author: Mr. Presiding Justice Eldredge

text:
    Oscar Nelson, Auditor of the State of Illinois, v. John B. Colegrove & Company State Bank et al. Margaret Schuessler et al., Intervening Petitioners and Appellants, v. Oscar Nelson, Auditor of the State of Illinois, Appellee.
    Gen. No. 8,617.
    Opinion filed April 11, 1933.

      Hogan & Coale, for appellants.
    Oscar J. Putting, for certain appellee.
   Mr. Presiding Justice Eldredge

delivered the opinion of the court.

In the liquidation suit of Oscar Nelson, Auditor of Public Accounts v. John B. Colegrove & Co. State Bank, claims were filed by Margaret Sehuessler of St. Louis, Missouri, John Willey of Taylorville, Illinois, and Minnie Waggoner of Springfield, Illinois. The first two were presented as regular claims indorsed with the prayer that they be declared preferred. The third was presented in the form of an intervening petition with the same prayer. By stipulation of counsel they are all brought here on one appeal. The prayer for preference was denied by the chancellor in each case.

Margaret Sehuessler, having $4,000 to invest, requested Harvey E. Gollogher, the cashier of the bank, to invest it for her. He agreed to purchase for her city warrants bearing interest at six per cent, payable semiannually and gave her the following receipt for her money:

“No............. May 11, 1927

Received of Margaret Sehuessler Four Thousand Dollars for City Warrants 6% — each six months.

$4000.00 Colegrove State Bank

by H. E. G-ollogher,

Cashier.”

He never sent her the warrants but paid her interest every six months up to and including May 15, 1929. The bank closed its doors October 11, 1929 and the receiver, at the request of Mrs. Sehuessler, delivered to her an envelope containing a promissory note dated August 30, 1927 for the principal sum of $4,073 with interest at the rate of six per cent per annum, payable semiannually and signed, “W. H. Fowler by H. E. Gollogher, agent.” On the back of this note were the indorsement of ITarvey E. Gollogher and several interest payments. Both Fowler and Gollogher were bankrupt and the said note was worthless. This money was never deposited in the bank by Mrs. Schuessler but was given to it for the specific purpose of buying city warrants for her. It is claimed that the money was placed with the other funds of the bank and used by the bank in its business and therefore its identity had been destroyed. It is the identity of the fund, and not the identity of the money or currency, which is to be established. As stated before, this money never was deposited to the claimant’s account in the bank or given to the bank for that purpose but only for the specific purpose of purchasing city warrants and the receipt given for it conclusively impresses it with a trust. It is true that some of the earlier decisions in this State have held otherwise, but it is now firmly established that under such circumstances as appear in this case, the money was given to the bank as a trust fund for a specific purpose and is entitled to a preference over the other creditors. People ex rel. Nelson v. Bates, 351 Ill. 439; Woodhouse v. Crandall, 197 Ill. 104.

John Willey gave to Gollogher, the cashier, $2,000 for the purchase of a “customer’s loan.” At the time this transaction took place Willey had that amount on deposit in the bank drawing four per cent interest and he desired to obtain six per cent, and requested Gollogher to invest it for him. Gollogher told him he would sell tn'-m a customer’s loan. There was no understanding of any kind as to whose note was to be purchased or that Willey himself would be consulted by Gollogher before the purchase was perfected. Gollogher gave the following receipt:

“No............. Sept. 8, 1927

Received of John Willey Two Thousand Dollars for Customer Loan one year 6%..................

$2000.00 * John B. Colegrove & Co.

State Bank

H. E. Collogher, Cashier.”

The bank, through Collogher, from time to time paid the interest on the amount. After the bank closed, the receiver found an envelope in the name of John Willey in which was a note executed by “W. H. Fowler, by Harvey E. Collogher, agent.” Willey left the whole matter of the purchase of a customer’s loan to Collogher and it appears that Collogher did what he promised to do and gave Willey the note of one of the customers of the bank. Willey never had possession of the note until after the bank closed and never inquired who the maker was but went to the bank and collected the interest thereon until the bank closed. Under these facts even though the note of Fowler was uncollectible, no claim against the bank can be allowed.

In the case of the petition of Minnie Waggoner, it appears that she was a stockholder in the bank and owned 20 shares thereof, originally worth $3,320. She had on deposit in the bank about $400 and also had $4,000 which she desired the bank to invest for her. Collogher promised her also that he would invest the money in customers’ loans. When the bank closed the receiver found an envelope marked with her name in which were the following receipts:

“No............. October 25, 1926

Received of Minnie Wagoner

Two Thousand.......................:... .Dollars

100

For Customer Loan One

Tear 7% — Secured by B. and L. Stock.

$2000.00

J. B. Colegrove & Co. S. Bk.

By Harvey E. Collogher

Cashier. ’ ’

££No............. 10-15-1927

Deceived op Minnie Wagoner

Two Thousand............................Dollars

100

For Customer Loan 1 year at 6%

$2000.00

Colegrove State Bk.

By H. E. Gollogher”

In the envelope were also the following securities being promissory notes: One executed by Henry Heuser for $200 secured by building and loan stock; one by Harvey Gollogher for $500 secured by building and loan stock; one by J. H. Seiler for $600, unsecured; one by Tina Kelso for $150, unsecured; one by Clyde Potts for $500, unsecured, and one for $2,000 by Harvey E. Gollogher, unsecured. In addition to these was the sum of $205.56 in cash received in payment of a note executed by E. J. Tomlin and interest thereon. At her request this envelope with the contents therein above mentioned was delivered to her. She immediately commenced to collect these various notes and at the time of the hearing she had collected nearly $2,000 but had collected nothing on the unsecured Gollogher note. In this case as in the Willey case, she left the whole matter of the investment of her $4,000 to Gollogher and all he promised to do was to invest it in customer’s loans which he apparently did. She accepted these notes from the receiver and collected nearly half of the total amount due. The fact that one of the notes was uncollectible would not impress the whole transaction with a trust or even a general claim against the bank, as we do not understand the law to be that if a person asks a bank to invest his money in the purchase of securities and the bank does so in accordance with the request, the mere fact that one or more of the securities' may have become uncollectible when the bank became insolvent, would establish. a claim against the bank, either general or preferred.

. The order of the court denied a preference in regard to the claim of Margaret Schuessler. In this we think the court erred and the decree in regard to her claim is reversed and remanded with directions to allow it as a preferred claim.

The decree does not find that the claims of John Willey and Minnie Waggoner were allowed as general claims against the bank but simply that they were not entitled to preference. It should have gone farther and found that neither of them were general or preferred claims against the bank. For the reasons stated the decree in so far as it relates to the claims of John Willey and Minnie Waggoner is reversed and remanded as to each of them with directions to find that neither claim is general nor preferred and to dismiss the same.

Reversed and remanded with directions.


source: Caselaw Access Project

license: Public Domain

text:
    The People of the State of Illinois ex rel. Oscar Nelson, Auditor of Public Accounts, v. Bank of Rushville. Carrie Shields, Executrix of the Estate of R. O. Shields, Deceased, Intervenor-Appellee, v. Henry W. Ladewig, Receiver of Bank of Rushville, Appellant. William H. Fahnestock, Intervenor-Appellee, v. Henry W. Ladewig, Receiver of Bank of Rushville, Appellant. R. W. Noble and Thomas Noble, Trading as Noble & Son, Intervenor-Appellee, v. Henry W. Ladewig, Receiver of Bank of Rushville, Appellant.
    Gen. No. 8,711.

      Opinion filed April 11, 1933.
    C. Edward Flesher and Oscar J. Putting, for appellant.
    O. D. Arnold, for appellees; Wm. J. Long, of counsel.
   Mr. Presiding Justice Eldredge

delivered the opinion of the court.

This is an appeal from three decrees rendered in the circuit court of Schuyler county on three separate intervening petitions which have no relation with each other except that they are similar as to points of fact and law. By stipulation of the parties the records of the three cases were consolidated into one record for the purpose of convenience and expedition in the disposition thereof. In a suit brought by the auditor of public accounts appellant was confirmed as receiver of the Bank of Rushville and the intervening petitions of the respective appellees were filed in said liquidation suit for the purpose of having their respective claims declared preferences as against the general creditors of the bank. An answer was filed by the receiver to each intervening petition denying that said claims should be classed as preferred. The evidence was presented to the chancellor upon a stipulation of facts under each intervening petition.

In the petition of Carrie Shields, executrix of the last will of R. O. Shields, deceased, it was stipulated that on January 13, 1931, H. C. Rinehart drew a check upon the Bank of Rushville in the sum of $344.05 payable to R. O. Shields as payee; Shields deposited the check in the Farmers State Bank of Mount Sterling for collection on January 14, 1931; the Farmers State Bank forwarded the check to the First National Bank of Chicago for collection and the First National Bank indorsed the check and forwarded it to the Bank of Rushville for collection and remittance; the Bank of Rushville received the check on January 16, 1931, and stamped it “Paid,” debited the account of Rinehart, the maker of the check, with the sum of $344.05 and returned the check to said Rinehart, and on this same day the Bank of Rushville drew a draft on the First National Bank of Chicago payable to the First National Bank of Chicago which draft was presented to the First National Bank of Chicago January 19, 1931, and was dishonored and not paid by the First National Bank of Chicago; in the meantime, on January 17, 1931' the Bank of Rushville closed its doors and subsequently R. O. Shields died testate and his widow, appellee, was appointed executrix of his last will. At the time the check was made Rinehart had sufficient funds in the bank to pay the same.

