text:
    Sam Howard, Appellant, v. Samuel Insull et al., Appellees.
    Gen. No. 39,612.

      Opinion filed February 28, 1938.
    Petition of appellant for rehearing and modification of opinion as to Field and Doyle denied March 16, 1938.
    Petition of appellees for rehearing denied March 16, 1938.
    Ashcraft & Ashcraft, of Chicago, for appellant; Carroll J. Lord and Rufus D. Beach, both of Chicago, of counsel.
    Poppenhusen, Johnston, Thompson & Raymond, of Chicago, for appellees Samuel Insull and Samuel Insull, Jr.
    Sidley, McPherson, Austin & Burgess, of Chicago, for appellee Stanley Field; Donald F. McPherson, George Ragland, Jr. and C. Bouton McDougal, all of Chicago, of counsel.
    Ditchburne & Lounsbury, of Chicago, for appellees H. L. Stuart et al.; Harry S. Ditchburne, Charles E. Lounsbury and Philip H. Kelley, of Chicago, of counsel.
   Mr. Presiding Justice O’Connor

delivered the opinion of the court.

June 28,1934, Sam Howard, as trustee in bankruptcy of the estate of Corporation Securities Co. of Chicago, filed his complaint in equity, praying an accounting from the defendants as directors and officers of the Securities company and from the Estate of Edward F. Swift, deceased, who had been a director of the company for a part of the time the corporation was in existence, for the alleged unlawful expenditures and waste of the corporation assets and for personal profits made by certain of the defendants in dealings with the corporate property. .The money claimed is in excess of $65,000,000. Two of the defendants, C. B. Stuart and Martin J. Insull, were not served with summons and have not entered their appearance. The executors of defendant Swift’s estate were dismissed out of the suit by a decision of the Supreme Court, People v. Superior Court, 359 Ill. 612. The other defendants, Samuel Insull, Samuel Insull, Jr., H. L. Stuart, F. EL Shrader, C. W. Sills, C. T. MacNeille, Stanley Field and Edward J. Doyle, each filed motions to dismiss the complaint, for want of equity. They also filed motions to strike certain parts of the complaint. The court did not pass on the latter motions but sustained each of defendants ’ motions to strike the complaint for want of equity, plaintiff elected to stand on his complaint, the suit was dismissed and plaintiff appeals.

Counsel for plaintiff say that the complaint involves two entirely separate and distinct phases. The first phase deals with certain activities of the Securities Co. during the first four months of its existence; and it is alleged that through the fraudulent direction and action of the officers and directors of the company with respect to four transactions (two purchases by the Securities Co. of large blocks of stock of the Middle West Utilities Co. and two purchases by the Securities Co. of large blocks of stock of the Insull Utility Investments, Inc.) the assets of the Securities Co. were unlawfully expended, resulting in loss to it and in large personal profit to some of the defendants. The second phase of the complaint, counsel say, deals with various transactions in the later period of the Securities Co.’s existence. And the complaint alleges various purchases of worthless securities from Insull controlled companies, the payment of dividends on preferred stock out of the capital, and the gift of cash to an Insull controlled company, the unlawful subscription to stock syndicates, and the purchase of great quantities of the Securities Co.’s own stock in an effort to support the market for the stock and the “switch” of these stocks at periodical intervals for the stock of Insull Utility Investments, Inc.

Counsel for some of defendants say in their brief that the transactions involved in the first phase of the complaint are: (1) the payment of $9,298,415.60 by the Securities Co. to Insull Utility Investments, Inc., on January 27, 1930, for one-half of a block of common and preferred stock of the Middle West Utilities Co. theretofore purchased by the Insull Utility Investments, Inc., for the joint account of itself and another Insull controlled corporation; (2) the payment on February 15, 1929, of $9,931,400 to the Middle West Utilities Co. for the purchase of a block of its common stock; (3) the payment on October 25, 1929, of $2,437,500 to Halsey, Stuart & Co. for the purchase from said company of preferred stock of the Insull Utility Investments, Inc.; and (4) the payment on January 6, 1930, of $2,803,440 to defendants Samuel Insull, Samuel Insull, Jr., Martin J. Insull and Margaret Insull for the purchase from each of them of common stock of the Insull Utility Investments, Inc.

The Securities Co. was incorporated October 4,1929, and went into bankruptcy April 18, 1932. The transactions just mentioned took place between October 4, 1929, and January 27, 1930, during which time neither Edward F. Swift, Edward J. Doyle nor Stanley Field was a director or officer of the Securities Co.

The second phase of the complaint sets forth many separate transactions and alleges the purchase of worthless securities of Insull controlled companies, payment of dividends on preferred stock out of capital, the gift of cash to an Insull controlled company, and the unlawful subscription of stock syndicates, the purchase of great quantities of the Securities Co.’s own stock in market support operations, all of which were brought about through the fraudulent direction and action of the officers and directors of the Securities Co., each of which transactions set up in the two phases of the complaint resulted in great losses to the Securities Co., and in personal profit to some of the defendants.

It is further alleged that defendants Field, Swift and Doyle were elected directors of the Securities Co. on June 11,1930, and continued to act as such until February 15, 1932. It is further alleged in the complaint that the Securities Co. was organized for the publicly announced purpose of purchasing and holding shares of companies whose resources were invested in public utilities, but that it was actually organized pursuant to an agreement entered into between the Insulls, the Stuarts, Sills, Shrader and MacEeille for the purpose of having it secretly purchase from defendants Samuel Insull and Halsey, Stuart & Co., large amounts of stock of the Middle West Utilities Co., which latter company required refinancing, and to bring about this result it was necessary to artificially raise the price of the Middle West stock; that the latter stock was of little or no value; that the stock of the Securities Co. was sold in “units” to numerous investors for more than $34,000,000.

The allegations of the complaint are to the effect that within four months of the formation of the Securities Co. there had been sold to it stocks of Insull controlled companies costing the Securities Co. nearly $25,000,000; that such stocks were purchased from the Insulls and Halsey, Stuart & Co., and from a syndicate controlled by Samuel Insull; that all of such sales were made for the benefit, gain and profit of such defendants; that such stock at the time of the purchase was of little or no intrinsic value; that such facts were well known to the officers and directors of the Securities Co. who are defendants, and the money paid by the Securities Co. for such purchase has been a complete loss except certain shares of the preferred stock of the Middle West Utilities Co. There are further allegations substantially to the same effect as the second phase of the complaint.

We think it clear the allegations sufficiently charge that the moneys of the Securities Co. were unlawfully expended and wasted and that some of the defendants personally profited by such unlawful expenditures. In these circumstances plaintiff could maintain this suit (sec. 70 of the Bankruptcy Act) unless, as counsel for defendants contend, it has been adjudicated by the Supreme Court in this very case that such an action would not lie. Howard v. Swift, 356 Ill. 80; People v. Superior Court, 359 Ill. 612. We think defendants’ contention cannot be sustained.

In the Swift case, plaintiff in the instant case filed his claim against the Estate of Edward F. Swift, deceased, who had been a director of the Securities Co., as above stated, claiming $37,308,646. The Supreme Court held that the probate court had no jurisdiction for the reason that the claim arose out of a tortious act which did not enrich the tort feasor and therefore the tort could not be waived and the action brought for money had and received. About two months after the decision in that case the instant suit was brought. The executors of the Swift estate were made defendants. It filed its motion to dismiss the suit, which was denied. Thereupon the representatives of the estate filed an original petition for a writ of prohibition in the Supreme Court to prohibit the further prosecution of the suit in the superior court against the Swift estate. The writ was awarded, the court holding that since it had already decided that the claim filed in the probate court could not be allowed because it was clearly a claim in tort resulting in no enrichment of the tort feasor, such decision was res adjudícala, and therefore the suit in equity against the estate, based on the same claim, would not lie. After the decision of the Supreme Court the Swift estate was eliminated as a defendant in the instant case, and some time thereafter plaintiff filed an amendment to his complaint, in which it was more specifically alleged that the Insulls, Stuart, Sills and MacNeille made large gain and profits — $1,500,000— from the sale of the stock of the Middle West Utilities Co. There is another allegation substantially to the same effect, in reference to the sale of stock of the Insull Utility Investments, Inc.

