having been filed for record until July 23, 1940, the statute was not complied with. Counsel argue that the statute was enacted for the specific purpose of protecting third persons from such situations as this record discloses and that to sanction the construction of the statute adopted by the court below would result in a legal fraud upon appellant.

This particular provision of our statute has not been construed by our courts, but similar provisions have been by the Appellate Courts of other States. Fenby v. Hunt, 53 Wash. 127, 101 Pac. 492 and cases there cited. In the Fenby case, it appeared that the chattel mortgage there under consideration was dated December 9, 1907 but was not delivered to the mortgagee until December 13, 1907 and was filed in the auditor’s office on December 21, 1907. The court held that the provision of the statute requiring it to be filed “within ten days from the time of the execution thereof” was complied with. In the course of its opinion, the court said: “The date of the mortgage, December 9, did not alone determine its ‘execution,’ as that word is understood and interpreted in statutes of a like character. The execution of a chattel mortgage means and includes the doing of those formal acts necessary to give the instrument validity as between the parties. There certainly could be no validity to a mortgage without a delivery and acceptance. One cannot be made a mortgagee unless there is some act on his part which can and does express his relation to the instrument. There must be a ‘meeting of the minds’ in this sort of relation as in any other contract. Without these formalities there is no mortgage. Jones, Chattel Mortgages, p. 104. The word ‘ execute, ’ when applied to a written instrument, unless the context indicates that it was used in a narrower sense, imports the delivery of such instrument. Le Mesnager v. Hamilton, 101 Cal. 532, 35 Pac. 1054, 40 Am. St. 81. In Brown v. Westerfield, 47 Neb. 399, 66 N. W. 439, 53 Am. St. 532, ‘execution’ was held to include all acts essential to the completion of the instrument. A very similar case to the one before us will be found in Hornbrook v. Hetzel, 27 Ind. App. 79, 60 N. E. 965; the mortgage being dated June 25, but not delivered nor filed until August 4. The court says: ‘Delivery was necessary to its execution. The statute requires that a chattel mortgage must be filed for record in the office of the recorder of the proper county within ten days after its execution. As there was no execution until its delivery, the mortgage was recorded in time. ’ For other cases in point see: Solt v. Anderson, 67 Neb. 103, 93 N. W. 205; Arrington v. Arrington, 122 Ala. 510, 26 South. 152; Shaughnessey v. Lewis, 130 Mass. 355; Wells v. Lamb, 19 Neb. 355. The mortgage, being filed within the time provided by law, became and was a lien upon the property described therein from the time of its execution on December 13, and was superior to appellant’s attachment levied December 19. McCarthy v. Seisler, 130 Ind. 63, 29 N. E. 407; Hanson v. Cochran, 9 Del. 184, 31 Atl. 880; Spencer Co. v. Papach, 103 Iowa 513, 70 N. W. 748, 72 N. W. 665; Way v. Braley, 44 Mo. App. 457.”

In Shaughnessey v. Lewis, 130 Mass. 355 it appeared that the statute of that State provides that no mortgage made after July 1, 1874 “shall be valid as against any other person than the parties thereto, unless the same is recorded within fifteen days after the' date thereof, or the property mortgaged is delivered to and retained by the mortgagee.” The property in question was attached on May 24, 1880 as the property of Mary A. Snow who had mortgaged the property to the plaintiff, the mortgage being dated June 16, 1879. It purported to be acknowledged on July 21, 1879 and was recorded on July 24, 1879. In sustaining exceptions to the ruling of the trial court which held that the date appearing in the testimonium clause was conclusive and that parol evidence to show the true date was not admissible the court cited Folsom v. clemence, 111 Mass. 273 and referring to that case said: “In that case, there was no date of a mortgage except it was dated 1870 without month or day of the month, but on its back was written, ‘March 24, 1870’; in reference to which it is said by the court that ‘the evidence tended to show that to have been the time of its delivery, which is the true date.’ The real question is, when did the instrument first take effect as a valid contract between the parties. If the instrument bore no other date than the month or year, it would be competent for either party to show its true date; and while the party claiming under it might show that in fact it was executed within fifteen days of its record, it would be equally competent for the other party to show that it had been effectual as a contract between the parties for a long time before the fifteen days. ... It is not a question of extending, limiting or varying the words of a written instrument, but it is simply the question; When was the execution of that contract evidenced by the actual delivery of it?”

