author: Mr. Justice Gridley

text:
    Dalmatinsko Dobrotvorno Drustvo Sveti Frano Imotski, Appellant, v. First Union Trust and Savings Bank, Appellee.
    Gen. No. 36,064.

      Heard in the second division of this court for the first district at the June term, 1932.
    Opinion filed November 22, 1932.
    Rehearing denied December 3, 1932.
    B. M. Steiner, for appellant.
    Nat M. Kahn, for appellee.
   Mr. Justice Gridley

delivered the opinion of the court.

In a first class action in assumpsit, tried before a jury, the court at the conclusion of all the evidence instructed them to return a verdict in favor of defendant,. and, after such verdict had been returned, entered judgment against plaintiff for costs. The main contention on this appeal is that the court erred in giving such instruction for defendant and in entering the judgment.

In plaintiff’s statement of claim it is alleged in substance that on May' 14, 1931, it had on deposit with defendant bank the sum of $1,789.65, under pass book No. 500,354; that on May 21, it withdrew the sum - of $50 from the account, leaving a balance of $1,739.65 ; that on May 27, it presented a regular withdrawal order or receipt to the bank and demanded payment of said balance of $1,739.65; that it then informed the bank that its said pass book had been lost or stolen and requested the issuance of a new one; that the bank refused to honor said withdrawal order or to pay all of said claimed balance and informed plaintiff that it (the bank) had paid the sum of $1,100 out of the account “on a withdrawal order dated May 14, 1931”; that plaintiff had not at any time authorized or directed the bank to pay out of the account the sum of $1,100, and if so paid out by the bank it “was paid out negligently and without the authority, direction or consent of plaintiff”; and that the bank is indebted to plaintiff in the sum of $1,100, etc.

• In its affidavit of merits the bank admitted that on May 14, 1931, plaintiff society had on deposit said sum of $1,789.65, as evidenced by said pass book, and that thereafter the society withdrew from the account the sum of $50. It alleged that on May 15, there was presented to the bank plaintiff’s “regular withdrawal order or receipt against the sum of money on deposit as aforesaid, dated May 14, 1931, for the sum of $1,100,” that said withdrawal order “was properly executed by plaintiff’s duly authorized officers,” that the pass book was at the same time presented, and that defendant “in good faith and without any notice whatsoever that said pass book had been lost or stolen,” or had otherwise passed from plaintiff’s possession, “paid to the person who presented said withdrawal order and book the sum of $1,100.” And the bank denied that it had paid out said sum of $1,100 negligently or without the authority and direction of plaintiff, or that it owed plaintiff the sum of $1,100.

The following facts in substance were disclosed from the evidence: The particular savings account, No. 500,354, was opened in March, 1924. At that time and prior thereto and in May, 1931, Stipe Zugo was the trusted secretary of plaintiff society. In February, 1930, the society adopted a resolution, to the effect that withdrawals from said account with defendant bank might be made by any two of four officers of the society, viz., John Dujmich, Mate Perkovich, Ante Bekovic and Zugo, and a copy of the resolution was delivered to the bank. Thereafter, when any sum of money was withdrawn from the account, a “withdrawal order,” or “receipt,” on a form furnished by the bank, was signed by said officers and presented to the bank, sometimes by two of said officers and sometimes by Zugo alone, and the money in the amount stated in the order or receipt was paid either to the two officers or to Zugo alone. About May 14,1931, Zugo, on the usual form, drafted in his handwriting ah order or receipt, dated May 14,1931, wherein it is stated: “Received of First Trust and Savings Bank,.... Hundred Dollars, $ — 100, which amount charge to my account, pass book No. 500,354.” Zugo, in whom the other officers of the society then had confidence, presented the instrument, as drafted and signed by him, to said other officers and it was successively signed by Dujmich, Perkovich and Bekovic. Thereupon Zugo, in the blank before the word “Hundred” wrote in lighter and different ink the word “Eleven” (thereby making the order for eleven hundred dollars, instead of “hundred”). On May 15, Zugo presented the order, as so changed, to the usual teller of the bank, who knew him. Noticing that the numerals on the order ($100) did not correspond with the words “Eleven hundred,” the teller made several lines in ink over the numerals $100 and wrote. immediately thereunder the numerals “$1100.” And thereupon Zugo received $1,100 from the bank, through said teller, and thereafter absconded, converted said amount to his own use, and ceased to be a member of plaintiff society. A photostatic copy of the instrument is contained in the transcript and the original instrument has been temporarily impounded with the clerk of this court.

After a careful examination of the instrument and considering, all the facts and circumstances in evidence, we are of the opinion that the court erred in instructing the jury to return a verdict for defendant. We think that it was for the jury to say upon proper instructions whether the teller was guilty of negligence in cashing the order for $1,100, and whether that negligence was the proximate cause of the loss of $1,000 to the plaintiff society, or whether the other officers of the society (as claimed by defendant), in signing the order in the condition it was when presented to them by Zugo, were guilty of such negligence as bars a recovery by the society. In Offutt v. World’s Columbian Exposition, 175 Ill. 472, 473, 474, it is said:

“An instruction to find against the party upon whom rests the burden of proof, on the ground that there is no evidence legally tending to prove his cause, — or, as it is now more generally stated, on the ground that the evidence, with all the inferences which the jury could justifiably draw from it, is so insufficient to support a verdict for such party that such a verdict, if returned, must for that reason be set aside, — is in the nature of a demurrer to the evidence, and, except as to technical methods of procedure, is governed by the same rules. The maker of the motion to so instruct admits the truth of all opposing evidence, and all inferences which may be fairly and rationally drawn from it. The motion does not involve a determination of the weight of the evidence nor the credibility of. witnesses.”

And in the same case it is further said (p. 476):

“The province of the jury must not be invaded, . . . , and where reasonable minds, acting within the limitations prescribed by the rules of law, might reach different conclusions the evidence must be submitted to the jury.” (See, also, Whalen v. Utica Hydraulic Cement Co., 103 Ill. App. 149, 152; Norris v. Illinois Cent. R. Co., 88 Ill. App. 614, 618.)

We do not think that all reasonable minds would agree that the bank, acting through its teller, was not guilty of any negligence in cashing the order or receipt in question, particularly when consideration is given to the entire instrument, wherein it appears that the word ‘ ‘eleven, ’’ before the word ‘ ‘hundred, ” is in lighter and different ink, and the act of the teller in changing the numerals on the instrument from “$100” to $1100.” A reasonable caution on his part would suggest that a new order or receipt be executed by all the signers before the money was paid out, or at least that he make some inquiry of said signers. Furthermore, it will be noticed that although the instrument is in the form of a receipt or withdrawal order, it amounts to a draft on the bank to pay out money to the society which it has on deposit with the bank. In the case of Crawford v. West Side Bank, 100 N. Y. 50, 53-55 (cited in United States Cold Storage Co. v. Central Mfg. Dist. Bank, 343 Ill. 503, 513, 514), it is said:

“The relation, existing between a bank and its depositor, is, in a strict sense, that of debtor and creditor ; but in discharging its obligation as a debtor, the bank must do so subject to the rules obtaining between principal and,agent.
“In disbursing the customer’s funds, it can pay them only in the usual course of business, and in conformity to his directions. In debiting his account it is not entitled to charge any payments except those made at the time when, to the person whom, and for the amount authorized by him. ... It receives the depositor’s funds upon the implied condition of disbursing them according to his order, and upon an accounting is liable for all such sums deposited, as it has paid away without receiving valid direction therefor. The bank is from necessity responsible for any omission to discover the original terms and conditions of a check, once properly drawn upon it, because at the time of payment, it is the only party interested in protecting its integrity, who has the opportunity of inspection, and it therefore owes the duty to its depositors of guarding the fund intrusted to it from spoliation. This liability arises, although an alteration of a material part of his .order has been effected, even though it be done so skillfully as to defy detection by examination. . . .
“The question of negligence cannot arise unless the depositor has, in drawing his check, left blanks unfilled, or by some affirmative act of negligence has facilitated the commission of a fraud by those into whose hands the check may come. The theory that a party who makes and issues commercial paper, properly and carefully drawn, to express the liability which he intends to assume, is chargeable with negligence on account of the criminal act of another in altering it after its issue, would render him a warrantor against such acts and is repugnant to justice and reason.” (See, also, Chicago Savings Bank v. Block, 126 Ill. App. 128, 130-1.)

