author: Mr. Presiding Justice Scanlan

text:
    Alex M. Ubowich, Also Known as Alex M. Uborwich, Appellee, v. The Northern Trust Company and First Union Trust and Savings Bank, Defendants. The Northern Trust Company, Appellant.
    Gen. No. 37,731.

      Opinion filed June 28, 1935.
    White & Hawxhurst, of Chicago, for appellant; Julius J. Hoffman and Ruth Weyand, both of Chicago, of counsel.
    Frederick A. G-ariepy and Owen Ball, both of Chicago, for appellee.
   Mr. Presiding Justice Scanlan

delivered the opinion of the court.

Plaintiff sued The Northern Trust Company, a corporation, and First Union Trust and Savings Bank, a corporation, in an action of the fourth class in the municipal court of Chicago. At the close of the evideuce it was stipulated that the jury be withdrawn and the cause be submitted to the court. There was a finding* and judgment in favor of plaintiff and against The Northern Trust Company, a corporation, in the sum of $1,112.50. The issues were found in favor of the First Union Trust and Savings Bank, and judgment was entered upon that finding. The Northern Trust Company, hereinafter called defendant, appeals.

Plaintiff’s statement of claim alleges that he was an heir in the estate of Charles Uborwich, also known as Charles Ubowich, deceased, and as such was entitled to $1,000 as his distributive share in the estate, which sum was deposited, by order of the probate court, with the county treasurer of Cook county, Illinois, for him; that on January 25, 1932, the check, a copy of which is attached to the statement, was issued to him, but it was not received nor indorsed by him, nor by anyone at his request or as his agent; that defendants indorsed the check, as is shown thereon, and cashed the same; that the First Union Trust and Savings Bank cashed the check and paid the sum of $1,000; that demand for this sum has been made of both defendants but they refused payment; that they have received said sum and said check and converted the same to their own use, to the damage of plaintiff in the sum of $1,000. Attached to the statement is a copy of the check, in words and figures as follows:

(Face of check)
“Joseph B. McDonough No. 587 Feb 8 1932 Treasurer of Cook County
H Chicago, Jan 25 1932
In Payment Of
Estates of Heirs
Share of Estate of Charles Uborwich
Pay to the
Order of Alex M. Uborwich............$1,000.00
The Sum of $1000 and OOcts Dollars
First Union Trust and Savings Bank 2-9 Chicago, Ill. 2-9 Harry E. Perry
Asst. County Treasurer (Back of check)
Pay only to within named payee Alex M. Uborwich F. F. Roberts
Paid Through Chicago Clearing House 15
Feb. 9 22 P M The Northern Trust Co.
Pay to the Order of Any Bank or Banker Prior Endorsements Guaranteed The Northern Trust Co.
Chicago
2-15 C. M. Nelson, Cashier 2-15”

Defendant’s amended affidavit of merits avers that the defense is as follows:

“1. Affiant denies that the plaintiff was entitled to have and recover $1,000 as his alleged distributive share in the estate of Charles Ubowich, also known as Charles Uborwich, deceased, at the time of the filing of suit herein, and denies that the plaintiff is now entitled to have and recover the sum of $1,000 as his distributive share in the said estate.

“2. Affiant further denies that the check described in the plaintiff’s statement of claim, a copy of which is attached thereto, was delivered to the payee therein described, or to any attorney or agent acting in his behalf by the drawer of the said check or any one acting in his behalf.

“3. Affiant further denies that the defendants or either of them have converted at any time the check described in the plaintiff’s statement of claim or the proceeds thereof to their own use.

“4. Affiant further denies that the plaintiff has suffered any damage whatsoever as the result of the negligence of the defendants or either of them, or hy reason of the conduct of the defendants or either of them.

“5. Affiant, further denies that the defendants or either of them are indebted to the plaintiff in any sum whatsoever.”

There is no dispute as to the facts. Charles Ubowieh, the father of plaintiff, died December 26,1927, and his will was probated in the probate court of Cook county. It provides, inter alia, as follows: days, withdrew the funds, save five dollars. On January 25, 1932, the following order was entered in the probate court of Cook county:

“In the Matter op the Estate of Charles Uborwich, Deceased

‘1 The petition of Alex M. Uborwich having been filed herein, setting forth that said petitioner is the son of Charles Uborwich, deceased, as shown by the Table of Heirship entered January 7, 1928, and it appearing to the Court that the sum of One Thousand Dollars has been deposited to the credit of Alex M. Uborwich with the County Treasurer of Cook County, Illinois, subject to the further order of this Court;

“It is therefore ordered, directed and decreed that the County Treasurer of Cook County, Illinois, pay over to said Alex M. Uborwich, said funds so deposited with said County Treasurer to be held for said Alex M. Uborwich under the order of this Court entered May 16, 1929, upon production to said County Treasurer of Cook County, Illinois, of a certified copy of this order. ’ ’

Plaintiff testified that he did not file the petition. Who did file it does not appear. The assistant county treasurer testified that the check of the county treasurer “was issued for his (plaintiff’s) share of the estate.” The evidence does not show who obtained the check from the county treasurer, nor how it was obtained, nor who indorsed plaintiff’s name on the back thereof.

“Second. ... I give, devise and bequeath . . . to my daughter, Stella Edwards formerly of 3101-28th Ave., Tampa, Florida, One Thousand ($1,000.00) Dollars, 3rd to my son, Alex M. Uborwich, address unknown, One Thousand ($1,000.00) Dollars, if said son cannot be found within five (5) years money is to go to my daughter Stella Edwards.” Plaintiff testified that he first learned of the death of his father in April, 1933; that he first heard that the check had been paid, the last part of April or the first part of May, 1933; that he first saw it in the county treasurer’s office in May, 1933; that he did not sign his name on the back of the check nor authorize or permit anybody to put his name thereon; that he does not know F. F. Roberts, whose name appears on the check; that he never presented the check to either defendant and never received any sum of money in any manner through the check. The check was deposited by one F. F. Roberts in his savings account in defendant bank. On the back of the check at that time were the indorsements “Alex M. Uborwich” and “F. F. Roberts.” Defendant sent the check to the drawee bank, the First Union Trust and Savings Bank, for collection, where it was paid. After Roberts received credit for the $1,000 in his account he, within a few

Defendant (appellant) states its theory as follows:

“ . . . That the plaintiff did not allege in his statement of claim, nor did he prove on the trial, that the check was delivered to and received by him in accordance with the law with respect to the delivery of negotiable instruments; that the plaintiff, never having-received the check, had no interest therein, and that, therefore, it was impossible for the defendant, The Northern Trust Company, to be liable to the plaintiff in an action of trover; that the order of the Probate Court of Cook County was obtained by fraud as shown by the plaintiff’s own evidence, and that because the order was fraudulently obtained it may be collaterally attacked by the defendant, who was a victim of the fraud; that the plaintiff had no right to the funds in question in any event because of the provisions and terms of the Will of Charles Uborwich which was introduced into evidence on behalf of the said defendant; and that the Municipal Court was without the' power under the Municipal Court Act to enter a judgment in a fourth class tort action for an amount greater than the sum of One Thousand Dollars ($1000.00), where the excess consisted of interest which accrued after the commencement of the suit. ’ ’

Plaintiff states his theory as follows:

“(a) The plaintiff’s theory is that although the check was never delivered to him, he was the one entitled to it and that by his suit he has ratified the delivery of the check and the collection thereof from the drawee bank, without ratifying the conversion of the proceeds of the check by the collecting bank, which obtained the money on the forged endorsement of the plaintiff’s name.

“ (b) Plaintiff also contends that the defense of impersonation now sought to be made (that the endorsement of the payee’s name was not a forgery, since it is claimed to have been made by an imposter to whom the County Treasurer intended to pay the money) cannot be made successfully because it was not pleaded as a defense in the court below, and because there is no evidence nor presumption that the County Treasurer intended anyone except the plaintiff to receive the proceeds of the check involved here.

“(c) As to the defendant’s contention that it can sit in review of the County Treasurer’s issuance of the check, to the order of the plaintiff, pursuant to an order of the Probate Court, plaintiff contends that except that this evidence identifies the plaintiff as the one intended to receive the check, evidence of the Probate Court order, the will of plaintiff’s father, and the other steps occurring before the check was issued are wholly immaterial here. A collecting bank that converts the proceeds of a check certainly cannot excuse its conduct by denying the right of the payee to receive the payment from the drawer. This is a matter of no concern to the collecting bank, for whatever the reason or the consideration for the issuance of the check by the drawer to the payee, if the drawer is satisfied to issue the check, the drawee bank or a collecting bank or others dealing with the check must be satisfied.