In regard to the petition of appellee William H. Fahnestock, it was stipulated that on January 14,1931, Fahnestock, drew a check on the Bank of Rushville in the sum of $41.20, payable to the order of the Abraham Lincoln Life Insurance Company and delivered the check to said insurance company which indorsed the same and deposited it in the First National Bank of Springfield, for collection on the same day; the First National Bank of Springfield forwarded the check to the Federal Reserve Bank of Chicago for collection and on January 15, the latter bank indorsed the check and forwarded it to the Bank of Rushville for collection and remittance; on January 16 the Bank of Rush-ville received the check, stamped it “Paid,” debited the account of Fahnestock with the amount of the check, and returned the check to the maker, Fahnestock. At the time this check was executed Fahnestock had in his account in the Bank of Rushville a sufficient sum of money to pay the same. On January 16, the Bank of Rushville issued- a draft drawn upon the First National Bank of Chicago, payable to the Federal Reserve Bank of Chicago which was presented to the First National Bank of Chicago January 19, when the payment was refused and the draft dishonored. On March 11, 1932, the Abraham Lincoln Life Insurance Company assigned to said Fahnestock all its right, title and interest to any claim they had against the Bank of Rushville on account of said check.

In regard to the petition of appellee Noble & Son, it was stipulated that the partnership of Noble & Son on January 12, 1931, drew a check upon the Bank of Rushville in the sum of $37.02 payable to Retail Merchants Mutual Insurance Company; the check was delivered to said insurance company on January 14, 1931, and was indorsed by the latter and deposited in the Commercial Merchants National Bank & Trust Company of Peoria for collection; this latter bank forwarded the check to the Federal Reserve Bank of Chicago for collection and on January 15, 1931, said Federal Reserve Bank indorsed the check and forwarded it to the Bank of Rushville for collection and remittance; on January 16, the Bank of Rushville received the check, stamped it “Paid” and debited the account of Noble & Son with the sum of $37.02 and returned the check to the maker, Noble & Son; that from the time said check was drawn until the amount thereof was charged off against the account of Noble & Son in the Bank of Rushville, there was sufficient money in the account of Noble & Son to pay said check. On January 16, the Bank of Rushville drew a draft on the First National Bank of Chicago payable to the Federal Reserve Bank of Chicago and forwarded the same to said Federal Reserve Bank, which draft was presented to the latter bank on January 19, when payment was refused and the draft dishonored. On March 12, 1932, the insurance company assigned all of its right, title and interest which it might have against the Bank of Rushville on account of said check to Noble & Son; that at the time said check was drawn and continuing until after the amount thereof was debited against the account of Noble & Son, the latter had in its account in the Bank of Rushville a sufficient sum of money to pay said check.

The contentions of appellant are: (1) The relation between claimants and the Bank of Rushville was that of debtor and'creditor; (2) where the assets of the bank have not been increased, and the whole transaction was merely a matter of bookkeeping, there can be no preferred claim, and (3) the Bank of Rushville was not the agent of claimants.

The claimants were strangers to the Bank of Rush-ville. They were not depositors in that bank and had had no business relations with it. When the bank received the check, marked it “Paid, ’ ’ debited the account of the maker with the bank in the amount of the check and returned it to the maker, the transaction between the maker and the bank as to the amount involved in the check was completed, the rights of the parties determined, and was not a mere matter of bookkeeping. While there might not have been by this procedure an actual augmentation, in the strict sense of the word, of the assets of the bank, yet, in debiting the account of the maker of the check in the amount thereof, the bank’s liability to the maker was reduced to the extent of the amount so debited and the assets of the bank in such amount were thereby indirectly enhanced. The bank never was a creditor of the maker of the check who was a depositor, but was the latter’s debtor and its liability as such debtor was decreased in the amount of the check. The money represented by the check belonged to somebody and it certainly did not belong to the bank, as, to so hold, would amount to a fraud on the payee of the check. It must necessarily and logically follow that the bank held this money in trust for the payee of the check. In the case of People ex rel. Nelson v. People’s Bank & Trust Co., 268 Ill. App. 39, the court held upon a similar state of facts that a trust was created in favor of the payee of the check and the claim was entitled to preference. These conclusions are supported also by the following cases: Bank of Poplar Bluff v. Millspaugh, 313 Mo. 412; Goodyear Tire & Rubber Co. v. Hanover State Bank, 109 Kan. 772; Messenger v. Carroll Trust & Savings Bank, 193 Iowa 608; Vermont Loan & Trust Co. v. First Nat. Bank, 37 Wyo. 216; Winkler v. Veigel, 176 Minn. 384; Skinner v. Porter, 45 Idaho 530.

Complaint is also made that the decree is erroneous in that it directed “such payment to be deferred until such time as it shall be determined by this court whether other creditors have equal priorities over general creditors to the fund out of which such payment is to be made.” It is urged that a decree ordering a receiver to pay a preferred claim is erroneous if the evidence does not show that the bank liquidation has proceeded far enough to determine whether there would or would not have to be a pro rata .distribution among the creditors. Bates v. People ex rel. Nelson, 265 Ill. App. 1. The decree specifically withholds the payment of these preferred claims until it shall be determined by the court whether creditors have equal priorities, and follows the rule laid down in the Bates case. There is no force to this alleged error.

The decree of the circuit court is affirmed.

Affirmed.


text:
    National Trust Bank, Appellant, v. George W. Seaman et al., Appellees.
    Gen. No. 8,729.

      Opinion filed April 11, 1933.
    T. N. Coper, for appellant.
    Charles M. Connor, for appellee.
   Mr. Presiding Justice Eldredge

delivered the opinion of the court.

In March, 1930, the First National Bank of Charleston was the owner of a note for the principal sum of $3,182.75 signed by Charles B. Seaman and Opal L. Seaman, the consideration of which was money loaned by that bank to said Charles B.. Seaman. Subsequently appellant purchased the assets of that bank including the above note. This note was renewed several times until March -19, 1932, when, in vacation, appellant procured a judgment by confession against Charles B. Seaman, Opal L. Seaman and G. W. Seaman, the latter being the father of Charles B. Seaman, and appellee here. The amount of this judgment was $3,684.47 and costs. At the succeeding term of the circuit court held in July, 1932, a motion was made by appellee to vacate the judgment and for leave to plead which was granted. Thereupon appellee, G. W. Seaman, filed a plea denying the execution and delivery of the note on which the judgment was confessed. To this plea appellant filed two replications, the first of which joined issue as to that part of the plea denying execution of the note. The second replication is very lengthy and one in which numerous facts are set forth to the effect that appellee knew that his name was signed to said note and by his silence is estopped from claiming that he did not execute the note in question. Later a stipulation was filed by the parties that the cause might be heard upon its merits without further pleading. A trial was had before a jury and a verdict returned finding the issues in favor of appellee, on which verdict judgment was entered.

The facts leading up to the execution of the note involved and on which judgment was taken, are briefly as follows: On August 21, 1930, Charles R. Seaman requested an increase in the loan and a renewal of the same. Appellant refused to grant this request unless he gave additional security. He told the officers of the bank that he could give his father (appellee) as-such security. Appellant thereupon drew up a renewal note including the additional amount requested which made the principal sum thereof $3,280 and delivered it to Charles R. Seaman, who took the renewal note and subsequently returned it with the names of Charles R. Seaman, Opal L. Seaman and G. W. Seaman written thereon. The bank paid Charles R. Seaman the additional amount of the loan, took the new note and delivered the old one to him. The new note became due February 21, 1931, and several notices were sent by appellant to Charles R. Seaman requesting the payment thereof. The post-office address of both Charles R. Seaman and G. W. Seaman was Toledo, Illinois. On March 6, 1931, appellant addressed a letter to G. W. Seaman at said post-office address stating: “Your attention is directed to a note of $3,280.00 signed by your son Charles R. and yourself which fell due on February 21, 1931. We have notified Charles two or three times and also notified you on March 4th about this note. Inasmuch as it is so far past due it must have attention within the next few days.” This letter was introduced in evidence as Exhibit No. 2. No reply having been received from G. W. Seaman, appellant addressed another letter to him March 27, 1931 stating therein: “We wrote you a few days ago to call at the bank at your first opportunity, and thus far have had no response from you. The reason we wrote you to come in was that a few months ago you signed Charles ’ note for $3,280.00 and the examiners who were here a short time ago have requested us to . secure a financial statement from you. Tour compliance with this request will aid us in carrying your paper.” No reply was received to this letter which was introduced as Exhibit No. 4. Prior to the mailing of Exhibits 2 and 4, appellant had sent a notice that said note would become due February 21, 1931, but it was addressed as follows: “Charles E. Seaman — G-. W. Seaman, Toledo, Illinois.” This notice is marked Exhibit No. 3. Subsequent to the mailing of Exhibits Nos. 2 and 4, a similar notice was mailed December 3, 1931, addressed in the same manner as Exhibit No. 3. This is Exhibit No. 5. On December 7, 1931, a similar notice was mailed and addressed in the same manner as Exhibits 3 and 5, that is, to Charles E. Seaman and Gr. W. Seaman jointly. This notice is Exhibit No. 6. On February 9, 1932, appellant mailed a letter addressed to Gr. W. Seaman solely and individually at Toledo, Illinois in which it said: “We had a request • about the first of the year that Charles ’ note be reduced materially. We wrote him on Jan. 21st to call at the bank and discuss this matter with us. But, thus far we have had no response from him. It is very important that this matter have his or your attention this week and we would suggest that one of you call at the bank and go over the matter with us.” This letter was admitted as Exhibit No. 7. On February 19, 1932, appellant mailed a letter addressed to Gr.'W. Seaman solely and individually at Toledo, Illinois, in which it stated: “Please call at the bank at the earliest possible time as we have a very important matter which we want to discuss with you. This matter should have your prompt attention. ’ ’ This is Exhibit No. 9.