In Hornbrook v. Hetsel, 27 Ind. App. 79, 60 N. E. 965, it appeared that the chattel mortgage was signed and acknowledged on June 25, 1897 but was not delivered until August 4, 1897, and was recorded the same day. The court held that delivery was necessary to its execution and that the statute requiring the instrument to be filed for record within 10 days after its execution was complied with as there was no execution of the mortgage until its delivery.

The word ‘ ‘ execution” when used in its proper sense conveys the meaning of carrying out some act or course of conduct to its completion, and when applied to a written instrument includes the performance of all acts which may be necessary to render it complete as an instrument, or to give the instrument validity or to carry it into effect. In common parlance, the word “execution” may mean the signing alone, but in a legal or technical sense, the word when used in reference to a conveyance, necessarily includes signing, sealing and delivery. 23 C. J. 278. The execution of an instrument includes the signing and delivery of it with the intention that it shall take effect. Crosier v. Crosier, 201 Ill. App. 406 (Abst.). As defined by Bouvier, execution means the accomplishment of a thing, the completion of an act or instrument,' the fulfillment of an undertaking; thus, a deed is executed when it is signed, sealed and delivered.

In the absence of a statute requiring it, a date is not necessary to the validity of a chattel mortgage, hence a mere mistake in dating the instrument will not invalidate it. While the date of the mortgage is presumably the date of the execution,- this presumption is merely prima facie. Antedating a valid chattel mortgage if not done with fraudulent intent, will not void it. 11 C. J. 477, sec. 112. In the absence of evidence to the contrary, a chattel mortgage is presumed to be executed on the date it bears. 10 R. C. L. 1040; Holm v. Lynd, 343 Ill. 645. “In the absence of testimony the law presumes that a chattel mortgage is delivered on the day of its date. ” 11 C. J. 489, sec. 138. It is well settled, however, that the actual date of the execution and delivery of a deed or instrument may be shown by parol testimony. 8 R. C. L. 1015, sec. 73; Weissbrodt v. H. W. Elmore & Co. 262 Ill. App. 1, and in Blake v. Fash, 44 Ill. 302, the court said: “It is always competent to show that the date inserted in a deed was not the date of its delivery.” An actual or constructive delivery of a chattel mortgage to the mortgagee or his duly authorized agent and acceptance on the part of the mortgagee are essential to make a mortgage a valid instrument. 11 C. J. 487-9, secs. 135, 142.

In the instant case, there was not only no delivery of the note or mortgage prior to July 20, 1940, but they were not signed nor was the mortgage acknowledged until that day. Manifestly, those acts are as essential to “execution” as is delivery. This mortgage, therefore, although dated July 11, 1940 was not executed until it was signed, acknowledged and delivered by the mortgagor and accepted by the mortgagee. This occurred on July 20, 1940, and having been recorded on July 23, 1940, the statutory provision was complied with and the trial court correctly so held. The judgment will, therefore, be affirmed.

Judgment affirmed.


author: Opinion by Justice Culbertson.

text:
    Rosie Russell, Appellee, v. Victoria Barnowski, Appellant.
    Heard in this court at February term, 1941;
    opinion filed May 31, 1941;
    rehearing denied July 31, 1941.
    J. E. Carr, for appellant; S. M. Ward, for appellee.
   Opinion by Justice Culbertson.

“Hot to be published in full.’’


text:
    City of Fairfield, Appellee, v. Sexton Manufacturing Company, Appellant.
    Heard in this court at October term, 1940;
    opinion filed May 31, 1941;
    rehearing denied July 31, 1941.
    C. Deneen Matthews, for appellant; Francis Feiger and Virgil W. Mills, for appellee.
   Opinion by Justice Culbertson.

‘‘Not to be published in full.”


author: Opinion by Presiding Justice Wolfe.

text:
    Charles Williams, Administrator of Estate of Daniel W. Davison, Deceased, Appellant, v. Marie A. Davison, Appellee.
    Gen. No. 9,658.
    Heard in this court at February term, 1941;
    opinion filed July 9, 1941;
    rehearing denied August 2, 1941.
    Fort & Fort, for appellant; D. M. Gregg and George W. Hunt, for appellee.
   Opinion by Presiding Justice Wolfe.