“ (d) Lastly, the plaintiff admits that the judgment in the present case is larger than permitted in a fourth class case in the Municipal Court of Chicago. However, since the passage of the 1931 amendment to Section 2 of the Municipal Court act (L. 1931, p. 420) permitting the transfer of cases from the fourth to the first class, this error in the present case is procedural —not jurisdictional — and is not available to the defendant because not raised at any time in the trial court. Had an objection that the amount of the judgment exceeded the permissible limit of a fourth class case been made in the court below the trial judge has certified that he ‘would have entered an order . . . changing this case from one of the fourth class to one of the first class.’ ”

As to defendant’s contention that plaintiff, because he never received the check, had no interest therein, and that, therefore, defendant is not liable to him, it is sufficient to say that the law seems to be settled that the bringing of this suit, one in trover for conversion, by plaintiff, is a ratification of the delivery of the check to the unknown recipient for the benefit of plaintiff. (See Crisp v. State Bank of Rolla, 32 N. D. 263, 268-9; Dodge v. National Exchange Bank, 20 Ohio St. 234, 249, 250; id., 30 Ohio St. 1, 6, 7; Pickle v. Muse, 88 Tenn. 380; Farmer v. Bank, 100 Tenn. 187; Allen v. Mendelsohn & Son, 207 Ala. 527, 528; Shaffer v. McKee, 19 Ohio St. 526; Indiana Nat. Bank v. Holtsclaw, 98 Ind. 85.) Upon the oral argument in this court defendant argued that to permit plaintiff to urge the ratification theory of the law would be to permit him to ratify a criminal act, and that the law never permits anyone to ratify a criminal act. The answer to this contention -is that plaintiff, by ratifying the delivery does not ratify the forged indorsement upon the check. If this contention of defendant were to prevail it would follow that the cases we have cited were erroneously decided. Several of them refer to the point now made. In Crisp v. State Bank of Rolla the court said (p. 269):

“So, too, it would seem that a person to whom a check is sent by mail, and which check is intercepted and cashed with a fraudulent indorsement thereon by a third party, may ratify the delivery without ratifying the forged indorsement. ’ ’ In Dodge v. National Exchange Bank, supra (20 Ohio St. 234), the court said (p. 249):

‘ ‘ The effect of the ratification was to make the check the property of the plaintiff; but he did not thereby impliedly authorize the indorsement of the check. ’ ’ Defendant had no information that the check had not been delivered to plaintiff and it did nothing in reference to the check that it would not have done had it been actually delivered to plaintiff. Nor is it harmed by being required to treat the check in law as having been delivered to plaintiff, since it so treated the check in fact. As stated in Crisp v. State Bank of Rolla, supra (p. 270):

“The bank is not prejudiced by this subsequent ratification, for it dealt with the check as the property of the complainant, and undertook to pay to bim or his order. The effect of this ratification is simply to make the check the property of the complainant. It does not ratify the collection of the check by one whose act in receiving it is subsequently ratified, and agency to receive a check payable to order implies no authority to indorse it in the name of the payee, or to collect it without such indorsement. In the case of Dodge v. National Exch. Bank (supra) a certificate of indebtedness by the government to Dodge was remitted by mail to the paymaster for a check. The mail was robbed, and the certificate presented by the thief to the paymaster, and a check demanded. The latter, without requiring proof of the identity of the holder of the certificate, issued a check payable to Dodge or order, and took up the certificate. The indorsement of Dodge was forged and the check paid. Subsequently Dodge sued the bank and recovered, the court holding that he might ratify the taking of the check for the certificate, and sue upon it as an accepted check. ’ ’

Defendant cites' cases where there had been no delivery to anyone by the drawer, and the decisions are based upon the principle that delivery is essential to the binding force of a check as a contract. None of the cases cited by defendant in support of its claim as to the effect of nondelivery to plaintiff is a trover suit by a payee against a collecting bank. In the instant case the county treasurer delivered the check to someone, and it was issued for plaintiff’s share of the estate. Under such circumstances plaintiff may ratify the delivery and sue for the conversion of the proceeds of the check.

As to defendant’s second contention, that “banks are not liable for paying money to an impostor on a check which the impostor has obtained from a drawer of a check by deceiving the drawer,” it is sufficient to say, in answer thereto, that such a defense was not interposed in defendant’s affidavit of merits, and under the rules of the municipal court in force on the date when the affidavit was filed, all defenses must be pleaded. Another reason against the contention is that the doctrine invoked by defendant is not applicable where the payee sues the bank. None of the cases cited by defendant is applicable to the instant suit. In considering certain cases cited by defendant it is necessary to remember that there is absolutely no evidence that the county treasurer delivered the check to an impostor with the intention that the impostor should receive the proceeds of the check, or even that the person who received it indorsed it or banked it. The money held by the drawer, county treasurer, was held by him under “An Act to provide for the disposal of unclaimed moneys in the hands of administrators and executors,” Cahill’s Ill. Rev. St. ch. 3, ¶¶ 141 and 142, which read as follows:

“Par. 141. Unclaimed money to be deposited.) Section 1. Be it enacted by the People of the State of Illinois, represented in the General Assembly, That when any administrator or executor shall have made final settlement with the county court, it shall be the duty of the court to order said administrator or executor to deposit with the county treasurer such moneys as he may have belonging to any non-resident or unknown heir or claimant, taking his receipt therefor and have the same filed at the office of the county clerk where such settlement has been made.

“Par. 142. How obtained after deposit.) Sec. 2. When money shall be deposited as aforesaid, the person or persons entitled to the same may at any time apply to the court making said order and obtain the same upon making satisfactory proof to the court of his, her or their right thereto.”

Plaintiff was an heir of his deceased father and a legatee of a. $1,000 legacy under the .will. Someone, other than plaintiff, filed the petition in the probate court and obtained the order which recites that the sum of $1,000 had been deposited to the credit of Alex M. Uborwich with the county treasurer of Cook county, subject to the further order of the court, and orders that the county treasurer pay over to Alex M. Uborwich “said funds so deposited with said County Treasurer to be held for said Alex M. Uborwich under the order of this Court entered May 16, 1929, upon the production to said County Treasurer of Cook County, Illinois, of a certified copy of this order.” Who filed the petition, who delivered the certified copy of the order to the county treasurer, and what occurred at the time of delivery, does not appear. The check, upon its face, shows the following: “In Payment of Estates of Heirs Share of Estate of Charles Uborwich Pay to the Order of Alex M. Uborwich $1,000.00.” On the back of the check the county treasurer stamped the following inscription: “Pay Only To Within Named Payee. ’ ’ The evidence does not warrant the argument of defendant that someone identified himself to the county treasurer as the plaintiff in order to obtain the check. Indeed, the evidence does not show whether the check was delivered by hand or by mail. Upon the face of the probate court order appeared the following in handwriting: “Mail check to Alex M. Uborwich, 3534 Olive St., St. Louis, Mo.,” but upon objection by defendant this writing was not admitted in evidence. Defendant concedes that the evidence fails to show that F. F. Roberts was the forger or the person who received the check from the county treasurer. It is a reasonable inference from the evidence that Roberts opened the savings account for the purpose of utilizing it as a means to obtain the money on the forged check, for within fifteen days after the account was opened he had withdrawn all of the money obtained upon the check, save five dollars. The check shows upon its face the purposes for which it was issued, and the stamped inscription upon the back was a direction by the county treasurer, as drawer of the check, that the proceeds of the check should be payable only to plaintiff. Still, the defendant accepted as a guaranty of genuineness of the payee’s indorsement, the indorsement of Roberts, with whom it had, apparently, no prior dealings. The argument of defendant that it exercised all due care in the transaction, even if the question of care were material to a determination of this cause, would not appeal to us.