On August 21, 1930, Charles R. Seaman had delivered to appellant a financial statement which disclosed that his assets were $17,155 and his total liabilities $14,802.75, leaving his net worth $2,352.25. In April, 1932, Charles R. Seaman and Opal L. Seaman each filed a voluntary petition in bankruptcy and were duly adjudged bankrupts.

Gh W. Seaman, appellee, testified that he never signed the note in question nor authorized his son Charles R. to sign his name thereto; that he never received Exhibits 2 and 4 nor any of the other exhibits except Exhibits 7 and 9 which he admitted he did receive and testified in regard thereto: “I read the letters (Exhibits Nos. 7 and 9) when they came; they didn’t say nothing about the note only that they just wanted to reduce Charles’ note and I wasn’t paying his bills; didn’t know that Charles had a note there; never told Charles that I would help to back him, and I never helped him to get any money and begged him not to buy the farm; knew he was paying too much for it; did not know he borrowed three thousand dollars from the First National Trust & Savings Bank of Charleston; knew it was taken over by the National Trust Bank of Charleston; I told Charley about the letters; a man named Johnson came to my house not long ago; Frank Johnson asked me in reference to the note whether I ever got any notice from the bank about the note and I told him I got a letter asking for a financial statement from me and I didn’t answer it; got a financial statement blank that they wanted me to fill out besides those two letters, but didn’t owe them nothing, so why should I answer them.”

On behalf of appellee the court gave to the jury the following instructions:

“2. The Court instructs the jury, that under the issues as joined in this case, it is incumbent upon the plaintiff to prove by a preponderance of the evidence that the note in suit was executed by the defendant Gr. W. Seaman, as alleged, that the plaintiff is the owner of the same, and that said note is now due and unpaid.

“3. The Court instructs the jury, that if you believe from a preponderance of the evidence in this case that the note in controversy was not executed by the defendant, Gr. W. Seaman — that is, that he never signed the same, or authorized his name to be placed thereto by any one, but that his signature was placed to said note without his knowledge or consent — then you should find for the defendant, although such note may have passed into the hands of a bona fide holder before maturity.

“4. The Court instructs the jury, that the pleas of the defendant Gf. W. Seaman in this action consist of a general denial and also the execution and delivery of the note sued on herein; that is, the burden of the proof is on the plaintiff to prove that the said Gf. W. Seaman made, signed and delivered the note sued on to the plaintiff; and that, unless you believe from a preponderance of the evidence before you in this case that the said Gf. W. Seaman did make and sign or cause to be signed and delivered the said note to the said plaintiff, your verdict should be for the said defendant Gf. W. Seaman and against the plaintiff.”

Appellant offered and the court refused to give the following instruction:

“2. You are further instructed that even though you may believe from a preponderance of the evidence in this case that the name of the defendant, Gf. W. Seaman, was forged to the note sued on in this case, yet if you further believe from the preponderance of the evidence that the said Gf. W. Seaman knew that the National Trust Bank had a note purporting to be signed by said Gf. W. Seaman, and the said defendant, Gr. W. Seaman, failed, neglected or refused to inform the bank that the purported signature of his name to the said note was unauthorized and not binding on him within a reasonable time thereafter, and that thereby the bank was induced to rely on the genuineness of his signature to the said note, without any notice that said signature was invalid, and that the bank has suffered a financial loss thereby, then and under that state of the proof, the said Gr. W. Seaman is stopped from denying that his signature to the said note is invalid and not binding on him.”

The giving of the above three instructions for appellee and the refusal to give the instruction offered by appellant excluded from the jury any consideration of the question of estoppel in pais set up in the replication of appellant, and if there was any evidence to support said replication, the action of the court in regard to said instructions was erroneous. It was held in the case of Paden v. Rockford Palace Furniture Co., 220 Ill. App. 534: “It is a well-established rule of evidence that -that which according* to the common experience of mankind usually happens in the usual and ordinary course of business, is presumed to have happened in a particular case until the contrary appears from the evidence. Commonwealth v. Jeffries, 7 Allen (Mass.) 548; Meyer v. Krohn, 114 Ill. 574; Ashley Wire Co. v. Illinois Steel Co., 164 Ill. 149; State v. Gritzner, 134 Mo. 512, 36 S. W. 39; Western Twine Co. v. Wright, 11 S. D. 521, 78 N. W. 942; Oregon Steamship Co. v. Otis, 100 N. Y. 446, 3 N. E. 485; Perry v. German-American Bank, 53 Neb. 89, 73 N. W. 538.”

In the case of Commonwealth v. Jeffries, 7 Allen (Mass.) 548, it was said: “No rule of evidence is better settled or more clearly founded in good sense and sound policy than that which authorizes presumptions or inferences of fact to be deduced from the proof of certain other facts, which, according to the common experience of mankind or the usual course of business naturally or necessarily lead to the result or conclusion which is sought to be drawn from them. Such presumptions . . . generating a belief or conviction in the mind as derived from those connections which are shown by experience, irrespective of any legal relation. The process of ascertaining one fact from the existence of another is essential to the investigation of truth, and prevails in courts of law as well as in the ordinary affairs of life, especially in cases where there is a well-known and established usage or course of business, and primary evidence of the existence of a fact is wanting or difficult to be obtained.”

After citing the case of Commonwealth v. Jeffries, supra, the court in New York Cent. R. Co. v. Lehigh Stone Co., 220 Ill. App. 563, held:

“Applying this rule of evidence it has been frequently held that letters would be presumed to have been delivered from evidence of their having been deposited in the mail properly stamped and addressed; that telegrams properly addressed would be presumed to have been received from the fact of their delivery to a telegraph company for transmission, and that goods delivered to an express company and properly marked for consignment would be presumed to have been delivered to the consignee. State v. Gritzner, 134 Mo. 512, 36 S. W. 39; Western Twine Co. v. Wright, 11 S. D. 521, 78 N. W. 942; 1 Grreenleaf on Evidence 40; Plano Mfg. Co. v. Parmenter, 39 Ill. App. 270; Ashley Wire Co. v. Illinois Steel Co., 164 Ill. 149; Meyer v. Krohn, 114 Ill. 574.

“In applying this rule in Oregon Steamship Co. v. Otis, 100 N. Y. 446, 3 N. E. 485, the Supreme Court of New York said: ‘The presumption indulged is one of fact and so open to rebuttal and contradiction and consists merely in the natural inference which may be drawn from the experienced certainty of transmission. The great bulk of letters sent by mail reach their destination, and equally so the great bulk of telegrams. A failure in either case is an exception; possible, but rare. The letters are transported by government officials, acting under oath and upon a system framed to secure regularity and precision, the telegrams, by private corporations, whose success and prosperity depend largely upon the promptness and accuracy of the work, and are faithful under the incentive of interest.’ ”

In the' case of Clark v. People, 224 Ill. 554, it was held: “If a letter is put into the post-office, that is prima facie proof, until the contrary appears, that the party to whom it is addressed received it in due course. (2 Best on Evidence, sec. 403; Underhill on Evidence, sec. 230; Wharton on Crim. Evidence, — -8th ed. — sec. 837; Ashley Wire Co. v. Illinois Steel Co., 164 Ill. 149; 22 Am. & Eng. Ency. of Law, — 2d ed. — p. 1252, and cases there cited.) ”

It may be conceded that as to Exhibits 3, 5 and 6, the above rule might not apply for the reason that these letters or notices were addressed to Charles B. Seaman and to appellee jointly, the name Charles B. Seaman preceding the name of appellee, and if appellee’s name was forged to the note and Charles B. Seaman received these notices he would not in all probability make them known to appellee. It may be conceded further that as to the letters, Exhibits 7 and 9, which appellee admits he did receive, would not be sufficient to charge him with notice that his name appeared upon the note as they did not specifically so state. But no such concession can be made as to Exhibits 2 and 4 which were mailed to appellee personally and specifically notified him that his signature was attached to said note and the evidence that these letters were mailed to him properly addressed and postage prepaid is prima facie evidence that he received them and it then became a question of fact for the jury to determine whether appellee did receive them. Meyer v. Krohn, 114 Ill. 574.