Sec. 70 of the Bankruptcy Act provides that the trustee of the estate of the bankrupt shall “be vested by operation of law with the title of the bankrupt” . . . to “Bights of action arising upon contracts or from the unlawful taking or detention of or injury to his property.” The authority for a trustee in bankruptcy to maintain a suit such as the one at bar is sustained by 4 Work on Bankruptcy, 3d ed., sec. 1537; Stephan v. Merchants Coll Corp., 256 N. Y. 418, 176 N. E. 824; Bynum v. Scott, 217 Fed. 122; McEwen v. Kelly, 140 Ga. 720, 79 S. E. 777.

If the Securities Co. had not gone into bankruptcy it could have maintained a suit to recover the loss it sustained, provided the allegations of the complaint were proven. (Dixmoor Golf Club v. Evans, 325 Ill. 612.) In these circumstances the trustee in bankruptcy can maintain the instant case. But counsel for defendants say that no recovery can be had for the alleged wrongful payment of dividends, because the remedy in such case is governed by the Illinois statute, which confers the right of aqtion on the creditors; and reference is made to section 23, ch. 32, Cahill’s Ill. St. 1931, which provides that ‘ ‘ The directors shall jointly and severally be liable for the debts and contracts of the corporation. . . . For declaring or assenting to a dividend if the corporation is, or is thereby rendered insolvent, or its capital is thereby impaired to the extent of such dividend,” and Seegmiller v. Bay, 249 Fed. 177; Ryerson & Sons v. Peden, 303 Ill. 171, and other cases are cited.

In the Bay case, he, as trustee of a bankrupt corporation, brought suit to recover unearned dividends illegally paid from the capital stock of the corporation when insolvent to defendant as a stockholder; he also sought to recover from defendant and other directors unpaid stock subscriptions, and prayed other relief not important here. There was a decree in his favor which was taken to the Circuit Court of Appeals, where that part of the decree in the trustee’s favor for the amount of the unearned dividends and the unpaid stock subscription was affirmed. The decree in other respects, not important here, was reversed. In that case Judge Alschuler in delivering the opinion of the court quoted section 19 (which is now substantially the same as section 23) and said (p. 181.): “Without prejudice to the right of any creditor to pursue his remedy under section 19, the decree, in so far as it finds and imposes liability thereunder for the debts of the corporation, is reversed, and in the other respects, viz. as to the liability for dividends declared and paid to the defendants in the action,' and liability for unpaid stock subscriptions, it is affirmed.” .We think this case is authority for the proposition that- the unearned dividends can be recovered by the trustee.

In the Ryerson case (303 Ill. 171), property had been turned in to a corporation in payment of certain stock subscriptions at an overvaluation. Afterward the corporation went into bankruptcy and par,t of Byerson’s claim against the corporation remaining unpaid he filed a bill in equity against the company and ‘ ‘ all its stockholders, charging that the company ceased doing business leaving debts unpaid; that the stockholders of the company, while acting as directors, had accepted from themselves property in full payment of their subscriptions for stock which was of far less value than the par value of the stock for which they had subscribed, and therefore, under the provisions of the Illinois Corporation act, the company and stockholders were liable.” And it was held that suit could be maintained directly by the creditors after the failure of the corporation, and that the right to enforce such liability was not an asset of the corporation to be turned over to the trustee in bankruptcy. The court there construed section 25 of the Corporation Act which provided that if any corporation dissolved or ceased doing business leaving unpaid debts, “suits in equity may be brought against all persons who were stockholders at the time, or liable in any way for the debts of the corporation, by joining the corporation in such suit; and each stockholder may be required to pay his pro rata share of such debts or liabilities to the extent of the unpaid portion of his stock, after exhausting the assets of such corporation.” The court then discusses Parmelee v. Price, 208 Ill. 544, which was a creditor’s bill to enforce liability against certain stockholders for unpaid subscriptions of stock, and quoted from that case, “It appears from the bill that the stock of appellees was paid for partly in cash and partly in property, and that this property was fraudulently overvalued to such an extent that, in fact, only forty per cent of the subscription was paid. "While this transaction was voidable as to creditors or other stockholders prejudiced thereby, it was binding upon the corporation. . . . (p. 179.) The creditor can collect either from the corporation or from the stockholder as he sees fit. . . . This, however, is where the stockholder is still hable to the corporation. It is for the unpaid portion of his subscription. ... In the case at bar, however, no right of action accrued to the creditor under section 8 [of the Corporation Act] for the reason that as between the corporation and the stockholder the stock subscription was fully paid. ’ ’

We think it clear that the Ryerson case is not in point. There Ryerson, a creditor, was suing a stock-subscriber because he had not fully paid for his stock by reason of overvaluation of the property which he turned in for the stock. It was held that such valuation was binding upon the corporation but not on the creditor. The facts in that case are not at all similar to the facts in the case before us.

We think the complaint in the instant case states a cause of action (Manning v. Campbell, 264 Mass. 386) against all the defendants except Doyle and Field. The charges made in the complaint against these two defendants are similar to the charges made against the Swift estate. Doyle, Field and Swift were directors of the Securities Co. during the same period of time. There is no charge in the complaint, nor in the amendment, that either Doyle or Field made any personal profit from any of the transactions, and in these circumstances we think the decisions in the Swift cases, 356 Ill. 80, and 359 Ill. 612, are controlling.

The decree of the superior court of Cook county, in so far as it dismissed the suit as to defendants Doyle and Field, is affirmed. In all other respects it is reversed and the cause remanded.

Affirmed in part, reversed in part and remanded.

McSurely and Matchett, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice O’Connor

license: Public Domain

text:
    Agnes B. O’Rourke, Appellant, v. The Prudential Insurance Company of America, Appellee.
    Gen. No. 39,733.
    Opinion filed February 28, 1938.
    Rehearing denied March 14, 1938.
    Follansbee, Shoret & Schupp, of Chicago, for appellant; John E. Gavin and Louis W. Becker, Jr., both of Chicago, of counsel.

      Hoyne, O’Connor & Rubinkam, of Chicago, for appellee ; Nathaniel Rubinkam and William S. Allen, of Chicago, of counsel.
   Mr. Presiding Justice O’Connor

Plaintiff, the beneficiary named in a life insurance policy issued by defendant on the life of her husband, brought suit to recover $650 which she claimed under the terms of the policy for instalments due up to the time of the beginning of the suit. The case was tried before the court without a jury, there was a finding and judgment in defendant’s favor and plaintiff appeals.

The policy is dated March 29, 1924. William J. O’Rourke, plaintiff’s husband, was the insured. It provided that “upon receipt of due proof of the death of the Insured within ten years from the date of this Policy, while it is in force,” $5,000 would be paid to the beneficiary, Mrs. O’Rourke, the plaintiff. There was a further provision that in case the insured was totally and permanently disabled while the policy was in effect, the defendant would pay to him certain benefits in instalments, and that if any of such instalments remained unpaid at the death of the insured they would be paid to the beneficiary.

