text:
    Dr. Lietzman, Dentist, Inc., Appellant, v. Radio Broadcasting Station W. C. F. L. et al., Appellees.
    Gen. No. 37,948.

      Opinion filed November 5, 1935.
    Aaron Soble, of Chicago, for appellant; Irving Goodman, of Chicago, of counsel.
    Fink & Daniels, of Chicago, for appellees; Meyer Fink and Max Daniels, of counsel.
   Mr. Justice Sullivan

delivered the opinion of the court.

Complaint for an injunction was filed September 7, 1934, by plaintiff, Dr. Lietzman, Dentist, Inc., an Illinois corporation, to restrain Badio Broadcasting Station W. C. F. L., Chicago Federation of Labor, John Fitzpatrick, president of Chicago Federation of Labor, E. N. Nockels, general manager of Badio Broadcasting Station W. C. F. L., and Dental Laboratory Workers’ Union No. 19358 from continuing a certain radio broadcast. September 11, 1934, a motion was made for a temporary injunction, which was granted by Judge Daniel P. Trade. October 16, 1934, on motion of defendants, an order was entered by Judge Klarkowski dissolving the temporary injunction and dismissing plaintiff’s complaint for want of equity. This appeal followed.

The complaint alleges substantially that plaintiff is the successor to the Boston Dental Parlors, an Illinois corporation, also known as the Boston Dentists; that plaintiff “has impressed itself on the public as almost synonymous with the Boston Dental Parlors”; that any disparaging* or prejudicial remarks about the Boston Dental Parlors or the Boston Dentists would necessarily injure plaintiff’s business; that plaintiff has expended large sums of money in building up its good name and reputation in the dental business; that it is necessary that it enjoy and continue to hold the confidence and good will of the public; that defendants are “conspiring and confederating” and are unlawfully, maliciously and libelously slandering the good name and reputation of the Boston Dental Parlors, the Boston Dentists and plaintiff, its successor, by broadcasting over radio station W. C. F. L. false and injurious statements “about the good name of plaintiff and making libelous and misleading” statements about the “business policies of plaintiff and urging the radio listening public not to patronize plaintiff’s dental parlors”; that defendants, by their representatives, employees and agents “have from time to time and are now” causing to be broadcast such statements as follow:

“Dental Laboratories Workers’ Union No. 19,358 wish to inform the public that Boston Déntal Parlors are non-union so far as organized labor is concerned, as they will not permit collective bargaining. We would suggest that you patronize other dental parlors for your necessary dental work if you are interested in fair, impartial treatment for the working man.

“The Boston Dentists who have several offices about town should not be patronized because they are interfering with the Dental Laboratories Workers’ Union. They are in direct opposition to the industrial act and should not be patronized.

“The Boston Dental Parlors operating throughout Chicago and nearby towns are unfair to President Roosevelt and the N. R. A. The Boston Dentists should not be patronized; they refused their laboratory workers permission to sign with organized labor, and are operating in defiance- of Section A-l of the National Recovery Act.”

It is further alleged that the above and similar statements have been and are being broadcast by defendants almost nightly over radio station W, C. F. L., with the express intent of destroying the business and good name of plaintiff with the public; that the “statements” broadcast are untrue and that plaintiff is “not unfair to President Roosevelt,” is' not “unfair to the N. R. A.,” and “is fair to labor”; that defendants are unlawfully and maliciously conspiring and confederating to intimidate and coerce plaintiff and its employees into “recognizing and accepting an alleged Dental Laboratory Workers’ Union”; that they and each of them are seeking to gain this end by illegally persuading and advising the public to boycott plaintiff’s dental parlor; that the aforesaid broadcasts of defendants have caused and are causing irreparable and grievous damage to plaintiff’s business; that same will be irreparably and irremediably destroyed and ruined unless the court restrains defendants and each of them “from broadcasting the defamatory statements hereinbefore set forth and similar statements” prejudicial to plaintiff’s business; and that plaintiff has no adequate remedy at law. The prayer of the complaint is that defendants be restrained “from broadcasting on the radio or otherwise publishing” any malicious or derogatory statements “that the Boston Dental Parlors or the Boston Dentists or plaintiff or either of them are unfair to President Roosevelt or unfair to the N. R. A., or unfair to the working man or to organized labor, and in any way urging, advising or instructing the public not to patronize plaintiff’s dental parlor”; and that defendants be restrained from “confederating and conspiring to interfere with the dental business of plaintiff by urging the public to boycott plaintiff’s dental parlors or from broadcasting any statements tending to undermine the good will, good name and confidence of the public in plaintiff’s dental parlors or from interfering with the business relations between plaintiff and its dental employees, and from breeding ill will, hatred and distrust between plaintiff and its dental employees.”

As ground for dismissal of the complaint defendants stated in their motion that plaintiff had an adequate remedy at law; that there are no facts alleged showing conspiracy; that equity will not restrain the publication of a libel; that the words complained of are not libelous; and that the injunction prayed for would be in violation of the constitutions of the United States and of the State of Illinois.

Plaintiff contends that broadcasting false and defamatory statements over the radio about its dental business and urging the public to boycott its dental parlors constitutes such a wrongful interference with its business and property as to warrant injunctive relief by a court of equity; and that the right of free speech as guaranteed by the constitution of this State and by the constitution of the United States does not confer the right to publish repeated false and defamatory statements, which are intended to destroy the dental business of plaintiff.

Although what preceded or actuated the broadcasts is not alleged in terms, it is reasonable to infer that it was an attempt on the part of the Dental Laboratory Workers’ Union to organize plaintiff’s laboratory workers and have them join the union, which was either opposed or thwarted by plaintiff.

The gist of the complaint is that defendants entered into an unlawful combination or conspiracy to intimidate plaintiff and its employees into recognizing the Dental Workers’ Union by advising the public to boycott plaintiff’s dental parlors. The motion to dismiss the complaint admits all of the well pleaded allegations contained therein, but it admits none of the conclusions or inferences drawn by the pleader. (Lindemann & Hoverson Co. v. Advance Stove Works, 170 Ill. App. 423; Betten v. Williams, 277 Ill. App. 353.) A careful examination of the complaint discloses that the charge of conspiracy is a mere conclusion without any foundation of facts. No facts are alleged to show either that a conspiracy existed among defendants or any of them or that the Chicago Federation of Labor, John Fitzpatrick, president of Chicago Federation of Labor, Radio Broadcasting Station W. C. F. L., or E. N. Nockels, its general manager, said or did anything either of a lawful or unlawful nature to interfere with or injure plaintiff in the conduct of its business. The only specific allegation of fact in the complaint connecting any of the defendants with plaintiff’s claimed injury to its business is that charging the Dental Laboratory Workers’ Union with making-broadcasts over radio station W. C. F. L. Other than that the broadcasts were permitted to be made over that station and that Nockels was its general manager, the complaint contains no averment that even attempts to charge either the station or Nockels with being or having been in a conspiracy with the Dental Laboratory Workers’ Union or anybody else. It is a matter of common knowledge that radio station W. C. F. L. is operated under the auspices of the Chicago Federation of Labor, and it is also a matter of common knowledge that its facilities are not used .exclusively for that organization’s business and activities. It is not even charged that the Dental Laboratory Workers’ Union was a member of or affiliated with the Chicago Federation of Labor, and to urge that the mere broadcasts or the permission to make them over the aforesaid station is sufficient to properly charge an unlawful conspiracy against the Chicago Federation of Labor, John Fitzpatrick, its president, radio station W. C. F. L., and Nockels, is no more logical or reasonable than it would be to say that any other broadcasting station, its manager, and its sponsor, would be guilty of conspiring with one of its clients simply because such client used in its broadcast matters that were scandalous, libelous or of a defamatory nature. While, under such circumstances in a proper case, those who owned or controlled such broadcasting station might be held liable in an action at law for any resulting injury or damage caused by permitting the use of its facilities for the dissemination of the scandal or libel, it could hardly be held to have been in an unlawful conspiracy with its broadcasting client. In our opinion, it is not sufficiently charged in the complaint that an unlawful conspiracy against plaintiff existed or that defendants or any of them were a part of an unlawful combination to interfere with its business.

In any event will equity afford injunctive relief against the publication of a mere scandal or libel!

It is not charged that defendants’ unlawful conduct consisted of anything more than broadcasting the statements heretofore alluded to, including the suggestion that for the reasons indicated plaintiff’s business should not be patronized.

While plaintiff charges that the statements contained in the radio broadcasts constituted- a “boycott” intended to “intimidate” it into “recognizing and accepting” defendant union, we think that the alleged false statements and objectionable matter in the broadcasts do not amount to coercion or intimidation in law, either of plaintiff or its clients or patients, present or expectant. The public, including the friends of organized labor to which the appeals were made, may have been deceived by the false statements if such they Avere, but it Avas left free to form its oAvn judgment and make its OAvn choice. Neither the public generally nor the members or friends of organized labor Avere coerced, intimidated or frightened by anything contained in the broadcasts. No threats of violence were made against either plaintiff, its business or property. (American Malting Co. v. Keitel, 209 Fed. 351.)

In the American Matting case, supra, where the law on the question is exhaustively reviewed, the court said at pp. 354-356:

“For 150 years it has been understood in England that equity had no jurisdiction to enjoin a libel, and the power of the courts of that country to do so rests upon statute.

“In the United States a like view of the matter has been taken. In Pomeroy’s Equity Jurisprudence, vol. 6, sec. 629, it is laid down that:

‘ ‘ ‘ Equity Avill not restrain by injunction the threatened publication of a libel, as such, however great the injury to property may be. This is the universal rule in the United States and was formerly the rule in England. The present rule in England rests on statute.’