As to the contention of defendant that “the plaintiff failed to satisfy the conditions of his father’s last will and testament and, therefore, is not entitled to the sum sued for as a legatee under this will,” it would seem to be a sufficient answer thereto to say that it does not concern defendant whether, as between plaintiff and his sister, plaintiff is entitled to the $1,000 legacy. The argument, in effect, attacks the propriety of the order of the probate court in a collateral proceeding and calls upon us to hold that plaintiff was not entitled under the will to the $1,000 and that the probate court should not have entered the order. This we cannot do. In support of its contention that we have a right to inquire into the question as to whether or not plaintiff had a right to the $1,000, defendant cites Green v. Hutsonville School District, 356 Ill. 216, which holds that where a judgment is procured through fraud and collusion for the purpose of defrauding a third person, such third person may show collaterally the fraud and collusion by which the judgment was obtained and escape the burdens and injuries thrust upon him by the judgment. In that case a judgment against the school district was obtained by consent and collusion of the parties without the district interposing an obvious and good defense, which it was its duty to interpose. A bill was filed in behalf of the taxpayers in the school district to restrain the extension and collection of certain taxes for the payment of bonds alleged to have been obtained through fraud and collusion, and it was held that the parties to the suit had the right to show collaterally the fraud and collusion by which the judgment was obtained and thus escape the burdens and injuries imposed upon them by the fraudulent and collusive judgment. That case and similar ones cited have no application to the instant case, as it is idle to argue, under the evidence, that the order of the probate court was obtained by collusion of plaintiff for the purpose of defrauding defendant. Indeed, there is nothing in the record upon which can be reasonably based the argument that the order of the probate court was not a proper one. Defendant did not introduce a complete record of the proceedings in that court and for aught that appears here the order may have been based upon some affirmative action by Stella Edwards, the sister of plaintiff. It does appear that the probate court, on May 16,1929, approximately two and one-half years prior to the issuance of the check, had found that plaintiff was entitled to the $1,000. Stella Edwards is the only one who could complain of such finding, and it appears that she sat by the side of plaintiff during the trial of this case. Defendant dealt with the check as the property of plaintiff and the question as to whether or not plaintiff or his sister was entitled to the $1,000 played absolutely no part in the conduct of defendant. Had the order of the probate court contained the name of Stella Edwards instead of plaintiff’s, and had the check of the county treasurer made her the payee, the result to defendant would have been the same had Roberts obtained possession of the check and deposited it to his account.

Defendant’s last point is that “the judgment for $1,112.50 and costs of suit was improperly entered, because, in the Municipal Court of Chicago, the trial judge is without the authority in actions of the 4th class to render judgment for an amount in excess of $1,000, unless the excess consists of interest or charges which accrued after the commencement of the suit.” Defendant calls our attention to the fact that it appears from the written opinion of the trial judge that the judgment is in excess of $1,000, because plaintiff was allowed interest from the date of conversion, February 8, 1932. Section 2 of the Chicago Municipal Court Act, Cahill’s Ill. Rev. St. 1933, ch. 37, ¶ 390, provides that in cases of the fourth class the amount to be recovered is limited to $1,000, save where the excess over $1,000 consists of interest, damages, or costs accrued after the commencement of the action. An amendment to that section, passed in 1931, provides:

“A case commenced as one of the first class may be changed to one of the fourth class, or a case commenced as one of the fourth class may be changed to one of the first class, upon such terms as to costs and notice to the parties as may be provided for by the rules of the court.”

In the certificate of the trial judge appears the following:

“I hereby certify that at no time prior to judgment herein nor at the time judgment was entered herein did the defendant, Northern Trust Company, object to the amount of said judgment on the ground that the amount of said judgment was in excess of that permissible in a case of the fourth class in this Court. Had such objection been made, I would have entered an order, as permitted by Section 2 of ‘An Act in relation to a municipal court in the city of Chicago, ’ as amended in 1931 (L. 1931 — p. 420), changing this case from one of the fourth class to one of the first class.”

In view of this attitude of defendant in the trial court it should not be heard to raise here the instant contention. There is some force in the argument of plaintiff that because of the amendment of 1931 the failure of the trial court to change the case to one of the first class was, at most, a procedural error rather than a jurisdictional one. In any event, the argument of defendant that because the judgment improperly allows interest from the date of the conversion until the date of the commencement of the suit, amounting to $87.50, it must be reversed in toto, is without merit. The trial court had jurisdiction of the persons and the subject matter of the suit, and the error committed was in allowing the aforesaid interest. Defendant does not ask us to oblige plaintiff to remit $87.50 from the judgment, but insists that the court was without jurisdiction to enter the judgment and that, therefore, we must reverse it in toto.

The judgment of the municipal court of Chicago will be affirmed.

Judgment affirmed.

Sullivan and Friend, JJ., concur.


source: Caselaw Access Project

author: Mr. Justice Matchett

license: Public Domain

text:
    In re Estate of Joseph Lalla, Incompetent et al., Minors.
    Gen. Nos. 38,215-38,217.

      Opinion filed July 5, 1935.
    H. E. Pool, for appellants.
    Scott, MacLeish & Falk, Eobertson, Crowe & Spence, John P. Conmy and Frank J. Komarek, all of Chicago, for appellees.
   Mr. Justice Matchett

delivered the opinion of the court.

These consolidated appeals, three in number, concern the estates of one conservator and two guardians. In each matter the principal question for determination involves the right of guardians and conservators to invest and the power of the probate court in such cases to authorize the investment of funds of such estates in 1 ‘ split mortgage securities. ’ ’ In each matter the questions were raised by objections of a guardian ad litem to the final report in the probate court. From the orders entered in that court appeals were taken to the circuit court, where each matter was heard de novo, being submitted as an agreed case pursuant to section 85 of the Civil Practice Act, and in compliance with Buie 48 of the Supreme Court. The determination of the question depends upon the interpretation of two statutes — in guardianship matters, section 22, chapter 64 (Cahill’s Ill. Rev. Stats. 1933, ¶ 22, p. 1519), and in the conservator matter, section 18, chapter 86 (Cahill’s Ill. Rev. Stats. 1933, 18, p. 1790.)

In all these estates the funds invested were derived from the United States Veterans Bureau and its successor in office, the United States Veterans Administration, and it is stipulated in each case that Frank T. Hines is administrator of such funds, is an interested party and is entitled to be heard. The amounts involved are comparatively small and the guardians and conservator served without compensation, but the decision in these matters will affect large numbers of similar estates in course of administration and investments amounting to millions of dollars. An opinion from the Supreme Court to the end that there may be a conclusive determination of the question is desired.

The parties are agreed that there is no material difference in the provisions of section 22 of chapter 64 and section 18 of chapter 86. Section 22 concerns the duties of guardians; section 18, the duties of conservators; but their duties are substantially .similar, the substance of the statutes is in pari materia, they are identical in design and purpose and place restrictions upon the rights of guardians and conservators, in addition to those which existed at common law. Neither statute, however, assumes to provide a complete code with respect to the duties and obligations of these trustees in the administration of the estates of their wards.

Section 22 of chapter 64 declares as follows with reference to investments by guardians:

“Loans upon real estate shall be secured by first mortgage thereon and not to exceed one-half the value thereof. No mortgage loan shall be made for a longer time than five years nor beyond the minority of the ward: Provided, the same may be extended from year to year without the approval of the court. ’ ’

Section 18 of chapter 86 declares as to conservators: “Loans upon real estate shall be secured by first mortgage, or trust deed thereon and not to exceed one-half the value thereof. All loans shall be subject to the approval of the court.” Both statutes seem to require the approval of the court with reference to such investments.

The securities to which objections were made in these estates were either purchased with the approval of the court, or approved by the court after the purchase was made. The objectors, however, contend that the probate court by reason of these and other statutory restrictions was wholly without power or jurisdiction to make orders approving the purchase of 11 split mortgage, securities, ’ ’ meaning thereby a series of notes or bonds ownership of which is in different parties, but all secured by the same trust deed or mortgage.

The probate court of Cook county is a court of limited jurisdiction. It can exercise only such powers as are expressly granted or are by implication necessary to carry out powers lawfully and expressly granted. People v. Seelye, 146 Ill. 189; Chapman v. American Surety Co., 261 Ill. 594. Upon appeal from the probate court, the circuit court of Cook county cannot exercise any power save that which the probate court could or should have exercised while the particular matter was pending therein. Miller v. Miller, 82 Ill. 463; Palmer v. Riddle, 180 Ill. 461; People v. Siman, 284 Ill. 28; Armstrong v. Obucino, 300 Ill. 140.

The above propositions, we understand, are not denied by the parties to this controversy. Neither is there a denial by them of the further proposition (which is established by a long line of cases) that the requirements of these statutes concerning the investment of funds of conservators and guardians are mandatory in their nature. Bond v. Lockwood, 33 Ill. 212; McIntyre v. People, 103 Ill. 142; Hughes v. People, 111 Ill. 457; Winslow v. People, 117 Ill. 152; Hayes v. Massachusetts Mut. Life Ins. Co., 125 Ill. 626; Chapman v. American Surety Co., 261 Ill. 594.