March 29, 1934, while the insured was temporarily insane he slashed his wrists and throat with a razor, as a result of which he died two days later. Counsel for both sides agree in this court that the question of liability depends upon whether the policy was in force on March 29, 1934, when the insured was totally and permanently disabled. Plaintiff’s position as stated by her counsel is: “We take the position that the policy properly construed was not in effect on March 29,1924, and that construed in terms most favorable to the company its terms commenced on March 30, 1924, and that March 29, 1934, was within” the ten-year period covered by the policy; while on the other side the position of counsel for defendant is that, “The date of the policy, March 29, 1924, is the date of the beginning of the term,” and therefore the ten-year period expired on March 28,1934, and was not in effect when the insured became permanently disabled on March 29th. Defendant’s counsel further say: “If death occurs on the date of the policy, the company is liable and it follows under counsel’s contention that in order to hold the company liable in this case, the term would have to be ten years and one day.” We are unable to agree with the contention of plaintiff’s counsel, and are of opinion that the policy was in force and effect on March 29, 1924, the date it bears. We think it clear that if the insured had died or was disabled on March 29, 1924, the company would be liable.

We are also of opinion that the questions whether the term would be ten years and one day, under the hypothesis of defendant’s counsel, or whether the term would be less than ten years under one of the contentions advanced by counsel for plaintiff, are beside the point and wholly immaterial.

In New York Life Ins. Co. v. Bullock, 26 Fed. (2d) 666, the Circuit Court of Appeals had before it the question of the meaning of the clause, “This policy shall be incontestable after two years from its date of issue,” etc., and said, “It would be useless to try to reconcile or to distinguish the many conflicting cases” on that question. We agree with that statement and therefore shall not attempt to analyze or discuss the many cases cited by counsel.

The question for decision is the meaning of the policy. The date of the policy is March 29, 1924. It provides that if the insured, William J. 0 ’Rourke, became totally and permanently disabled while the policy was in effect “within ten years from the date of this Policy,” defendant would pay certain benefits. So that the question for decision turns upon the meaning of the words, “within ten years from the date of this Policy.” The rules governing the construction of insurance policies are the same as those applicable to other contracts. Contracts of insurance, like other contracts, must be construed according to the terms the parties have used. It is only when there is ambiguity in a policy that the law invokes the rule that it should be construed most favorable to the insured and against the insurance company. Jabara v. Equitable Life Assur. Soc., 280 Ill. App. 147.

We think it clear that the language in the policy in the instant case is ambiguous, as demonstrated by the contrariety of the opinions of the courts where language in the policies involved is almost identical with the language in the policy before us. And under the rule of law we must construe the policy in terms most favorable to the insured and against the company.

It has often been held that the proper method of computing time where an act is to be performed within a particular' period from a specified day, is to exclude the day named and to include the day on which the act is to be done. Dierssen v. Williamsburg C. Fire Ins. Co., 204 Ill. App. 240; Caraher v. First Guardian Co., 268 Ill. App. 389; Price v. Illinois Bell Tel. Co., 269 Ill. App. 581; New York Life Ins. Co. v. Bullock, 26 Fed. (2d) 666; Metropolitan Life Ins. Co. v. Lodzinski, 194 Atl. 79 (N. J.).

In the Dierssen case the fire insurance policy provided that in case of fire proof of loss should be filed “within sixty days from the time of the fire.” In construing that language we said (pp. 242-243): “It has long been firmly established in this State that the proper mode of computing time when an act is to be performed within a particular period from or after a specified day is to exclude the day named and include the day on which the act is to be done. Ewing v. Bailey, 5 Ill. (4 Scam.) 420; Protection Life Ins. Co. v. Palmer, 81 Ill. 88; Pugh v. Reat, 107 Ill. 440; United States Mut. Acc. Assoc. v. Mueller, 151 Ill. 254; Colonial Mut. Fire Ins. Co. of Philadelphia v. Ellinger, 112 Ill. 302; Cummins v. Holmes, 11 Ill. App. 158.”

In the Caraher case (268 Ill. App. 389) the court had occasion to construe certain sections of the Negotiable Instruments Act where it is said (p. 394): “ ‘In computing time “from” a day, the rule is to exclude that day.’ (Anderson’s Dictionary of Law, p. 481.) ‘From’ is a term of exclusion unless by necessary im-' plication it is manifestly used in a different sense. (Bradley v. Rice, 13 Me. 198, 201.) An officer commissioned to hold office during the term of four years from the 2d day of March, 1845, is in office on the 2d day of March, 1849. The word ‘from’ excludes the day of date. (Best v. Polk, 18 Wall. 112, 119.) In Lewy v. Wilkinson, 135 La. 105, 64 So. 1003, the court held that a note dated December 31, payable in one year, matures on December 31 of the following year. ’ ’

In the Price case (269 Ill. App. 581) we held that an action to recover for injuries sustained in an automobile accident was commenced within the two-year limitation period when commenced on the same day of the month as the date of the accident two years later, the day of the accident being excluded in computing the time which had elapsed. In that case we distinguished the case of Irving v. Irving, 209 Ill. App. 318, relied upon by defendant in the instant case. We there said (p. 588): “ ‘The tendency of recent decisions is very strongly toward the adoption of a general rule which excludes the day as the terminus a quo in such cases. And in some jurisdictions it is so provided by statute. ’ 37 C. J. 1054.”

In the Bullock case (26 Fed. (2d) 667) the Circuit Court of Appeals was called upon to construe the following language in a life insurance policy: “This policy shall be incontestable after two years from its date.” The policy was dated June 3, 1924, and the insurance company brought suit to cancel the policy on June 3, 1926. It was held the suit was brought within apt time. The court said, “The word ‘from’ excludes the day of date. Best v. Polk, 18 Wall. 112, . . . Dutcher v. Wright, 94 U. S. 553.”

In the Lodzinski case (194 Atl. 79) the court construed a clause of a life insurance policy. The clause was: ‘ ‘ This policy shall be incontestable after it has been in force for a period of two years from its date of issue.” The policy was dated February 21, 1933, and the bill to cancel the policy was filed February 21, 1935. It was held the bill was filed within apt time. The court there said (p. 80): “the two-year period of incontestability did not expire until midnight of the 21st of February, 1935. The Supreme Court of the United States seems to be in accord with this view.

“ ‘The determination of the case depends upon the meaning of a clause in the policy as follows: “Incontestability. — This policy shall be incontestable, except for non-payment of premiums, provided two years shall have elapsed from its date of issue. ” ’ ‘ The trial court held that the words “its date of issue” were to be construed as referring to the date upon the face of the policy, viz. August 23,1915. ’ ” Citing Mutual Life Ins. Co. of N. Y. v. Hurni Packing Co., 263 U. S. 167.

In the Hurni case where a life insurance policy declared that it would be incontestable except for nonpayment of premiums provided two years should have elapsed “from its date of issue,” it was held that the date intended was the one specified in the policy although it was earlier than the date of the execution and delivery. The court there said (pp. 174-175): “The rule is settled that in case of ambiguity that construction of the policy mil be adopted which is most favorable to the insured. The language employed is that of the company and it is consistent with both reason and justice that any fair doubt as to the meaning of its own words should be resolved against it. . . .

“Here the words, referring to the written policy, are ‘from its date of issue.’ While the question, it must be conceded, is not certainly free from reasonable doubt, yet, having in mind the rule first above stated, that in such case the doubt must be resolved in the way most favorable to the insured, we conclude that the words refer not to the time of actual execution of the policy or the time of its delivery, but to the date of issue as specified in the policy itself.”