“In High on Injunctions (4th Ed.) sec. 1015, that writer states that the doctrine which seems most in accord with the principles governing the jurisdiction of equity by Avay of injunction is that, the preventive jurisdiction being limited to the protection of property rights which are remediless by the usual course of procedure at law, courts of equity will not restrain the publication of libels or works of a libelous nature, even though such publications are calculated to injure the credit, business, or character of the person aggrieved, and that he will be left to pursue his remedy at law. In a case in the Supreme Court of the United States (1885), Francis v. Flynn, 118 U. S. 385, 56 Sup. Ct. 1148, 30 L. Ed. 165, Mr. Justice Field said:

“ ‘If the publications in the newspapers are false and injurious, he can prosecute the publishers for libel. If a court of equity could interfere and use its remedy of injunction in such cases, it would draw to itself the greater part of the litigation properly belonging to courts of law. ’

“In 1886 the question arose in the Circuit Court for the Third Circuit in Kidd v. Horry, 28 Fed. 773. An injunction was asked to restrain the defendants from publishing certain circular letters concerning the business of the complainants. The injunction was refused. The opinion was by Mr. Justice Bradley, who said:

“ ‘But neither the statute law of this country nor any Avell-considered judgment of the courts has introduced this neAV branch of equity into our jurisprudence. There may be a case or two looking that way, but none that we deem of sufficient authority to justify us in assuming the jurisdiction. . . . We do not regard the contrary decision in Croft v. Richardson, 59 How. Prac. (N. Y.) 356, as of sufficient authority to counteract these cases or to disturb what we consider to be the well-established law on the subject.. That law clearly is that the court of chancery will not interfere, by injunction, to restrain the publication of a libel. . . . We do not think that the existence of malice in publishing a libel or uttering slanderous words can make any difference in the jurisdiction of the court. Malice is charged in almost every case of libel, and no cases of authority can be found, we think, independent of statute, in which the power to issue an injunction to restrain a libel or slanderous Avords has ever been maintained, Avhether malice was charged or not. Charges of slander are peculiarly adapted to and require a trial by jury; and. exercising, as we do, authority under a system of government and law which by. a fundamental article secures the right of trial by jury in all cases at common law, and which by express statute declares that suits in equity shall not be sustained in any case where a plain, adequate, and complete remedy may be had at law, as has always heretofore been considered the case in causes of libel and slander, we do not think that we should be justified in extending the remedy of injunction to such cases.’

“In 1909 the question arose in the Fifth' Circuit (Citizens’ Light, Heat & Power Co. v. Montgomery Light & Water Power Co. (C. C.) 171 Fed. 553), and the court held that equity had no jurisdiction to enjoin a libel or slander defaming the credit and business standing of an individual or corporation. The court said:

‘ ‘ ‘ The difficulties in the way of affording such relief are unsurmountable. They grow alike out of constitutional provisions and want of jurisdiction in the court of equity. ’

“In 1907 the question arose in the Eighth Circuit (Montgomery Ward & Co. v. South Dakota Retail Merchants’ & Hardware Dealers’ Assoc. (C. C.) 150 Fed. 413), and the court refused the injunction, saying:

“ ‘In the jurisprudence of the United States there is no remedy for the abuse of this right (to freely speak, write and publish) conferred by the Constitution, except an action at law for damages or a criminal proceeding by indictment or information. ’

“In 1912 the question was before a District Court in Missouri (Vassar College v. Loose-Wiles Biscuit Co., 197 Fed. 982). The bill was dismissed; the court saying:

“ ‘In this country a court of equity is without jurisdiction to restrain the publication of a libel. ’

“The state courts in a number of cases have held that the jurisdiction of equity did not extend to libels and have refused injunctions to restrain their publication. Boston Diatite Co. v. Florence Mfg. Co., 114 Mass. 69, 19 Am. Rep. 310 (1873); Marlin Firearms Co. v. Shields, 171 N. Y. 384, 64 N. E. 163, 59 L. R. A. 310 (1902); Baltimore Life Ins. Co. v. Gleisner, 202 Pa. 386, 51 Atl. 1024 (1902); Mayer v. Journeyman Stone-Cutters’ Assoc., 47 N. J. Eq. 519, 20 Atl. 492 (1890).

“In all that has been said we have not lost sight of the fact that the courts have sometimes issued injunctions to restrain the publication of false statements injurious to business or property. The cases in which such a jurisdiction has been assumed have been those which have involved conspiracy, intimidation, or coercion. In 22 Cyc. 900, it is laid down:

“ ‘A court of equity has no jurisdiction to restrain a mere libel or slander. Nor does the fact that the false statement may injure plaintiff in his business or as to his property constitute a sufficient ground for an injunction, in the absence of acts of conspiracy, intimidation, or coercion. ’ ”

We have quoted extensively from this opinion because it announces the settled law of practically every jurisdiction in this country, including Illinois.

Inasmuch as the alleged false statements could constitute nothing more than mere libel or slander, carrying with them only a peaceful suggestion or appeal to the public not to patronize plaintiff for the reasons given, the elements of intimidation and conspiracy to boycott are obviously injected into this controversy to bring it within the exception to the rule that equity will not intervene and restrain a libelous or slanderous publication, unless it is an adjunct of, coupled or linked with, or an incident to conspiracy, intimidation or coercion. We have already shown that neither intimidation nor coercion in law occur in this case and that no unlawful conspiracy is sufficiently alleged.

Assuming that a conspiracy is properly alleged, do any of the statements complained of constitute a boycott in the legal sense? Justice Taft in Toledo, A. A. & N. M. Ry. Co. v. Pennsylvania Co., 54 Fed. 730, defined a boycott as follows:

“As usually understood, a boycott is a combination of many to cause a loss to one person by coercing others, against their will, to withdraw from him their beneficial business intercourse, through threats that, unless those others do so, the many will cause similar loss to them.”

In Beck v. Railway Teamsters’ Protective Union, 118 Mich. 497, it was held that the boycotting of one who refuses to accede to demands of the union is unlawful, where the means used to prevent persons from dealing with the person boycotted are threatening in their nature, and tend naturally to overcome, by fear of loss of property, the will of others, and compel them to do what they would not otherwise do, although such means are unaccompanied by actual violence or threats of violence'.

In American Federation of Labor v. Buck’s Stove & Range Co., 33 Appeal cases, Dist. of Col. 83, after citing many decisions of the federal and state courts throughout the country, it was said at p. 106:

“From these decisions it will be gathered that the boycott, as generally understood, is a combination to harm one person by coercing others to harm him.”

It is apparent that the mere suggestion to the public not to patronize plaintiff’s business for the reasons advanced, unaccompanied by violence, threats, intimidation or coercion, does not amount in law to an illegal boycott. The statements being at most merely slanderous, come, we think, within the purview of the Bill of. Bights (Sec. 4, Art. 2) of the constitution of the State of Illinois, which provides that “every person may freely speak, write and publish on all subjects, being responsible for the abuse of that liberty . . . . ”

Iii passing upon the right to “freely speak, write and publish” as guaranteed by the constitution, in Vulcan Detinning Co. v. St. Clair, 315 Ill. 40, our Supreme Court used the following significant language, at pp. 46, 47:

“In construing this order it is proper to assume that the chancellor intended to enter an order in harmony ivith the constitution, Avhich declares that ‘ every person may freely speak, write and publish on all subjects, being responsible for the abuse of that liberty. ’ If the order in question is construed to mean that appellant and other members of the union cannot refer to the nonunion men employed by appellee as traitors, then any discussion had by the strikers among themselves, in their meeting place or elseivhere, or any publication they might make or notice they might give, could be considered a violation of the injunction. If a court of equity has the power to restrain and punish members of a labor union from speaking, writing or publishing on the subject of a dispute between the union and .the employer, then the members of the labor union are not such persons as are within the quoted constitutional provision. If the right of a union man, or any other man, to speak, Avrite and publish freely on any subject is abused to the harm of another the remedy is an action for damages, and that remedy is deemed adequate. If the public suffers injury because of a malicious publication the remedy is by a criminal action for libel. The guaranty of this section extends as fully to the poorest as to the wealthiest citizen of the State. Though an abuse of the liberty so guaranteed may result in loss for which there cannot be adequate compensation, the American people believe that it is better that such be the result in isolated cases than that the liberty of speech be subject to the supervision of a censor.”

We have carefully examined all of the cases cited by plaintiff where an injunction was granted to restrain the publication of a libel and find that the unlawful act amounting to intimidation, threats, coercion, conspiracy or boycott, was what was primarily enjoined, and the libel or slander merely as an incident of, or one of the means chosen for the accomplishment of the unlawful purpose. No case has been cited and we have been unable to find one that holds that the publication of a mere libelous or scandalous statement may be enjoined by a court of equity.

Were the alleged libelous and scandalous statements true or false?

It is logical to infer from the allegation in the complaint that “defendants . . -. are conspiring and confederating ... to coerce plaintiff and its employees into recognizing and accepting an alleged Dental Laboratory Workers’ Union,” that plaintiff’s employees were not members of that union, that plaintiff was averse to having them join the union, and that plaintiff opposed and thwarted the union’s attempt to organize its employees. Does it not reasonably follow that plaintiff is “non-union as far as organized labor is concerned, ” and that it refused its “laboratory workers permission to sign with organized labor” as stated in the broadcasts ? This being true, we think that the defendant union was within its rights in publishing such facts. The statements that plaintiff was “unfair to President Roosevelt and the N. R. A.” and was “operating in defiance of section A-l of the National Recovery Act,” we deem to be but fair comment in view of the facts and circumstances. The N. R. A., in so far as it attempted to regulate the relations between employer and employees, stood for “collective bargaining” as advocated by President Roosevelt, and it is difficult for us to understand how these references could be considered as libelous, scurrilous or defamatory.