The investments in controversy are as follows:

The conservator in the Lalla estate purchased at par the note of William and Leah Fine for the sum of $1,000. It was one of 17 notes secured by a trust deed which was a first lien on all the property. The other notes were owned by other parties. The conservator also purchased at par a so-called mortgage bond for the sum of $500 issued by the Hawthorne Roofing & Tile Co. It was one of a series of 45 bonds aggregating $35,000 and secured by a first lien trust deed conveying real estate. The other bonds were owned by other parties.

In the Waterbury estate the guardian purchased at par two first mortgage gold bonds of the Enterprise Parlor Furniture Co. for the sum of $500 each. These bonds, with others, in the aggregate amount of $30,000 were secured by a trust deed of the same date, which was a first lien on the property conveyed, and the other bonds were owned by other parties.

In the Kellogg estate the guardian purchased at par for LaVerne Lucille Kellogg a first mortgage gold bond for the .sum of $1,000 executed by Erick and Esther Linn. This note, with others aggregating the total sum of $10,000 and maturing on divers dates, was secured by a first trust deed of even date conveying real estate. Another of the same issue of notes in the sum of $1,000 was purchased at par by the guardian for the estate of Shirley Adellia Kellogg. Both these notes are in default. The guardian also purchased at par for the estate of Shirley Adellia Kellogg a first mortgage note of James P. and Mary E. McGee for $250. This note, with others made by the same parties in the ag'gregate amount of $35,000, was secured by a first lien trust deed, and default has been made in the payment of the note.

The guardian also purchased at par for the estate of Shirley Adellia Kellogg the note of Nils and Olga Anderson for the sum of $500. This note by extension became due April 7, 1932. It was secured by a first lien trust deed executed by the makers. The total indebtedness of $16,000 secured was represented by 16 principal promissory notes numbered 1-A to 16-P. The note 11-K, together with another note which would mature upon the same date, was the first of the unpaid notes to mature. These notes are not in default. This guardian also purchased for the estate of LaVerne Lucille Kellogg at par the note of Patricia Schmitz for the sum of $750. It was secured by a first lien trust deed executed by the maker to secure an indebtedness aggregating $21,000, represented by 31 principal promissory notes for divers amounts and maturing on divers dates. This note is in default.

The trust deeds in these purchases made in the Kellogg* estate are distinguished from the trust deeds securing the notes purchased in the. estates of Lalla and Waterbury in a vital respect, in that each of those trust deeds contained a “parity clause,” so-called. The parity clause in the trust deed securing the Fine notes reads as follows:

“All of said notes herein described are equal in all things secured by this Trust Deed without any preference or priority whatsoever of the lien thereof in favor of any one or more of said notes, over one or more of the others.”

There were substantially similar provisions in the Hawthorne Roofing & Tile Co. and the Enterprise Parlor Furniture Co. trust deeds. There are no such provisions in the Linn, McGee, Anderson or Schmitz trust deeds. The absence of any such parity clause seriously affects the lien value of these split mortgages, since in such case the liens attach and are entitled to priority in the order of the maturity of the same. Schultz v. Plankinton Bank, 141 Ill. 116; Kuppenheimer v. Chicago Title & Trust Co., 163 Ill. App. 127. Where, however, there are several notes or bonds secured by the same trust deed, and these notes or bonds mature at the same time, each holder of a note or bond has an equal equivalent or concurrent lien on the mortgaged property with all the other holders of notes or bonds, and in the event of foreclosure and sale, are to be paid pro rata out of the proceeds of the sale. The result is the same as if so many separate mortgages of equal and concurrent rank and dignity were simultaneously executed. No single note or bond holder acquires a first mortgage lien prior to the mortgage lien of the other holders. Walker v. Dement, 42 Ill. 272: Humphreys v. Morton, 100 Ill. 592; People v. Mitchell, 223 Ill. App. 8; In re Estate of Sargent, 276 Ill. App. 312.

The circuit court approved of the purchase of the Anderson note and disapproved of the purchase by the guardian of all other notes purchased for the Kellogg estate and charged the amount of the purchase to the guardian. It approved the purchases made by the conservator in the Lalla estate and by the guardian in the Waterbury estate. It was held that those securities which did not have an equal and equivalent lien value with all other notes of the issue because the notes matured at different times and where there was no clause in the trust deed providing parity of lien or excluding priority and preference according to the order of maturity in the event of foreclosure, did not conform to the requirements of the statute. Those notes or bonds which had equal and equivalent value with all other notes of the issue either by reason of the fact that all of the notes matured on the same day, or by reason of the fact that the trust deed included a clause providing parity of lien and ratable security for all the notes of the issue, were held to be securities which conformed to the requirements of the statutes.

The objectors say:

“It is the contention of the objectors that both the guardianship and conservatorship statutes contemplate first lien security and that no lien is a first lien if it is subordinate to other liens or if it is equal to and equivalent with other similar liens.” The objectors contend that any holding inconsistent with this last proposition is contrary to the plain and unambiguous language of the statutes in question.

It is trite to say that the object of the construction of a statute is to ascertain the intention of the legislature, and that to this end we first look to the language of the statute itself. Here as to language the one statute is distinguished from the other only by the term “trust deed,” which is not a material difference. In People v. Mitchell, 223 Ill. App. 8, we held that the distinction between a trust deed and a mortgage was “more technical than real.” In Ware v. Schintz, 190 Ill. 189, the Supreme Court held that a deed of trust given to secure a debt was in legal effect a mortgage, and the legislature has declared, “A trust deed in the nature of a mortgage shall be deemed to be a mortgage, and be subject to the same rules as a mortgage.” (Cahill’s Ill. Rev. Stats. 1933, ch. 30,¶ 109, sec. 61.)

In Bouvier’s Law Dictionary, vol. 2, p. 2248, a mort7 gage is defined to be:

“A conveyance of real estate or assignment of personal property, without parting with the possession in either case, by way of hypothecation as security for the performance of some act, usually the payment of money, and treated at law as a conveyance or assignment, but in equity as a lien.” Webster’s New International Dictionary defines the word “first” as meaning “preceding all others; first in time or" a series, position, or rank; earliest in time or succession; foremost in position; in front of, or in advance of, all others; foremost in rank, importance, or worth. ’ ’ Indeed, judicial elaboration adds little to the popular and customary understanding' that “first” means neither second nor subordinate to any other of the same kind.

In determining whether split mortgage securities may be construed as first mortgages within the meaning of these statutes, it is well to bear in mind that neither conservators nor guardians in the first instance derive the right and power from these statutes to invest their wards ’ money in any loan upon real estate. They had the power to make such loans at common law and independently of these statutes. These statutes do not create a power in conservators and guardians. On the contrary, the statutes operate by way of limitations and restrictions upon powers which already existed. Moreover, the legislature has directed the method and the spirit in which statutes, such as these, must be construed, stating that ‘ ‘ expressions shall be liberally construed in order that the true intent and meaning of the Legislature may be fully carried out. ’ ’ Cahill’s Ill. Rev. Stats. 1933, ch. 131, ¶ 1.

These statutes command that the obligation thus purchased by guardians or conservators must be secured by a first mortgage or trust deed; that is, an instrument which creates a lien that is first, not second or subordinate, to any other made by the owner or his predecessor in title. A first lien within the meaning which the objectors would give to it can scarcely be said to exist anywhere. Taxes, court costs of foreclosure, sheriff’s fees, master’s charges and commissions, costs of advertising, and similar items take precedence. The trustees’ fee also is a prior charge which must be paid before distribution to the note-holder of the proceeds of the foreclosure sale. It is apparent, we think, that the legislature used the term “first mortgage” in the usually accepted meaning of the words, rather than in a narrow literal or technical sense.

The objectors cite some of the earlier Illinois cases which seem to hold that a mortgage vests the legal title in the mortgagee. Hall v. Byrne & Co., 1 Scam. (Ill.) 140. That was the common law rule, but that is not the present rule in this State. Jones on Mortgages, 8th ed., vol. 2, pp. 361, 362; Reeve on Illinois Law of Mortgages and Foreclosures, vol. 1, pp. 3-10, and cases there citéd. The authorities cited from other jurisdictions where the legal as opposed to the equitable theory, of mortgages obtained are not in point, nor are cases like National Surety Co. v. Manhattan Mortgage Co., 174 N. Y. S. 9, and Hoyt v. Dollar Savings Bank, 175 N. T. S. 377, where by special agreement of the parties in interest one part of the loan was subordinated to another, applicable.