‘‘Not to be published in full.”


text:
    Richard L. Thorsch, Appellant, v. Wilhelmina R. M. Haley, Appellee.
    Gen. No. 9,639.
    Heard in this court at February term, 1941;
    opinion filed August 7, 1941.
    William R. Friedrich and Savage & Holbrook, for appellant; Edward R. Nadelhoffer, for appellee.
   Opinion by Presiding Justice Wolfe.

“Not to he published in full.”


author: Opinion by Justice Dove.

text:
    Marvin Koester, Appellee, v. George Reber, Appellant.
    Gen. No. 9,640.
    Heard in this court at February term, 1941;
    opinion filed August 7, 1941.
    Harold R. Nettles, for appellant; Harry C. Tear, for appellee.
   Opinion by Justice Dove.

“Not to be published in full.”


text:
    Mrs. M. Janisco, Appellee, v. First National Bank of Lockport, Appellant.
    Gen. No. 9,649.
    Heard in this court at February term, 1941;
    opinion filed August 7, 1941.
    Snapp, Heise & Snapp, for appellant; Dorrance D. Snapp and William M. Garvey, of counsel; Ray F. Faulkner and Matthew W. Stefanich, for appellee; Ray F. Faulkner, of counsel.
   Opinion by Justice Dove.

“Not to be published in full.’’


text:
    Charles H. Albers, Receiver, Appellee, v. Floyd M. Overby, Appellee, and Sam Shreffler, Appellant.
    Gen. No. 9,670.
    Heard in this court at May term, 1941;
    opinion filed August 7, 1941.
    Claude M. Granger, for appellant; Ode L. Rankin, for appellee.
   Opinion by Justice Dove.

“Not to be published in full.”


text:
    Ceco Steel Products Corporation, Appellant, v. Anna Couri, Appellee. M. E. Dornon and J. W. Fidler, Coparties.
    Gen. No. 9,681.
    Heard in this court at the May term, 1941.
    Opinion filed July 9, 1941.
    Rehearing denied August 25, 1941.

      Morgan & Morgan, of Peoria, for appellant.
    L. E. Sutherland, of Peoria, for appellee.
   Mr. Presiding Justice Wolfe

delivered the opinion of the court.

The Ceco Steel Products Corporation filed a suit in equity in the circuit court of Peoria county to enforce a mechanic’s lien against real estate of Anna Couri in Peoria county. The pleadings are the ordinary ones in mechanic’s lien cases. The petition alleged that the plaintiff had furnished material to Dornon and Fidler (the contractors), which was used in improving the property of the defendants, Edward Couri and Anna Couri. The petition alleged that the property in question had been enhanced in value $244.21, the amount of plaintiff’s claim, and asked for a lien on said premises for the amount of the unpaid bill. The defendants, Dornon and Fidler did not answer the complaint and were defaulted. The defendants, Couri, filed an answer which did not deny any of the allegations of the complaint, but set forth the fact that the contractor had been paid in full before any notice had been served on them of plaintiff’s claim. Later, the defendants filed an amended answer setting forth an affidavit which had been executed by Dornon. It is alleged that it was executed July 31, 1937, at the time of their payment to the contractor.

There is no dispute that the plaintiff delivered the materials in question to the contractor, and that the same were used in the construction of the building, or that the materials furnished enhanced the value of the premises to the amount of plaintiff’s claim. The only question is whether the affidavit executed by M. E. Dornon at the time the Couris paid for the work on the building, is a sufficient compliance with the mechanic’s lien statute, so as to bar the claim of the plaintiff for a lien. The affidavit is as follows:

“M. E. Dornon, being first duly sworn on Ms oath, deposes and says that he is a co-partner with one J. W. Pidler, doing business as Standard Hoofing & Siding Co. in the City of Peoria, State of Illinois.
“Affiant further says that they were the contractors on a certain job for Edward Couri and Anna Couri by furnishing asbestos shingles on the building owned by them at 1101 S. Jefferson Avenue, Peoria, Illinois, as well as the labor for said work; and that said co-partners agreed with said Edward Couri to furnish said material and do all the labor for the sum of Six Hundred ($600) Dollars, in the following manner: groceries, to the amount of One Hundred Twenty-five ($125) Dollars to be taken by us and the balance of Four Hundred Seventy-five ($475) Dollars in cash.
“Affiant further says that said co-partners finished the work on said building at 1101 S. Jefferson Avenue, Peoria, Illinois during the month of July, and that on July 31, 1937 the said Edward Couri paid us the sum of Four Hundred Seventy-five ($475) Dollars in cash and the balance of One Hundred Twenty-five ($125) Dollars we took from him, the said Edward Couri, in groceries and meats; that we have received from the said Edward Couri the full amount due us on said job, being for material and labor, and that there was nothing due us from the said Edward Couri on this 31st day of July, 1937.
“Affiant further says that the materials used on the said for said Edward Couri belonged to us and were our exclusive property, no one having any interest or claim therein, and that all the labor was paid by us.
“M. E. Dornon
“Subscribed and sworn to before me this 31st day of July, 1937.
(Seal)
“S. J. Couri.”

The trial court held that this affidavit was sufficient, and was a compliance with the mechanic’s lien statute. The sections of the lien statute involved in this proceeding are five and thirty-two. Section 32, chapter 82 Smith-Hurd’s Illinois Statutes provides: “'Wrongful payment of owner to contractor. — No payments to the contractor or to his order of any money or other considerations due or to become due to the contractor shall be regarded as rightfully made, as against the sub-contractor, laborer, or party furnishing labor or materials, if made by the owner without exercising and enforcing the rights and powers conferred upon him in sections five (5) and twenty-two (22) of this act.” Section 5: “It shall be the duty of the contractor to give the owner, and the duty of the owner to require of the contractor, before the owner or his agent, architect or superintendent, shall pay or cause to be paid to said contractor or to his order any moneys or other consideration, due or to become due such contractor, or make or cause to be made to such contractor any advancement of any moneys or any other consideration, a statement in writing, under oath or verified by affidavit, of the names of all parties furnishing materials and labor, and of the amounts due or to become due each. Merchants and dealers in materials only shall not be required to make statements herein provided for. ’ ’

It will be noted that in section 5 it says that the statement in writing shall contain, ‘ ‘ The names of all parties furnishing materials and labor and the amount due to or become due each.” The pertinent part of the affidavit it will be noted states: “affiant further says that the materials used for said Edward Couri belonged to us and were our exclusive property, no one having any interest or claim therein, and that all of the labor was paid by us.” This is not a compliance with the statute. It is conceded that if the contractor would make a false affidavit and state that the subcontractors had been paid in full when they had not been so paid, unless there was reason for the owner of the property to suspect that it was false, or has knowledge that it was false, that the owner of the property would be protected. The appellant in this case concedes this to be the law and does not claim that the affidavit in question is false, but that when they sold the materials to Dornon and Fidler, the contractors, the title passed to them on the delivery of the materials, and the affidavit wherein it states that the materials used in the improvement of the property was the exclusive property of the contractors is true. The affidavit is defective in not stating from whom Dornon and Fidler purchased the material, and whether it had been paid for.

It is our opinion that the trial court erred in dismissing the petition of the plaintiff, and holding that the affidavit was sufficient, under the statute, to protect the defendant-owner, Anna Couri, from a lien. The judgment of the trial court is hereby reversed and the cause remanded with directions that an order be entered allowing the appellant’s claim for a lien.

Reversed and remanded with directions.


text:
    Martha A. Merrill, Appellee, v. City of Wheaton, Appellant.
    Gen. No. 9,591.

      Heard in this court at the October term, 1941.
    Opinion filed July 9, 1941.
    Rehearing denied August 25, 1941.
    Willard E. Cain, of Wheaton, and Carlton L. Fischer, of Chicago, for appellant.
    Chancellor & Chancellor, of Chicago, and J. Paul Kuhn, of Aurora, for appellee.
   Mr. Justice Dove

delivered the opinion of the court.

Appellee recovered a judgment for $3,616.67 against appellant, the City of Wheaton, in the circuit court of Kane county for damages alleged to have been sustained by her because of the removal by the city of an enclosed stairway at the rear of her building, the amount expended by her in removing certain plumbing and other improvements and alterations in the said building which she owned in the City of Wheaton, together with loss of rents. The attempted improvements and alterations were designed to convert the building from a one-family occupancy into a two-flat apartment. The acts of appellant complained of were done by the officers of the city, acting under the provisions of a zoning ordinance hereinafter referred to.