In discussing the right of a union or its members to endeavor by peaceful persuasion to induce members of the same craft to join their organization, and how far they may go in presenting their cause, in Beck v. Railway Teamsters’ Protective Union, supra, the court said at pp. 516, 517:

' “So, also, the laborers have the right to fix a price upon their labor, and to refuse to work unless that price is obtained. Singly, or in combination, they have this right. They may organize in order to improve their condition and secure better wages. They may use persuasion to induce men to join their organization, or to refuse to work except for an established wage. They may present their cause to the public in newspapers or circulars, in a peaceable way, and with no attempt at coercion. If the effect in such case is ruin to the employer, it is damnum absque injuria, for they have only exercised their legal rights. ’ ’

As to the union’s right in a labor dispute to peaceably suggest and advise that an employer be not patronized, Justice Van Orsdel in his concurring opinion in American Federation of Labor v. Buck’s Stove & Range Co., supra, said at pp. 116, 121-123:

“Applying the same principle, I conceive it to be the privilege of one man, or a number of men, to individually conclude not to patronize a certain person or corporation. It is also the right of these men to agree together, and to advise others, not to extend such patronage. That advice may be given by direct communication or through the medium of the press, so long as it is neither in the nature of coercion or a threat. . . .

“. . . It is not unlawful for citizens to organize together for any of the main purposes for which the American Federation of Labor exists. It is not unlawful for that order to have an official organ; it is not unlawful for that organization, through the medium of that organ, to express freely its opinion as to the fairness or unfairness with which certain employers deal with their employees; and it is not unlawful for the paper to contain advice to the friends of labor not to patronize such employer. Again, we do not assume that it will be contended that a citizen has not perfect freedom to deal with whom he pleases, and withhold his patronage for any reason that he may deem proper, whether the reason be one originating in his own conscience, or through the advice of a neighbor, or through the reading of an article in a paper. Neither would it be unlawful for such citizen to advise another not to deal with a person with whom he has concluded not to continué his patronage. If this advice may extend to one, it may to a hundred; and the thing done will not be actionable so long as it is in an expression of honest opinion, and not slanderous, however much the intercourse between this citizen and his neighbors may operate to injure the person against whom the advice is directed. ...

“No one doubts, I think the right of the members of the American Federation of Labor to refuse to patronize employers whom it regards as unfair to labor. It may procure and keep a list of such employers, not only for the use of its members, but as notice to their friends that the employers whose names appear therein are regarded as unfair to labor. This list may not only be procured and kept available for the members of the association and its friends, but it may be published in a newspaper or series of papers. To this extent they are within their constitutional rights; at least, where a court of equity cannot intervene. But, as soon as, by threats or coercion, they attempt to prevent others from patronizing a person whose name appears on the list, it then becomes an unlawful conspiracy, — a boycott. ’ ’

The trend of modern judicial and legislative thought is to recognize the right of any party or person participating or interested in a labor dispute to give publicity to the existence of or the facts involved in such dispute, and the Clayton Act (U. S. Anti-Injunction Statute) specifically prohibits the federal courts from issuing injunctions to prohibit such publication.

While the case of the American Steel Foundries v. Tri-City Central Trades Council, 257 U. S. 184, dealt with a strike and held picketing in that case unlawful, the reasoning of the opinion in the case is especially applicable to the questions involved here. The court said at p. 209:

“Labor unions are recognized by the Clayton Act as legal when instituted for mutual help and lawfully carrying out their legitimate objects. They have long been thus recognized by the courts. They were organized out of the necessities of the situation. A single employee was helpless in dealing with an employer. He was dependent ordinarily on his daily wage for the maintenance of himself and family. If the employer refused to pay him the wages that he thought fair, he was nevertheless unable to leave the employ and to resist arbitrary and unfair treatment. Union was essential to give laborers opportunity to deal on equality with their employer. They united to exert influence upon him and to leave him in a body in order by this inconvenience to induce him to make better terms with them. They were withholding their labor of economic value to make him pay what they thought it was worth. The right to combine for such a lawful purpose has in many years not been denied by any court. The strike became a lawful instrument in a lawful economic struggle or competition between employer and employees as to the share or division between them of the joint product of labor and capital. To render this combination at all effective, employees must make their combination extend beyond one shop. It is helpful to have as many as may be in the same trade in the same community united, because in the competition between employers they are bound to be affected by the standard of wages of their trade in the neighborhood. Therefore, they may use all lawful propaganda to enlarge their membership and especially among those whose labor at lower wages will injure their whole guild. It is impossible to hold such persuasion and propaganda, without more, to be without excuse and malicious. ’ ’

In the recent case of Fenske Bros. v. Upholsterers International Union, 358 Ill. 239, in which the Illinois anti-injunction act was declared to be constitutional and which is the latest expression of our Supreme Court on the question, the court upheld the right to peaceably and without threats or intimidation carry placards announcing a strike and that the employer was not employing union labor. Exhibition of the placards was certainly a publication of the matters contained thereon, and we think that the rule announced in that case is equally applicable to the facts in this cause.

We are impelled to hold that it is not unlawful for a labor organization in a radio broadcast to express freely its honest opinion as to the fairness or unfairness of the attitude of an employer toward organized labor and that it is not unlawful that such broadcast contain advice to the public and friends of union labor not to patronize such employer.

For the reasons indicated we are of the opinion that a court of equity had no jurisdiction to restrain the radio broadcasting of the statements set forth in the complaint. Therefore, the decree or order of the circuit court dismissing the complaint for want of equity is affirmed.

Affirmed.

Scanlan, P. J., and Friend, J., concur.


source: Caselaw Access Project

author: Mr. Justice Sullivan

license: Public Domain

text:
    Bunker Hill Country Club et al., Appellants, v. John McElhatton et al., Appellees.
    Gen. No. 37,997.

      Opinion filed November 5, 1935.
    John O. Wagner, of Chicago, for appellants.
    Schofield & Wood, of Chicago, for appellees ; Frank Schofield and David H. Kraft, of Chicago, of counsel.
   Mr. Justice Sullivan

delivered the opinion of the court.

This appeal seeks to reverse a decree sustaining defendant McElhatton’s motion to strike plaintiffs’ second amended complaint for insufficiency in law and form and to dismiss this cause for want of equity.

Plaintiffs are the Bunker Hill Country Club, an Illinois corporation (hereinafter for convenience sometimes referred to as the club), the individual owners of 2,665 of the 3,000 outstanding shares of preferred stock and 652 of the 2,000 outstanding shares of common stock of the club, and the individual owners of $43,500 second mortgage notes issued by it, the stockholders and holders of the notes acting not only in their own behalf but also in behalf of all those similarly situated. The original complaint in this cause was filed in March, 1934, an amended complaint April 16, 1934, and the second amended complaint July 2, 1934.

The pertinent allegations of the latter are that the club was incorporated for the purpose of owning and operating for profit a golf club and other enterprises incidental thereto; that it now is and was on July 14, 1927, the owner of a golf club consisting of approximately 115 acres of land located in Niles, Cook county, Illinois, improved with a golf course and a clubhouse and other buildings; that the individual stockholder plaintiffs were on July 14, 1927, and still are the owners of record of the number of preferred shares and of common shares of stock of the club set forth in the complaint; that the individual creditor plaintiffs are the owner’s of the principal amounts of the second mortgage notes specified in the complaint; that the trust deed securing* said second mortgage notes is subject to a prior incumbrance in the principal amount of $109,300; that there is interest on the prior incumbrance due and unpaid amounting to approximately $9,000, as well as due and unpaid taxes against the club property of about $16,000; that there is approxk mately three years interest at six per cent due and unpaid on the second mortgage notes owned by the creditor plaintiffs; that on the date of filing the original complaint, and at all times since, the club was and is insolvent and unable to pay its obligations as they mature; that on the date of filing the original complaint its land, buildings, furniture, fixtures, machinery and- equipment and all other assets of every kind and character were and are now worth less than $108,000; that the total liabilities, including the first and second mortgages, due and unpaid interest on same and due and unpaid taxes, were when the original complaint was filed and now are $156,000, an amount greatly in excess of the total assets of the club; that the club had authority to issue 3,000 shares of preferred stock of a par value of $100 a share and 2,000 shares of common stock of no par value, and that on July 14, 1927, there were and are now issued and outstanding 3,000 shares of preferred stock of the club of a par value of $100 a share, aggregating $300,000 and 2,000 shares of common stock of no par value; that under the articles of incorporation of the club its preferred shares of stock were to be preferred both as to its assets and earnings; and that on July 14, 1927, the board of directors of the Bunker Hill Country Club was composed of seven members, including defendant MeElhatton.