The general rule as to estoppel by silence as stated in 10 B. C. L. p. 810, § 118 is: “Mere silence when a forged signature is shown to the person named as maker of a note will not operate as an estoppel unless the holder has been damaged thereby, but an alleged maker may become liable by failure to repudiate, where by such action he has caused the holder of the paper to suffer damage and loss, and a party appropriating any benefit from the use of forged paper cannot thereafter repudiate his alleged signature.” Estoppel by silence has long been recognized in this State. Mullaney v. Duffy, 145 Ill. 559; McDonald v. Stark, 176 Ill. 456.

In the case of Brown v. People’s Nat. Bank, 170 Mich. 416, 136 N. W. 506, it was held: “The general rule is that estoppel arises against one who, with knowledge of the fact, fails to give notice until an opportunity of recovery on the forged instrument, which would have been available if prompt notification had been given, is lost. ’ ’ The court in the above cited case cites Ewart on Estoppel, 135 as follows: “If a man’s name be forged, and after himself becoming-aware of the fact he refrain from advising the holder of the document, and by reason of such inaction the holder’s position is changed (by the death, escape or bankruptcy of the forger, or otherwise), there will be an estoppel of the man whose name is forged.”

The right of seeking- restoration and payment from the person who accomplished or procured the forgery is, in itself, a substantial and valuable right. Leather Mfrs. Nat. Bank v. Morgan, 117 U. S. 96. The doctrine of estoppel by silence will prevail when injury of some nature or in some degree would result. Rothchild v. Title Guarantee & Trust Co., 204 N. Y. 458. If appellee in this case did have knowledge that his forged signature appeared upon the note in question and kept silent in regard thereto thus leading appellant to believe that it was genuine and to rely upon it as a surety thereon until the other makers of the note went into bankruptcy and appellant was thereby deprived of an opportunity of collecting the note or a part thereof, then appellee was estopped from setting up the defense of forgery or disclaiming his liability upon the note. Exhibits 2 and 4 were prima facie evidence that appellee had such knowledge and the jury should have had an opportunity of passing upon that fact and it was error to exclude the consideration thereof from the jury.

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

Reversed and remanded.


text:
    Nathan W. Odle, Appellant, v. Hoopeston Canning Company, Appellee.
    Gen. No. 8,736.

      Opinion filed April 11, 1933.
    Charles Troup, for appellant.
    Dyer & Dyer, for appellee.
   Mr. Presiding Justice Eldredge

delivered the opinion of the court.

The declaration in this case consists of an amended original count and an additional count. A demurrer was sustained to both counts and appellant electing to stand by the declaration, judgment was given in favor of appellee in bar of the action.

The amended original declaration is substantially as follows: “For that whereas, etc., on, to-wit, March 10th, A. D. 1931, the defendant was operating a canning factory in Hoopeston, in Vermilion County, Illinois, for the canning of sweet corn, and had so been operating said factory for to-wit, five years theretofore and operated it after said date, up to, to-wit, the present time;

“that plaintiff on, Maréh 10th, 1931, and since said date, was operating a farm in Vermilion County, which included, with other real estate, 45 acres of land hereinafter referred to;

“that on said date and in years prior thereto, it was and had been the custom of the defendant, for the purpose of procuring sweet corn to be canned by it, to ascertain by letter or otherwise from persons operating-farms in the vicinity of Hoopeston (including- the vicinity where plaintiff’s land was located), how many acres of land persons desired to and could plant to sweet corn for the ensuing year and to submit to such persons the prices per ton which it would pay for said corn, to the end that such persons would plant and cultivate and raise certain acres of sweet corn which could and would be delivered to defendant’s factory at such prices when ready for canning', and to this end on, to-wit, March 10th, 1931, the defendant sent two letters to the plaintiff which were received by the plaintiff, true and correct copies of which- are as follows:

“ ‘March 10, 1931.

“ ‘Dear Sir:

“ ‘Our prices on sweet corn in good canning condition delivered to the factory in 1931 will be

“ ‘ Country Gentleman Corn $11.50 per ton

“ ‘Golden- Bantam Corn 14.00 per ton.

“ ‘If you need assistance gathering your sweet corn we agree to gather 50% of same at whatever wages we have to pay our men, plus 2$ per cwt. where the acreage is not to exceed four miles distance from our plant, and 4^5 per cwt. over this base price for any acreage beyond four miles from our plant. Where the distance does not exceed four miles and the corn is one-half mile or more from the paved roads, you are expected to haul extra loads, jerked by our men to the factory whenever requested to do so, without cost to us.

“ ‘Where the distance exceeds four miles you are expected to haul the loads to the paved roads or to the factory when asked by us to do so, without cost to us. Also in case of extreme wet weather, you will agree to help furnish jerking teams in the fields when asked to do so, without cost to us.

“ ‘When the crop is poor, due to working the ground wet, failing to get same in condition before planting, or lack of proper cultivation, we reserve the right not to help you on the delivery of said corn.

“ ‘In case of emergencies, due to scarcity of men, extremely hot or rainy weather, or unforeseen accident, you are expected to help jerk and deliver corn to the factory.

‘ ‘ ‘ Growers of sweet corn will be entitled to one ton, either husks or cobs, per acre of sweet corn grown, free, for their individual use. Those who do not use their full allowance of cobs or husks will not be allowed to dispose of them to other parties.

“ ‘Very truly yours,

“‘(Signed) Hoopeston Canning Co.

“ ‘March 10, 1931.

“ ‘Dear Sir:

“ ‘Before deciding on naming a price for our sweet corn this year, we ascertained what canners in other states are paying and found these prices to run from $8.00 to $12.00 per ton, with the average about $11.00.

“ ‘The factories located in the immediate vicinity are practically the only ones in the U. S. who give any assistance in delivering the corn. Nearly all the other canners require the grower to jerk and haul all his corn to the factory. This hauling that we do for our growers costs us $1.50 per ton more than we are charging them, which makes the corn cost us $13.00 per ton for Country Gentleman and $15.50 per ton Golden Bantam, which is considerably more than other canners are paying, as they do not have this hauling charge. Furthermore, a great many canners charge their growers with the seed he plants, thus further reducing the grower’s net return. We do not charge for the seed.

“ ‘We have to sell our canned corn in competition with these canners whose green corn costs them less than ours, and the only way we can continue in business is by reducing our costs in every way possible.

“ ‘We are now ready to book part of our acreage and will be pleased to hear from you. Old growers will be given preference when they have ground that we consider suitable for raising sweet corn. Acreage offered after we have filled our present requirements will be listed and may be accepted later if conditions warrant it. We do not anticipate making our full acreage contracts until the latter part of April.

“ ‘Will you please fill out and mail or bring the enclosed form to us ? If you desire to plant more than one field fill out a similar form for each field.

“ ‘Very truly yours,

“ ‘(Signed) Hoopeston Canning Co.’

“That the form referred to in the letter last above set forth was enclosed therewith;

“That upon the receipt by plaintiff of the defendant’s letters and the form enclosed therewith, or shortly thereafter, the form enclosed was filled out to the effect that plaintiff would plant and attend 45 acres of his land in sweet corn pursuant to the letter above referred to and signed by plaintiff and mailed to defendant; that thereby plaintiff then and there agreed with defendant, subject to the conditions contained in said letters, that the plaintiff would plant and tend to ‘Country G-entleman’ sweet corn for the year 1931, said 45 acres of land so operated by plaintiff, and in consideration thereof, defendant, subject to the conditions in said letters, agreed to buy of the • plaintiff at $11.50 per ton, the sweet corn raised on said 45 acres of land; that defendant retained said form so signed by plaintiff and gave no copy thereof to the plaintiff and plaintiff has not now, and never has. had, a copy of said form, but the defendant has always retained the same;

“that plaintiff’s 45 acres of land had previously been used by him as a pasture and feeding ground for feeding cattle and hogs and had otherwise been fertilized and was in a high state of fertility and productivity and ,had been plowed in the fall and winter of 1930, ' all of which plaintiff had previously told to defendant; that had said 45 acres of land been put in and tended to sweet corn for the year 1931, the same would have produced, to-wit, three and one-half tons per acre of sweet corn;

• “that after making said contract with the defendant, he arranged his affairs to plant said 45 acres of land in 1 Country Gentleman’ sweet corn and also arranged for the crops and cultivation for the rest of his farm consisting of to-wit, 160 additional acres of land, and did not make or attempt to make, any arrangement, with another company operating a canning factory for the canning of sweet corn, then and theretofore and since operating at Hoopeston, Illinois, for the raising of sweet corn on said 45 acres of land for said other company which he would have done had it not been for the fact that he relied upon the contract so made by him and the defendant being carried out by the defendant ;