The essence of a mortgage consists in the kind and quality of lien upon the land which is created thereby. If as to priority it is first (that is, not second or subordinate to any other) then within the plain meaning of the words of these statutes it is a first mortgage. Nor does the fact that the mortgage secures several notes or bonds owned by different persons affect the nature and quality of the lien or impair it in any way, where the instrument contains clauses providing for complete parity between the several notes and bonds or obligations- secured. As was said in Freutel v. Schmitz, 299 Ill. 320, the lien is measured by the amount of the debt. It is not measured or appraised by the form of the debt, or the ownership of it. These may (and often do) affect the desirability of the security; so do many other considerations, such as, for instance, the personal credit of the makers of the notes or bonds which are secured, or, most important of all, the market value of the land conveyed. The legislature in its discretion might have imposed in this connection limitations or restrictions, but it did not do so. It might have provided (and wisely) for limitations with reference to the remedies available in case of default. It did not do so. These matters, with many others, seem to have been left to the discretion of the conservators and guardians, subject only to the provision that their judgment should be approved by the county or probate court.

We hold that the court properly approved the purchase of these securities in which the trust deeds contained provisions for parity of the notes and bonds secured and equality of lien under the provisions of the respective trust deeds. For the same reasons we hold that the purchase of the Anderson note in the Kellogg estate was properly approved. While there was no parity clause in the trust deed, the date of the maturity of both obligations secured thereby was such as to preserve the parity and equality of lien.

We do not undertake to say that guardians and conservators ought as a matter of wise policy to purchase these split securities, or even that judges of county and probate courts should in the exercise of their discretion under the statute approve of such investments. The last few years have taught much about the values of investment securities. Conservators, guardians and courts are not precluded from acting upon the wisdom which they may have acquired by reason of such experience.

The objectors argue that the precise question has been settled adversely to the contention of the conservator and guardians, The first case relied on is People v. Mitchell, 223 Ill. App. 8. That was an action in debt brought upon the bond of the treasurer of the State of Illinois. By an act of the General Assembly, approved June 16, 1909, it was in substance provided that a fund known as Kaskaskia Commons Permanent School Fund should be kept by the treasurer of the State and auditor and invested in certain named State and municipal securities, “or good first mortgages on real estate, so as to bring at least 5 per cent interest; said investments to be made by the State Treasurer by and with the approval of the State Auditor, who shall be keeper of said securities and the Auditor shall keep an accurate and correct record thereof.” It was assigned for breach of the bond that the treasurer had invested $20,000 of said fund in the purchase of 30 certain bonds of the United Flour Mills Co., an industrial corporation of Minnesota, operating in that State and in South Dakota; that these 30 bonds were a part of a series of bonds, 600 in number, of the aggregate face value of $500,000, drawing interest at the rate of 6 per cent per annum and maturing in annual series commencing* February 1, 1916, and extending to February 1, 1930; that these bonds were secured by a trust deed to a Chicago bank as trustee which provided that the security should be for the equal pro rata benefit of the holders of the bonds; that bonds were issued to the amount of $500,000 and sold to different persons, but the bonds purchased had defaulted and demand had been made on the treasurer to restore the $20,000, which he refused to do. The sufficiency of this assignment was questioned by- demurrer and sustained by the trial court. The Appellate Court said that the legislature certainly had a purpose in using the word “good” in describing the mortgages under which the investments were to be made, and then went on to say that in its opinion the statute permitted such investment only in notes secured by a mortgage which gave to those notes, and those notes only, a first lien on the real estate. The security described in the declaration was objectionable from many other standpoints. The statement as to the exclusive character of the lien was merely obiter. Moreover, the statute there did not (as the statutes we are here considering do) provide for judicial control of the investments. Also (unlike these) that statute assumed to provide a complete code for the investment of the funds. The case is therefore clearly distinguishable and, we think, not controlling here. It was, however, cited in In re Estate of Sargent, 276 Ill. App. 312, where it was held that a conservator, who purchased securities from a company of which he was manager, occupied an inconsistent position, and that he would be held liable on grounds of public policy, — a rule which has been declared in many cases and is well settled. The securities there purchased were a part of a series of notes, and the court, citing the Mitchell case, said that a mortgage which gave other notes an equal lien was not an investment in a “good” first mortgage. The statement was, of course, wholly unnecessary to a decision of the case.

The objectors also cite In re Guardianship of Lutz, 280 Ill. App. 587. In that case, also, it appears the court relied on the Mitchell case as applicable and controlling. We hold it is not, for the reasons stated. In that case too the Appellate Court held that the investment had not been approved by the court. We hold this to be an important and controlling fact. Bruner v. Wolford, 356 Ill. 514. Moreover, the proceeding* was not against the guardian, but against the vendor.

The sureties on the bond of the guardian in the Kellogg case have filed a cross appeal from that part of the order which charged against them the amount of the funds of the several wards used in the purchase of securities other than the Anderson note. In view of the decisions we have already pointed out as to the construction of trust deeds containing no parity clauses where the notes or bonds secured matured upon different dates, the holding of the circuit court as to these securities could not, in our opinion, have been other than what it was. The guardian in the purchase of the McGee note obtained the equivalent of a thirty-seventh mortgage, in the purchase of the Schmitz mortgage a fourth mortgage, in the purchase of the Linn mortgage third and fourth mortgages. Even if the statutes in question limiting and restricting the powers of conservators, guardians and the court had not been enacted, we would agree with the objectors that these securities would not have met the requirements at common law.

In reaching the conclusion that the orders in question should be affirmed, we have not found it necessary to consider the ■ historical development of these statutes in this State nor the contemporaneous construction of the same extending over years, the convenience and necessities of such investments arising out of the evolution of trade and commerce, nor the evidence of experts, all of which are relied on by the conservator and guardians. We prefer to rest our decision upon the plain and (we think) necessary interpretation of the language of the statutes and the fact that the securities were purchased upon approval by the probate court.

For the reasons indicated, in each estate the order of the circuit court will be affirmed.

Order affirmed.

McSurely, P. J., and O’Connor, J., concur.


author: Mr. Justice O’Connor

text:
    Joe Sylvester, Appellant, v. The Buda Company, Appellee.
    Gen. No. 38,282.
    Opinion filed July 5, 1935.
    Sol Andrews, of Chicago, for appellant.
    Angerstein, Piggott & Angerstein, Ashcraft- & Ashcraft, of Chicago, and Duncan & O’Conor, of Ottawa, for appellee; Thomas C. Angerstein, Bus-sell F. Locke, Alan E. Ashcraft, Jr., and Andrew 0 ’Conor, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

January 27,1934, plaintiff brought an action against the defendant in which he alleged that for a number of years he had worked for defendant in its factory in which sand and other materials were mixed together with make molds, and in the course of his work he “necessarily breathed in large quantities of sand dust and other dusts” and thereby became affected with occupational diseases known as pneumoconiosis and tuberculosis; that defendant had wilfully failed to comply with section 1 of the Occupational Diseases Act (ch. 48, ji 185, Cahill’s 1933 Stats.), and had negligently failed to comply with sections 12 and 13 of the Health, Safety and Comfort Act (ch. 48, fifí 154, 155, Cahill’s 1933 Stats.). While the cause was pending our Supreme Court, on April 17, 1935, held section 1 of the Occupational Diseases Act and sections 12 and 13 of the Health, Safety and Comfort Act void for uncertainty. Parks v. Libby-Owens-Ford Glass Co., 360 Ill. 130; Boshuizen v. Thompson & Taylor Co., 360 Ill. 160. On May 10th, a few days after these two opinions were handed down, an order was entered on plaintiff’s motion, giving him leave to file an amended complaint in which he sought to set up a right of action based on the common law for the occupational diseases which he claimed to have contracted in the performance of his work, as a result of inhaling dust, alleging that defendant had negligently, wilfully and wantonly failed to provide plaintiff a reasonably safe place to work, in that it failed to have installed in its factory suction fans or other reasonable apparatus for collecting the injurious dust in the air, and for failing to provide reasonable masks and respirators or other apparatus to be used or worn by plaintiff which would effectively prevent plaintiff from inhaling the dust.