It was further alleged that on said date MeElhatton was the owner of 450 shares of common stock of the club; that, desiring* to prefer himself over the creditors of the club and the other shareholders thereof, he demanded that the club purchase his 450 shares of common stock for $80,000 or more; that the company refused to do so; that he, “disregarding his duties as director of said plaintiff corporation, thereupon in order to force and compel said corporation to purchase said . . . 450 common -shares, entered upon a campaign of terrorism designed and intended to wreck and cause great injury to plaintiff Bunker Hill Country Club; that said defendant John MeElhatton called one or more meetings of certain of the members of said Bunker Hill Country Club and endeavored to induce them to resign from said club; that said defendant John MeElhatton was on said July 14, 1927, assistant manager of said Bunker Hill Country Club in addition to being a director thereof, and in order by force, fear and intimidation to compel said Bunker Hill Country Club to purchase said . . . 450 common shares thereof as aforesaid, he refused to obey, perform and carry out the duties of assistant manager and director of said Bunker Hill Country Club, and said John McElhatton for the purpose aforesaid threatened to and proceeded to use various devices and artifices to persuade members of said Bunker Hill Country Club to resign and organize another golf club and some members did resign and did organize another golf club; that he made false and untrue statements concerning said Bunker Hill Country Club and threatened to take measures to disrupt and wreck said Bunker Hill Country Club; that the income from said Bunker Hill Country Club was largely derived from the revenue secured from the members thereof; that the resignation of such members would cause serious loss to said Bunker Hill Country Club, and that the acts of said John MeElhatton seriously injured said Bunker Hill Country Club and caused it great financial loss; that because of said acts and threats and intimidation of defendant John MeElhatton and because of and under fear and duress caused thereby the board of directors of said Bunker Hill Country Club for and in the name of said Bunker Hill Country Club entered into an agreement under date of July 15, 1927, to purchase from said defendant, John MeElhatton, . . . 450 common shares for the sum of . . . $80,000, a copy of which said agreement is appended hereto as Exhibit A (B) . . . ; that in pursuance of said agreement the directors of said Bunker Hill Country Club executed and delivered to said defendant, John McElhatton, the eight promissory notes of the plaintiff, Bunker Hill Country Club, in the principal amount of . . . $10,000 each, being in an aggregate principal amount of $80,000; . . . that pursuant to said agreement said . . . 450 common shares were deposited in escrow with the Chicago Title and Trust Company under an escrow agreement, a copy of which is hereto affixed as Exhibit B . . . , and are now in the possession of the defendant, Chicago Title and Trust Company, under said escrow agreement.”

It was then averred that from July 15, 1927, when the contract and notes were executed, until this action was instituted in March, 1934, the club paid McElhatton interest on said notes to the amount of $20,950; that on July 14, 1927, the total value of the assets of the Bunker Hill Country Club was less than $400,000 and its liabilities exclusive of its issued outstanding-shares of preferred stock were in excess of $112,000 ; that in addition to such liabilities the outstanding 3,000 shares of preferred stock of a par value of $100 a share, aggregating $300,000, were entitled to preference in that amount over the common shares of the club which were of only nominal value; that neither on July 14, 1927, nor on the dates when the original, amended or second amended complaints were filed did the club have any surplus available for the purchase of its stock and has no surplus now and is insolvent; that such contract to purchase its own stock was, ever since has been and is now illegal; that the contract to purchase McElhatton’s 450 shares of common stock constituted and now constitutes an attempt to illegally prefer him over other shareholders and over creditors of the Bunker Hill Country Club and constituted an attempt to apply and divert the corporate assets to the personal benefit of McElhatton; and that the application of any assets of the club to the payment of the aforesaid notes or any of them will be an illegal application of such assets, which will prefer MeElhatton over other stockholders and defraud the creditors of' the club.

Plaintiffs aver their willingness in the event that MeElhatton returns the $80,000 notes, $20,950 interest received by him on same and interest on that interest, to cancel the escrow agreement under which the Chicago Title & Trust Company holds the 450 shares of common stock purchased by the club from MeElhatton and held by it as security for the payment of the notes and the interest thereon. The complaint concludes with a prayer for the rescission of the contract between the club and MeElhatton, for cancellation of the $80,000 notes and that the 450 shares of stock held in escrow by the Chicago Title & Trust Company be ordered delivered to the club to be held by it until MeElhatton returns the interest theretofore received by him and interest on same. MeElhatton’s motion to strike this complaint and dismiss the cause for want of equity was sustained as were similar motions pre^ viously directed to the original and first amended complaints.

The second amended complaint was verified in behalf of plaintiff Bunker Hill Country Club by its president, B. F. Andresen, the owner of 1,500 shares of its preferred stock and 500 shares of its common stock at the time the complaint was filed, as well as at the time the contract for the purchase of MeElhatton’s stock was executed July 15,1927. On that date he was also president of the club and one of its directors, and under the terms of the contract he personally guaranteed the payment of the notes. As such owner of 1,500 shares of preferred and 500 shares of common stock of the club, he is an individual plaintiff stockholder as are two other stockholders who were directors when the contract and notes were executed.

Incorporated as a part of and attached to plaintiffs ’ second amended complaint as “exhibit A” are the minutes of a meeting of the board of directors of the club held July 14, 1927, showing all seven directors present and B. F. Andresen presiding, at which meeting a resolution was adopted authorizing the contract to purchase McElhatton’s stock.

On the following day, July 15, 1927, pursuant to the resolution adopted by the club’s directors the previous day, the contract was entered into between the club and McElhatton. The notes were delivered to McElhatton. The 450 shares of stock were delivered by McElhatton to the club, indorsed in blank in its behalf by its officers and deposited in escrow with the Chicago Title & Trust Company as security for the payment of the notes and interest thereon. Thereupon McElhatton resigned as director of the club and from his $100 a week position as its assistant manager.

Did the six disinterested directors of the Bunker Hill Country Club’s board of seven, who were obviously adverse and hostile to McElhatton, the seventh, in the particular transaction, have the right to authorize the contract for the purchase of his stock in the club and the execution and delivery of its notes in payment thereof1

The great weight of authority in this and the majority of jurisdictions is that a director may deal or contract with his corporation where he acts in good faith and the corporation is represented by a quorum of disinterested directors or other independent officers. (Fletcher Corp., vol. 3, ch. 11, sec. 931; 14 A. C. J., p. 118.)

There is no charge that any of the other six directors were in collusion with McElhatton and the logical inference is that they were not only disinterested in his welfare, but were adverse and hostile to him. This being so we know of no legal inhibition against the board of directors entering into a valid contract in behalf of the corporation with McElhatton for the purchase of his stock.

The law is well settled in this State that such a contract is legal and binding upon the corporation if authorized in good faith and in its best interests while solvent by a disinterested majority of its directorate acting not in collusion with or in the interest of the contracting director or in prejudice of creditors. The pleadings show no restriction in the club’s articles of incorporation against the purchase of its own stock. The club was admittedly solvent when the contract in question was entered into July 15, 1927, inasmuch as in the first amended complaint its total net assets were alleged to have been more than $320,000 and in the second amended complaint “less than $400,000,” and its liabilities about $112,000 at that time.

It is claimed that the $300,000 preferred stock then issued and outstanding should also be held to be a liability of the corporation, and, if so considered, that the club was insolvent when the contract was made. This position is untenable. The club’s articles of incorporation provide in part:

“The holders of preferred stock shall be entitled to receive, when and as declared from the surplus or net profits of the corporation, dividends at the rate of six per cent (6%) per annum on the par value thereof ... . Dividends on such preferred stock shall be cumulative. In the event of any dissolution, liquidation or winding up of the corporation or the sale of its assets whether voluntary or involuntary, or in the event of its insolvency, or upon any distribution of its capital, there will be paid to the holders of the preferred stock the par value thereof, to-wit $100.00 per share, and the amount of all unpaid dividends thereon before any sum shall be paid or any assets distributed among the holders of the common stock.

In Gibson v. Bedard, 173 Minn. 104, in passing upon a like contention, where a substantially similar provision was contained in the articles of incorporation before that court, it was said at p. 108:

“The preferred stock does not, as contended on behalf of appellants, have a lien on all the capital and assets of the corporation. It has, however, a preference, under the provisions of the articles which constitute the contract, over the common stock as to certain earnings of the corporation and as to assets on dissolution for a stated amount. But there is no allegation of any violation of the contract in these respects ....

“. . .In dealing with contracts challenged on the ground of fraud, actual or constructive, the term ‘insolvency’ has reference to insufficiency of assets of the debtor to cover his liabilities.”

In our opinion the article heretofore set forth merely confers a preference to the holders of the preferred stock of the club as to the distribution of dividends and division of property and assets of the corporation in the event of its dissolution, liquidation or insolvency.

It is urged that the creditor plaintiffs, even though they became such subsequent to the purchase of McElhatton’s stock by the club, may attack the transaction. "While there is no allegation in the second amended complaint as to when they became creditors, the first amended complaint alleges that the second mortgage was placed upon the club property March 31, 1931, and it thus appears that all of the creditor plaintiffs who are holders of notes under the second mortgage did not become creditors of the club until nearly four years after its purchase of MeElhatton’s common stock. It 'has repeatedly been held by the courts of review of this State that a corporation’s purchase of its own stock is not subject to attack by creditors unless at the time of the transaction they were existing creditors in respect to whose rights such purchase was fraudulent or at the time the purchase was made the corporation was insolvent or in process or contemplation of dissolution. (Republic Life Ins. Co. v. Swigert, 135 Ill. 150; Clapp v. Peterson, 104 Ill. 26; Fraser v. Ritchie, 8 Ill. App. 554.) If such a purchase was made with the fraudulent intent to hinder or defraud subsequent creditors, it would also be clearly invalid and subject to attack. (Melvin v. Lamar Ins. Co., 80 Ill. 446; Olmstead v. Vance & Jones Co., 196 Ill. 236.) It surely cannot be said that this purchase of stock by the club, consummated nearly four years before the creditor plaintiffs came into existence, was made when the corporation was in process or contemplation of dissolution or with the fraudulent intent to hinder or defraud them. The creditor plaintiffs, in our opinion, have no right to question the validity of the corporation’s contract with McElhatton.

Was the contract made in good faith and in the best interests of the corporation? The corporation was solvent and much more than able to pay its debts in July, 1927. When B. P. Andresen conceived the idea and incorporated the golf club in 1924, McElhatton was golf “pro” at a country club near Chicago, of which Andresen was a member. He immediately employed McElhatton as his assistant manager, and as part of his duties he sold stock in the club and obtained playing members, at a salary of $100 weekly, which he received until the contract was made and he severed his connection with the club July 15,1927. The resolution adopted by the board of directors of the club July 14, 1927, and heretofore referred to as “Exhibit A,” recited, among other things, that “whereas controversies and differences having arisen between John McElhatton and the corporation respecting the conduct, operation and management of the business and affairs of the corporation, and whereas it is deemed desirable and for the best interests of the corporation that all of the controversies and differences existing between . . . McBlhatton and the corporation be settled and adjusted . . . therefore be it resolved that Bruno Fred Andresen, president of the corporation, and Ernest H. Allen, secretary of the corporation, be and they are hereby authorized and empowered for and on behalf of the corporation to accept the offer of the said John McBlhatton to sell to the corporation 450 shares ... of its common stock without nominal or par value for the sum of . . . $80,000.”