“that on to-wit, the 1st day of May, A. D. 1931, and while said contract between him and the defendant was in full force and effect and when the plaintiff had done nothing toward rescinding or breaching the same, and was ready, able, willing and anxious to carry out the same, defendant without any reasonable cause whatsoever canceled said contract and notified the plaintiff that it would not carry out and perform the terms of the same;

“that he thereupon attempted to make a contract with the other canning company at Hoopeston, Illinois, for the raising of sweet corn on said 45 acres of land, for it, but could not do so because it had already filled its requirements in that respect, and thereupon plaintiff was compelled to and did put said 45 acres of land in other crops for the year 1931, as follows: he planted 28 acres of said land in field or Indian corn; and 11 acres of said land in soy beans and 6 acres of said land in Soudan grass;

“that by reason of being prevented from putting said 45 acres of land in sweet corn (which he would have done had the defendant not wrongfully canceled its contract with him as aforesaid) and having to put the same in other crops as aforesaid, the plaintiff was greatly damaged and sustained damages, being the difference between the net value of the crops as actually put in by him on said 45 acres of land and the gains he would have derived had he not been prevented from planting sweet corn on said land, in the amount of, to-wit, $1,050.25; and also sustained other damages in this: that had the defendant not canceled its contract with him he would, under his contract with the defendant, have received 45 tons of husks and cobs suitable for feeding to live stock, which were at the time he would ha,ve received the same, if defendant had carried out its contract with him, of the fair cash market value of, to-wit, $3.50 per ton, making a loss to the plaintiff of $157.50 by reason of not receiving said husks and cobs; and also if sweet corn had been planted on said 45 acres of land, the value of the early stock pasture of the cornstalks left remaining after the sweet corn was jerked, would’ have been to-wit, $2.00 per acre, or $90.00 and also under said contract entered into between plaintiff and defendant, the defendant was to and would have furnished the sweet corn seed to plant said land and by reason of the defendant haw' ing canceled said contract, and the plaintiff having to plant other crops thereon, the plaintiff was compelled to and did purchase seed for the planting of other crops which he planted on said ground and paid therefor as follows:

Seed corn for planting Indian or field corn on said land................................$ 9.50

Soy bean seed for planting soy beans on said land ..................................... 22.50

Soudan grass seed for planting on said land.... 16.00

which amounts were the fair cash market value of said seeds at time plaintiff purchased and planted the same; and also by reason of the extra help or hire necessary for planting the crops which were actually planted on said land (which the plaintiff would not have been to had he put said 45 acres of land in sweet corn) plaintiff was compelled to and did pay out, to-wit, $57.50, and also by reason of the strength, fertility or plant food removed from said soil by reason of raising-field corn or Soudan grass thereon (which would not have occurred had plaintiff planted said ground to sweet corn) the plaintiff was damaged $50.00.

“To the total damage of the plaintiff in the sum of $2,000.00 and therefore he brings suit.”

The additional count is substantially the same as the other count except that it contains in addition thereto the following allegations: “It was then averred that afterwards on March 15th appellant called at appellee’s office in Hoopeston and it was then and there definitely agreed between appellant and appellee that appellant would plant 40-acres of said land to Country Gentleman sweet corn for appellee and that later on, to-wit, March 15,1931, it was agreed between appellant and appellee that appellant would plant the remaining 5 acres of said land to Country Gentleman sweet corn for appellee unless notified by appellee not to do so, and that appellant was not notified by appellee not to plant said remaining 5 acres until thereafter when appellant’s contract was wrongfully canceled by appellee.”

The amended original count does not show a completed contract. It is clearly evident from the circular letter of appellee that there was no intention on its part to be bound by every offer that might be made to it by growers of sweet corn. It is clearly stated that old growers would be given a preference when they had ground that appellee considered suitable for raising sweet corn. The circular also indicates that appellee had a discretion as to the amount of sweet corn which it would buy as is indicated by the statement that acreage offered after appellee had filled its requirements would be listed and might be accepted later.

Although the additional count contains the allegation “it was mutually then and there definitely agreed between appellant and appellee that appellant would plant forty acres of said land,” etc., such averment is but a pure conclusion of law and is not a sufficient allegation of mutual promises.

Moreover, any damages which might be sought under such an alleged contract would be purely conjectural and speculative.

The judgment of the circuit court is affirmed.

Affirmed.


author: Mr. Justice Shurtlbff

text:
    Elkhart State Bank of Elkhart, Illinois, Defendant in Error, v. Joseph H. Schlarman et al., Plaintiffs in Error.
    Gen. No. 8,728.

      Opinion filed April 11, 1933.
    Bartley & Younge, for plaintiffs in error.
    B. C. Mills, Peter Murphy and Harold F. Trapp, for defendant in error.
   Mr. Justice Shurtlbff

delivered the opinion of the court.

Elkhart State Bank of Elkhart, Illinois, a banking corporation, defendant in error (which will hereinafter be referred to either as the complainant or the bank), filed its bill in equity in the circuit court of Logan county against St. Patrick’s Roman Catholic Congregation of Elkhart, Illinois, a religious corporation, and the five trustees of that corporation, namely, Joseph H. Schlarman, Bishop of the Roman Catholic Diocese of Peoria, Illinois; Gerald T. Bergan, Vicar General; Ralph J. Lane, parish priest; Patrick Bohan and Michael Danaher, and also named as a party defendant the Roman Catholic Diocese of Peoria, Illinois, which is merely a territorial subdivision of the Catholic Church and was not served with process. The Catholic Diocese of Peoria, a religious corporation, was served with process and for that reason joined in the answer. Those defendants (hereinafter referred to as such) are the plaintiffs in error in this cause.

The bill charges that many years ago certain real estate therein described was acquired for the purpose of erecting thereon a Catholic church at Elkhart, in Logan county, Illinois, and later such church, known as St. Patrick’s Roman Catholic Church, was erected and a parochial residence for the parish priest was also built thereon; that the title to the real estate was held in trust for the use and benefit of the congregation ; that originally such title was held by the Catholic Bishop of Chicago, who, in 1877, conveyed the same to John L. Spaulding, the first Bishop of Peoria, who later conveyed it to Edmund M., Dunne, the second Bishop of Peoria. The latter died in 1928, and his successor, Joseph H. Schlarman, the present Bishop of the Diocese of Peoria, acquired the title through the will of the former Bishop. Thereafter, on the 25th of October, 1930, Bishop Schlarman caused the incorporation of the congregation with the five persons above named as trustees.

The bill further charges that one Patrick J. Barry, a Catholic priest, was duly appointed in 1921 by the Bishop of Peoria as the pastor of said church at Elk-hart and continued as such pastor until September 1, 1930; that said Patrick J. Barry as such pastor thereby became the agent and representative of Edmund M. Dunne as Bishop of Peoria and of the Roman Catholic Diocese of Peoria, and of St. Patrick’s Roman Catholic Congregation at Elkhart, and as such carried on, conducted and managed the fiscal affairs and business of the Bishop, Diocese and Congregation at that place.

The bill further charges that in carrying on the business and affairs as such pastor the said Patrick J. Barry borrowed various sums of money from the bank and gave his notes therefor, and in so doing was acting as agent and representative of the Bishop of Peoria, said diocese and said congregation, who recognized and held him out as their agent and representative for that purpose; that among said notes were certain notes executed in 1928 and 1929, aggregating the principal sum of $3,231, which were unpaid.

The bill then prays that the court fix and determine by decree the amount of indebtedness due to the bank and “direct and decree and enforce the payment of the same and may make the demand thereof a lien and charge upon the said trust property aforesaid, and that your orator may have such other and further relief in the premises as to equity shall appertain and to your Honor shall seem meet.”

The defendants filed a demurrer to the bill, setting forth that the bill of complaint was without equity and that on its face it showed that the complainant, if it had a remedy at all against any of the defendants, had an adequate remedy at law. This demurrer was overruled by the court. The defendants then filed an answer to the bill, in which they reserved all right of exception, etc., admitted the ownership of the real estate described in the bill and the chain of title thereto as set forth in the bill of complaint, and that Father Barry was the duly appointed pastor of the church at Elkhart from 1921 to the 1st day of September, 1930, and that, as such pastor, he was the representative of the Bishop of Peoria in the collection of funds for the support of the church at Elkhart and for the disbursement of such funds so collected in the payment of ordinary expenses of said church, but the defendants, in their answer, denied that Father Barry was at any time authorized by the bishop, or by any other person or persons whomsoever, to borrow any money for any purpose in connection with said church, parish or congregation on account of which the notes sued on were given, and the defendants further denied that Father Barry, in borrowing any money or incurring any indebtedness evidenced by any of such notes, was acting as the agent or representative or by authority of either the Bishop or Diocese of Peoria or the congregation at Elkhart, and that if such promissory notes exist they are the personal and individual obligations of Patrick J. Barry.