Our conclusion is that this case, under its particular facts, is one for a jury under proper instructions to pass upon, and accordingly the judgment appealed from is reversed and the cause is remanded.

Reversed and remanded.

Kerner, P. J., and Scanlan, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Commonwealth Trust & Savings Bank, Appellee, v. Martha P. Hart, Administratrix of the Estate of Ernest E. Hart, Deceased, Appellant.
    Gen. No. 36,083.

      Heard in the second division of this court for the first district at the June term, 1932.
    Opinion filed November 22, 1932.
    Rehearing denied December 3, 1932.
    John S. Hummer, for appellant; Hummer & Hummer, of counsel.
    Lucius, Buehler & Lucius, for appellee; Ernst Buehler, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

On March 31, 1930, plaintiff filed a sworn claim of the 6th class in the probate court of Cook county for $1,900, and certain interest, against the estate of Ernest E. Hart, deceased. Attached to the claim was “a certain Guaranty Agreement, dated September 26, 1927, and executed and delivered by the deceased, and by Simon Hirsh, N. H. Spéro and C. S. Kelly.” It is stated that the claim is for “liability of Ernest E. Hart, deceased, for the unpaid balance and interest due on an original loan of $3,000; made on March 9,1928, to William S. Nyman, doing business as Acacia Furniture Co., — said balance being in the amount of $1,900, . . . and said liability arising from said Guaranty Agreement.” Subsequently such proceedings were had in the probate court that the claim was disallowed on February 18, 1931. From this order plaintiff perfected its appeal in the circuit court, where there was a trial de novo of the cause without a jury, resulting in the court on March 12, 1932, making a finding in favor of plaintiff (the claimant) and adjudging that it recover of defendant, Martha P. Hart, as administratrix of said estate, “the sum of $2,070.25, being the amount found due it as aforesaid, together with costs, as a claim of the 6th class, to be paid in due course of administration.” From said judgment the present appeal is prosecuted.

In the draft judgment order the circuit court found, inter alia:

“That the guaranty agreement sued upon constitutes a general guaranty and an irrevocable one, and that the debt secured thereby was incurred in the lifetime of Ernest E. Hart, deceased, and that the same was not increased but was decreased after his death, and that the renewal notes given to the claimant from time to time did not effect a cancellation of the pending debt.”

The Guaranty Agreement, dated September 26,1927, and signed by the deceased in his lifetime and by the three other individuals, is partly in printed type and partly in typewriting, and is in substance as follows:

Whereas, William S. Nyman, having his place of business in Chicago, (hereinafter termed the Borrower), desires to obtain from Commonwealth Trust & Sav. Bank (hereinafter termed the Bank) “loans, discounts, advances, credits, acceptances, or renewals or extensions thereof ... all of which . . . are hereinafter termed ‘Credits’ or ‘Guaranteed Obligations ’.”

Noav Therefore the undersigned, in consideration ' of one dollar, “and of credits to be made by the Bank” to or for the use, benefit or account of the Borrower, ’ “hereby jointly and severally promise, agree and guarantee to and with the Bank” as follows:

The Borrower will punctually pay any and all sums, both principal and interest, which he now owes or may owe to the Bank, “and any renewals or extensions of the same, to which renewals or extensions the undersigned expressly assent and agree.”

This guarantee is a “guaranty of payment by the Borrower and not a guaranty of collection or collectibility.” . . . The Bank shall not be required to enforce any rights or pursue any remedies against the Borrower, or upon or against any collateral that may be held by the Bank as security for any guaranteed obligations as a condition precedent to the coming into effect of the liability of any or all of the undersigned, “this obligation to the Bank being absolute and unconditional. ’ ’

The liability of the undersigned shall in no way be impaired or affected whether at any time the aggregate of the guaranteed obligations is either more or less than the principal amount guaranteed hereunder, or said guaranteed obligations are or are not secured by collateral or otherwise. The undersigned agree that all or any part of such collateral may be exchanged by the Bank for other collateral, and that the Bank may release or surrender to the Borrower any and all such collateral, without notice by the Bank and without the further consent of any of the undersigned, whose liability hereunder shall in no way be impaired or affected by any such exchange, release or surrender.

The joint and several liability of the undersigned hereunder “shall not at any time exceed the aggregate principal sum of $3,000.”

This guaranty “shall apply to all credits heretofore made or made hereafter until this guaranty shall be duly cancelled or terminated by agreement in writing between the Bank and the undersigned,” but no such cancellation or termination “shall affect the liability of the undersigned hereunder upon or in respect of credits granted by the Bank prior to such cancellation or termination, irrespective of the dates of the maturity of such credits. ’ ’

The undersigned agree to the terms and provisions of the guaranteed obligations, entered into by the Borrower with the Bank, and as to said obligations, expressly waive (1) demand by the Bank upon the Borrower of payment; (2) notice by the Bank to any or all the undersigned of non-payment by the Borrower; and (3) notice by the bank to any and all the undersigned of sale, upon notice or advertisement of or other realization upon the collateral held by the Bank as security.

The undisputed facts, as disclosed on the trial in the circuit court, are in substance as follows: In September, 1927, when the guaranty agreement was executed and delivered by Ernest E. Hart, and the three other individuals to the plaintiff bank, Hart was its president. William S. Nyman, individually, then was engaged in business in Chicago under the trade name of Acacia Cabinet Shop. On November 16, 1927, the bank loaned Nyman $1,000 on his individual note. On December 10, 1927, the bank loaned Nyman the additional sum of $2,000 on his individual note. Hart acted for the bank in these transactions. ' The total of the two loans amounted to $3,000, which was the limit of the guarantors’ possible liability .to the bank at any time, as stated in the guaranty agreement. Thereafter each of these notes was renewed. On March 9, 1928, the two renewed notes being surrendered, Nyman signed a new 90-day note for $3,000, which was several times renewed, less certain small payments which were made thereon by him. In the meantime he had incorporated his business as Acacia Furniture Co., and the renewed notes, payable to the order of the bank, were signed both by Nyman, individually, and by said Furniture Co., by Nyman, its president. On April 4, 1929, the indebtedness on the note had been reduced by $500, and on that day a new 30-day note for $2,500 was executed. Before its maturity a further payment of $100 was made on the indebtedness and a new 30-day note for $2,400 was executed on May 3, 1929. Before its maturity, Hart died on May 15, 1929, of whose death the bank had immediate knowledge or notice. Thereafter further small payments were made from time to time on the indebtedness, and the note, less the payments, was successively renewed on several occasions, without the consent of or notice to the legal representative of Hart’s estate. On March 31, 1930, when the bank’s claim against Hart was filed in the probate court, the bank had in its possession the joint note of Nyman and the Acacia Furniture Co. for $1,900, dated February 1, 1930, payable 45 days after date to the order of the bank. On the hearing in the circuit court it appeared that there was unpaid on said note, and on the original indebtedness of Nyman to the bank, the sum of $1,818.19, plus interest, etc., or a total sum of $2,070.25, for which amount the judgment appealed from was entered.

In 1 Brandt on Suretyship & Guaranty, 3rd Ed., p. 230, sec. 106, it is said: “A rule never to be lost sight of in determining the liability of a surety or guarantor is, that he is a favorite of the law and has a right to stand upon the strict terms of his obligation, when such terms are ascertained.” In Phoenix Mfg. Co. v. Bogardus, 231 Ill. 528, 531, it is said: “The law is well settled that the undertaking of a surety is to be strictly construed and his liability not to be extended by construction. The liability of guarantors is governed by the same rules.” In 12 Ruling Case Law, p. 1053, sec. 1, a “guaranty” is defined to be “a promise to answer for the payment of some debt or the performance of some obligation, on default of such payment or performance, by a third person who is liable or expected to become liable therefor in the first instance.” In National Eagle Bank, v. Hunt, 16 R. I. 148, 151, 152. it is said:

“Guaranties have been divided into two classes: One where the consideration is entire, that is, where it passes wholly at one time; the other where it passes at different times, and is, therefore, severable or divisible. The former are not revocable by the guarantor, and are not terminated by his death and notice of that fact. (Citing cases.) The latter, on the contrary, may be revoked as to subsequent transactions by the guarantor, upon notice to that effect, and are determined by his death and notice of that event.” (Citing cases.)