Following the authorities above referred to, we hold that the policy in question was in force on March 29, 1934. And since the insured was totally and permanently disabled on that date, plaintiff can recover. Defendant having denied liability on the ground that the policy was not in effect March 29, 1934, proof of disability was waived. The law never requires the doing of a useless act.

The judgment of the municipal court of Chicago is reversed and the cause is remanded with directions to enter judgment in favor of the plaintiff, in accordance with what we have said in this opinion.

Reversed and remanded with directions.

McSurely and Matchett, JJ., concur.


author: Mr. Justice McSurely

text:
    Thomas L. McNeff and Joseph W. McNeff, Trading as McNeff Brothers, Appellees, v. White Eagle Brewing Company, Appellant.
    Gen. No. 39,315.

      Opinion filed February 28, 1938.
    Rehearing denied March 14, 1938 and slightly modified.
    Sidney J. Wolf and Frank Peska, both of Chicago, for appellant.
    Campbell, Clithero & Fischer and Pope & Ballard, both of Chicago, for appellees.
   Mr. Justice McSurely

delivered the opinion of the court.

Plaintiffs brought suit to recover damages on account of breach of a contract in which defendant contracted for the purchase from plaintiffs of a quantity of hops. Upon trial the jury returned a verdict for plaintiffs of $2,500; on plaintiffs ’ motion for judgment notwithstanding the verdict the court entered judgment against defendant for $11,362, from which defendant appeals.

Plaintiffs are engaged in the business of growing hops on the Pacific coast, and they make contracts with other growers for their crops; through a Mr. Moerke in Chicago they entered into negotiations to secure from defendant orders for hops, and on August 21, 1933, three contracts were executed by the parties, the first calling for delivery by plaintiffs to defendant of 500 bales of hops of the 1933 crop; the second contract was for the same amount of the 1934 crop; and the third for the same amount of the 1935 crop; shipments to be made during October and November in each year. The first shipments under the first contract were made about September 15, 1933; apparently defendant then concluded that the contract called for more hops than it required, and in January, 1934, Joséph McNeff, one of the plaintiffs, came to Chicago and had an interview with Mr. Górecki, president, and Mr. Krypel, a director of defendant; they told Mr. McNeff that defendant was financially unable to go through with the original contracts; that they had had bad luck with some of the beer, which had gone sour on account of leaky vats; they proposed that new contracts be made, which defendant in a letter said were to “supplement” the three contracts of August, 1933 — these new contracts to cover 300 bales of hops a year instead of 500 as called for by the prior contracts, and to include the yearly crops from 1934 to 1937 inclusive. This was agreed to and the several contracts were executed. These contracts were dated January 27,1934, although they were not signed until February 20th.

In the first contract, which is the subject matter of this suit, defendant agreed to pay 53 cents a pound, 12 bales of hops to be delivered weekly. On this contract only one shipment was accepted by defendant after the contract was signed on February 20th. May 3rd defendant told Mr. McNeff that they would not receive any more hops except the 5 bales delivered on that date; June 2, 1934, defendant, through Mr. Górecki and Mr. Krypel, told Mr. McNeff that they would take no more hops, to which Mr. McNeff replied that plaintiffs would expect defendant to live up to its contract, to which the officials replied that it could not do so as the market bad declined, but that they would take hops if plaintiffs would deliver them at the market price; that they would pay only the market price. Plaintiff's introduced evidence to show that on June 2, 1934, the market price was 30 cents a pound, although defendant introduced evidence tending to show that the market price was about 28 cents a pound.

Defendant first argues that the verdict of the jury is a compromise verdict and should be set aside, citing Selamakos v. Victory Ice & Ice Cream Co., 246 Ill. App. 178, 181, 182, and other cases. Undoubtedly this is the general rule, applicable to all cases where disputed questions of material facts are submitted to a jury for determination. At the request of plaintiffs, without objection from defendant, the court instructed the jury that if it should find that plaintiffs were entitled to recover, the damages would be the difference between the contract price and the market price in Chicago at the time defendant refused to accept deliveries. Having found defendant liable for breaching its contract the jury should have, by simple computation, estimated the damages at the difference between 30 cents a pound, the market price, and 53 cents a pound, the contract price, or 23 cents a pound; multiplying this by the number of pounds — 49,400—which defendant refused to take, amounts to $11,362, the amount of the judgment. As defendant refused on June 2,1934, to accept any more shipments of hops on its contract, the question then is, Were there any facts from which the jury could properly conclude that defendant was legally justified in this refusal?

Both the prior contracts of August, 1933, and the instant contract provide, “Samples to be submitted to White Eagle Brewing Co., Inc. for selection.” Defendant argues that plaintiffs breached this contract by failing to submit samples to defendant, as required by the contract. Under the prior contract plaintiffs furnished samples of the 1933 crop which were accepted by defendant. When the present contract was actually signed, February 20th, it was dated back to January 27th to cover the 48 bales already delivered, of which samples had been submitted and approved by defendant, and there is no denial that all of the hops delivered and tendered were part of the two carloads shipped and then in the Chicago storage warehouse, of which defendant had approved samples. There is seemingly no contention that defendant was entitled to have samples submitted with every week’s delivery. The contract was for the sale of 300 bales of hops and the samples submitted and accepted were from these hops.

Moreover, in the considerable correspondence between the parties defendant never once assigned as a reason for its failure to take the hops that it had not been furnished with samples. Mr. Górecki, defendant’s president, testified that the reason it could not take the hops was because defendant ‘ ‘ could not stand that for such a big amount of hops because we don’t need it at once, and we take a small portion.” The only evidence with reference to samples is that of an employee of defendant, a young lady who testified that on two occasions she told the truck driver delivering hops that they would not take them because no samples had been furnished, although the truck driver testified that he had never talked with the woman. A reasonable construction of the contract calls for the submission of samples only when a different lot was delivered. The lot tendered was part of the same lot of which samples had already been submitted and approved. There was no disputed evidence for the jury to weigh and determine as to the submission of samples.

There was some evidence presented by defendant that some barrels of beer made with hops supplied by plaintiffs turned sour, but there was no evidence that this was because of the kind of hops used. The brew master for defendant testified that the hops furnished by plaintiffs were good hops and that he never had any trouble with them nor complaint about their quality, and that no beer was spoiled by reason of them; that the beer was spoiled because of the smell from an old sewer, of which he complained to defendant’s president. This witness testified that hops had nothing to do with souring beer. Another employee of defendant, who did the mashing and putting the hops in the brewing kettle, testified that the hops furnished by plaintiffs were fine hops; that he never heard any complaints of them and never heard it was possible for hops to make beer sour. Also, an expert chemist for the brewery trade testified that sour beer was not caused by hops but from other sources.

Defendant’s counsel say that the refusal of a vendee to accept goods tendered does not per se create a breach unless the vendor elects to consider the breach as a termination of the contract, and the argument seems to be that it was for the jury to pass upon the question whether plaintiffs had accepted defendant’s refusal to take the hops, and if the jury should conclude that plaintiffs had not done so, then the law is that plaintiffs must be held to have elected to keep the contract alive and therefore were bound to continue making "weekly tenders of deliveries.