The record discloses that appellee’s house was located in a district restricted by the zoning ordinance to one-family occupancy. On September 16, 1931, she procured a permit to erect an addition to the house, six feet wide, running back from the front porch thirty-one and one-half feet and two stories high. The plans called for altering the house from one and a half stories to two stories, and extending the front porch across the width of the addition. The contractor began the erection of an outside stairway leading upstairs from the front porch, which was not called for by the approved plans, and was stopped by the building commissioner, who changed the plan so as to permit the stairway to be erected inside the building, which was done. While the work was in progress, and after its completion, appellee was stopped from time to time in attempted further alterations to adapt the building for two-family use, without securing a new permit. These alterations included certain plumbing, and an enclosed stairway at the rear of the building, running to the second story from the ground. None of these alterations were contemplated by the approved plans or embraced in the permit, and when the rear stairway was about four-fifths completed, the city required her to remove it, which was done in December 1931 or January 1932. It was reconstructed in the spring of 1932 without permission. A summons for violation of the building and zoning ordinances was issued, whereupon, appellee filed a suit for injunction in the circuit court of DuPage county to restrain appellant from interfering with her in the completion of the remodeling of the building. The injunction suit resulted in a decree on May 31, 1933, dismissing the bill for injunction and granting the relief asked in appellant’s cross bill. The decree found appellee had commenced plumbing work and other alterations in violation of the permit and the ordinances of the city, from which she had been compelled to desist, and had begun the erection of the rear enclosed stairway without any permit, in violation of the zoning ordinance. This decree ordered her to remove the stairway within sixty days, and in the event of her failure to do so, the same should be removed by the city authorities. On August 22, 1933, appellee was notified by the building commissioner to remove the addition at the rear of the building, and upon her failure to do so, the city removed it in September following. On June 7, 1932, while the injunction suit was pending in the circuit court, the parties thereto stipulated that on the part of the city there should be no further prosecutions of the alleged violations of the pending building ordinances until a hearing on the merits was had, and on the part of the complainant it was stipulated that no alterations or improvements should be made upon the premises during the same time, the stipulation reciting that it was to be in force for forty days from its date.

In January 1934, appellant sued out a writ of error from the Supreme Court to review the decree of May 31, 1933. The Supreme Court held the zoning ordinance was void so far as it applied to appellee’s property, reversed the decree and remanded the cause with directions to dismiss the. city’s cross bill and grant the relief prayed in appellee’s original bill. (Merrill v. City of Wheaton, 356 Ill. 457.) The circuit court thereafter entered a decree in compliance with the mandate of the Supreme Court and appellee completed the building in 1935, and thereafter rented it as a two-family residence.

Appellant contends that the right to restrict the rights of property owners in the use of their property is conferred upon municipalities as a police power; that the exercise of the police power is a governmental function, and a city is not liable for the acts of its officers and employees in the exercise thereof; that the doctrine is equally applicable to negligence cases and in cases of wilful acts in excess of the police power; that it applies to governmental functions voluntarily assumed; and that the immunity extends to acts done under an unconstitutional or void ordinance enacted in the exercise of governmental functions. Appellee insists that this doctrine is limited to a reasonable exercise of the police power; that before the city could invade and destroy her property it must have shown an emergency existed and that the property was a public nuisance or dangerous to the public health, morals, welfare or safety; and that the exercise of the police power in this instance was arbitrary, unreasonable, discriminatory, excessive and unfair, rendering the city liable in damages.