The answer further admits that, subsequent to the dates of these notes, on October 25, 1930, the Bishop of Peoria caused the incorporation of St. Patrick’s Roman Catholic Congregation at Elkhart, as alleged in the bill, but sets forth that prior to that date the congregation was not incorporated and was not a legal entity of any kind or character and had no organization of any kind, but consisted solely of those persons professing the Roman Catholic faith who attended that church as parishioners, and that the members of said congregation held no meetings, had no officers or trustees or managers, but .that the affairs of the church and the property thereof were under the sole control and supervision of the bishop of the diocese, under and in accordance with the customs, usages, rules and regulations of the Roman Catholic Church.

The defendants further in their answer set forth that prior to May 9, 1931, the Roman Catholic Diocese of Peoria was merely a territorial subdivision of the Roman Catholic Church, and was not incorporated, nor was it a legal entity of any kind or character, but that on that date the Bishop of Peoria caused the Catholic Diocese of Peoria to be organized as a religious corporation in accordance with the laws of the State of Illinois.

The answer denies that the complainant is entitled to relief sought in the bill or any part thereof, or any other or different relief in the premises.

A trial was had before the court, sitting as a chancellor, and a decree was entered sustaining the allegations of the bill of complaint, finding that Patrick J. Barry was the agent and representative of the bishop, the diocese and the congregation in borrowing the money and executing the notes in question, and adjudged that the defendant, St. Patrick’s Roman Catholic Congregation of Elkhart, Illinois, a corporation, pay to the complainant the sum of $4,231.05, together with costs of suit.

This writ of error is sued out to reverse that judgment and decree.

Shortly after Father Barry was appointed pastor of the Elkhart church in 1921, he did some remodeling and repairing, both of the church and the rectory. The bank introduced evidence of witnesses to show materials furnished and work done in that connection. According to the bank’s own testimony, it appears, however, that practically all of such work and materials were paid for prior to 1926, and the evidence shows the balance was paid for out of current income. The bank’s testimony shows, too, that none of the moneys used to pay for such work and materials or services rendered by artisans, are represented by the notes sued on in this case. There is no evidence showing that the congregation or anyone, except 'Father Barry, individually, benefited by reason of any money borrowed from the bank evidenced by the notes in question.

As appears from the notes themselves, complainant’s Exhibit 3 is dated September 24, 1928, for $1,900, payable to the order of the bank and signed “Rev. Patrick J. Barry, Pastor of St. Patrick’s Church”; complainant’s Exhibit 4 is for $450, dated October 23, 1928, signed “Rev. Patrick J. Barry”; complainant’s Exhibit 5 is for $500, dated January 21, 1929, signed “P. J. Barry”; complainant’s Exhibit 6 is for $481, dated the same day, January 21, 1929, and signed “Rev. P. J. Barry, Pastor of St. Patrick’s Catholic Church. ’ ’

The evidence shows, as alleged in the answer, that at the time these notes were given St. Patrick’s congregation had no legal entity whatever. It was not until afterwards, in 1930, that it was incorporated.

The evidence also shows that there was never any business meeting of the congregation, it had no officers or trustees, and no authority was ever asked of or given by the congregation for the borrowing of this money or the giving of these notes. In fact, no member of the congregation or parish ever had anything to do with the business affairs of the church.

There is no evidence to show that Father Barry had any authority to borrow this money or execute the notes, either from the Bishop of Peoria or anyone else, except that he was priest of the parish during the years set out.

There is no scintilla of evidence that Bishop Dunne either authorized, had knowledge of or ratified the borrowing of any money or the giving of any notes other than those relating to the $5,000 loan. The only participation of the bishop with reference to borrowing of money or giving of notes appears when he signed his name to five $1,000 notes on July 8, 1925, and the evidence of the bank relating to that is wholly incompetent. That evidence indicates that those notes were renewed by the bishop in 1927 by the giving of one note for $5,000. That note was paid by the present bishop in 1931.

The only authority shown for the signing of the notes by Father Barry in behalf of the bishop, or the diocese, was the fact that he was the priest of the parish appointed by the bishop.

The evidence shows that of the funds borrowed from the bank and otherwise Father Barry made large expenditures in his own behalf. The loans all went into his personal checking account at the bank. He took two trips to Europe and in 1925 before leaving he purchased $2,000 in traveler’s checks, which were lost. The president of the bank testified: “I remember he bought a foreign draft for three hundred dollars and travelers’ checks. I don’t remember the exact amount, but I think the foreign draft and travelers’ checks together amounted to about three thousand dollars, and he hadn’t any more than got on the ocean until the KN and KA concern in New York went broke, and consequently his travelers’ checks were no good, and I tried to send him a wire. I knew he would be on the ocean without funds, so I called the bank in Chicago and asked them if they couldn’t wire him one hundred pounds sterling, because I felt that I had a moral obligation on account of those travelers ’ checks given on the New York bank. I think it was in the summer when we sold him three thousand dollars worth of travelers’ checks and other evidences of credit. He was gone on that trip for two or three months.” The president further testifies that he owned a Hudson car in 1922 and bought one or two other cars while he was in Elkhart, and the president further testified:

“When Father Barry left Elkhart he posted a notice on the church door to ■ the effect that there was a $6,300 indebtedness due by the church to the Elkhart State Bank. That was incorrect so I wrote him about it and in reply to that letter he wrote that the church obligation consisted only of the five thousand dollar note and a note of four hundred and eighty-five dollars which was given to pay for the furnace in the house. He said that those two notes constituted the church debt and the rest was his personal obligation which he would meet as soon as he could.”

His financial report made to the bishop and congregation as of July 1, 1929, indicates, however, that the furnace had been paid for out of current income and that $1,000 of the $5,000 note had been paid off, since it shows owing to the Elkhart bank a balance of only $4,000.

The above report shows that the income of the parish from pew rent, -collections, etc., exceeded $3,000 per year, and that out of such current income the pastor paid all of the expenses of the parish; that he bought automobiles and other articles of individual comfort; , that he had no church account at the bank, but only an individual account in his name as “P. J. Barry,” and that all of these articles, as well as the foreign exchange, were paid for out of that, account. He pur-. chased an electric refrigerator and other machinery and equipment for the parish house, and in the accounting had in this cause of the P. J. Barry account in defendant in error’s bank, there has been no attempt made to separate the items of matters used in behalf of the church and the items of personal expenses used solely for the benefit of P. J. Barry.

The president of the bank further testified that in 1928 and 1929 the bank examiner instructed the bank officials to secure the bishop’s signature to the $1,900 note and other Barry personal notes. So far as this record shows, none of the indebtedness in dispute was incurred by the authority of the bishop, the diocese or the congregation, nor was it expended in behalf of any of these parties. The congregation was never incorporated until October 25,1930, and it is not liable for any possible debts of the prior unincorporated society or congregation. The decree in this cause provides: “that the said defendant St. Patrick’s Boman Catholic Congregation of Elkhart, Illinois, a corporation, pay to the complainant the sum of $4,231.05 together with complainant’s costs in this behalf expended, and that execution issue therefor. ’ ’

It has been held in St. Patrick’s Catholic Church v. Daly, 116 Ill. 76, that the congregation, after becoming-incorporated, assumed none of the personal liability formerly existing against the congregation, and the court say, on page 82:

“But the point made against the present decree, that no personal decree should have been rendered against the church corporation for any deficit that may remain after the sale of the property, seems to be well taken. Most, if not all, of the money which it is alleged Daly advanced and expended for the use of the óhurch, was advanced and expended before the corporation had, in fact, any existence. It did not become a corporate body until the year 1876. The present corporation assumed no liability to Daly against the congregation before it became incorporated. The utmost he can claim is a lien upon the property and improvements thereon, which he insists were purchased with his money. The money was not advanced to the corporate body that now exists, and no personal liability exists upon it to refund the advances so made. In this respect the decree is erroneous.” In this case Daly, the priest, had purchased the lots and erected the church and after the incorporation he sought in equity to establish a resulting trust. It was held there was no personal liability against the new corporation and the same rule applies in the case at bar.

But appellee seeks to construe the incorporation of St. Patrick’s Boman Catholic Congregation of Elk-hart, Illinois, upon October 25, 1930, not as organizing a new corporation, but under the provisions of section 46i of “An act to amend an act entitled, ‘An act concerning corporations, ’ approved April 18, 1872, in force July 1, 1872, as amended by acts amendatory thereof, by adding thereto 11 sections to be numbered and known as sections 46a to 46k inclusive,” section 46i (Cahill’s St. ch. 32, H185) providing as follows:

■ ‘ ‘ 185. Former organizations may incorporate. 46i. Any congregation, church or society heretofore incorporated under the provisions of any law for the incorporation of religious societies, may become incorporated under the foregoing sections from 46a to 46h, inclusive of this Act, in the same manner as if it had not previously been incorporated, in which case the trustees of the new corporation shall be entitled to, and invested with, all the real and personal estate of the old corporation, in like manner and to the same extent as the - old corporation, subject to all the debts, contracts and liabilities.”