The distinction between these two classes of guaranties is well illustrated by Lush, Lord Justice, in Lloyds v. Harper, L. R. 16 Ch. Div. 290, 319. “An instance of the first,” he remarks, “is where a person enters into a guaranty that, in consideration of the lessor granting a lease to a third person, he will be answerable for the performance of the covenants. The moment the lease is granted there is nothing more for the lessor to do, and such a guaranty as that of necessity runs on throughout the duration of the lease. The lease was intended to be a guaranteed lease, and it is impossible to say that the guarantor could put an end to the guaranty at his pleasure, or that it could be put an end to by his death, contrary to the manifest intention of the parties. ...

“Instances of the second class are more familiar. They are where a guaranty is given to secure the balance of a running account at a banker’s, or a balance of a running account for goods supplied. There the consideration is supplied from time to time, and it is reasonable to hold, unless the guaranty stipulates to the contrary, that the guarantor may at any time terminate the guaranty. He remains answerable for all the advances made or all the goods supplied upon his guaranty before the notice to determine it is given ; but at any time he may say, 61 put a stop to this; I do not intend to be answerable any further; therefore do not make any more advances or supply any more goods upon my guaranty. ’ As at present advised, I think it quite competent for a person to do that where, as I have said, the guaranty is for advances to be made or goods to be supplied, and where nothing is said in the guaranty about how long it is to endure. In that case, as at present advised, I cannot entertain a doubt that the judgment of Mr. Justice Bowen, in Coulthart v. Clementson, L. R. 5 Q. B. Div. 42, is perfectly right, that notice of the death of the guarantor is a notice to terminate the guaranty, and has the same effect as a notice given in the lifetime of the guarantor that he would put an end to it.”

We think it clear that the guaranty agreement in the present case is of the second class of guaranties, as defined in National Eagle Bank v. Hunt, supra. And we think it is also to be construed as a “continuing guaranty,” as defined in the text books. (See illustrations of such guaranties in 1 Brandt on Suretyship & Guaranty, 3rd ed., secs. 175-177, pp. 357-61.) In 28 Corpus Juris, sec. 13, p. 897, it is said:

“A continuing guaranty is one which is not limited to a single transaction, but which contemplates a future course of dealing, covering a series of transactions, generally for an indefinite time; and hence where the continuance of a guaranty is expressly limited, it is not a continuing guaranty. It is prospective in its operation and is generally intended to provide security in respect to future transactions within certain limits, and contemplates a succession of liabilities, for which, as they accrue, the guarantor becomes liable.”

Inasmuch as it appears from the evidence in the present case that all loans or advances by the bank to the borrower (Nyman) were made after the execution of the guaranty agreement by the four signers (including Hart), only the salient prospective features of the instrument need be considered. They are in substance (a) that the signers guarantee the punctual payment to the bank of any and all sums of money which the borrower (Nyman) may owe to the bank, “or any renewals or extensions of the same, to which renewals or extensions the undersigned expressly assent and agree”; (b) that the guaranty is one “of payment by the borrower” and not one “of collection or collectibility”; (c) that the joint and several liability of the signers ‘ ‘ shall not at any time exceed the aggregate principal sum of $3,000”; (d) that the guaranty applies to all loans or credits “made hereafter,” until the guaranty shall be canceled or terminated “by agreement in writing between the bank and the undersigned”; (e) that, however, in case of a cancellation or termination in this manner, the liability of the signers shall not be affected “upon or in respect of credits granted by the bank prior to such cancellation or termination, irrespective of the dates of the maturity of such credits.” It is especially to be noticed that no particular termination time of the guaranty is stated; it is to be continued in force for an unlimited time, save that it may be canceled and terminated by an “agreement in writing between the bank and the undersigned” (i. e., all four of them, including Hart).

A somewhat similar guaranty agreement, relative to merchandise to be sold in the future, was under consideration in the case of Jordan v. Dobbins, 122 Mass. 168. It there appears that in February, 1873, William Dobbins executed and delivered a guaranty agreement to Jordan, wherein Dobbins guaranteed to Jordan “the prompt payment by George E. Moore to Jordan,' at maturity, of all sums of money and debts which he may hereafter owe Jordan for merchandise, which Jordan may from time to time sell to him, whether such debts be on book account, by note, draft or otherwise, and also any and all reneivals of an%y such debt,” and wherein it was provided that Dobbins should not be compelled to pay on the guaranty a sum exceeding $1,000; that the guaranty should be a continuing one, and that it should “apply to and be available to Jordan for all sales of merchandise made to Moore until written notice shall have teen given by the undersigned (Dobbins) to Jordan, and received by Jordan, that it shall not apply to future purchases.” It further appears that thereafter Jordan, relying on the guaranty agreement, sold and delivered to Moore, between January 16 and May 28, 1874, certain merchandise which he had not paid for; that other similar merchandise had been sold and delivered to Moore between the date of said guaranty and January 16, 1874, which he had paid for; that Dobbins had died in August, 1873; that in September, 1873, Elizabeth Dobbins was appointed administratrix of his estate; that Jordan had had no notice of Dobbins ’ death until after all the unpaid for merchandise had been sold and delivered to Moore; that suit was brought by Jordan against the administratrix of Dobbins’ estate on the guaranty to recover for the value of the unpaid for merchandise, which had been sold and delivered to Moore; and that in the trial court Jordan had recovered a judgment against Dobbins’ estate. In reversing the judgment and in entering judgment for the estate, the Supreme Court of Massachusetts said in part (p. 170, italics ours):

“An agreement to guarantee the payment by another of goods to be sold in the future, not founded upon any present consideration passing to the guarantor, is a contract of a peculiar character. Until it is acted upon, it imposes no obligation and creates no liability of the guarantor. After it is acted upon, the sale of the goods upon the credit of the guaranty is the only consideration for the conditional promise of the guarantor to pay for them. The agreement which the guarantor makes with the person receiving the guaranty is not that I now become liable to you for anything, but that if you sell goods to a third person, I will then become liable to pay for them if such third person does not. It is of the nature of an authority to sell goods upon the credit of the guarantor, rather than of a contract which cannot be rescinded except by mutual consent. Thus such a guaranty is revocable by the guarantor at any time before it is acted upon.
‘1 Such being the nature of a guaranty, we are of the opinion that the death of the guarantor operates as a revocation of it, and that the person holding it cannot recover against his executor or administrator for goods sold after the death. Death ■ terminates the power of the deceased to act and revokes any authority or license he may have given, if it has not been executed or acted upon. His estate is held upon any contract upon which a liability exists at the time of his death, although it may depend upon future contingencies. But it is not held for a liability which is created after his death, by the exercise of a power or authority which he might at any time revoke.
“Applying these principles to the case at bar, it follows that the defendant is entitled to judgment. The guaranty is ... in its nature nothing more than a simple guaranty for a proposed sale of goods. The provision, that it shall continue until written notice is given by the guarantor that it shall not apply to future purchases, affects the mode in which the guarantor might exercise his right to revoke it, but it cannot prevent its revocation by his death.”

There is apparently a conflict in the authorities in this country as to whether in a continuing guaranty the death of the guarantor ipso facto terminates the guaranty, or whether it is terminated only upon notice of that fact received by the person to whom' the guaranty was made. (American Chain Co. v. Arrow Grip Mfg. Co., 235 N. Y. S. 228, 234; annotated note in 42 A. L. R. pp. 926-936.) In the present case this conflict is of no importance, as it is undisputed that the bank had immediate notice of Hart’s death on May 15, 1929.