The law relating to the exercise of the police power by municipalities and the question of their liability in such cases is well settled. The enactment of a zoning ordinance under the statute relating thereto is within the scope of the police power, as promoting public health, safety, morals and the general welfare. (Ill. Rev. Stat. 1939, ch. 24, par. 66 [Jones Ill. Stats. Ann. 21.486]; City of Aurora v. Burns, 319 Ill. 84.) A recognized distinction obtains in cases involving tort liability of a municipality between governmental or public functions on the one hand, and private, proprietary or ministerial functions on the other. A city, in the use of the police powers conferred upon it by the legislature, does not act in its private capacity, or in the local interest, but in the exercise of a governmental function in the general public interest. (Taylor v. City of Berwyn, 372 Ill. 124.) It is not liable for the malfeasance or nonfeasance of its officers in the enforcement of police regulations enacted for the purpose of securing and preserving the safety, health, welfare and good order of the public. (Taylor v. City of Berwyn, supra; Craig v. City of Charleston, 180 Ill. 154; City of Chicago v. Williams, 182 id. 135.) The fact that the adoption of a zoning ordinance is optional does not take the ordinance, when enacted, out of the police power. (Gebhardt v. Village of LaGrange Park, 354 Ill. 234.) No liability is created against a municipal corporation by acts of its officers done under an unconstitutional or void ordinance enacted in the exercise of governmental functions. (McQuillin, Municipal Corporations, 4th ed. sec. 2640; 43 C. J. 964, sec. 1745; 19 R C. L. 1099, sec. 383.) In this class of eases to hold the municipality liable would be to impose upon the taxpayers damages which might prove so onerous as to destroy the municipality itself. (Miralago Corp. v. Village of Kenilworth, 290 Ill. App. 230.)

Appellee cites in support of her contention sections 939 and 943 of McQuillin, Municipal Corporations, which lay down the principle that a municipality can destroy property when it becomes a nuisance or dangerous to public health, morals, or safety, and, in case of an emergency, may destroy property in order to prevent the spread of fire; that, although private property must be held subordinate to reasonable police regulations, lawful property cannot be destroyed or confiscated under the guise of such regulations for its protection, where the property itself or the use thereof is not a public nuisance; and that restrictions on the use of property under the police power for purely artistic or aesthetic purposes are regarded as invasions of private property rights. On the latter proposition, appellee cites and relies upon City of Chicago v. Gunning System, 214 Ill. 628, decided under an ordinance regulating the use of billboards, and other similar holdings. These authorities merely relate to the power of a city to destroy or restrict the use of private property under the police power. They do not hold or imply that a municipality is liable in damages for acts done under an ordinance enacted in the exercise of governmental functions, and no authority is cited which so holds. The authorities on the question of a city’s liability for the torts of its officers, either by malfeasance or nonfeasance, under such an ordinance are uniform in their holdings of nonliability.

It may be further observed, that municipal officers not only have the right, but the law imposes upon them the duty, to enforce the provisions of all of the ordinances of their city, unless and until they are repealed or their invalidity is established in a court of competent jurisdiction. When appellant required appellee to conform to the provisions of the zoning ordinance, it was merely carrying out the duty imposed upon it by law. When it removed the rear stairway, the lumber was stored in appellee’s basement, and what was useable was subsequently used in its reconstruction. The stairway was removed by the city, not only under the ordinance, but by the authority of a decree of the circuit court concerning which no proceeding for review had been instituted, and not then until appellee had been notified to comply with the decree and had failed to do so. Even if a municipality would generally be liable in damages for arbitrary, unreasonable, discriminatory, excessive and unfair acts in the exercise of the police power, the claim that it so acted here is without any foundation. So too, is the claim that appellant violated the stipulation of June 7, 1932. The record shows it did not do so.

Because of the city’s nonliability it is unnecessary to discuss the other grounds urged for reversal. The judgment is reversed and judgment is entered in this court for appellant.

Judgment reversed. Judgment here for appellant.


author: Mr. Justice Huffman

text:
    Randolph-Perkins Company, Appellee, v. City of Highland Park, Appellant.
    Gen. No. 9,654.
    Heard in this court at the February term, 1941.
    Opinion filed July 9, 1941.
    Rehearing denied August 25, 1941.
    Philip J. McKenna, Corporation Counsel, for appellant.
    McKinney, Folonie & Grear, of Chicago, for appellee.
   Mr. Justice Huffman

delivered the opinion of the court.

Appellee is an engineering firm. On May 6, 1929, it entered into a written agreement with appellant to furnish engineering services and to supervise the construction of a proposed street lighting system. The improvement was to be paid for by special assessment, and appellee was to be paid for its services in local improvement bonds issued against said project. The contract further provided that in the event the improvement was abandoned by appellant, appellee was to receive as an agreed compensation for its services rendered, the sum of $7,500.

The proposed work was abandoned by the city. Appellee brought this suit to recover under the contract. The case was heard by the court upon a stipulation of facts. The court rendered judgment for appellee in the sum of $7,500. The city prosecutes this appeal from such judgment.