It is contended that St. Patrick’s Roman Catholic Congregation of Elkhart, having been before October 25, 1930, “incorporated” as a part of the Catholic Diocese of Chicago and later as a part of the Catholic Diocese of Peoria, that it had been “incorporated” and therefore came under the strict language of section 46i as set out. and therefore, “shall be entitled to and invested with,- all the real and personal estate of the old corporation, in like manner and to the same extent as the old corporation, subject to all the debts, contracts and liabilities.” If that is the construction of said section 46i, then St. Patrick’s Roman Catholic Church of Elkhart, by its incorporation, took over all the title to the cathedrals and church property of the old Chicago Diocese, anyway all of the church property in the Peoria Diocese, and the seat of church government should be at Elkhart. But to those who were familiar with the purposes of the act and assisted in enacting it into legislation, it is known that such was not the purpose or effect of the law. It was intended as an organic act, upon which to frame a temporal government for all sects and creeds, and was submitted to and accepted by all sects and creeds. Section 46i reads:

“Any congregation, church or society heretofore incorporated under the provisions of any law for the incorporation of religious societies.” Cahill’s St. ch. 32, If 185. This refers to independent church governments, whether affiliated or non-affiliated. The Catholic congregations have become incorporated under section 46a of the act, Cahill’s St. ch. 32, U 177, reading:

“It shall be lawful for any congregation, church, or society, now or hereafter existing in the State of Illinois, and which is under the patronage, control, direction or supervision of any ecclesiastical body, diocesan or like ecclesiastical officer, agreeably to the laws thereof, to become incorporated according to sections 46a to 46h, inclusive, of this Act,” etc., and an incorporation under these provisions is taken and held as a new and original incorporation, with the right to make contracts and to hold such property as may be conveyed to such original incorporation and the rule as laid down in St. Patrick’s Catholic Church v. Daly, supra, has not been disturbed. The rule stands by many authorities that an unincorporated congregation has no legal entity and cannot be liable for any debt and the members thereof are not liable for any expenditures unless they gave their authority therefor. (Clark v. O’Rourke, 111 Mich. 108, 69 N. W. 147, 66 Am. St. Rep. 389; Richmond v. Judy, 6 Mo. App. 465; Ehrmanntraut v. Robinson, 52 Minn. 333, 54 N. W. 188; Ray v. Powers, 134 Mass. 22; Frendendall v. Taylor, 26 Wis. 286; Cousin v. Taylor, 115 Ore. 472, 239 Pac. 96, 41 A. L. R. 750.)

There is no competent and sufficient testimony in the record tending to establish that the indebtedness was for the benefit of St. Patrick’s Church and was not for the sole and only benefit of Father P. J. Barry. There was no competent ánd sufficient testimony in the record to establish a liability against any corporation or person, except upon the promissory notes submitted, and upon these notes there could be no decree against any of the defendants in this suit.

Section 18 of the Uniform Negotiable Instruments Act, Cahill’s St. ch. 98, 38, provides: “No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. ’ ’

A promissory note is not only evidence of the debt, but it is the only admissible evidence thereof, and parol evidence is inadmissible for the purpose of showing that someone whose signature does not appear is liable thereon. (Shiel v. Chicago Title & Trust Co., 262 Ill. App. 410; People v. Michigan Avenue Trust Co., 229 Ill. App. 512.)

Four canon rules of the church were introduced in evidence by plaintiffs in error, through its chancellor, as follows:

“195. We decree that no priest whatsoever may deposit money of the church in a bank in his private name or may inscribe the bank book with his private name. In such book is to be written the name of the church, to which is added, ‘through Bey. N. M., Sector, or Treasurer. ’ That is taken from the second plenary council' of Baltimore. Nor may any rectors pay any personal debts with checks of the church.

“196. No priest in our diocese is permitted to build any church, pastoral residence, school or other structure nor to enlarge the old, or change or accept the burden in any manner whatsoever or under any pretext of debt more than $200.00 without having obtained beforehand our permission in writing. This permission is not granted until the plans of the building contemplated with the probable computation of impending work to be done shall have been exhibited to the Bishop. Likewise it is forbidden that a rector alienate any goods of the Church before he has obtained our permission in writing.

“199. To no rector or administrator is it permitted to give a written note in the name of the church without our permission expressed in writing.

“200. All hold that the Bishop is held in no manner whatsoever to pay such note if any cleric or lay person contrary to these regulations shall have accepted money or contracted such debt.”

It is plain in this cause as presented that appellee had an adequate remedy at law.

For the reasons stated, the decree of the circuit court of Logan county is reversed.

Reversed.


author: Mr. Justice Shurtleff

text:
    B. F. Snow, Appellant, v. Charles H. Anderson, Appellee.
    Gen. No. 8,730.

      Opinion filed April 11, 1933.
    Lillian E. Sohlagenhauf, for appellant.
    John F. Garner, for appellee.
   Mr. Justice Shurtleff

delivered the opinion of the court.

Oil May 5, 1932, appellant, B. F. Snow, filed his bill for foreclosure in the circuit court of Adams county, Illinois, against Charles H. Anderson, appellee, in which said appellant averred that on March 6, 1926, Charles H. Anderson and Maggie Anderson of the City of Quincy, Adams county, Illinois, were indebted to said B. F. Snow in the sum of $300; that they made their certain promissory note of that date to said B. F. Snow for the sum of $300 with interest at the rate of three and one-half per cent per month upon the unpaid principal, said principal sum and interest to be paid in monthly instalments of $25, beginning with March 6, 1926, and a similar amount on the sixth day of each and every month thereafter for a period of 11 months until the entire sum and interest had been paid in full.

To secure the payment of the principal sum and interest, Charles H. Anderson and Maggie Anderson by their mortgage of March 6, 1926, conveyed to said B. F. Snow the following described real estate: The south 64 feet of lot number four in block number 35 of Willard Keyes addition to the City of Quincy, Adams county, Illinois, which deed was acknowledged on March 6, 1926, and filed in the recorder’s office of Adams county, Illinois, on March 9, 1926.

The note and mortgage were attached to and made a part of the complainant’s bill of complaint and were in words and figures as follows:

“$300.00 Quincy, Illinois, March 6, 1926.

For Value Received,

undersigned promise to pay to B. F. Snow a licensee under the small Loan act of the State of Illinois Three Hundred Dollars said principal sum to become due and payable as follows, to-wit: $25.00 on the 6th day of each and every month after date hereof for and including 11 months and $25.00 on March 6, 1927, at the office of the payee in Quincy, Illinois, with interest after date computed at the rate of 3% per cent per month upon the unpaid principal and payable as it accrues on the 6th day of each month after date hereof.

“And to secure the payment of this note and the interest thereon undersigned hereby irrevocably authorizes any attorney of any court of Record to appear for the undersigned in such court, in term time or vacation, at any time hereafter and confess judgment without process in favor of the holder of this note, for such amount as may appear unpaid thereon, and to waive and release all errors which may intervene in such proceedings and consent to an immediate execution upon such judgment, hereby ratifying and confirming all that said attorney may do by virtue hereof.

“And it is agreed that if default be made in the payment of any of said installments or principal or interest as same becomes due, then at the election of the holder hereof, and without notice the whole of said note shall at once become due and payable, anything hereinbefore contained to the contrary notwithstanding; and in case suit is brought hereon, 10 per cent of balance as attorney’s fees for the services of the plaintiff’s attorneys, shall be included in any judgment. entered in such suit.

Witness.................. Chas. H. Anderson

Address: 924 North 7th Maggie Anderson

“Mortgage — With Power to Appoint Receiver

(No.........)

This Indenture, Witnesseth, that the Mortgagors Charles H. Anderson, sole heir and devisee of Mary Anderson, deceased, and Maggie Anderson, his wife, of City of Quincy in the County of Adams and State of Illinois, Mortgage and Warrant to B. F. Snow of the City of Quincy, County of Adams and State of Illinois, to secure the payment of one certain promissory note executed by mortgagors aforesaid bearing even date herewith, payable to B. F. Snow, a licensee under the small loan act of the State of Illinois, for the principal sum of Three Hundred and no-100 ($300.00) dollars said principal sum to become due and payable in installments as follows, to-wit: $25.00 on the 6th day of each and every month after the date hereof for and including 11 months, and $25.00 on March 6, 1927, at the office of the payee in Quincy, Illinois, with interest after date computed at the rate of 3y2 per cent per month upon unpaid principal and payable as it accrues on the 6th day of each month after date hereof; the following described real estate, to-wit: The South Sixty-four (64) feet of Lot Number Four (4) in Block Number Thirty-five (35) of Willard Keyes Addition to the City of Quincy and being situated in the County of Adams, in the State of Illinois, hereby releasing and waiving all rights under and by virtue of the Homestead Exemption Laws of the State of Illinois, and all right to retain possession of said premises after any default in payment or breach of any of the covenants or agreements herein contained.