Defendant made a motion to dismiss the amended complaint upon the ground that there existed no common law right of action for an occupational disease, and that if there did exist a right of action at common law, such right would be barred by the provisions of the Workmen’s Compensation Act. The .court sustained defendant’s motion on the two grounds, dismissed the suit, and plaintiff appeals.

We have been favored with excellent briefs by both parties, who agree that the only question before this court is whether there is a common law right of action for an occupational disease as alleged in the amended complaint.

Counsel for defendant cite section 1, ch. 28, Cahill’s 1933 Statutes, by which the common law of England, with certain exceptions, was declared the law of this State and say: “The common law as adopted by the State of Illinois was, then, the common law of England prior to the fourth year of James the First, which was March 24th, 1606, and is the common law of the State of Illinois at the present time except insofar as it has been repealed by legislative authority.” This statement is somewhat inaccurate because the common law, or. unwritten law, is not inflexible but is constantly changing according* to custom, as found in the decisions of the courts. “Many lawyers, and the majority of laymen who reflect on the subject at all, do not think of the law as being founded on Custom, and as gradually changing with Custom. To These there ‘is an ancient, never-ending* dream of mankind that there is peculiar, rigid and unchangeable Law. . . . This view ... is now regarded by science as error,*...’

‘ ‘ Carter has demonstrated conclusively that Custom is not only one of the sources of the Common Law or Unwritten Law but that it is the only source. ‘Ancient Customs’ he says, have been ‘regarded by writers as having the force of law, but this quality they impute, not to the Custom, qua custom, but to its antiquity, whereas the conclusion at which I arrive erects present existing Custom as the standard of Law. ’

“As new conditions arise for which there are no actual existing* customs applicable, rules of law must be framed by the Judges to meet the changing* conditions. These rules are not arbitrarily created, but are formulated by the standards of Custom, which standards are synonymous with Justice and Bight. Custom, therefore, today within the meaning and limitations that I have defined, shapes and determines our Unwritten Law or Common Law, which is the great body of law regulating the affairs of life.” Johnston’s Modern Conception of Law, pages 141, 150, 341.

Counsel for plaintiff has cited a number of author^ ities in which he claims it is held that one may recover for injuries sustained or occasioned by occupational diseases. We do not stop to analyze or distinguish these cases because we are of opinion that plaintiff’s contention has been decided adversely to him by the Supreme Court of this State and of many other States.

In Parks v. Libby-Owens-Ford Glass Co. above referred to (360 Ill. 130), in considering the question of the invalidity of section 1 of the Occupational Diseases Act of this State, the court, after discussing the several sections of that act, said (p. 137): “By this legislation the legislature recognized the existence of occupational diseases. (Madison v. Wedron Silica Co., 352 Ill. 60.)” And continuing (p. 145): “The plaintiff argues, however, that a jury is especially equipped to determine the standard of reasonable and approved devices, and asserts that the history of the comm on law is replete with instances of juries passing on what is ‘reasonable.’ This argument ignores the fact that the liability here is of statutory origin and did not exist at common law. ’ ’

And in considering this same question the court, in Boshuizen v. Thompson & Taylor Co. (360 Ill. 160), said (p. T63): “This type of legislation was a complete stranger to the common law, and section 1 under consideration here has no common law origin or history. (First Nat. Bank v. Wedron Silica Co., 351 Ill. 560; Arquin Industrial Com., 349 id. 220; Keeran v. Peoria, Bloomington and Champaign Traction Co., 277 id. 413; Adams v. Acme White Lead Works, 182 Mich. 157, 148 N. W. 485; Pennsylvania Pulverizing Co. v. Butler, 61 F. (2d) 311.) . The ".'section has no generally accepted body of precedents, no established standards of conduct and no common knowledge or understanding on which it is bottomed. ’ ’

It has been held that the common law of England did not give an employee a right of action for occupational diseases. Innes or Grant v. C. & G. Kynoch, 1919, Appeal Cases 765. In that case Lord Buck-master, in discussing this question said, (p. 773): “My Lords, cases of this kind are always painful to consider and hard to decide. A man is engaged in work, hazardous to health and — it may be — to life itself; disease, followed by a ruined constitution, or even death, may ensue, and yet, so far as the common law is concerned, there is no remedy. ’ ’

In Peru Plow Co. v. Industrial Commission, 311 Ill. 216, which was a proceeding under the Workmen’s Compensation Act, the court said (p. 220): “The words ‘accident’ and ‘accidental injury,’ as used in the Compensation act, were meant to include every injury suffered in the course of employment for which there was an existing right of action at the time the act was passed, and to extend the liability of the employer to make compensation for injuries for which he was not previously liable and to fix the limit of such compensation. . . . Occupational diseases are not covered by the Compensation Act, although not all diseases are to be excluded from the purview of the Compensation law.”

The legislature in 1911 passed the Workmen’s Compensation Act and the Occupational Diseases Act, and if, as said in the Peru Plow Co. case just quoted from, the Workmen’s Compensation Act was enacted to give every employee who had suffered in the course of his employment a cause of action against his employer for compensation “for which there was an existing right of action at the time the act was passed,” except for occupational diseases suffered by the employee, it must be presumed that the legislature, by passing the Occupational Diseases Act, intended to give an employee who had contracted an occupational disease, a remedy for the damages occasioned by such disease. This construction would give effect to the Occupational Diseases Act, and it must be assumed that the legislature knew the existing law, was enacting a new law, and not merely declaring what the law already was.

When the legislature enacts a statute, it must be presumed that it knows the existing law and intends to make some change in the former law, unless in exceptional cases when it may be said to be codifying the law, as was the case, to a great extent, when it codified the law merchant in the Negotiable Instrument Act. In 36 Cyc. p. 1145, in considering this question, the author says: ‘ ‘ The court must assume, however, that the legislature knew the existing* law and that its purpose in enacting the statute was to make some change in the former law.” And our Supreme Court in the Boshuisen case had the same view of the law because it took judicial notice of the report and recommendation of the Occupational Diseases Commission appointed by the governor of this State pursuant to a joint resolution adopted by the general assembly. And although the Supreme Court declared section 1 of the Occupational Diseases Act void, yet we can look at the wording* of that section and other sections of that act which are valid in considering whether the legislature intended by that section to make a change in the existing law. Baird v. Hutchinson, 179 Ill. 435; Shaughnessy v. Holt, 236 Ill. 485; People v. Kuns, 248 Ill. 42; sec. 452, 2 Lewis’s Sutherland Statutory Construction, 2nd Ed.; Champlain Refining Co. v. Corporation Commission, 51 F. (2d) 823-834.

In the Baird case, the court said (p. 440): “In subjecting an enactment to such an investigation the court will not reject from consideration an unconstitutional section, if one there be, but will refer to it as constituíing a part of the enactment for all the purposes of construction. ’ ’

And in the Shaughnessy case (236 Ill. 485), the court said (p. 487): “Even when a section of the statute has been held to be unconstitutional it may still be considered with the other sections for the purpose of construction.”

In Adams v. Acme White Lead and Color Works, 182 Mich. 157, which was cited by our Supreme Court in the Boshuisen case, Adams had filed a claim before the industrial board for compensation for disability due to red lead poisoning — an occupational disease. But the court held that occupational diseases were not within the purview of the Compensation Act and therefore no recovery could be had. The court there said (p. 161): “Manifestly, the terms ‘personal injury’ and ‘personal injuries,’ above mentioned, refer to common law conditions and liabilities, and do not refer to and include occupational diseases, because an employee had no right of action for injury or death due to occupational diseases at common law, but, generally speaking, only accidents, or, rather, accidental injuries, gave a right of action. We are not able to find a single case where an employee has recovered compensation for an occupational disease at common law. Certainly it can be said that in this State no employer has ever been held liable to the employee for injury from an occupational disease, but only for injuries caused by negligence. ’ ’

Our Supreme Court not only approved of this holding in the Boshuizen case, but also in the earlier case of Labanoski v. Hoyt Metal Co., 292 Ill. 218, where it was held that the Occupational Diseases Act and the Workmen’s Compensation Act were not conflicting*, that an employee did not have an election of remedies; that his remedy must be under the Compensation Act if he was injured accidentally, and under the Occupational Diseases Act if he was injured in health because of the failure of the- employer to comply with its provisions. The court there said (p. 221): “An occupational disease, such as lead poisoning, does not occur suddenly but is a matter of slow development, and the Occupational Diseases Act was passed for the protection .of employees from such diseases. Whether the Workmen’s Compensation Act of the State of Michigan, the title of which is very similar to ours, applied to occupational diseases, was thoroughly considered by the Supreme court of Michigan in Adams v. Acme White Lead and Color Works, 182 Mich. 157. It was held not to apply to such diseases but to injuries arising from accidents alone.”