The facts do not appear to be in dispute and only one question is involved in this case. The city’s outstanding indebtedness at the time of the making of the contract on May 6, 1929, was in excess of its statutory limitation as provided by ch. 113, sec. 44, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 87.01]. Appellant claims, that provision of the contract which provided in case the improvement was not confirmed or was abandoned by the city, the compensation of appellee for its services was to be $7,500, was ultra vires, in that the indebtedness of the city was then in excess of its statutory limitation and therefore, appellee could have no recovery.

It is insisted by appellee that since it was to be paid for its services in bonds issued against the local improvement, to be paid for by the property benefited, that appellant did not thereby add to its indebtedness within the meaning of the above section of the statute.

In the case of local improvements such as involved in this suit, in which the cost is to be paid by special assessments against the property benefited, it is generally considered that a contract which provides that a contractor shall be paid from such assessments, does not create any indebtedness on the part of a municipality within the meaning of the constitutional or statutory limitation. Dillon (5th ed.) Vol. 1, par. 198, p. 368 (Ch. on constitutional limitations and restrictions on power to incur debt); Fuller v. Heath, 89 Ill. 296; Jacksonville Railway Co. v. City of Jacksonville, 114 Ill. 562, 567. Under such contracts, resort against the city for the purpose of satisfying such bonds cannot usually be maintained. Conway v. City of Chicago, 237 Ill. 128; Simpson v. City of Highwood, 372 Ill. 212, 219. Hence, when the rights of a contractor are so limited, there is no debt considered created within the debt limit provision of a constitution or statute.

Appellee next urges that the appropriations which were made prior to the execution of its. contract were sufficient to include the expense of engineering services furnished by it. In support of this contention, it cites: Murrie v. Harper, 249 Ill. App. 586; James Anderson Co., Inc. v. City of Highland Park, 276 Ill. App. 327; Charles Deleuw & Co. v. City of Charleston, 298 Ill. App. 403, and Simpson v. City of Highwood, supra.

It was stipulated that at the times in question, there was no city engineer of said city, that none had been appointed, and that the annual appropriation ordinances of the city included appropriations for engineering fees for the board of local improvements of the following amounts for the following fiscal years:

It appears from the stipulation that a similar contract was entered into between the parties on July 9, 1926, under which contract, appellee performed services that are stated to be reasonably worth $1,152.42; that this first project was abandoned by the city, and appellee received no compensation for work done; that the contemplated work by the second contract of May 6, 1929, incorporated the territory included in the first proposed project together with much additional territory; and that upon the second contract of May 6, 1929, appellee expended $9,838.10 of its money in and about the proposed improvement, prior to the time the same was abandoned by the city.

The necessity of continuing the corporate organization and government of a city and meeting and providing for the ordinary current expenses has produced a situation where it is generally considered that if a city has in its treasury, or at its immediate command by the collection of taxes levied or presently payable, sufficient funds to pay such current expenses, then as to such expenses, no debt within the constitutional or statutory prohibition is created thereby. Dillon (5th ed.) Vol. 1, par. 193, p. 350. The power to provide for the expenses attendant upon the maintenance of municipal government is necessary to preserve its existence, and an obligation of the city which is within the current revenue for the year, is not to be regarded as creating an indebtedness prohibited by restrictions as to debt limitation. So long as the current expenses and obligations of the city are kept within the limits of money on hands, and the current revenues in process of immediate collection, the municipality may be fairly' regarded as doing business on a cash basis. Schnell v. City of Rock Island, 232 Ill. 89. To hold otherwise, would be to apply such rigid interpretation as would completely paralyze municipal power in every city where the debt had reached the prescribed limit.

There is no showing what became of the funds represented by the items included in the above appropriation ordinances for engineering expenses. They were far in excess of the judgment recovered by appellee. In the absence of any showing that such funds have been disbursed, we may assume they yet remain within the village treasury. People v. Village of Bradley, 367 Ill. 301, 306.

We are of the opinion that such appropriations could be reasonably considered to include such an item of engineering expense as was rendered by appellee.

Where the various items included in the annual appropriation ordinance of a city are within the current revenue for the year, such amounts are not to be regarded as creating indebtedness within the statutory limitation as contemplated by said section 44, of chapter 113.

The judgment herein is affirmed.

Judgment affirmed.