The contract with McBlhatton was not exclusively a transaction involving a sale of his stock to the club. It also provided that for seven and one-half years from the date of the contract he was not to become engaged in any capacity with the Tam O Shanter Golf Club in the Chicago district or any other golf club (with certain exceptions) within a radius of five miles of the property of the corporation without the consent in writing of the club. As a result of the contract he was required to. resign as director of the club and to relinquish his position as assistant manager, which paid him a salary of $100 weekly. In short, his entire relationship with the club was severed, enabling it to dispense with what was considered by it at that time a disrupting force fraught with loss and failure to it.

In Joseph v. Raff, 82 App. Div. 47 (81 N. Y. S. 546), an almost parallel case, where there was dissatisfaction and controversy as there was here, and where the president, who was also a director, refused to resign unless the corporation purchased his stock, the court held at p. 552:

“This being for the best interests of the company, it was proper for the directors to endeavor to secure the defendant’s resignation; and it was lawful for him to resign, and to impose as a condition that he receive the amount owing to him by the company and a reasonable allowance for giving up his salaried position. It was also lawful for him to refuse to resign the management of the company unless his stock was taken off his hands.

“. . . Furthermore, the transaction having been had in entire good faith, and not in contemplation of the insolvency of the company, the company would be estopped, and we think its subsequent creditors should also be estopped, from questioning the validity of the purchase of the stock by the company from the defendant, since it is impossible to rescind the sale and restore him to the position he then occupied. Had he remained director and president, a's he mig’ht and doubtless would have done but for this agreement, he would have had the benefit of his individual judgment in the management of the affairs of the company for the protection of all stockholders, including his own interest as such.”

Interest amounting to $20,950 was paid on the notes over a period of more than six years subsequent to the making of the contract, and this action was not instituted until nearly seven years after the contract was executed and the notes delivered. It is a matter of common knowledge that golf clubs were in the ascendency and that there was an active rising market for acreage property in the Chicago district in 1927. All courts have taken judicial notice of the depression with its repercussion in land and other values, and the fairness of the contract and the good faith of the parties must necessarily be viewed in the light of conditions as they were in 1927 and not in retrospect. We are impelled to conclude that the facts alleged are insufficient to show that the contract was made in bad faith and not in the best interests of the club.

Plaintiffs claim that the board of directors of the club were induced to authorize the contract by the fraud and duress of MeElhatton. An examination of the second amended complaint reveals that there are no well pleaded facts showing either. The only reference in the complaint to fraud on the part of McElhatton is “that he made false and untrue statements concerning the Bunker Hill Country Club,” which is obviously a conclusion and manifestly insufficient to charge fraud. It is an established rule that allegations contained in a complaint must be construed most strongly against the plaintiff and that only such facts are admitted by a motion to strike as are well pleaded in the complaint. Such a motion admits none of the conclusions or inferences drawn by the pleader. (Lindemann & Hover son Co. v. Advance Stove Works, 170 Ill. App. 423; Betten v. Williams, 277 Ill. App. 353.)

Plaintiffs’ charge of duress is based solely on the assertions in the complaint that McElhatton “entered upon a campaign of terrorism designed and intended to wreck” the club; that he “called one or more meetings of certain members and endeavored to induce them to resign” from the club; that in order “by force, fear and intimidation” to compel the club to purchase his stock, he refused to perform his duties; that he threatened to and proceeded to use various devices and artifices to persuade “members of the club to resign and organize another golf club”; that he “threatened to take measures to disrupt and wreck the club ’ ’ ; and that, “because of such acts, threats and intimidation, and, because of and under fear and duress caused thereby, ’ ’ the board of directors entered into the agreement with him. These allegations are merely a statement of conclusions, without any foundation of fact. It is well settled that facts showing duress must be stated in the complaint. (Betten v. Williams, supra.) There is no allegation that any wrongful word, act or conduct of McElhatton rendered the directors of the club incompetent to contract with the exercise of their “free will power.” (Wood v. Telephone Co., 223 Mo. 537.) Nor is it alleged that the corporation and its disinterested directors were without reasonable opportunity to institute proceedings in equity to protect themselves against the designing, oppressive or unlawful acts of McElhatton, if there were any such. (Illinois Merchants Trust Co. v. Harvey, 335 Ill. 284.) There is no allegation in the complaint from which it can be inferred that there was anything fraudulent or illegal in McElhatton’s transaction with the club or that the contract was made under duress.

• In any event the resolution of the board of directors authorizing the contract recites that differences and controversies respecting the operation and management of the club had arisen between it and McElhatton and that it was deemed desirable and for the best interests of the club that all such differences and controversies be settled and adjusted by accepting McElhatton’s proposal that he be paid $80,000 for his stock.

It is well settled law in this State that where there is discrepancy or contradiction between allegations in a complaint and facts as shown in an exhibit attached to and made a part of the complaint, the exhibit will control; and that a motion to strike the complaint does not admit such allegations as are in conflict with facts disclosed by such exhibit. (Lyons v. 333 North Michigan Ave. Bldg. Corp., 277 Ill. App. 93.)

The allegations of the complaint which attempt to charge fraud and duress are clearly in conflict with and refuted by the facts contained in the resolution, and the recital in the exhibit containing the resolution that the contract was ‘ ‘ desirable and for the best interest of the corporation” must be held to be controlling.

Even though it were possible to hold the complaint sufficient, it was not filed, as noted above, until nearly seven years after the transaction in question, and any cause of action in connection with it is barred by the statute of limitations. Plaintiffs say that they did not learn of the existence of the alleged cause of action until a few months before the filing of their complaint because of its careful concealment by the club’s directors and thus attempt to evade the statute. This does not prevent the running of the statute, however, as there is no allegation of fraudulent concealment by McElhatton. (Parmelee v. Price, 208 Ill. 544; Lan caster v. Springer, 239 Ill. 472; Keithley v. Mutual Life Ins, Co., 271 Ill. 584; Jackson v. Anderson, 355 Ill. 550.) In the Jackson v. Anderson case, supra, the court said at p. 557:

“Mere silence of the defendant and mere failure on the part of the complainant to learn of a cause of action do not amount to such fraudulent concealment. (Fortune v. English, 226 Ill. 262; Lancaster v. Springer, supra; Parmelee v. Price, supra.) Furthermore, we have held that good faith and reasonable diligence are essential elements in asking for relief from a court of equity. (LeGout v. LeVieux, 338 Ill. 46.) There is no showing of any reason why the complainants could not have learned in 1926 of the facts which they claimed to have learned in 1931. There is no showing of any diligence to learn such facts, and it is hardly consistent with good faith to hold a valuable piece of property through the economically fat years, and then, during times that are economically lean, seek to repudiate the deal whereby it was acquired.”

We are of the opinion that the disinterested majority of the board of directors of the corporation had the right and authority to make the contract with MeElhatton, which was advantageous to it at the time it was made, and authorize the execution and delivery of the notes to him; that such contract was entered into in good faith while the corporation was solvent; that neither fraud nor duress that might vitiate it is sufficiently alleged in the complaint; that the instant action is barred by the statute of limitations; and that the contract and notes are legal, binding and enforceable.

For the reasons indicated herein the decree or order of the circuit court sustaining defendant MeElhatton’s motion to strike the second amended complaint and to dismiss the cause for want of equity is affirmed.

Affirmed.

Scanl an, P. J., and Friend, J., concur.


author: Per Curiam.

text:
    George Roy, Appellee, v. City of Springfield, Appellant.
    Gen. No. 8,962.
    Opinion filed November 7, 1935.
    Hugh J. Dobbs, of Springfield, for appellant; J. R Finkle,. of Springfield, of counsel.

      T. J. Sullivan and Frank R. Sullivan, both of Springfield, for appellee.
   Per Curiam.

This cause is before the court on the petition of the city of Springfield for leave to appeal from the judgment of the circuit court of Sangamon county.

It appears from the record that judgment was entered upon the verdict of the jury on December 24, 1934; that notice of appeal was filed in said court on March 18, 1935; that on May 6, 1935, an order was entered by the circuit court extending the time to and including July 1, 1935, within which report of proceedings in said cause should be filed; that on June 28, 1935, the report of proceedings was filed.

From the affidavit filed in support of the petition for leave to appeal it appears that the record in said case was not on file in the office of the clerk of this court on July 29, 1935, the last day in which the record could be filed under the rules of this court.

The right to appeal is not a constitutional right and does not exist unless it is conferred by statute. Union Drainage District No. 6 v. Dupuis-Granger Drainage District No. 11, 313 Ill. 37. Being purely statutory the statute granting the same must be strictly complied with. Hall v. First Nat. Bank of Pittsfield, 330 Ill. 234.

Unless an appeal is taken as a matter of right within 90 days from the entry of the judgment complained of the burden is upon the petitioner to show not only that there is probable ground for reversal of the judgment complained of, but also to satisfy the court that the delay in taking the appeal was not due to his culpable negligence before an order can be entered by the reviewing court granting the appeal.