The main controversy in the present case arises because of the clause in the agreement that the signers (including Hart) guarantee that “the borrower (Nyman) will punctually pay any and all sums which he may owe to the bank, and any renewals or extensions'' of the same, to which renewals or extensions the undersigned expressly assent and agree.” Counsel for plaintiff contend in substance that when the plaintiff bank accepted renewal notes from Nyman after notice of Hart’s death, no new indebtedness thereby was created, and consequently Hart’s estate was not released from liability, even though the renewal notes were given and accepted without the consent or knowledge of the legal representative of Hart’s estate. Counsel for the estate, however, contend that said acts should operate as a release of the estate from liability on the indebtedness represented by the notes. And they argue in substance that if the plaintiff bank be permitted to extend the indebtedness in this manner, without the consent or knowledge of the legal representative of Hart’s estate, it could continue to make further extensions and thereby subject the estate to liability for an indefinite period and prevent an early settlement of Hart’s estate as contemplated by the Administration Act, Cahill’s St. ch. 3, and, furthermore, that the estate might thereby be prevented from enforcing its right of contribution from Hart’s coguarantors in the guaranty agreement.

In support of their contention and argument counsel for the estate refer to the decisions and holdings in Home Nat. Bank v. Estate of Waterman, 30 Ill. App. 535 (affirmed in 134 Ill. 461); Gay v. Ward, 67 Conn. 147, and other cases. The Waterman case was considered in the Appellate Court for the second district of Illinois on appeal from an order of the circuit court of Kane county disallowing the large claim of the bank against the Waterman estate. Waterman, in his lifetime, together with several other stockholders of a Harvester Co., had subscribed to a contract of guaranty dated August 10, 1882, wherein they guaranteed the payment to the bank “on or before March 1, 1883, such proportion of our company’s debt, or any extension thereof made in the meantime, in cash, as said farmers’ notes are held to secure.” Four extensions of the indebtedness were made before July 19,1883, on which date Waterman died. Three extensions were made thereafter. The procedure in each case was to cancel the matured note and accept a renewal note in lieu thereof. The Appellate Court held in substance that the power of the bank to extend or renew the note was revoked by Waterman’s death and that the extensions and renewals made thereafter released his estate from liability, and affirmed the judgment of the circuit court in disallowing the bank’s claim against said estate. The court said in the majority opinion (30 Ill. App. 548, 549):

“It is contended by appellant that, as the agreement speaks of a possibility of renewal, it gave authority to the Harvester Co. and appellant to renew without additional consent of Waterman. Without stopping to inquire what the true interpretation would be if Waterman had been alive when the three last renewals were made, we understand the lawr to be that any power of that description would be revoked by the death of the party giving it. The death of Waterman worked a revocation of any authority to extend the time of payment of the original debt that may have existed prior to that time. . . .
“Taking the case as a whole, we must hold that Waterman, on account of the extensions of the time of payment, and the taking new notes from the Harvester Co. and delivering up the old ones to the original debtor after Waterman’s death and without appellees’ consent, releases the latter, as executor of Waterman’s estate, from the obligation as surety.”

The decision of the Appellate Court was reviewed and affirmed by our Supreme Court, as above stated. In the course of the opinion the court said (134 Ill. 467):

“Even if we assume, for the purposes of the decision, that the agreement contemplated renewals of the notes of the Harvester Company, and extensions of the time for the payment of the same, and that the necessity of procuring further consent of Waterman for the making of such renewals and extensions was thereby obviated, yet it is manifest that his death revoked all authority given by him in that behalf, — and the record shows that several renewals of the notes were made after his decease.”

In the Connecticut case above referred to (Gay v. Ward, 67 Conn. 147) the litigation arose on “a contract of continuing guaranty in the form of a bond,” signed . by several stockholders of a Manufacturing Company, to a bank in Hartford, Conn. The signers guaranteed to the bank “the full, prompt and ultimate payment” of all commercial paper which the bank may “have discounted or may hereafter discount ... to an amount not to exceed $15,000 in all at any one time.” It was provided in the instrument that upon notice to the bank by one or all of the guarantors, such guarantor or guarantors should not be holden upon the bond for any liability created by the company subsequent to the giving of such notice. From the date of the bond to February 9, 1888, the bank discounted commercial paper of the company, upon which date the company failed. In January, 1889, the bank recovered a judgment against the executors of Cay, one of the guarantors, in the amount of about $11,000, which the executors of G-ay paid. Subsequently one Wadsworth, another guarantor, voluntarily paid to the executors of Gray one-half of said amount. Thereafter the action for contribution was brought by the executors of Gray and of Wadsworth against the respective administrators of the estates of one Ward and one Cowles (each a signer of the instrument during Ms lifetime) ' and others. The case reached the Supreme Court of Connecticut upon the request for an advisory opinion, and the Supreme Court advised the lower court “to render judgment in favor of the defendants.” It further appeared that Ward died in April, 1883, and his estate was settled in December, 1883; that Cowles died in 1873, and his estate was settled in June, 1873; that all of the discounts, which existed on February 9, 1888, and which the estate of Gray and Wadsworth paid, were made by the bank long subsequent to the death of Cowles and none was a renewal of a discount made in his lifetime; that $5,000, of said $11,000, were discounts made by the bank after having notice of Ward’s death, and $6,000, of said $11,000, were renewals of paper made after notice of Ward’s death, but of paper originally discounted prior to Ward’s death; that the bank, Gray and Wadsworth had immediate notice of the death of Cowles and of Ward; and that the Manufacturing Company was solvent at the times of the deaths ,of Cowles and Ward. In the course of the opinion the Supreme Court of Connecticut said (pp. 159, 160, italics ours):

“The duty of the bank upon this bond, if it desired to hold the estate of Ward liable, was to enforce its claim upon the paper existent at Ward’s death, against his estate. Instead of this, the bank renewed and extended its discounts, taking new paper for the old, without the knowledge or acquiescence of the representatives of Ward. Thereafter the bank must look to ! the remaining guarantors upon the bond; it waived its right to enforce payment from the estate of Ward, when it accepted paper in renewal of the old. Each renewal of the old paper constituted payment of the old paper, so far as Ward’s estate was concerned. Each renewal so made had, for its security, the guaranty of the living guarantors upon the bond, who had not notified the bank of the termination of their liability upon the guaranty. . . .
“The claim that, because the bond of guaranty in this case bound the guarantors to the ‘full, prompt and ultimate payment’ of all paper discounted after the execution of such bond, therefore the guaranty covers discounts made before the death, and renewals of such discounts made after the death of the guarantor, cannot be sustained. • The guaranty here applies to paper discounted, and to the renewal or extension of such discounts, before the decease of a guarantor. Otherwise a continuing liability existed against the estate of the deceased guarantor so long as the renewals were made. Such a result was not intended by the parties to the bond. They did not intend to continue a liability after the death of a guarantor, for am, indefinite period, which he and they could terminate at any time during his life. A contract of guaranty is to be construed so as to promote the use and convenience of commercial intercourse. . . . And its language is not to be extended by any strained construction, for the purpose of enlarging the guarantor’s liability. . . . But its construction is to be according to what is fairly to be presumed to have been the understanding of the parties, without any strict technical nicety. . . . These established rules of construction accord with the construction we give to the guaranty before us.”

Counsel for the bank in the present case place considerable reliance upon the holdings and decision in Exchange Nat. Bank of Spokane v. Hunt, 75 Wash. 513, to sustain their position that the judgment appealed from should be affirmed. We think that case can be distinguished in its facts from the present case. But, if not, we think that the decision is contrary to the' holdings and decisions of our Supreme Court in the Waterman case, supra, and contrary to the general current of authority.

After a careful reading of the guaranty agreement in the present case, and after considering the undisputed facts, the well settled principles of the law relating to guaranties and the authorities above cited and discussed, we have reached the conclusion that the circuit court erred, as a matter of law, in entering the judgment appealed from, and that the probate court was right in originally disallowing the bank’s claim against the Hart estate. Accordingly, the judgment of the circuit court of March 12, 1932, is' reversed, and judgment for costs is entered here in favor of the defendant and against the plaintiff, Commonwealth Trust & Savings Bank.

Reversed with judgment here.

Kerner, P. J., and Scanlan, J., concur.


text:
    Frank L. Webb, as Receiver of Depositors State Bank, Appellee, v. Charles L. Marozas et al., Defendants. Appeal of Mary Dervinski, Appellant.
    Gen. No. 36,143.