Regardless of the question of law thus presented, the evidence shows without contradiction that on May 23, 1934, plaintiffs’ attorneys wrote defendant to the effect that unless by June .2, 1934, defendant indicated its willingness to accept deliveries of hops under the contract, defendant’s conduct “will be regarded as an entire repudiation of your obligations under the contract, and we shall proceed accordingly. ’ ’ This clearly was notice to defendant that plaintiffs would consider the contract terminated on the date mentioned. It is well settled that where one party refuses to be bound by a contract the other party may, at his election, treat the repudiation as putting an end to the contract and sue for the profit he would have realized if he had not been prevented from performing. Lake Shore & M. S. Ry. Co. v. Richards, 152 Ill. 59, 80; Roebling’s Sons’ Co. v. Lock Stitch Fence Co., 130 Ill. 660; Alvey-Fergus on Co. v. Ernst Tosetti Brew. Co., 178 Ill. App. 536, 543; Reskie, Kirshbaum & Co. v. Walzer, 213 Ill. App. 305; Consolidated R. & C. Co. v. Crane Co., 183 Ill. App. 392, 394. It follows from these considerations that there were no disputed questions of fact to be determined by the jury.

It is argued that since plaintiffs in their bill of particulars, filed with their complaint, set their damages at $9,800, recovery must be limited to this amount. Undoubtedly this is the general rule. Hess Co. v. Dawson, 149 Ill. 138, 144, 145. On oral argument counsel for plaintiffs stated that upon the trial the bill of particulars was wholly forgotten or ignored. Plaintiffs should have asked leave to amend the bill of particulars so as to correspond with the judgment they asked to have entered. And even in this court the bill of particulars may on motion be amended. Sec. 92, Practice Act, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 104.092]. We hold that if the amount of the judgment is proper, the fact that it exceeds the amount claimed in the bill of particulars does not require a reversal.

We do not give assent to plaintiffs’ proposition that where both parties join in a motion for judgment notwithstanding the verdict, this amounts to a waiver of a trial by jury, although Hungate v. New York Life Ins. Co., 267 Ill. App. 257, 263, and Sumner v. Smysor, 273 Ill. App. 588, 592, so decided. These cases involve motions for directed verdicts. No such motions were made in the instant case. Moreover, in Wolf v. Chicago Sign Printing Co., 233 Ill. 501, it was definitely held that a motion to direct a verdict raises only a question of law, and this rule has not been changed by pars. 192 and 248 of the Practice Act, which provide that a jury trial shall be waived unless one of the parties requests in writing a jury trial.

Was it proper to figure the amount of damages on the basis of the difference between the'market price of hops on June 2,1934, the date of the breach, and the contract price 1 This question received extended treatment in three cases, all involving contracts for the sale of hops, Horst v. Roehm, 84 Fed. 565, Roehm v. Horst, 91 Fed. 345, and Roehm v. Horst, 178 U. S. 1. In the last court Mr. Chief Justice Fuller, after a most elaborate discussion, concludes that under circumstances like those now presented plaintiff could immediately sue upon the breach of the contract. The facts in that case were almost identical with the case at bar, involving contracts for the sale and delivery of hops, a declining market price and the refusal by the defendant to accept further deliveries. It was proper to estimate the damages, based upon the breach of the contract on June 2nd.

It is also in evidence that 152 bales of hops which plaintiffs tendered to defendant were sold to other parties at prices ranging from 24 cents to 30 cents a pound.

Some criticism is made of statements by plaintiffs’ counsel in argument to the jury with reference to the failure of defendant to produce as witnesses the attorney for defendant, who apparently supervised the execution of the new contracts, and Mr. Krypel, a stockholder and director of the defendant company. Their absence as witnesses was a legitimate subject of comment and there was no error in this respept.

In arriving at the amount of judgment to be entered the-correctness of the computation is not questioned. We have, therefore, the case where no material questions of fact are in dispute, and the court is requested to compute the amount of damages correctly and to enter judgment for the proper amount. We hold that the order entered by the court is the only order that the record shows could properly be entered. The judgment is therefore affirmed.

Affirmed.

O’Couhor, P. J., and Hatchett, J., concur.


author: Mr. Justice McSurelt

text:
    I. Sidney Neiman, Appellee, v. Templeton, Kenly and Company, Ltd. et al., Appellants.
    Gen. No. 39,826.

      Opinion filed February 28, 1938.
    Charles E. Lot, of Chicago, for appellants.
    Jacobson, Merrick, Nierman & Silbert, of Chicago, for appellee; David Silbert and Arthur Altschul, both of Chicago, of counsel.
   Mr. Justice McSurelt

delivered the opinion of the court.

Plaintiff filed his petition as a stockholder seeking a writ of mandamus to compel defendants to permit him to examine the books of Templeton, Kenly & Company, Limited, a corporation; a motion to dismiss was made and denied and the court ordered the writ to issue. Defendants appeal.

The petition purported to be filed under the authority of sec. 45, ch. 32, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 32.045]. Defendants say that on the face of the petition it appears that plaintiff is not in the class of stockholders to which the statute grants the right to examine the books of a corporation.

The act gives this right to “Any person who shall have been a shareholder of record for at least six months immediately preceding his demand or who shall be the holder of record of at least five per cent of all the outstanding shares of a corporation.” The petition was filed July 15, 1937. It alleged that about December 1, 1936, the petitioner became the owner of 56 shares of stock of defendant corporation; that on March 29, 1937, the corporation issued to him certificates of these shares of stock; that on June 24,1937, he demanded and was refused permission to examine the books of defendant corporation. Defendants say that this shows on its face that petitioner was the owner of record of stock in defendant corporation only about three months before the demand was made, and therefore he does not come within the statutory qualification of one entitled to examine the books.

Under section 38 of the Corporation Act of 1919 the right to examine the books was given “each stockholder of a corporation” without any qualifications as to the length of time he had held stock, or the amount. This right to any stockholder, without restrictions, gave encouragement to unscrupulous persons to create a nuisance value for their stock. They would acquire a small amount of stock and at once demand the right to examine the books of the corporation, solely for the purpose of harassing and annoying its officers so as to force the purchase of their stock at considerable profit. In order to curb these predatory actions the legislature in 1933, repealing the 1919 Corporation Act, inserted in section 45 giving the right of examination, words defining the class of stockholders entitled to this right. Ill. Business Corp. Act annotated 187. They should be record holders of stock for at least six months immediately preceding the demand, or holders of record of at least five per cent of the outstanding shares, and the object of the examination must be “for any proper purpose.”

Counsel for plaintiff argue that the statutory qualifications of the stockholder are operative only when the petitioner asks for the imposition of the penalty prescribed in the latter part of the statute, which provides that if any officer or agent should refuse the demand of a shareholder to examine the books he should be liable to the shareholder in a penalty of 10 per cent of the value of the shares owned by such shareholder, in addition to any other damages or remedy afforded him by law. It is said that as the petitioner did not seek for the imposition of this penalty he was not required to bring himself within the qualifications of stockholders first described in the statute. There is nothing in the statute itself which indicates that the imposition of a penalty on the refusing corporation agents can be imposed only on the petition of those stockholders described in the act. There is no logical connection between the qualifications of the stockholder, prescribed in the act, and the collection of a penalty. The penalty is because of the refusal to permit the books to be examined and not because of the kind of stockholders requesting this. We hold that the qualifications of stockholders entitled to enforce their demands is definitely fixed by the statute without reference to or connection with the imposition of a penalty on the refusing corporation agents.

Plaintiff argues that to limit the right to examine the books to the class of stockholders described in the statute is class legislation, and that to construe this statute in this manner is to declare it unconstitutional. The constitutionality of the statute is to be determined by the Supreme Court, but it has been recognized repeatedly as within the power of the legislature to classify persons so long as the classification is general and has some reasonable relation to the end sought. Parker-Washington Co. v. Industrial Board, 274 Ill. 498. Manifestly the instant statute was passed to prevent the abuses to which we have referred. The limitations of the time of holding stock or the amount, and that the demand must be for a proper purpose, are all reasonable limitations, tending to avoid unreasonable and improper demands.