“But it is Expressly Provided and Agreed, That if default be made in the payment of the said one promissory note, or any part thereof, or the interest thereon, or any. part thereof, at the time and in the manner above specified for the payment thereof, or in case of waste or non-payment of taxes or assessments on said premises, or of a breach of any of the covenants or agreements herein contained, then and in such case the whole of said principal sum and interest accrued thereon remaining unpaid, secured by the said one promissory note, in this mortgage mentioned, shall thereupon, at the option of the said mortgagee, his heirs, executors, administrators, attorneys or assigns become immediately due and payable; and this mortgage may be immediately foreclosed to pay the same by said mortgagee, his heirs, executors, administrators, attorneys or assigns; and it shall be lawful for the said mortgagee, his heirs, executors, administrators, attorneys or assigns, to enter into and upon the premises hereby granted, or any part thereof, and to receive and collect all rents, issues and profits thereof.

“Upon the filing of any bill to foreclose this mortgage in any Court having jurisdiction thereof, such Court may appoint any proper person receiver, with power to collect the rents, issues and profits arising out of said premises during the pendency of such foreclosure suit, and until the time to redeem the same from any sale that may be made under any decree foreclosing this mortgage shall expire, and such rents, issues and profits, when collected, may be applied toward the payment of the indebtedness and costs herein mentioned and described. And upon the foreclosure and sale of said premises, there shall be first paid out of the proceeds of such sale all expenses of advertising, selling and conveying said premises, and 10% of balance as attorney’s or solicitor’s fees, to be included in the decree in such proceeding, as part of the complainant’s cost therein, and all moneys advanced for premium for insurance, taxes, assessments and other liens, then there shall be paid the principal of said note whether due and payable by the terms thereof or not, and the interest thereon.

“Dated this 6th day of March, A. D. 1926.

Chas. H. Anderson (seal)

Maggie Anderson (seal) ”

“State of Illinois, Adams County, ss.

“I, J. E. Morton, Notary Public, in and for said County in the State aforesaid, do hereby certify that Charles II. Anderson and Maggie Anderson, his wife, personally known to me to be the same person whose names are subscribed to the foregoing instrument as having executed the same, appeared before me this day in person, and acknowledged that they signed, sealed and delivered the said instrument as their free and voluntary act, for the uses and purposes therein set forth, including the release and waiver of the right of Homestead.

“Given under my hand and Notarial seal, this 6th day of March, A. D. 1926.

J. E. Morton, Notary Public.”

The bill was later amended by inserting and describing appellee, B. F. Snow, as “a licensee under the Small Loan Act of the State of Illinois.” The bill had been answered, averring payment of the note, and a replication was filed and the cause referred to the master in chancery to take the proofs, but upon the amendment of the bill appellee demurred to the bill generally and set out special grounds of demurrer as follows:

1. “That it appears by said amended bill that interest or charges in excess of those permitted by an act to license and regulate the business of making loans in the sum of Three Hundred Dollars ($300.00) or less, approved June 14, 1917, was charged by the complainant.

2. “That it appears by said amended bill that interest or charges in excess of those permitted by an act to license and regulate the business of making loans in sums of Three Hundred Dollars ($300.00) or less, approved June 14, 1917, was contracted for between the complainant and defendant.

3. “That it appears by said amended bill that interest or charges in excess of those permitted by an act to license and regulate the business of making loans in sums of Three Hundred Dollars ($300.00) or less, approved June 14, 1917, was received by the complainant. ’ ’ The court sustained the demurrer and dismissed the bill, from which decree appellant has brought the record to this court by appeal.

Appellee contends that by the terms of the mortgage, the appellant has contracted to charge the appellee, in addition to the three and one-half per cent per month, on the full principal sum of $300 the following items:

1. Costs of foreclosure. 2. Master’s fees and commissions.

3. Advertising. 4. Selling.

5. Conveying. 6. Money advanced for insurance.

7. Taxes. 8. Assessments.

9. Cost of Beceiver. 10. Bents, issues and prof-

11. Other liens, its during receivership.

and that the only legal item permitted to be charged under the Small Loan Act in addition to the three and one-half per cent per month is the cost of recording papers and an attorney fee for entry of judgment or foreclosure, not to exceed 10 per cent. The act cannot be construed to include any other costs.

Section one of the act, Cahill’s St. ch. 74, if 27 (being section 13 of chapter 74 of Smith-Hurd’s Bev. St. 1931) provided: “It shall be unlawful to make any loan of money, credit, goods, or things in action in the amount or to the value of three hundred dollars ($300.00) or less, whether secured or unsecured, and charge, contract for, or receive a greater rate of interest than seven (7) per centum per annum therefor, without, first obtaining a license from the Department of Trade and Commerce as herein provided,” etc.

Cahill’s St. ch. 74, ft 28 (section 14 of Smith-Hurd Bev. St.) provides: “Every licensee licensed hereunder may loan any sum of money, goods, or things in action, not exceeding in amount or value the sum of three hundred dollars ($300), and may charge, contract for and receive thereon interest at a rate not to exceed three and one-half (3%) per centum per month.

“Interest shall not be payable in advance or compounded and shall be computed on unpaid balances. In addition to the interest herein provided for, no further or other charge, or amount whatsoever for any examination, service, brokerage, commission, attorney fee (except for foreclosure or entry of judgment), and in no case shall a greater amount be allowed as attorney fee than as is evidenced by 10 per cent of the amount found to be due or other thing shall be directly or indirectly charged, contracted for or received, except the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing or recording in any public office any instrument securing the loan, which fees may be collected when the loan is made, or at any time thereafter.

“If interest or charges in excess of those permitted by this Act shall be charged, contracted for or received by any licensee, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges whatsoever.

“No person shall owe any licensee at any time more than three hundred dollars ($300) for principal.”

From paragraphs 27 and 28 of Cahill’s St. ch. 74 (sections 13 and 14 of Smith-Hurd) it is clear that licensees under this act may take mortgages on chattels and real estate to secure the loans, which they or any one licensed may make. And it is also clear that under paragraph 28 (section 14) the licensee, mortgagee, may foreclose his mortgage agreeably to the rules, customs and usages of a court of equity in the State of Illinois and have an attorney’s fee allowed to the mortgagee not to exceed the amount prescribed by said section. The special provisions as to the attorney’s fee and “the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing or recording in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter,” are mentioned in the law, for the reason that they are the only fees or charges with which the mortgagee or note holder have anything to do, or in which he is interested or required to pay. The whole intent of the law is to make it impossible for the licensee directly or indirectly to make a charge of interest greater than three and one-half per cent per month. The court fees on foreclosure, .the master’s fees and commissions, advertising when necessary, selling by the master, or other commissioner, when appointed by the court, the conveyance by the master, the cost of the receiver and the rents, issues and profits during the receivership, are all legal parts of the proceedings of a court of chancery, the fees fixed by statute and all fees to be paid to the officers of the court, with Which the mortgagee has nothing to do and all follow the property in the foreclosure suit as incidents of the mortgage and under the law, in equity, the mortgagee is entitled to have such costs and fees paid out of a sale of the property, in which the mortgagee can in no manner participate. The Small Loan • Act does not mention these items, but the general law provides for their payment as costs in the case.

As to taxes and assessments, practically the same reasoning applies. Taxes and assessments are a public charge, the liability for their payment is fixed by statute, and the payment of the taxes and assessments, when they become due, enters into and is a part of the security which the mortgagee, under this law, is permitted to take.

The mortgage in this case also provides that upon the nonpayment of taxes the mortgagee may declare the entire debt due, and it is mentioned as one of the breach of covenants that may arise under this instrument. We do not deem this as any attempt by any possibility on the part of the mortgagee, by contract or otherwise, to exact or obtain any additional interest upon the loan.

In the mortgage near the bottom in fine print, as a part of a clause providing for the distribution of the proceeds of sale, there is a clause: “and all moneys advanced for premium for insurance,” etc. “as part of complainant’s costs,” etc. This is a clause of a different nature. No claim is made in the bill for any such payment of premiums for insurance. No such claim could be made in the bill or otherwise, unless there was a contract or covenant in the mortgage given by way of security, providing that the mortgagor should keep any of the buildings upon the premises insured for a definite amount. There is no such clause in the mortgage and the mortgagor did not covenant to keep the premises insured in any amount and, therefore, in that respect the mortgagor was not requested to and did not incur any liability as to insurance. The mortgagee does not claim any such liability. The mortgage was drawn upon an ordinary printed form mortgage. A great many clauses of the form were scratched out, apparently to make the form used comply with the Small Loan Act. This clause in the mortgage in question is meaningless, is of no effect and is apparently a clerical error and amounts to nothing in substance warranting a court of equity to declare a forefeiture.

For the reasons stated, the decree of the circuit court of Adams county is reversed, and the cause remanded to that court, with directions to require appellee to answer the bill of complaint.

Reversed and, remanded with directions.