      Heard in the second division of this court for the first district.
    Opinion filed November 22, 1932.
    Harold O. Mulks, for appellant.

      Altheimer, Mayer, Woods & Smith, for appellee; William F. Struckmann and Hermas A. Kabaker, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

This is an appeal by Mary Dervinski (also known as Mary Darwin), one of the defendants to complainant’s verified bill to foreclose a first mortgage trust deed on certain improved premises in Chicago, Illinois, from an interlocutory order of the superior court, entered April 13, 1932, appointing D. W. Cahill as receiver of the premises.

In complainant’s bill, filed March 25, 1932, he alleges that “on February 9, 1932, Oscar Nelson, Auditor of Public Accounts of the State of Illinois, appointed your orator as Receiver of Depositors State Bank, an Illinois banking corporation; that thereafter your orator qualified as such receiver by accepting the appointment and filing’ his bond, and now is . . . the duly qualified and acting receiver of said bank; and that among the assets of said bank in his hands as such receiver are certain securities hereinafter more fully described. ’ ’ Then follow allegations in substance that on September 8, 1930, Charles L. Marozas and wife, being justly indebted in the sum of $30,000, executed and delivered their 45 principal notes payable to bearer, — 15 of which are for $1,000 each and payable on September 8, 1933, and 30 of which are for $500 each and payable on the same day, and all bearing interest at six per cent per annum, payable semiannually, and which instalments of interest are evidenced by attached coupon or interest notes; that on September 8, 1930, to secure the payment of all the notes, Marozas and wife executed, acknowledged and delivered their trust deed, conveying the premises in question to the Chicago Title & Trust Co., as trustee, which trust deed was duly recorded on December 4, 1930 (copies of the notes and trust deed are attached and made a part of the bill); that in and by the trust deed the grantors covenanted and agreed inter alia to pay the indebtedness and interest as evidenced by the notes, to pay all taxes and assessments levied on the premises, and to keep the building insured against fire, etc.; that it is further provided in the trust deed that in case of default for three days in the payment of any note or.any instalment either of principal or interest, or in case there is a breach of any of their covenants or agreements contained in the trust deed, then the whole of the principal indebtedness, at the option of the legal holder of the principal notes, shall become immediately due and payable without notice, and thereupon said holder shall have the right to immediately foreclose the trust deed; that in and by the trust deed the grantors waive all right to the possession of the premises and the income therefrom, pending such foreclosure proceedings, and agree that “upon the filing of any bill to foreclose said trust deed a receiver shall, upon motion of solicitors for complainant, without notice, be immediately appointed by the court to take possession of said premises and collect the rents, issues and profits therefrom during the pendency of such foreclosure suit,” etc., and further agree that all expenses and disbursements paid or incurred in behalf of the complainant in connection with said foreclosure, including reasonable solicitor’s fees, stenographer’s fees, etc., shall become so much additional indebtedness secured by the trust deed and shall be allowed in any decree foreclosing the same; that complainant “as .Receiver as aforesaid,” is now the legal holder and owner of all of said notes; that on March 8, 1931, the semiannual instalment of interest, aggregating $900, on all of the principal notes became due, that only the sum of $300 was paid, leaving a balanco of interest unpaid of $600, and that such default in the payment of said interest has continued ever since March 8, 1931; that on September 8, 1931, another semiannual instalment of interest, aggregating ■ $900, became due and Avas not paid, and that such default has continued eAer since; that on March 8, 1932, another semiannual instalment of interest, aggregating $900, became due and was not paid, and that’ such default has continued ever since; that complainant “has elected to declare,” and by the filing of this bill “does declare,” the entire principal indebtedness secured by said trust deed to be immediately due and payable; that the general taxes for the year 1928, levied and assessed against the premises, amounting to $586.23, together Avith penalties and costs, remain unpaid; that the general taxes for the years 1929 and 1930, levied and assessed against the premises, have not been paid, and that the general taxes for the year 1931 are now a lien against the premises; that they are improved with a one-story brick garage building and sales room and with a gas station, and are commonly knoAvn as 1449-1459 West 51st street, and 5105-5113 South Laflin street, Chicago; that “owing to the prevailing general depression of business, the value of said real estate has greatly depreciated, and that upon a judicial sale the premises will not bring sufficient to pay the indebtedness secured by said trust deed, together with the unpaid taxes and the taxes which are now a lien thereon and the costs and expenses of this proceeding”; that the premises “are meagre and scant security” for the indebtedness, and that their value “does not exceed the sum of $20,000”; that the defendant, Mary Dervinski, “is the record holder of the equity of redemption of said real estate”; that the Chicago Title & Trust Co. is also the trustee under another trust deed on the premises made by said Mary Dervinski, a AvidoAv, dated December 15,1930, and recorded on February 10,1931; and that there are other claimed incumbrances on the premises and other persons (naming them) who have or claim some interests in the premises, but such interests, if any, are subordinate to the lien of the trust deed herein sought to be foreclosed. The bill prayed for a foreclosure and for the appointment of a receiver pendente lite, etc.

On April 9, 1932, Mary. Dervinski entered her appearance. On the same day, after due notice to her, complainant’s motion for the appointment of a receiver of the premises pendente lite was continued to April 13, 1932, on which day she filed a general demurrer to complainant’s bill. On April 13, 1932, also, there was a hearing on complainant’s motion for the appointment of a receiver. It does not appear that any affidavits were presented to the court by Mary Dervinski or any other party, or that any evidence was introduced upon the hearing. By her demurrer Mary Dervinski admitted all the well pleaded facts alleged in the bill. At the conclusion of the hearing the court entered the interlocutory order appealed from. In the order, set out in full in the transcript, the court finds “that the makers of the trust deed, sought to be foreclosed herein, pledged the rents, issues and profits from said real estate as security for the indebtedness described therein, and waived all right to the possession of and income from said premises pending foreclosure proceedings until the period of redemption expired, and agreed upon the filing of a bill to foreclose said trust deed that a receiver might be appointed by the court with the usual powers of a receiver in chancery to have immediate possession of and to operate and lease said premises, and to collect the rents therefrom during the pendency of said suit and during the statutory time of redemption from foreclosure sale; that default has been made in the payments provided for in the trust deed; that the.value of the real estate in the trust deed is less than the amount of indebtedness secured thereby; and that complainant is entitled to the appointment of a receiver.” And the court ordered:

“That D. W. Cahill be and he is hereby appointed receiver of the premises (describing them), with the usual powers incident to receivers in chancery, together with the following powers: To carry on all legal proceedings necessary for the protection of said premises, including any proceeding necessary to acquire possession of the whole or any part thereof, to employ counsel, to institute and prosecute suits for rent now due or hereafter to become due, and to lease said premises on the best terms obtainable.
“That defendants attorn to said receiver, and that all persons in possession pay rent to him for the premises occupied by them.
“That complainant file his complainant’s bond herein in the sum of $1,000, and that the receiver file a receiver’s bond herein in the sum of $3,000, within — days from the date hereof.”

The transcript further discloses that on April 18, 1932, on presentation of the receiver’s bond, the court ordered that “the bond of D. W. Cahill, as receiver herein, in the sum of $3,000, be and the same is hereby approved”; that on April 22, 1932, on presentation of complainant’s bond and upon his motion, the court ordered that “leave be granted to Frank L. Webb, as receiver of Depositors State Bank, complainant herein, to file instanter his complainant’s bond,” and that such “complainant’s bond, with Frank L. Webb, not individually but as receiver of Depositors State Bank, as principal, and Fidelity & Deposit Company of Maryland, as surety, in the sum of $1,000, be and the same is hereby approved”; and that on May 10, 1932, within apt time, appellant perfected the present appeal in the superior court by the filing of her appeal bond in the sum. of $250 with the clerk of said superior court, which bond was approved by said clerk, as provided in section 123 of the Practice Act, Cahill’s St. ch. 110, If 122. The appeal subsequently was perfected within apt time in this court.