Plaintiff cites Miller v. Spanogle, 275 Ill. App. 335, 340-343, as holding it is not necessary to allege in the petition the statutory requirements of a stockholder seeking to examine the books. There the petition seeking the writ of mandamus alleged that the petitioner is, and for five years last past has been, a stockholder in the company. The opinion, for the most part, discusses the averments of mismanagement of the corporation tending to support the allegation that the purpose of the demand was proper. The opinion contains a statement suggesting that, as this was not a proceeding to recover a penalty it was unnecessary for the petitioner to allege how long he had held stock or how much. But other language in the opinion indicates that the court considered the allegation that the petitioner had been a stockholder for five years past, as sufficient. Wise v. Byllesby & Co., 285 Ill. App. 40, 45-47, involved a similar proceeding, where the petitioner alleged that for at least six months prior to the date of demand he was a stockholder in defendant corporation. The important question in issue was the purpose of the examination. It was argued that the Corporation Act gave the petitioner an absolute right to examine the books, citing the Miller case, supra. We construed the opinion in that case as holding that the right of examination was not absolute and that the section of the statute had changed the law, as theretofore announced. We held that under the present statute, “the right of examination is not absolute but qualified and limited to the class of stockholders whose interests are such as described in the statute, and who desire an examination for a purpose which is not improper.”

The latter part of the statute provides that, “nothing herein contained shall impair the power of any court of competent jurisdiction, upon proof by a shareholder of proper purpose, to compel by mandamus or otherwise the production. . . .” for examination of the books of the corporation. It is argued that this provision is a re-enactment of the common law right of any stockholder to examine the corporation’s books and annuls the provisions of the statute describing the class of stockholders entitled to this right. In essence this argument is, that the legislature, having solemnly prescribed certain requirements, in the same section repealed them.

It has been held many times that in construing a statute effect must be given to every clause, if possible, anrl that construction should not be adopted which negatives any part of a statute if such construction can be avoided. Consumers Co. v. Industrial Com., 364 Ill. 145.

This provision last quoted is virtually the same as the last clause of section 38 of the Corporation Act of 1919. At common law the right to the writ of mandamus was not unrestricted. The writ was not granted merely to gratify an idle curiosity in the examination of corporate records, “and unless there is some particular matter in dispute between members of -the corporation, or between the corporation and its individual members, or some specific purpose for which the inspection is necessary, mandamus will not lie.” High’s Extraordinary Legal Remedies (3rd ed.), sec. 310. It was to remove these restrictions on the purposes of the examination that the provision in question was added to the section in prior statutes and in the enactment of 1933. Stone v. Kellogg, 165 Ill. 192, 205. The provision under consideration relates only to the object of the examination sought and not to the qualifications of the stockholders.

Plaintiff cites cases from other jurisdictions which are said to hold that the right of any stockholder to examine the books of a corporation is unrestricted and unlimited. The cases cited hardly go so far, but in any event we prefer to follow our judgment as expressed in the Wise case, that the right of examination is qualified and limited to the class of stockholders described in the statute. We are of the opinion the better reasoning supports this view.

We hold that the petition, in the respect indicated, did not comply with the statute.

It is the well settled rule that where the allegations for the writ of mandamus fail to show a legal right, the writ will be denied. Quernheim v. Asselmeier, 296 Ill. 494, 499.

The writ was awarded not only against the corporation and its officers but against Walter B. Templeton individually and F. W. Krickhan individually. This was improper. People v. Mottinger, 212 Ill. 530; McMechan v. Yenter, 301 Ill. 508, 512.

For the reasons indicated we hold that the motion to dismiss the petition should have been allowed. The judgment order is reversed and the cause is remanded with orders to grant defendants ’ motion to dismiss the petition.

Reversed and remanded with directions.

O’Cohhor, P. J., and Hatchett, J„ concur.


text:
    People of the State of Illinois ex rel. Oscar Nelson, Auditor of Public Account of the State of Illinois, v. Homewood State Bank of Homewood, Illinois. The Village of Homewood, Appellant, v. Homewood State Bank of Homewood, Illinois and Charles H. Albers, Appellees.
    Gen. No. 39,853.
    Opinion filed February 28, 1938.
    Rehearing denied March 14, 1938.
    Frank P. Cowing, of Homewood, for appellant; Daniel S. Wentworth and Robert F. Dewey, both of Chicago, of counsel.
    Samuel P. Curman, of Chicago, for appellee Charles H. Albers.
   Mr. Justice McSurely

delivered the opinion of the court.

The village of Homewood, Illinois, filed a petition in the above entitled cause, which involves the liquidation of the Homewood State Bank of Homewood, Illinois, seeking to establish a preferred claim in the sum of $44,882.94, the amount of public moneys of the Village in the bank on July 16, 1932, the date it ceased doing-business ; the petition was referred to a master, who took evidence and reported, recommending that the allowance as a preferred claim be denied but that it be allowed as a general claim; the circuit court approved the master’s report and the Village appeals to this court.

The Village’s position is that it passed an ordinance obligating any bank designated as a depository of funds of the village of Homewood to furnish a surety bond of not less than $25,000 to the Village, safeguarding the funds. The Village says that no such, bond was furnished, therefore its deposits in the Homewood bank were unlawful and are impressed with a constructive trust — the bank holding- the deposits as a trustee ex maleficio. The principal case relied upon is People v. State Bank of Maywood, 354 Ill. 519. That this is a correct statement of the general law may be conceded, but counsel for the receiver says that the required bond was furnished.

Henry Stolzenbach was the treasurer of the village of Homewood when the bank closed and had been continuously treasurer for about 35 years prior to that time; during all this time it was customary for Mr. Stolzenbach to carry in his own name with the Home-wood State Bank deposits belonging to the Village; some of these accounts were opened by himself but most of them by his daughter Mamie, who seems to have acted as a deputy for her father in the performance of his duties as treasurer; almost every one of these accounts is in the personal name of Henry Stolzenbach; there was no mention in any of them of the village of Homewood; Stolzenbach and his daughter drew on these accounts, although most of the depositing and drawing was done by the daughter, who signed her father’s name to checks; both father and daughter testified that all the moneys in these accounts, although carried in the name of Henry Stolzenbach, belonged to the village of Homewood.

October 15,1929, the Village by its trustees passed a resolution requiring that the Homewood State Bank furnish a surety bond of $25,000 to secure the deposits of the Village funds. A bond in the sum of $25,000 was furnished, executed by the Columbia Casualty Company of New York as surety, and Henry Stolzenbach, treasurer, as principal, running to the village of Home-wood to secure the faithful performance of his duties as treasurer and an honest accounting for all moneys belonging to the Village that may come to his hands in his official capacity. The Homewood State Bank and its directors, called “Indemnitors,” also furnished an indemnity bond, reciting that Henry Stolzenbach was the treasurer of the village of Homewood and the Columbia Casualty Company of New York had become surety on his bond, and that he had agreed to deposit in the Homewood State Bank moneys coming into Ms hands by virtue of his office. The indemnitors agreed to indemnify the treasurer and the Casualty Company against any loss sustained in consequence of the failure of the bank to pay, on legal demand, all moneys of the Village deposited. Henry Stolzenbach testified that he received this last bond in connection with the Village moneys that he carried in the Homewood State Bank. He also testified that he filed suits for the use of the village of Homewood on both bonds.

The bond, executed by the bank and its directors individually,, was for the purpose of indemnifying the Village for all loss which it might sustain by reason of the failure of the bank to pay all moneys deposited to its credit. Counsel for the Village argue that the bonds should have run to the village of Homewood rather than to its treasurer. Bearing in mind that the bank had no account in the name of the Village, it was proper that the bond should indemnify the treasurer, in whose name the Village accounts with the bank were kept.