The same ruling was made in Miller v. American Steel & Wire Co., 90 Conn. 349, and Industrial Commission v. Brown, 92 Ohio St. 309. In the Miller case an employee sought to recover compensation under the Workmen’s Compensation Act for lead poisoning which was an occupational disease, and it was held that no compensation could be had under the Workmen’s Compensation Act. The court there said (p. 359): 1 ‘ Since the common-law action for damages, which was founded on the master’s negligence, never attempted to cover the typical case of an occupational disease caused by continued exposure to the ordinary and known risks of the employment, the inference is plain that the alternative compensation scheme ivas not intended to cover such diseases.”

To the same effect is the holding in Gordon v. Travelers’ Ins. Co. (Tex. Civ. App.), 287 S. W. 911, where plaintiff was seeking to recover for an occupational disease, where the court said (p. 912): “The appellant could not recover at common law against his employer for the additional reason that no recovery was allowed at common law for occupational or industrial diseases. Miller v. American Steel & Wire Co., 90 Conn. 349, 97 A. 345, L. R. A. 1916 E. 510.”

And in Ewers v. Buckeye Clay Pot Co., 29 Ohio App. 396, 163 N. E. 577, the court held that no action would lie at common law for an occupational disease. In that case Ewers brought an action at law to recover from pneumoconiosis, an occupational disease. It was alleged that plaintiff contracted the disease by inhaling dust, in the performance of his duty. The court there said, quoting from page 578 of the N. E. Reporter: “no recovery could be had at common law for an injury to or death of an employee due to an occupational disease was decided by the Supreme Court of Ohio in Zajachuck v. Willard Storage Battery Co., 106 Ohio St. 538,140 N. E. 405, and in Industrial Commission of Ohio v. Monroe, 111 Ohio St. 812, 146 N. E. 213.”

And in the Monroe case (111 Ohio St. 812, 146 N. E. 213, the court said: “At common law there was no liability for damages for occupational diseases, but by statute (109 O. L. 183) the Legislature has classified in 15 different divisions diseases occupational in character that are compensable. ’ ’

And the Supreme Court of Washington, in Calhoun v. Washington Veneer Co., 170 Wash. 152, 15 P. (2d) 943, held that a common law action could not be maintained by an employee for carbon bisulphide poisoning due to his work in a factory, but that he could only recover under the Factory Act.

Counsel for plaintiff cites cases such as Thompson v. United Laboratories Co., 221 Mass. 276; Pigeon v. Fuller & Co., 156 Cal. 691; Wiseman v. Carter White Lead Co., 100 Neb. 584, and other cases which he contends hold in effect that an action at common law would lie for an occupational disease, and says that the statements in the opinions by our Supreme Court in the Parks and Boshuisen cases, above referred to, to the effect that an action for an occupational disease would not lie at common law, are “pure dictum.” We do not here stop to discuss the authorities cited by counsel because we do not agree with counsel’s contention that the language of the opinions in the two cases is dictum because a reading of the opinions disclosed the fact that the court was unable to find any common law precedent to sustain an action for an occupational disease.

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

Judgment affirmed.

McSurely, P. J., and Hatchett, J., concur.


author: Mr. Justice Dove

text:
    Eugene J. Kesslar, Appellee, v. Raymond Sherman et al., Appellants.
    Gen. No. 8,881.

      Opinion filed July 6, 1935.
    J. Bruce Amell, David J. Peffers, George R. Warner and Mighell, Allen & Latham, of Aurora, for appellants.
    Butters & Butters, of Ottawa, and L. B. Olmstead, of Somonauk, for appellee.
   Mr. Justice Dove

delivered the opinion of the court.

On October 3, 1931, Homer H. Sherman and his son, Raymond H. Sherman, were indebted to the First National Bank of Aurora in the sum of $6,610, and as evidence of that indebtedness, they executed and delivered to said bank their collateral note for said sum, payable to the order of the bank. This note matured March 1, 1932, and bore six per cent interest per annum. It recited that the makers had pledged with the said bank as collateral security for the payment thereof a junior trust deed upon 221.59 acres of land in La Salle county. On the same day that Homer H. Sherman and Raymond Sherman executed the $6,610 note, Homer H. Sherman executed his note for $7,000 payable to himself and delivered the same, after indorsing it, to the First National Bank of Aurora. This note was secured by said junior mortgage which Homer H. Sherman also executed on October 3, 1931. This mortgage, conveyed the premises involved herein to the First National Bank of Aurora as trustee. In January, 1932, Homer Sherman died intestate. Thereafter Alvin Sherman was appointed administrator and his estate is being administered in the probate court of Kane county. On June 27, 1932, the bank filed its claim against said estate upon its $6,610 note'and the claim was thereafter duly allowed for the sum of $6,901.93. Thereafter, the First National Bank of Aurora, being insolvent, closed and I. H. Hamilton was appointed receiver thereof. On October 14, 1933, the note of $7,000 and the junior trust deed to secure the payment thereof were purchased by appellee, the plaintiff below, from the receiver for $1,800 and the receiver credited upon the original note of $6,610 the amount received from the sale of said collateral. At the June term, 1932, of the circuit court of La Salle county, the first mortgage upon the premises involved herein was foreclosed, resulting in a sale thereof to Edmund C. Haas. Prior to the institution of this proceeding, appellee redeemed from this sale and the master issued to him a certificate of redemption.

On March 30, 1934, this proceeding was instituted by appellee to foreclose the junior trust deed which he had theretofore purchased from Hamilton, the receiver of the First National Bank of Aurora. His complaint recited most of the foregoing facts and further alleged that the bank had obtained judgment upon the $7,000 note in the circuit court of Will county, that a transcript thereof had been filed in the office of the circuit court of La Salle county, but averred that it was for the same indebtedness represented by the trust deed of the plaintiff and that it is in fact the property of the plaintiff. The complaint made all the heirs of Homer H. Sherman, deceased, his administrator and all parties interested parties defendant to this proceeding. Answers were filed and after the issues were made up, a hearing was had, resulting in a decree finding that there was due appellee the sum of $14,240;.56. This amount being made up of $6,074.46, which the decree found appellee had paid in order to redeem the premises from the prior foreclosure sale, together with the sum of $7,859.71, being the principal sum of $6,610, together with interest thereon, and also the further sum of $306.39, being the amount paid out by appellee for taxes. The decree was in the usual form and directed the payment of said $14,240.56, together with solicitor fees, within five days from the entry of the decree, and in default thereof that the mortgaged premises should be sold. It is from this decree that this appeal has been prosecuted by the administrator and heirs of Homer H. Sherman, deceased, and the receiver of the First National Bank of Aurora. They concede that appellee was entitled to redeem from the sale under the decree foreclosing the first lien upon these premises, and that he is. entitled to recover the amount he paid to redeem, together with the sums he advanced for the payment of taxes and interest. They insist, however, that inasmuch as the receiver retained the principal collateral note of $6,610 and that appellee only purchased the $7,000 note and junior trust deed given to secure the payment of the same, he was only an equitable assignee of the debt represented by the original collateral note to the extent of the amount he paid for said collateral, which was $1,800, and that therefore the decree is erroneous in finding that there was due him $7,859.71, this sum being the amount of the principal collateral note of $6,610 and interest thereon to the date of the decree.

Appellee insists that the receiver in pursuance to the provisions of the collateral note sold the collateral to him and by so doing, the receiver parted with all his right and interest therein and that in this proceeding appellee is entitled to recover not simply the $1,800, being the amount he paid the receiver therefor, but the amount due upon' the principal collateral note of $6,610, he contending that the assignment to him of the collateral note and mortgage operated as an assignment of the amount due the bank under its principal note. In support of their respective contentions, counsel for appellants and appellees cite the case of Peacock v. Phillips, 247 Ill. 467. In that case it appeared that Lillie M. Phillips was the owner of the premises known as 151 Astor street in Chicago and being indebted to the Chicago Savings Bank and Trust Co. in the sum of $2,500, executed a note for that amount and she, with her husband, also executed a note for $4,000 payable to their own order and indorsed the same in blank. They also executed a second mortgage upon said premises to secure the payment of this $4,000 note and delivered this note and mortgage to the bank as collateral security for the payment of their $2,500 note. On April 29, 1907, this note having matured and not being paid, the bank sold the collateral security to J. Arnold Scudder (who knew all the circumstances of the pledge) for $2,530.62, being the amount due the bank. Thereupon the bank canceled the $2,500 note and delivered it to Mrs. Phillips. In a proceeding by the owner of the first trust deed to foreclose the same; he, Scudder, filed his cross-bill, insisting that he was entitled to receive the full amount of his $4,000 note and interest thereon. In refusing to sustain this contention, the court held that the bank might have foreclosed the mortgage pledged to it, but the equities between the parties would have forbidden a decree for any more than the amount due on its $2,500 note, that while the contract between Mrs. Phillips and the bank conferred upon the bank the power of sale and enabled the bank to do an act to obtain payment which could not otherwise have been done, that such a grant of power to sell did not enable the bank to confer a greater right upon the purchaser with full notice of the facts and circumstances and the extent to whióll the bank could enforce the obligation, than the bank would have had in case of foreclosure.