The main contention of appellant’s counsel, relied upon for a reversal of the order appointing a receiver pendente lite of the premises, is in substance that that portion of section 11 of the Illinois Banking Act, Cahill’s St. ch. 16a, ¶ 11, which attempts to confer upon the State auditor power and authority to appoint receivers of Illinois banks, is in violation of Article III of the Constitution of Illinois, and void, for the reason that said portion of the section attempts to confer judicial powers upon an administrative officer (the State auditor); that the alleged appointment by the State auditor of complainant as receiver of the Depositors State Bank on February 9, 1932, therefore, was void and of no legal effect; and that complainant, as the receiver of said bank, was without legal power or authority to institute the present foreclosure proceeding. As the present appeal is one from an interlocutory order appointing a receiver and one authorized solely by virtue of section 123 of the Practice Act, Cahill’s St. ch. 110, ¶ 122, and as it is provided in that section that “no appeal shall lie or writ of error be prosecuted from the order entered by said Appellate Court on any such appeal” (see Craig v. Craig, 246 Ill. 449, 450), we are of the opinion that this court has jurisdiction to consider and pass upon the question raised by counsel on this appeal. (Bistor v. McDonough, 262 Ill. App. 404, 406; Klever Shampay Karpet Kleanors v. Chicago, 238 Ill. App. 291, 300-302; People v. Sears, 230 Ill. App. 484, 488-490; Mobile & Ohio R. Co. v. Fraser, 169 Ill. App. 210, 214; New Ohio Washed Coal Co. v. Coal Belt Ry. Co., 116 Ill. App. 153, 154.)

In Article III of the Constitution of Illinois it is provided:

‘ ‘ The powers of the government of this State are divided into three distinct departments — the legislative, executive and judicial, and no person, or collection of persons, being one of these departments, shall exercise any power properly belonging to either of the others, except as hereinafter expressly directed or permitted. ’ ’

In section 11 of the Illinois Banking Act, as amended in 1923 and now in force (Cahill’s St. 1931, ch. 16a, ¶ 11, p. 170) it is provided in part:

“. . . If the capital stock of said bank shall remain impaired for sixty days after such notice by the Auditor, or, if it appears from the reports made to the Auditor under this Act, or from any examination made by or on behalf of the Auditor, that the conditions of any bank organized under this Act are such that the impairment of the capital stock cannot be made good, or if, in the opinion of the Auditor, it is operating with an insufficient portion of its assets in cash or readily convertible securities, or that the business of any such bank is being conducted in an illegal, fraudulent or unsafe manner, he may, in his discretion, without having taken the steps provided in this section to make good the impaired capital stock, forthwith, for the purpose of reorganization or liquidation through receivership, take possession and control of the banking house, furniture and fixtures, books, records and assets of every description, of such bank. If the Auditor determines that the bank cannot be reorganized and that the same should be liquidated through receivership he shall appoint a receiver, and require of him such bond and security as he deems proper. Such receiver, under the direction of the Auditor, shall take possession of, and for the purpose of the receivership, the title to, the books, records and assets of every description of such bank, and shall proceed to collect all debts, dues and claims belonging to it, and, upon the order of a court of record of the county in which said banlc is located, may sell or compound all bad or doubtful debts, and on a like order may sell all the real and personal property of such bank, on such terms as the court shall direct. . . .
“Such receiver shall have authority to sue and defend in Ms own name with respect to the affairs, assets, claims, debts and choses in action of such bank. . . . He shall have the power and authority . . . to do such other things and take such other steps from time to time under the direction and approval of the Auditor as may reasonably appear to be necessary to conserve the trust estate and secure the best interests of the creditors of said bank. ...”

In the present foreclosure proceeding it will be noticed that there are two receivers, — the complainant, Frank L. Webb, as receiver of the Depositors State Bank, appointed as such by the State auditor under a statute (section 11 of the Banking Act), and D. W. Cahill as receiver pendente Ute of certain improved real estate, appointed by the superior court on the application of Webb as receiver of said banlc. Webb as such receiver is' not an officer of the court but is a party litigant. Cahill, as receiver, is an officer of the court, and it is his duty to conserve, not the property of the bank generally, but only that property of appellant which Webb, as receiver, has brought into court for conservation and for the enforcement of the lien thereon of a trust deed. Webb may conveniently be called the statutory receiver and Cahill the receiver pendente lite. In United, States Trust Co., v. New York W. S. & B. Ry. Co., 101 N. Y. 478, 483, it is said:

“The power of a Court of Chancery to appoint a receiver pendente lite in foreclosure cases, is a part of its incidental jurisdiction, not depending upon any statute, and which it exercises, whenever by reason of the insufficiency of the security, or other reason, equity requires that the rents and profits of the mortgaged property, pending the litigation, should be impounded and retained, to be applied upon the debt, to be ascertained by the final judgment.”

In Decker v. Gardner, 124 N. Y. 334, the court discusses the law in relation to receivers of corporations and draws a distinction between such receivers and receivers pendente lite as follows (pp. 337, 338, italics ours):

“Jurisdiction to appoint receivers of corporations is tvholly statutory. The power to declare a forfeiture of corporate franchises was originally in England vested in the courts of law, and was exercised in a proceeding brought by the attorney-general in the name of the sovereign. The Court of Chancery never assumed jurisdiction in such cases until it was conferred by act of parliament. It declined until the power was conferred by statute to sequestrate corporate property through the medium of a receiver, or to dissolve corporate bodies, or to restrain the usurpation of corporate powers. (Citing cases.) The courts of this country followed the English system. (Citing cases.) And the jurisdiction in such cases is now a subject of statutory regulation in most if not all of the States.
“In 1825 the legislature of this State authorized the Court of Chancery to sequestrate the property of corporations against whom judgment at law had been obtained and execution was returned unsatisfied, and to appoint receivers of the same, and to decree the dissolution thereof in cases of insolvency. . . . The receivers authorized by statute to be appointed upon the dissolution of the corporation are the representatives of the corporate body, and generally are vested •with the title to the corporate property, and, for the purpose of administering thereon and winding up the affairs of the corporation, succeed to its powers and franchises. In this State they are vested with all the real and personal estate of the corporation, and are made trustees of such estate for the benefit of the creditors and stockholders, and possess generally all the powers and authority conferred by law upon the assignees of insolvent debtors.
“Receivers appointed pendente lite are, however, mere temporary officers of the court, and do not possess the powers of a permanent receiver unless specially conferred upon them by order of the court. . . . The Court of Chancery, however, possessed and exer- , cised in many cases the power to appoint receivers pendente lite of property which was the subject matter of litigation before the court. Such receivers possessed no legal powers. They were officers of the court merely, and their functions were limited to the care and preservation of the property committed to their charge, and they possessed no authority except such as the orders of the court conferred. . . . This power of appointment of a receiver pendente lite was .one incidental to the jurisdiction of the court. It did not depend upon statute, and was not affected by the character of the parties before it, whether an individual or a corporation, or by the nature of the property.”

In High on Receivers, 4th Ed., sec. 39, it is said (p. 52, italics ours) :

“It has been held that the appointment of a receiver is not necessarily a judicial act in all cases, in the sense that it must be made only by the courts. And the right of the legislature of a state to enact a law, authorizing the governor of the state to appoint a receiver of an insolvent banking corporation, is not a violation of the constitutional provision limiting each department of the government to its own particular sphere; the appointment of a receiver under such law being in no manner a decree or judgment affecting title to property, and not being a final determination of any rights, either legal or equitable.”

In Carey v. Giles, 9 Ga. 253, the governor of the State of Georgia had appointed a receiver of an insolvent bank, as he was authorized to do under a statute of the State. It was contended in substance that said statute was unconstitutional and invalid because it conferred upon the governor judicial powers. In deciding the contention in the negative the court said (p. 256):

“Was the appointment of a receiver a judicial act? If so, it is very clear that it could not be made by the Legislature, without violating an express provision of the Constitution. But it does not seem to us to be of this description of power. It was not a case of controversy between party and party; nor is there any decree or judgment affecting the title to property; it determines no right, legal or equitable. The receiver is merely to collect, hold and disburse the assets of the bank for the benefit of all concerned; and it is in the power of the Courts to direct and control him in the proper execution of his duties.”