The facts shown in the affidavit in support of the petition are these: that a complete transcript of the record was presented to the office of the clerk of this court on July 6, 1935, and that said record was withdrawn therefrom on July 16, 1935, pending payment of the filing fee and to facilitate the preparation of an abstract; that counsel, presenting said record to said clerk, requested the clerk to furnish a bill for such filing fee so that the same could be vouchered in due course of city business in transactions wherein the legal department of the city has incurred expense payable from the revenue of the water department. Such fee bill was delivered to counsel for the city on July 16, 1935, and the same was vouchered for payment on July 22, 1935. ■

An employee of the clerk’s office made a notation that said record was required to be returned to said office on or prior to Monday, July 29, 1935-, in order that said appeal be perfected as a matter of right, and said counsel understood that he was to be advised thereof on the receipt of said filing fee or in case said date arrived and the fee was not paid; that, due to the illness of one of the employees of the city, a check did not in fact issue in payment of said filing fee until August 1, 1935, and on the same day said employee who had been absent on a vacation returned and called attention of counsel that the time of filing said record was past due; that between July 23 and August 1st counsel for the city was engaged in business of the city, requiring his appearance in courts of record which necessitated his absence from his office almost continuously from July 24 to July 30. His associate counsel during said period had abstracted said record but was under the erroneous impression that said record had been filed.

Are the facts shown by the affidavit sufficient to satisfy the court that the delay in taking an appeal was not due to appellant’s culpable negligence? “Culpable,” in the sense in which it is used in section 76, paragraph 1, of the Civil Practice Act (Ill. State Bar Stats. 1935, ch. 110, ¶ 204) and in rule 29 of the Supreme Court, is that of ‘‘ blamable. ’ ’ Peoria & P. U. Ry. Co. v. Clayberg, 107 Ill. 644, 651. One would be guilty of culpable negligence if he failed to exercise that degree of care rendered appropriate by the particular circumstances, and which a man of ordinary prudence in the same situation and with equal experience would not have omitted.

By the filing of a notice of appeal in the circuit court counsel perfected an appeal and he also complied with all of the requirements of the Civil Practice Act and rules of court even to procuring a complete transcript of the record in the case long before the time it was necessary to file the same and was fully informed as to the final date upon which the record on appeal must be filed, and had notice also of the necessity of paying the filing fee to the clerk of the court at the time the record was presented for filing, and all of which he must necessarily have known from his experience as an attorney but failed to file the same on or before the day it was due to be filed.

It is stated that counsel understood that he was to be advised when the filing fee was received by the clerk or when the date arrived and the fee was not paid, and that a check was not issued by the city for the filing fee because of the illness of one of the employees of the city.

Does it appear, from the facts stated in the affidavit in support of the petition to appeal, that counsel for petitioner exercised that degree of care that a lawyer of ordinary prudence and of equal experience would have exercised under the same circumstances 1 We think not. Even though counsel may have been busy in courts of record in the interests of the city, the record could have been filed and the fee paid by any messenger of the city. It was not a service that was necessary to be performed by counsel in person, although it was his duty to see that the same was filed in time in order that the appeal be not dismissed.

We are of opinion that appellant has failed to show facts sufficient to satisfy the court that the delay in taking an appeal was not due to appellant’s culpable negligence. It will be unnecessary to consider other-questions raised by the parties.

Leave to appeal denied.


author: Mr. Presiding Justice McSurelt

text:
    Pontiac Refining Company, Inc., Appellee, v. Railway Express Agency, Inc., Appellant, and Lorraine Hotel Company.
    Gen. No. 38,209.
    Opinion filed November 12, 1935.
    Cutting, Moore & Sidley, of Chicago, for appellant; C. Daggett Harvey, of Chicago, of counsel.
    No appearance for appellee.
   Mr. Presiding Justice McSurelt

delivered the opinion of the court.

Plaintiff brought suit to recover the value of a shipment of gold bullion delivered to the defendant Railway Express Agency, a corporation, for delivery, alleging that the Express Agency failed to deliver to the consignee. The Lorraine Hotel Company, a corporation, was joined with the Express Agency as defendants. Upon trial by the court the Hotel was acquitted, the Express Agency was found guilty and plaintiff’s damages were assessed in the amount of $100. From the judgment defendant appeals. Plaintiff files no brief in this court in support of the judgment.

Plaintiff undertook to ship a small package of gold bullion from Pontiac, Michigan, via the Railway Express Agency to the plaintiff’s vice president, Mr. C. E. Jennings; the package was addressed to C. E. Jennings “in care of Lorraine Hotel,” Chicago; when the package arrived in Chicago an employee of the Railway Express Agency took it to the Lorraine Hotel and inquired of the room clerk on duty if Mr. C. E. Jennings was in, saying he had a package for him; the room clerk informed the employee that Mr. Jennings was not in but that he would take the package for Jennings and sign the bill or delivery sheet; the package was left with the clerk, who put it in the hotel safe; later, by mistake, the clerk turned over the package to a man by the name of Charles Jennings, who was a different person from the C. E. Jennings for whom the package was intended; this Charles Jennings converted the gold to his own use.

It has been decided in many cases that where a package is addressed to a consignee in the care of a third person, this confers upon such third person the right to receive the goods and constitutes him the proper person to whom to make delivery. A typical case is Philadelphia Tapestry Mills v. New England S. S. Co., 251 Mass. 270. There a shipment was sent, through the defendant steamship company to ‘ ‘Wasserman Bros., % S. A. Mangam, Pier 14 N. R., N. Y.” The steamship company delivered the . shipment to Mangam and it was subsequently lost. Plaintiff sued the steamship company. The court held that it was freed from further liability by delivering the shipment to Mangam, saying, “Where goods are shipped to a consignee in the care of another person, that person has the right to receive the goods and he becomes the proper person to whom the carrier may make delivery.” Among other cases to the same effect are Commonwealth v. Peoples Express Co., 201 Mass. 564; City National Bank v. El Paso & N. R. Co., 262 U. S. 695; United States Express Co. v. Hammer, 21 Ind. App. 186; Ela v. American Merchants’ Union Express Co., 29 Wis. 611; Russell & Annis v. Livingston & Wells, 16 N. Y. 515; Chicago & N. W. Ry. Co. v. Merrill, 48 Ill. 425; Schlesinger v. West Shore R. R. Co., 88 Ill. App. 273; Hoops v. Wells Fargo & Co., 176 Ill. App. 620. We have been unable to find any case holding to the contrary.

It follows, therefore, that the judgment was improperly entered, and it is reversed without remanding.

Beversed.

Matchett and O’Connor, JJ., concur.


author: Mr. Presiding Justice McSurely

text:
    In re Estate of Frank B. Klock, Deceased. Harold F. Klock, Appellee, v. Glena Wooton Klock, Appellant.
    Gen. No. 38,235.
    Opinion filed November 12, 1935.
    Samuel Spitzer and Henry N. Shabsin, of Oak Park, for appellant.

      Campbell, Clithero & Fischer, of Chicago, for appellee.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Glena Wooton Klock (hereafter called respondent) widow of Frank B. Klock, deceased, applied for and received letters of administration of her husband’s estate; subsequently Harold F. Klock, a son of the deceased by a prior marriage, filed his petition asking that the order granting letters testamentary to the respondent be revoked and set aside; she filed an answer to this petition; the probate court vacated and expunged the order granting the respondent letters; she appealed to the circuit court and there filed her amended answer to the petition; on motion, the circuit court struck the amended answer on the ground that the probate court was without jurisdiction to adjudicate the matters put in issue by the petition and the amended answer; respondent elected to stand upon her amended answer and the petition was taken as confessed and the letters granted to her were revoked and letters of administration were granted to the petitioner, Harold F. Klock. Respondent appeals from that order to this court.

The petition was based upon an antenuptial agreement made between Frank B. Klock and Grlena Wooton —respondent’s name before marriage — in which each of the parties relinquished all rights in the estate of the other. Respondent’s amended answer asserted that her signature to this antenuptial agreement was procured by fraud and hence was invalid. The question presented is whether the probate court of Cook county, in the exercise of its jurisdiction in the administration of decedent’s estate, had jurisdiction to pass upon the validity of the antenuptial agreement, the execution of which by respondent was alleged to have been obtained by fraud.

The particular fraud alleged is a statement of the extent of deceased’s property contained in the agreement, said to be untrue. Respondent alleges in her amended answer that on the day of the marriage, about half an hour prior to the marriage ceremony, Frank B. Klock presented to her for execution the ante-nuptial agreement, which is set forth in the petition of Harold F. Klock; thereupon both parties signed the agreement and the marriage ceremony was performed a half hour thereafter. She asserted that this agreement was prepared by the attorneys representing Frank B. Klock; that she never before this time had seen the agreement although there had been a discussion some time prior with reference to such an agreement; that she signed the agreement in complete reliance upon the fairness and truthfulness of the statements in the agreement. The agreement states that the market value of the property of Frank B. Klock was approximately $300,000. It was provided that respondent should receive payment of not less than $100 a month during the life of Frank B. Klock and $400 a month, should she survive him, was to be paid her during the term of her natural life or until she should be married.

In case she survived she agreed to make no claim to any part of decédent’s estate, and if any part shall have passed to her by descent she agreed to immediately transfer all such interests; she waived and relinquished all right to dower, homestead and widow’s award, and all other rights which might accrue to her by reason of the marital relation.

The amended answer asserts that instead of an estate of approximately $300,000, Frank B. Klock at that time owned property of the value of more than $2,100,000, and therefore the interest in his property provided for in the antenuptial agreement for his surviving spouse was grossly inadequate and disproportionate; that Frank B. Klock had failed to disclose truly to the respondent the character and amount of his estate, thus perpetrating a fraud upon respondent.