The instant case differs from Peacock v. Phillips, supra, in that there the collateral was sold for the amount due the pledgee and the principal collateral note for $2,500 having been so paid was thereby discharged and was surrendered by the pledgee to the maker while in the instant case the collateral sold for $1,800, which was much less than the amount due the pledgee and the pledgee simply credited the principal note with the amount received from the sale of the collateral and retained the principal note and now insists that in equity he, the holder of the principal note, is entitled to receive all over the amount which his assignee paid him for the collateral. We do not think there is any merit in this contention. Here appellee paid the receiver $1,800 for the collateral security and by so doing* steps into the shoes of the original pledgee and cannot be required to surrender the rights which he acquired except upon payment or tender of the amount of the debt for which this collateral was originally pledged. If appellee had not purchased the collateral and this proceeding had been instituted by the receiver, the decree in the instant case is clearly right. No authority has been cited and we are unable to find any which limits the purchaser of collateral to recover thereon only the amount he paid therefor where it appears that the amount due the pledgee at the time of the sale exceeded the amount the pledgee received therefor. The receiver has no further interest in the collateral which he sold and assigned to appellee. The receiver has parted with his interest therein and appellee has acquired whatever rights he had. The record discloses that the bank filed the principal note as a claim against the Homer Sherman estate and the claim was allowed and the bank has a judgment in its favor thereon, the same to be paid in due course of administration, but the bank or the receiver has received nothing upon said claim and nothing from any source, except the $1,800 paid to the receiver by appellee for the collateral. If the premises covered by the mortgage sought to be foreclosed herein are sold and appellee receives the full amount so found due him, being the amount due on the $6,610 note, then the makers of the principal note have satisfied that obligation and the receiver is entitled to nothing. If, however, the obligation of the makers of the principal note is not satisfied by the sale of the mortgaged premises, the receiver of the bank still has his claim against the estate of Homer H. Sherman, as well as Raymond H. Sherman, to whom the receiver may look for payment.

The conclusion we have thus arrived at is eminently equitable to all. Raymond H. Sherman and the heirs of Homer H. Sherman (Raymond H. Sherman and Homer H. Sherman being the makers of the principal note of $6,610) cannot complain because under no'circumstances will they be liable to pay more than the amount due upon the obligation .which they executed to the bank on October 3,1931. Those obligated upon the $7,000 note and mortgage which Homer H. Sherman executed to secure the payment of the $6,610 note and which he lodged with the First National Bank of Aurora to secure its payment cannot complain because their obligation thereon is limited to the amount due upon the $6,610 note. The receiver is in no position to complain because he sold the collateral and received therefor what must be presumed to have been its value when sold or else he would not have disposed of it. Although he retained the principal note of $6,610 and credited thereon the amount he received from the sale of the collateral, still, under the facts as disclosed by this record, he, the receiver, by assigning to appellee the $7,000 note and mortgage held by him as collateral, invested appellee with the right to recover thereon to the extent of the amount due upon the principal note of $6,610, and if that amount is in fact received by appellee in this proceeding, the full liability of the makers of the $6,610 note still held by the receiver will have been discharged. This is a proceeding in equity to foreclose upon the collateral and what we hold is that appellee here in this proceeding occupies the identical position that the receiver would occupy if he were the plaintiff.

In 49 C. J. 1031, it is stated that the general rule is that a bona fide pledgee of a chose in action may enforce it for the entire amount thereof against the obligor and will retain the surplus, after the payment of his debt, as trustee for the pledgor, but where the pledgor is also the maker of the collateral note sued on, that then the amount of the pledgee’s recovery will be restricted to the principal debt. At page 964 of the same work, the author states that the pledgee, having merely a special property in the pledge as security for his debt, cannot make a valid assignment of the collateral separate from the debt so as to confer any rights on such assignee as against the pledgor and on the following page it is said that it is a general rule that upon an assignment of his interest in a pledge, the assignee or purchaser steps into the shoes of the original pledgee and cannot be required to surrender the property tó the pledgor except upon payment or tender of the debt for which the property was originally pledged. Such also is the holding in Bradley v. Parks, 83 Ill. 169; Belden v. Perkins, 78 Ill. 449.

The complaint in the instant case alleged that the First National Bank of Aurora procured judgment in the circuit court of Will county upon the note of $7,000, which it held as collateral security, that said judgment is for the same indebtedness represented by the trust deed of the plaintiff and that said judgment in fact belongs to and is the property of the plaintiff. The separate answers of Alvin Sherman and I. H. Hamilton, the receiver, each admitted the allegations of the complaint to the effect that judgment was taken by the bank upon the $7,000 note, but denied that said judgment or any part thereof was ever purchased by or belonged to the plaintiff. The decree found that at the time of the execution and delivery of the $7,000 note and trust deed, Homer H. Sherman was indebted to the First National Bank of Aurora in the sum of $6,640.38, evidenced by a note of October 3, 1931, for that sum and that the said note of $7,000 and trust deed were given by Sherman and received by the bank as collateral security therefor. The decree also found that there is nothing due to the First National Bank of Aurora on said note of $6,640.38 and further found that the bank procured a judgment in the circuit court of Will county upon this note of $6,640.38 and that “said judgment is for the same indebtedness represented by said trust deed of the plaintiff herein of October 3rd, 1931, and belongs to and is the property of the plaintiff,' Eugene J. Kesslar.” The only evidence in the record is that the principal collateral note executed on October 3, 1931, by Raymond H. Sherman and Homer IT. Sherman was for the sum of $6,610' and there was no evidence produced upon the hearing with reference to any judgment other than the one rendered by the probate court of Kane county upon the claim of the bank upon the original note of $6,610 and this claim was allowed on January 17, 1933, for the sum of $6,901.93.

The decree after ordering the sale of the premises to pay the amount so found due provided that in the event the proceeds derived from the sale were insufficient to pay the amount found due that the master apply the same to the extent to which such proceeds may reach in satisfaction thereof and in the event the premises shall sell for more than sufficient to pay the several amounts so found due that then the surplus should be brought into court by the master to abide the further order of the court. This provision, we think, amply protects appellants as in this event the obligation of the makers of the $6,610 note and of the $7,000 note and trust deed will have been discharged and the owners of the equity of redemption would be entitled to such surplus and the lower court will be in a position to make the proper orders in connection therewith.

The decree erroneously found that at the time of the execution and delivery of the $7,000 note and trust deed, Homer H. Sherman was indebted to the First National Bank of Aurora in the sum of $6,640.38.

It also erroneously found that there is nothing due the bank on said note and erroneously found that the judgment in Will county was taken by the bank upon the note of $6,640.38 and that this judgment belongs to appellee. All these findings should be eliminated from the decree. There is also an error in computation. The principal note of $6,610 is dated October 3, 1931, and bears six per cent interest from date. The date of the decree is July 30, 1934. The amount due upon this note was $7,730.40 and not $7,859.71. The decree is therefore erroneous in this respect. The amount due plaintiff for which he was entitled to a decree in this proceeding on July 30, 1934, was therefore $14,111.25, made up of the following items, viz.;

The amount he paid to redeem ... .$ 6,074.46

Principal ....................... 6,610.00

Int. on $6,610 from Oct. 3, 1931 to

July 30, 1934 .................. 1,120.40

Taxes ..........'................. 306.39

$14,111.25

The decree of the circuit court of La Salle county will therefore be modified in this court as in this opinion indicated and as so modified will be affirmed. One-half of the costs in this court will be paid by appellee and one-half by appellants.

Decree modified and as modified affirmed.