A similar decision was made in Jeffries v. Bacastow, 90 Kan. 495, where it appeared that the bank commissioner of the State had appointed a receiver for an insolvent State bank under a State statute and it was contended that the statute was unconstitutional and invalid. In denying the contention the court said' (pp. 497, 498) :

“The argument is that the appointment of a receiver is a judicial act to be performed by a court of equity, and that it cannot he performed by an executive officer, like the bank commissioner, under a government framed like ours upon the theory of a separation of powers. This argument is built entirely upon a name. The person spoken of as ‘receiver’ might just as well have been called a special deputy bank commissioner. . . . The fact of insolvency having- been discovered, the statute directs the hank commissioner’s course, and the designation by him of a person to wind up the affairs of ihe bank is no more a judicial act than his order to the board of directors to remove a dishonest cashier. His powers are purely administrative and in no way infringe upon the ancient authority of courts to determine rights of person and property in specific controversies pending before them.”

We are not advised that our Supreme Court has decided the precise question herein raised by appellant’s counsel. But there are other cases in still other jurisdictions in which decisions have been rendered similar to those in the authorities above cited. (See Bushnell v. Leland, 164 U. S. 684, 685; Cosmopolitan Trust Co. v. Mitchell, 242 Mass. 95, 113, 117; LaMonte v. Lurich, 86 N. J. Eq. 26, 27.) We are therefore of the opinion that there is no substantial .merit in counsel’s main contention, as above set forth. And, even if portions of section 11 of the Illinois Banicing* Act might be considered as in violation of Article III of the Constitution of Illinois, we do not think that appellant is in any position to raise the point as it is a mere collateral attack upon the title to the office of at least a de facto officer. (See Leach v. People, 122 Ill. 420, 427-431.)

Counsel for appellant also urges several technical points as grounds for a reversal of the order of April 13, 1932, appealed from. One is that the transcript does not affirmatively show that the complainant’s bond of $1,000, provided for in the order, was actually filed or given. In the order complainant was directed to file a complainant’s bond of $1,000, and the receiver (Cahill) a receiver’s bond of $3,000. In the order of April 18, the presented receiver’s bond in the sum of $3,000 was approved. In the order of April 22, the presented complainant’s bond in the sum of $1,000 was approved. If such bond was not in fact filed or given, appellant or other interested parties should have called the court’s attention to the fact. And it is not improper for the court to appoint a receiver, conditioned upon complainant and the receiver filing the required bonds at a future day. (See Reliance Bank & Trust Co. v. Dalsey, 263 Ill. App. 546, 553.)

Other contentions are that the order appealed from should be reversed (1) because of claimed defects in the bill in that (a) it does not specifically allege that the State auditor directed complainant to commence the present foreclosure proceeding; (b) does not sufficiently allege how complainant’s appointment, as receiver of the bank, was made and whether in writing and under the bond and seal of the auditor; (c) does not properly set forth the bond which complainant, as receiver of the bank, gave to the auditor when the latter appointed him as such receiver; and (2) because before entering said order the court did not pass upon appellant’s general demurrer to complainant’s bill, which demurrer was filed on the same day said order was entered. We find no substantial merit in any of these contentions, warranting a reversal of the order.

Our conclusion is that the interlocutory order appealed from, appointing D. W. Cahill, as receiver of the premises in question, should be and it is affirmed.

Affirmed.

Keener, P. J., and S canean, J., concur.


author: Mr. Justice Scanlan

text:
    Rocco de Stefano, Appellee, v. Max Miles et al., Appellants.
    Gen. No. 35,883.

      Heard in the second division of this court for the first district at the April term, 1932.
    Opinion filed November 22, 1932.
    Rehearing denied and additional opinion filed December 13, 1932.
    Jacob A. Mogill, for appellants; Preston Clark and Morton S. Cressy, of counsel.
    Cavender, Milchrist & Kaiser, for appellee.
   Mr. Justice Scanlan

delivered the opinion of the court.

On June 9, 1931, a judgment by confession in the sum of $1,271.50 was entered against the defendants on a promissory note containing a warrant of attorney. From an order entered December 23, 1931, denying “the motion” of the “defendant” to vacate the judgment by confession, defendants have appealed.

The defendants contend that “the court erred in not vacating and setting aside the judgment or granting the defendants leave to appear and defend.” It is very clear from the common law record in this case that this contention cannot be sustained. Section 21 of the Municipal Court Act, Cahill’s St. ch. 37, ¶ 409, provides: ‘ ‘ That there shall be no stated terms of the municipal court, but said court shall always be open for the transaction of business. Every judgment, order or decree of said court final in its nature shall be subject to be vacated, set aside or modified in the same manner and to the same extent as a judgment, order or decree of a circuit court during the term at which the same was rendered in such circuit court: Provided, a motion to vacate, set aside or modify the same be entered in said municipal court within thirty days after the entry of such judgment, order or decree. If no motion to vacate, set aside or modify any such judgment, order or decree shall be entered within thirty days after the entry of such judgment, order or decree, the same shall not be vacated, set aside or modified excepting upon appeal or writ of error, or by a bill in equity, or by a petition to said municipal court setting forth grounds for vacating, setting aside or modifying the same, which would be sufficient to cause the same to be vacated, set aside or modified by a bill in equity: Provided, however, that all errors in fact in the proceedings in such case, which might have been corrected at common law by the writ of error coram nobis may be corrected by motion, or the judgment may be set aside, in the manner provided by law for similar cases in the circuit court.” The common law record shows that on November 13, 1931, “defendant” moved the court to vacate and set aside the judgment entered by confession, and that on November 27, 1931, “defendant” was granted leave to file an amended petition in five days, but it fails to show that a petition or any document purporting to be in the nature of a petition was ever filed. The defendants rely upon that part of section 21 which we have italicized.

The filing of a petition under section 21 “is an independent proceeding in the nature of a new suit, and not a mere incident to the original suit.” (Imbrie v. Bear, 230 Ill. App. 155, 158.) “This section means that where a judgment is entered in the municipal court and 30 days have elapsed, the municipal court is without power to vacate or set it aside except it may be vacated or set aside if a motion is made under section 89 of the Practice Act, Cahill’s St. ch. 110, ¶ 89, showing sufficient grounds under that section, or the judgment may be vacated and set aside upon petition being filed which alleges facts sufficient to cause the judgment to be vacated and, set aside by a bill in equity if filed in the circuit or superior court.” (Welley v. Klein, 257 Ill. App. 171, 174. Italics ours.) In Steudle v. Manthie et al., 185 Ill. App. 576 (abstract decision), the court held: “Section 21, paragraph 284, of the Municipal Court Act, provides for the only method of giving to the Municipal Court jurisdiction to vacate judgments or orders entered by the Municipal Court after thirty days have intervened after the entry of a judgment or final order. No petition was filed under the authority conferred by said section 21, and the order under review was entered without jurisdiction.” (Italics ours.) In Gage Hotel Co. et al. v. Kantoos et al., 185 Ill. App. 393, 395, the court stated: “In the present case no ‘petition to said Municipal Court setting forth grounds for vacating, setting aside or modifying’ the judgment was filed. The order entered November 16, 1912, overruling the motion of the defendants to vacate the judgment entered on August 7, 1912, was properly made, as the court lacked jurisdiction to enter the order prayed for.” It has been repeatedly held that a petition under section 21 is in the nature of a bill in equity. To cite a few of the cases: Doyle v. Fallows, 207 Ill. App. 5; Izzi v. Iolongo, 248 Ill. App. 90, 93; Imbrie v. Bear, supra, 158. Under section 21 a petition takes the place of a bill in chancery and if filed it, of course, becomes a part of the common law record. (See Welley v. Klein, supra, 176.) A record is incomplete that fails to show that the court has jurisdiction of the subject matter, jurisdiction of the person of the defendant, and the determination of the cause by the court. (See Baldwin v. McClelland, 152 Ill. 42, 52.) In the instant case, because the record fails to show that a petition was filed “setting forth grounds for vacating, setting aside or modifying the same, which would be sufficient to cause the same to be vacated, set aside or modified by a bill in equity,” the court was without jurisdiction to vacate or modify the judgment by confession. We may add that the bill of exceptions shows that no petition nor any pleading in the nature of a petition was offered in evidence or even presented to the trial court upon the hearing of “the motion” to vacate the judgment.