Section 18 of the Administration Act, Ill. State Bar Stats. 1935, ch. 3,¶ 18, gives the probate Court jurisdiction to grant letters of administration where the decedent died intestate, and section 11 gives power to appoint an administrator to collect pending a controversy as to the right to administer an estate. Respondent argues that in addition'to these powers the probate court has jurisdiction to declare an antenuptial agreement obtained through fraudulent means to be ineffec tive and not binding, citing Kroell v. Kroell, 219 Ill. 105. That case involved the question as to the sufficiency of an antenuptial contract to release a widow’s award. The opinion states that “all charges of fraud were eliminated.” The Supreme Court therefore had before it simply a question of law involving a construction of the antenuptial contract. No question of fraud was involved. Edwards v. Martin, 39 Ill. App. 145, involved the construction of an antenuptial contract, the opinion saying, that ‘ ‘ The only thing before us, then, is to determine whether by the terms of the contract appellee waived any and all right to any portion of her husband’s estate.” Williams v. McKeene, 193 Ill. App. 615, is cited by respondent; but that case involved, primarily, the question of the validity of a marriage. In her reply brief respondent says that the case In re Estate of Cover, 188 Cal. 133, is on all fours with the case at bar. There the validity of an ante-nuptial agreement was questioned. The opinion in that case shows that the matter was heard in the superior court of California, which, by the constitution of that State, was given original jurisdiction of various classes of actions and special proceedings and all matters of probate. The matter was heard by a jury in the superior court, sitting in probate,' and it was held that the superior court while sitting in matters of probate is the same as it is while sitting in equity.

As opposed to this position the petitioner cites a number of cases which hold that a sealed instrument, such as this is, cannot be impeached for fraud except where a court of equity has been invoked to set it aside for such fraud; that the only exception to this is where fraud is in the execution of the instrument, where, by some trick or device, one is induced to sign an instrument which he did not intend to execute. Jackson v. Security Mut. Life Ins. Co., 233 Ill. 161; Woodbury v. United States Casualty Co., 284 Ill. 227; Bach Brick Co. v. City of Chicago, 335 Ill. 101. Rook v. Rook, 111 Ill. App. 398, involved the question whether the probate court had jurisdiction to declare a deed absolute upon its face to be a mortgage. The court said:

“While it has been held that county and probate courts may exercise such equitable jurisdiction in the settlement of estates and the allowance of claims, as is adapted to their organization and mode of proceeding, (Shepard v. Speer, 140 Ill. 238) and that whenever within the scope of the statutory jurisdiction confided to them, the relief to be administered, the right to be enforced, or the defense to an action properly pending before them, involved the application of equitable principles, their powers are commensurate with the necessity demanding their exercise, whether legal or equitable in their nature, (Woerner on Adm., Sec. 149; Shepard v. Speer, supra) we do not think that this includes the power to reform a written instrument under seal, so as to vary or qualify the language used therein, or to declare a déed, absolute upon its face, to be a mortgage. This power rests exclusively within a court of equity. Lloyd v. Sandusky, 203 Ill. 621. ’ ’

The recent case of Howard v. Swift, 356 Ill. 80, involved certain claims against an estate arising out of alleged fraudulent actions of directors of a company, one of which was the decedent. The probate court dismissed the suit on the ground of want of jurisdiction. The Supreme Court affirmed this judgment, saying:

‘ ‘ The probate court, by virtue of the constitution, is therefore not a court of general jurisdiction, but its jurisdiction is circumscribed and restrained by the constitution. Any legislative acts which attempt to extend such jurisdiction beyond that conferred by the constitution are violative of the constitution. Such court has no general equitable jurisdiction but can only exercise equitable power within the zone conferred by the constitution. ’ ’

In Hannah v. Meinshausen, 299 Ill. 525, it was again said that probate courts are not courts of general chancery jurisdiction but may exercise only such chancery powers as may be within the limits of the jurisdiction conferred by the constitution, namely, the settlement of estates of deceased persons, appointment of guardians, etc. Gooch v. Suhor, 121 Va. 35, involved a question very similar to that before us. A brother of the decedent, Gooch, was appointed administrator; Mrs. Suhor applied for appointment as administratrix, asserting that a marriage contract which negatived her appointment had been procured by fraudulent representations and concealment and was therefore void; her prayer for appointment was denied and she appealed to the Supreme Court. It was held that the probate court had no general equitable jurisdiction and had no power to pass upon the validity of the agreement; that the appropriate procedure was in equity. Maurer v. Naill, 5 Md. 324, involved a similar question. Because of an antenuptial contract the widow’s application for letters of administration was denied. Other cases also so holding are Estate of Walker, 169 Cal. 400; Ward v. Thompson, 6 Gill & Johnson’s (Md.) 349; Charles v. Charles, 49 Va. 486.

The order striking respondent’s answer is not an adjudication as to the validity of the antenuptial agreement. In Buerger v. Buerger, 317 Ill. 401, various orders were entered and proceedings had in the probate court in the usual administration of estates, all of which were affirmed by the circuit, Appellate and Supreme Courts. A bill was filed contesting the will. It was argued that the proceedings in the probate and circuit courts were res adjudicata. The Supreme Court held to the contrary, saying that the probate proceedings merely made a prima facie case so that the estate may be cared for and the administration proceed, reserving the right to any interested person to contest the validity of the will.

In the instant case the record shows that respondent has filed her bill of complaint in chancery in the circuit court of Cook county, seeking to set aside the ante-nuptial agreement, in which bill she alleges under oath that “the Probate Court of Cook County, Illinois, is without jurisdiction to adjudicate the invalidity of said agreement,”- — referring to the antenuptial agreement.

We hold that the probate court was without jurisdiction to test the validity of this agreement.

It is suggested by the petitioner that the probate court could properly revoke the letters of administration issued to her on the ground that they were procured by false pretenses. Section 26 of the Administration Act, Ill. State Bar Stats. 1935, ch. 3, ¶ 27, provides that letters of administration may be revoked where they are granted upon false pretenses. In her petition for letters she stated under oath that the value of the decedent’s estate did not exceed $5,000, and her bond in the sum of $10,000 was accepted in reliance upon this statement. Subsequently she asserted more than once under oath that the value of the estate was at least $1,500,000. The probate court might well have considered this in revoking the letters issued to the respondent.

.For the reasons indicated we hold that the order of the circuit court is proper and it is affirmed.

Affirmed.

Hatchett and O’Coxnor, JJ., concur.


text:
    Harry I. Weisbrod, Appellant, v. E. Lowitz et al., Defendants. Leon M. Woolf et al., Appellees.
    Gen. No. 38,264.

      Opinion filed November 12, 1935.
    Castle, Williams & McCarthy, of Chicago, for appellant ; Emmett J. McCarthy and Robert R. Hanley, of Chicago, of counsel.
    Mayer, Meyer, Austrian & Platt, of Chicago, for appellees; Frederic Burnham and Miles Gr. Seeley, both of Chicago, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Plaintiff brought suit to recover the purchase price of 1,000 shares of Electric Bond and Share Company stock alleged to have been sold by defendants to plaintiff, in violation of the Illinois Securities Law, claiming damages of $35,000; upon trial by the court the judgment was against him, and from this he appeals. It is conceded that the stock in question was not registered or qualified under the provisions of the Illinois Securities Law and not exempt under any of its provisions.

Defendants first say, in defense, that they acted solely as the agents of plaintiff in purchasing the stock and hence are not answerable under the securities law. Defendants are stock brokers, having no stock for sale; they act only as brokers for customers, buying and selling as customers order; they charge a commission on such transactions. Plaintiff had been a customer of defendants for several years, commencing in 1923; plaintiff would at intervals give orders to defendants by telephone with reference to transactions- in stocks; defendants would execute these orders and on the same day would confirm by mail what had been done. Plaintiff, before the particular transaction in question, had bought shares of the Electric Bond and Share Company through defendants and apparently was more or less familiar with the stock.

September 12, 1931, he called Mr. Woolf, one of the defendants, by telephone and inquired as to quotations in the market. Plaintiff says that Woolf mentioned the Electric Bond and Share Company and gave some information about it and said that if it could be bought for $30 a share it was a good buy; plaintiff then said that if it reached this • figure to buy 1,000. shares for him. Mr. Woolf testified that he answered plaintiff’s inquiries as to quotations on different stocks; that he did not volunteer any information and did not solicit him to zbuy any shares of stock of the Electric Bond and Share Company.

Woolf made a written memorandum of the order and forwarded it to defendants’ New York office by private wire; the New York office transmitted the order to brokers doing business on the floor of the New York Curb Exchange where the purchase of 1,000 shares was made at $30 a share; a report of this purchase was then sent to the defendants at their Chicago office and Woolf sent plaintiff a confirmation of the order showing the purchase price of $30,000 and a charge by defendants of a brokerage commission of $150; no other commission or profit was charged or received. A few days later the defendants received the certificates of stock and they were delivered, pursuant to plaintiff’s orders, to certain banks which lent plaintiff money with which to pay for the stock,

We are of the opinion the trial court correctly found that defendants acted solely as the agents of the plaintiff in the transaction and purchased the stock as ordered by him. The sellers of the stock were the undisclosed principals of the New York brokers who made the sale to defendants’ brokers on the floor of the New York Curb Exchange. The distinction between a stock dealer who deals in stocks on his own account and a stock broker who acts as his customer’s agent has been clearly expressed by Meyer in The Law of Stock Brokers and Stock Exchanges, pages 249 and 250 of the edition of 1931 and page 32 of the supplement of 1933. The author notes that stock dealers usually confirm the transactions to customers by using words like “confirming sale to you,” or “confirming purchase from you, ’ ’ whereas stock brokers usually couch their confirmations in language as follows: “We have this day bought (or sold) for your account and risk.” The confirmation in the instant case read, “We have this day bought for your account and risk. ’ ’

Cases cited by plaintiff do not negative this position. In Link, Petter & Co. v. Pollie, 241 Mich. 356, it was held that the brokers solicited the purchaser to buy. In Taft v. Otte & Co., 274 Ill. App. 280, the opinion merely states the conclusion that the defendants there had acted as sellers. The briefs in that case show that the defendant did not charge the customer a brokerage fee and in its confirmation referred to the transactions as a sale, and also purchased the stock at one price and resold it to the plaintiff at a profit. The facts there are quite different from those in the instant case.