Moreover, when the Village filed suits on these bonds it ratified them and accepted their benefits. It was admitted that the Village recovered a judgment against the bank directors in its suit on their bond for the entire amount of the Village deposits with the bank, plus interest, and apparently a compromise collection was made from a number of individual directors. Counsel for the receiver states that this judgment and its satisfaction is a matter of record in the superior court, and there is no denial of this. It is well settled that where a party has accepted the benefits of a contract he is estopped from denying the validity of the instrument by which these benefits came to him. Lake St. El. R. Co. v. Carmichael, 82 Ill. App. 344, 350; Collins v. Cobe, 104 Ill. App. 142, 145; Cray v. Peoria Board of School Inspectors, 231 Ill. 63.

The Village says that no financial statements were furnished by the bank to the Village as required by the statute. Mr. Stolzenbach testified that statements were sent to him by the bank. Statements were furnished to the Village when they were furnished to its treasurer.

Counsel for the Village mistakenly try to draw a dividing line between the village of Homewood on the one hand and Henry Stolzenbach, treasurer of the Village on the other, with respect to the bank deposits. The financial dealings between the Village and the bank were by the Village treasurer. The Village acted through him, the bank accounts were kept in his name and the bonds properly ran to indemnify him, and he was the proper persbn to receive the financial statements.

The order of the court approving the master’s re-, port and ordering the dismissal of the claim for a preference was proper and it is affirmed.

Affirmed.

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


author: Mr. Justice Matchett

text:
    City National Bank and Trust Company, Appellee, v. James J. O’Keefe, Appellant.
    Gen. No. 39,397.
    Opinion filed February 28, 1938.
    Litsinger, Healy, Beid & Bye, of Chicago, for appellant.
    Defrees, Buckingham, Jones & Hoffman, of Chicago, for appellee; Vincent O’Brien, John Merrill Baker and Walter Sczudlo, all of Chicago, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

In an action brought by the successor trustee to foreclose a trust deed a decree was entered on the reeommendation of a master on May 11, 1936. The decree directed that in default of payment of the amount found due the premises should be sold by the master subject to redemption. July 30, 1936, pursuant to notice, the master offered the premises for sale and James J. O’Keefe bid the sum of $5,000, and that being the highest and best bid offered, the master accepted it. While the sale was made on July 30, 1936, the report of sale was not filed in the superior court until November 5, 1936. The report stated that O ’Keefe had paid on account of his bid the sum of $500, and that there was a deficiency of $23,165.88. On the same day the report was filed the court entered an order finding that $5,000 was not a fair and reasonable bid, and that for that reason the sale should be set aside, and the master was directed to return to the bidder the $500 or any portion thereof in his hands and to hold a new sale within 60 days, complying with the provisions of the decree.

November 13th O’Keefe filed his petition in the cause, setting up that the sale was subject to taxes, which, with the penalties, amounted to between $4,000 and $5,000; that the entire bond issue secured by the trust deed was originally $22,000, upon which $2,000 had been paid; that the premises were located at 5048 West Quincy street in Chicago and were improved with a 3-story brick building containing six 3-room apartments and a 3-car brick garage; that the premises were not worth more than $12,000; that in a cross-bill filed by the Central Trust Company, who preceded the present successor trustee, it was represented under oath by one of its officers that the premises could not be sold for a sum in excess of $15,000, and that the premises were worth not to exceed that sum; that on November 5, 1936, attorneys for the successor trustee served notice that on November 5, 1936, they would file the master’s report of sale or move that a hearing be set for an early date; that Judge Miller at that time was ill and absent and his motions were heard by Judge Allegretti; that the attorneys for the successor trustee at that time moved that the sale be set aside on the sole ground that the bid, as set forth, was inadequate; that the court entered an order prepared by attorneys for the plaintiff, no copy of which had been submitted to the petitioner, and that no copy was given to them until after the entry of the order.

The petitioner averred that his bid was made at an open advertised judicial sale at which attorneys representing all the outstanding bonds and the successor trustee were present; that his bid was the highest; that the price is adequate; that by reason of the deficiency petitioner will not be entitled to rents for 15 months; that during that period there will be an accrual of additional taxes; that upon a representation to the court by the trustee that the premises were not worth more than $15,000 the court appointed a receiver on or about March 25, 1933; that the receiver has been in possession and money in his hands will be applied on the indebtedness to the bondholders. The petition prayed that the order of November 5, 1936, should be set aside and the master’s report of sale be approved and the sale confirmed. The petition was duly verified.

The successor trustee answered, admitting the sale of the premises by the master at public sale after due notice and advertisement, and that O’Keefe was the highest and best bidder, and the sale to him subject to unpaid taxes. The answer states that a bondholders’ committee had not prepared a plan of reorganization and was not in a position to make a bid prior to the sale; that such plan of reorganization was in the process of preparation; that" petitioner through his solicitors moved that a sale be had before the plan of reorganization could be completed and a competitive bid made by the bondholders ’ committee; that the committee attempted to secure an outside bidder but was not successful until after the sale was held; upon the information and belief it was averred that the petitioner was the owner of the equity of redemption; that the bid made by him was not for the benefit of the majority of the bondholders. It denies that the premises are not worth more than $12,000 but admits that an officer of the Central Republic. Trust Company, trustee, had stated under oath that the premises could not be sold for a sum in excess of $15,000; that the total amount of indebtedness, including master’s fees, etc., was $28,165.88, which would leave a deficiency of $23,165.88; that the costs and prior items which would be disbursed out of the price bid totaled $2,558.09, and that a balance of only $2,441.91 would be available for distribution to the holders of bonds, being about 11 per cent of the face amount of the principal indebtedness; that the bondholders’ committee had secured a bidder who would offer from $2,000 to $4,000 more than the bid of petitioner; that upon the hearing of the report of sale Mr. Benjamin E. Sherman appeared in open court and stated he would offer from $2,000 to $4,000 more at any competitive sale that might be held, and offered to guarantee at least a bid of $2,000 more than the bid of petitioner. The answer averred that the sale was set aside on motion of the court after the statements of counsel for petitioner and after the statement of the solicitors for the successor trustee; that the draft order was read and an addition thereto made in the handwriting of the judge. This answer also was duly verified.

The cause came on for hearing November 13, 1936, upon the petition and answer and statements of counsel made in open court, and an order was entered denying the prayer of the petition, from which petitioner has appealed.