The plaintiff has made a motion to strike the bill of exceptions from the files because it fails to incorporate the petition required by the statute. There is no merit in this contention. As we have heretofore stated, the filing of a petition under section 21 is an independent proceeding in the nature of a new suit, and not a mere incident to the original suit, and where a petition is filed it becomes a part of the common law record and it is unnecessary to incorporate it in a bill of exceptions. The fatal defect in the instant record is not that the bill of exceptions fails to show a petition, but that the common law record fails to show that such a pleading was ever filed. The motion to strike the bill of exceptions is therefore denied.

Under the record in this case the trial court was without jurisdiction to entertain a motion to vacate the judgment, and the order appealed from must therefore be affirmed and it is accordingly so ordered.

Order dated December 23,1931, affirmed.

Kerner, P. J., and Gridley, J., concur.

Additional Opinion Upon Petition pob Rehearing.

In their petition for a rehearing defendants state that as a matter of fact they did file a petition and an amended petition in the aforesaid cause in the municipal court, and they pray that we grant a rehearing in the cause and allow them to file an additional record, which, they state, will show that a petition and an amended petition were filed in the municipal court in due time in the said cause, and they insert in their petition for rehearing what purports to be a petition and an amended petition, and a certificate of the clerk of the municipal court which recites that said petition was filed in the cause on November 13, 1931, and said amended petition was filed on December 2, 1931. On April 25,1932, after the above cause had been docketed in this court, plaintiff filed here a motion to strike “the alleged bill of exceptions from the files of this court and to dismiss the aforesaid purported appeal of proceedings and to affirm the judgment,” and in support of this motion written suggestions were filed, and by the same defendants were apprised that neither the common law record nor the bill of exceptions showed that a petition to vacate the judgment had been filed in the cause. Defendants filed a written answer to the motion of plaintiff, in which they stated that “a complete record and abstract and brief has been filed by the defendants. The stenographic record is a complete and true record and is so certified by the clerk and approved by the court.” They did not, in the answer, make any statement to the effect that the common law record was not complete. Their position was that the motion of plaintiff was a technical one, and they argued: “We respectfully suggest that neither a sworn petition or an affidavit can have either superior weight or even equal weight with the actual testimony taken under oath in open court. In other words, we respectfully submit that the testimony taken in open court is the best evidence to present to the Appellate Court and that any affidavits made by witnesses are to be disregarded upon the presentation of the sworn testimony in open court. ’ ’ In the reply brief filed by defendants on May 21, 1932, nearly a month after plaintiff had filed his motion to strike the bill of exceptions and to affirm the judgment, they stated: “A complete stenographic record of the testimony is a sufficient record to present to this court the questions to be decided. . . .In the case at bar there is a common law record and a complete stenographic record. ’ ’ The determination of the motion of plaintiff to strike, etc., was reserved to the final hearing. Until the filing of our judgment in this cause defendants did not apprise this court of the alleged fact that the common law record here filed was not a complete one. They deliberately chose to have this court decide the appeal upon the then state of the record. The- judgment is adverse to them and they now ask us to grant them a rehearing that they may reform their battle line. If we grant the petition for a rehearing in the instant case it would, in our judgment, establish a bad precedent, far reaching in its effect.

In support of their petition defendants cite par. 81, ch. 110, Cahill’s Ill. Rev. St. 1931, which provides: . . That if it shall appear to the Supreme or appellate court that the record in any cause is incomplete or insufficient upon which to fairly consider and pass upon errors or cross errors assigned, such court shall order the clerk of the trial court to certify such additional parts of the record as it shall deem necessary, and such court shall make such order as to the costs resulting therefrom as it shall deem just. . . . ” But counsel do not inform us what application that paragraph has to the instant record. Defendants cite Gerke v. Fancher, 57 Ill. App. 651, and Harmon v. Callahan, 286 Ill. 59, in support of their contention that an “omission of a material part of the record may be supplied after decision by this Court.” In the Gerke case the court allowed an omission in the common law record to be supplied after the court had decided the ease, upon the ground that the omission was the fault of the clerk of the trial court, and the appellant and his attorney iverc free from negligence. The court in that case, upon the rehearing, adhered to its original judgment. Nor has Harmon v. Callahan any application to the instant situation. In that case it appeared affirmatively from the common law record that the defendant had filed a second amended affidavit of merits to the plaintiff’s claim and that thereafter the plaintiff moved the trial court to strike the said affidavit from the files, and that the court ‘ sustains said motion and same is ordered stricken from the files of this cause, except a certain part thereof as per motion filed,” and that the defendant elected to stand by said affidavit and that the court thereupon rendered judgment against him by default for want of an affidavit of merits. It further appears that the motion to strike the second amended affidavit of merits from the files was not included in the transcript of the record. The plaintiff contended that when the municipal court struck the affidavit of merits from the files it ceased to be a part of the record and could only be restored as a part of the record in the cause by a bill of exceptions. The Supreme Court held that “the affidavit of merits is the defendant’s pleading in the municipal court and takes the place of the defendant’s plea in common law actions, and it appears from the rule of the municipal court above set out that what would be termed at common law a demurrer to this pleading is in the municipal court required to be in form a motion to strike. It is settled by the decisions of this court that the action of the trial court in sustaining a demurrer to a plea is preserved for review without a bill of exceptions. . . . The action of the court in striking only a part of the affidavit of merits can only be explained upon the theory that the court treated the motion to. strike as a demurrer to the affidavit of merits. Had the motion been considered purely as a motion to strike the pleading from the files and not as a demurrer, the affidavit of merits, as a whole, would necessarily have been stricken. The court, however, sustained the motion as to a part, only, of the affidavit of merits, clearly showing that the motion challenged the matters set up in the affidavit of merits as a defense to the plaintiff’s claim, and while the motion is not before us it is evident from the judgment, when compared with the statement of claim and the affidavit of merits, that the portion of the affidavit of merits which was not stricken was that part which set up as a defense to a portion of the claim. ... It therefore clearly appears from the record that the motion to strike was, in effect a demurrer to the affidavit of merits. ... In order to pass upon the question presented to the Appellate Court for review the motion to strike should have been before that court. It was not included in the transcript of the record filed in that court. The record was incomplete and insufficient to enable the Appellate Court to fairly consider the errors assigned. ’ ’ The Supreme Court then quotes section 81 of the Practice Act and holds that in compliance with the statute the Appellate Court, in the state'of the record before it, should have ordered the clerk of the municipal court to certify to the Appellate Court the motion to strike which had been omitted from the record. There it affirmatively appeared to the Supreme Court that a motion to strike the affidavit of merits from the files “except a certain part thereof as per motion filed,” had been filed. The decision in that case has no bearing upon a record like the one before us. In the instant case we were warranted in concluding, from the common law record and the attitude of counsel for defendants in this court, that it was a complete record.

One of the three counsel for defendants, Jacob A. Mogill, has filed in this court, in support of the petition for a rehearing, an affidavit in which he states that the clerk of the municipal court failed to prepare a complete common law record by omitting and neglecting to include the petition and amended petition which had been filed in the cause, and “this affiant further states that he at no time whatsoever participated or assisted said clerk in checking the said record and was in no way responsible for the omission by the said clerk, nor was he apprised of the omission of the pleadings from the common law record as prepared solely by the clerk of the Municipal Court . . . until this Court on November 22, 1932, handed down its decision,” and that he “relied upon the certification and authentication of the clerk of the Municipal Court' . . . that it was a complete, true and' correct transcript of the record for the consideration of the Appellate Court. ” It is clear that the memory of the counsel is at fault. The answer of defendants to the motion of plaintiff to strike the bill of exceptions from the record and to affirm the judgment was signed by Jacob A. Mogill, personally, and it is evident from the motion to strike and the said answer, that attorney Mogill was fully aware, in April, 1932, that the common law record failed to show that a petition to vacate had been filed.

The petition for rehearing must be denied and it is accordingly so ordered.

Petition for rehearing denied.

Kerner, P. J., and Gridley, J., concur.