Considering the evidence as having established that defendants were brokers acting for plaintiff in this transaction, are they amenable to the Illinois Securities Law? Plaintiff argues that they are and that they became liable to return the full purchase price of the stock because they knowingly furthered, aided and assisted in the transaction. Section 37 (1) (Cahill’s Ill. Rev. St. ch. 32, ¶ 290) provides as follows:

“ (1) Every sale and contract of sale made in violation of any of the provisions of this Act shall be void at the election of the purchaser, and the seller of the securities so sold, the officers and directors of the seller, and each and every solicitor, agent or broker of or for such seller, who shall have knowingly performed any act or in any way furthered such sale, shall be jointly and severally liable, in an action at law or in equity, upon tender to the seller or in court of the securities sold, to the purchaser for the amount paid, the consideration given or the value thereof, together with his reasonable attorney’s fees in any action brought for such recovery. ’ ’

Subsec.4, sec. 2, defines the term “sale” and subsec. 5 defines “dealer and broker.” These definitions are quite lengthy and include every transaction constituting or leading up to a transfer of ownership of securities. But section 37, above quoted, creates rights and imposes liabilities. It clearly is aimed at those, who sell stock not qualified.

In every transaction of this nature there are' two parties — a buyer and a seller. Plaintiff’s argument that the act applies to anyone participating’ in the transaction, even as the agent for the buyer, ignores any distinction or difference between a buyer and a seller. Clearly the legislature did not intend to penalize the buyer in such a transaction, and it would be illogical and abnormal to penalize the buyer’s agent who was acting for his principal.

It should be remembered that in a transaction of this sort there is only one change of ownership, namely, from the seller to the buyer. The New York owners of the stock under consideration did not sell to their brokers but their brokers represented the owners in making the sale. And so plaintiff was not purchasing from Ms brokers, who were acting as his agents in the matter. The sale was from the New York owners to the plaintiff through the medium of their respective brokers.

It is not of controlling importance that the defendant Woolf gave as his opimon to plaintiff that the stock was a “good buy” at $30 a share. Plaintiff was seeking information and the broker was giving it as best he could. There was no evidence that plaintiff was asked or solicited to buy.

Subsec. 4, sec. 2, of the Illinois Securities Law was amended in 1933 by adding these words:

“The terms ‘sale,’ ‘offer for sale’ or ‘sell’ shall not include the execution of orders for purchase of securities by a licensed dealer or broker provided such dealer or broker acts as agent for the purchaser, has no direct interest in the sale or distribution of the security ordered, receives no commission, profit or other compensation, other than the commissions involved in the purchase and sale of the security, and delivers to the purchaser written confirmation of the order which clearly itemizes his commission, profit, or other compensation. ’ ’

Plaintiff argues that this changed the law on the principle that the legislature will be presumed by any amendment to change the existing law. The trial court held that this amendment was intended as a clarification, and we are of the opinion that this is a correct interpretation of the amendment. The amendment does not change one word of the section as it previously read. It is merely an additional paragraph. It can hardly be presumed that the legislature intended that the language of the section before this amendment should mean one thing and precisely the same words used by it when this amendment was added should mean something else. We find no case cited which holds that it must be presumed that the legislature intended to change the law when the section retains without qualification or proviso the identical language of the previous enactment, merely adding additional and more detailed provisions. We hold that the trial court correctly found that defendants were the brokers and agents of plaintiff in this transaction and hence not liable.

The securities law requires, upon a rescission by the purchaser, a “tender to the seller or in court of the securities sold.” Plaintiff did not make a proper tender. The evidence shows that he made statements that he was ready to make a tender but his stock was then pledged with the First National Bank of Chicago as collateral for a loan made to defray part of the purchase price. There is ■ no evidence that plaintiff could have obtained the stock from the bank in order to make a tender.

A number of cases are cited excusing a tender on the ground that it is shown that the tender would not be accepted, but those cases involve contracts for the purchase of securities. In such cases it has been held that tender is waived where it would be a useless formality. We are of the opinion that a different rule obtains where the penal provisions of a statute are sought to be enforced. It should be noted that tender may be made in open court, which would be pointless if a tender could be excused by a previous refusal. If the defendants' were liable they were entitled to receive back the stock sold, and the tender is not a matter of performance by them but of restitution to them.

Upon the trial plaintiff tendered 333⅓ shares of stock which he said he had purchased shortly before the trial for the purpose of making a tender. Plaintiff explained the number of shares by saying* some change had been made in the capital structure of the Electric Bond and Share Company whereby three shares each of the old common stock were exchanged for one share of new common stock. Plaintiff had sold the original 1,000 shares of stock outright. Cases are cited by plaintiff holding that where the seller of unlisted securities has induced the purchaser to exchange them he, the seller, will not be permitted to assert that the plaintiff is unable to return the original shares. That is not the case here. Plaintiff did not exchange the original stock for new stock and there is no evidence that the tendered stock was purchased at the suggestion of defendants. Moreover, after plaintiff had elected to rescind the purchase and after defendants had denied any liability, which meant a refusal to accept any stock from plaintiff, he continued to exercise, for his own profit, all the incidents of ownership by selling it and keeping the proceeds. He thus waived any attempted rescission. Weber v. Rupp, 235 Ill. App. 132.

Plaintiff’s right to recover is purely statutory, hence all the conditions upon which that right is based must be complied with before a recovery can be had. The statute contemplates that tender must be made of the stock sold unless this is excused by the action of the other party which led to an exchange. Glen v. Dodson, 347 Ill. 473.

We see no convincing reason to disagree with the conclusions of the trial court, and its judgment is affirmed.

Affirmed.

Matchett and O’Connor, JJ., concur.


text:
    City of Chicago, Appellee, v. Charles Peterson, Appellant.
    Gen. No. 38,284.
    Opinion filed November 12, 1935.
    Behearing denied November 26, 1935.
    Russell, Murphy, Curran & Pearson, of Chicago, for appellant; Walter Wm. Pearson, of counsel.
    William H. Sexton, Corporation Counsel, for appellee ; Otto P. Weiner and William V. Daly, Assistant Corporation Counsel, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Defendant, a dealer in used tires, was found guilty and fined $100 for failure to have a second-hand dealer’s license as required by section 3685 of the revised Chicago Code of 1931. The case was taken directly to the Supreme Court on the certificate of the trial judge that the validity of a municipal ordinance was involved, the public interest requiring a direct appeal. The Supreme Court was of a contrary opinion, holding that only a construction and not the validity of an ordinance was involved, and the case was therefore transferred to this court. City of Chicago v. Peterson, 360 Ill. 177.

Is the ordinance applicable to the business of buying and selling used automobile tires in the city of Chicago ? The case was tried upon a stipulation of facts. Defendant not only dealt in used automobile tires but also sold and offered for sale some new tires, but this was incidental to his used tire business. There was no other type of merchandise sold by him. He had no license to operate this business. Section 3685 makes it unlawful for any person, firm or corporation to maintain a second-hand store without first obtaining a license therefor.

Section 95 of article 5 of the Cities and Villages Act [Cahill’s 1933 St. ch. 24, ¶ 65 (95)] delegated to the city of Chicago power “To tax, license and regulate secondhand and junk stores and yards.” Defendant argues that the words “second-hand and junk stores” are classed together in a manner indicating that the legislature had in mind second-hand stores in the nature of junk stores and that one who deals in second-hand automobile tires cannot be termed a junk dealer. Defendant cites, City of Duluth v. Bloom, 55 Minn. 97, where the question was whether or not a store dealing in new and second-hand furniture came within the terms of a similar ordinance which required a license. It was there said that the word junk was of nautical origin, originally meaning old or condemned cable and cordage; that afterward the word meant worn out or discarded material in general that still may be turned to some use, like old rope, chain, parts of machinery, etc. The plaintiff properly notes that a dealer in second-hand furniture cannot be regarded as a dealer in junk, as often such furniture is more valuable than new. An article of furniture cannot be regarded as junk merely because it is old.

City of Chicago v. Reinschreiber, 121 Ill. App. 114, involved a dealer in bottles both new and used, in about equal amounts. It was held that no license was required, as used bottles are in no way distinguishable from bottles that are new. It can hardly be claimed that old used tires are as good as new ones. The same reasoning was applied to an ordinary book store which sold some second-hand books. Eastman v. City of Chicago, 79 Ill. 178. It was held that a second-hand book was just as useful as a new book. In City of Chicago v. Moore, 351 Ill. 510, it was said that “second-hand and junk stores are classed together in a manner indicating that the general assembly had in mind only second-hand stores carrying on a business similar to that carried on by junk stores, where inducements are liable to be held out to minors to steal articles in order to sell them at such stores.” It is a matter of common knowledge that used tires are frequently stolen and sold.' Old and worn out tires are in the nature of junk and probably have only the value of the rubber contained. But spare tires in good condition are frequently stolen and a second-hand store that purchases such articles needs regulation.

Section 3684 of the ordinance defines a second-hand store as any building, place or premises where used or second-hand fixtures, motors, motor vehicles, motorcycles, apparatus, “or any other second-hand goods, wares, merchandise or commodities are sold, offered for sale, exchanged, bartered or kept with the intention of selling, bartering or exchanging.”

By section 3690 it is provided that records of .such purchases, sales and exchanges shall be kept which shall record, among other things, the “tire numbers (including extra tire numbers) ” and also all marks of identification on automobile parts, including “tires.”

We are of the opinion that the ordinance is applicable to the business of defendant as a dealer in second-hand automobile tires, and as it is conceded that he had no license as required by the ordinance the judgment is proper and is affirmed.

Affirmed.

Hatchett, J., and O’Connor, J., concur.