It is contended on behalf of O ’Keefe that the chancellor acted arbitrarily in refusing to approve the master’s report of sale, in setting it aside and in directing that another sale be made. It is argued that the record discloses no legal objections sufficient to justify the disapproval of a judicial sale; that there was no fraud, mistake or irregularity; that none of the parties was under disability; and that the court was therefore bound to approve the report of sale and erred in setting it aside. The cases relied upon are Chicago Title & Trust Co. v. Robin, 361 Ill. 261, and Glanz v. Taken, 293 Ill. App. 74. The decisions upon the questions presented by this record have not been altogether uniform. In recent cases the Supreme Court has clarified the law applicable. In Straus v. Anderson, 366 Ill. 426, the law with reference to judicial sales of this kind is stated as follows: ‘ ‘ The question as to the power of a court of equity to refuse to confirm a sale or set aside a sale for mere inadequacy of price has been the subject of much judicial discussion. It would seem, at first impression, that there was much confusion and a great contrariety of opinion amongst the courts and textwriters upon the subject. This apparent lack of harmony has arisen because of the failure to differentiate between the condition of the record before the court as to the sale attacked or sought to be vacated. The setting aside of an executed sale is one character of proceeding. The opposition to the approval of a purported sale requiring the confirmation of the court for its validity and finality, falls into a different classification. In the first mentioned class the sales have been completed, generally, either by reason of the fact that no approval of the court is required, or where such approval, being requisite, has been obtained. Sales grouped within this category will ordinarily not be set aside because of inadequacy of price in the absence of proof of fraud or some irregularity in the sale. It is out of this division of sales from which the principle emerged that stability should be given judicial sales, and that courts would not void the same in the absence of fraud or some irregularity in the proceeding attendant upon the sale. In those cases the buyer has an interest or right in the property. In the second division the court, in legal contemplation, is the seller. The officer conducting the sale acts as the agent of the court in offering the property for sale. His declaration striking off the property to the highest bidder carries with it no interest or title to the property. The bid is only an offer to buy. Until, and unless, the court confirms the report of sale made by the officer conducting the sale, there is no sale. In the latter character of sales the chancellor has a broad power in their supervision made under his direction and may, acting in his judicial discretion, confirm or disapprove any such sale. (Miller v. Miller, 332 Ill. 177; Hart v. Burch, 130 id. 426.) In the latter type of sales the court may refuse to confirm the sale merely because of the inadequate price for which the premises are struck off. These principles are recognized in Levy v. Broadway Carmen Building Corp. (ante, p. 279), where numerous authorities bearing upon the subject are reviewed.”

This classification was applied by the second division of this court in the case of Chicago City Bank & Trust Co. v. Johnson, 293 Ill. App. 564. In that case the sale had been executed and the court held that in the absence of well recognized equitable grounds, such as fraud or irregularity, the court might not set the sale aside. This record presents a question arising upon an unexecuted sale, one in which the bid made to the master amounts only to an offer which does not become a sale until it has been confirmed by the court. Glanz v. Taken, 293 Ill. App. 73, was a case of this kind, but the opinion indicates that the decisions of Levy v. Broadway-Carmen Bldg. Corp., 366 Ill. 279, and Straus v. Anderson, 366 Ill. 426, and First National Bank v. Bryn Mawr Beach Bldg. Corp., 365 Ill. 409, were not called to the attention of the court.

On the undisputed facts in this case as disclosed by the petition, the answer and the statements made by counsel on the hearing of the cause, we think it was clearly within the discretion of the chancellor to refuse to confirm the sale, and that he did not err in setting it aside.

For the reasons indicated the order is affirmed.

Affirmed.

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


text:
    Julian J. Gray, Appellant, v. The First National Bank of Chicago et al., Appellees.
    Gen. No. 39,526.

      Opinion filed February 28, 1938.
    Lloyd C. Whitman, of Chicago, for appellant.
    Winston, Strawn & Shaw, Harold V. Amberg and Paul W. Tatge, all of Chicago, for appellee First National Bank of Chicago; Walter H. Jacobs and Reuben A. Borsch, both of Chicago, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

On July 18, 1936, plaintiff Gray filed in the superior court a bill of review to set aside a decree of that court entered July 22, 1935, in an action to foreclose a trust deed. On motion of defendant, First National Bank, the bill of complaint was stricken and the cause dismissed by a decree entered January 11, 1937. Plaintiff brings this appeal.

From the bill of complaint it appears that the First Union Trust & Savings Bank is a corporation organized under the laws of Illinois with relation to banks and bankers; that July 23,1931, it filed an amended and supplemental bill and afterward an amendment thereto to foreclose a trust deed executed by Gray; that a foreclosure decree was entered May 23, 1933, upon the report of a master to whom the cause was referred; that pursuant to the decree the master on July 17, 1935, sold the premises described, and on July 18, 1935, filed his report of sale and distribution. On the same day the First National Bank of Chicago filed its petition in the cause, praying that the decree for the deficiency recommended by the master might be entered in its favor. The petition averred that after the entry of the decree of July 17, 1933, the First Union Trust & Savings Bank, pursuant to an act of congress, consolidated with the First National Bank of Chicago under the charter of petitioner; that the comptroller of the currency issued a certificate so certifying and thereupon the consolidation became effective; that the consolidated banking association held a special permit from the Federal -Reserve Board pursuant to par. k of section 248, title 12, of the United States statutes granting petitioner the right to act as trustee and in other fiduciary capacities; that petitioner also held a certificate from the State auditor of public accounts of the State of Illinois giving it the right to accept and execute trusts under the name, “First National Bank of Chicago ’ ’; that it was duly qualified under the laws of the United States and the laws of Illinois to accept and execute trusts under that name; that by reason thereof the existence of the First Union Trust & Savings Bank was merged into and continued in the petitioner, and that all rights, powers, etc., vested in the First Union Trust & Savings Bank, as trustee, are now possessed by petitioner, and thereby petitioner had become the complainant in the cause and was entitled to recognition as such.

The petition prayed for further relief. On July 22, 1935, the court entered a decree approving the master’s report of sale and distribution, reciting the filing of the petition of the First National Bank of Chicago, finding that the allegations of the petition were true and adjudging that by virtue of the consolidation the existence of the First Union Trust & Savings Bank was merged into and continued in the First National Bank of Chicago, and that the bank had become and was complainant in the case and as such entitled to the benefits thereof, and decreed that as such complainant trustee it have and recover from Gray $106,205.26 with interest at 5 per cent from June 10, 1935, and have execution therefor. July 25, 1935, Gray moved to vacate the order of July 22, 1935, on the ground that the petition was docketed on the motion calendar for presentation on July 18,1935; that Gray then appeared and advised the court that defendant desired to answer but his counsel was otherwise engaged; that Gray’s counsel understood the court had granted 5 days for answer; that on July 22, 1935, Gray appeared, thinking the answer and hearing on the petition would be then considered; that counsel understood he had all of July 22,1935, to answer and on the morning of that day was engaged in the United States District Court; that defendants believed they had a meritorious defense to the petition and should be permitted to answer. The motion was denied.

The files in this court in Gen. No. 39,002 show that on June 3, 1936, Gray filed his petition for leave to appeal from the decree of July 22, 1935; that the bank on June 13th filed its answer to the petition and on June 15th the prayer of the petition was denied; that Gray afterward filed a petition praying this order of June 15, 1936, might be set aside, which on June 29, 1936, was denied.

The First National Bank of Chicago moves to dismiss this appeal for the reason that Gray by his petition for leave to appeal secured one review of the decree. The bank says a party may not compel defendant to defend the foreclosure decree twice in the same court, and that Gray cannot in this manner relitigate questions heretofore reviewed; that the judgment entered upon his petition for review is binding and may not again be opened up. The bank cites Salley v. People, 122 Ill. App. 70; Soden v. Claney, 269 Ill. 98, 101, 102; and Wabash, St. Louis & Pac. Ry. Co. v. Peterson, 115 Ill. 597.

The petition for leave to appeal to this court was filed pursuant to the provisions of sec. 76 of the Civil Practice Act (Ill. Rev. Stat. 1937, ch. 110, p. 2410 [Jones Ill. Stats. Ann. 104.076]) which provides for a notice of appeal after the expiration of 90 days from judgment and within the period of one year only, however, by order of the reviewing court upon motion and notice to adverse parties and upon a showing by affidavit that there is a merit in appellant’s claim and that the delay was not due to appellant’s “culpable negligence.” In addition to merit the petitioner must show the absence of culpable negligence. No opinion was filed in this court in that proceeding. The files and records show the merits of the matter were presented but it does not affirmatively appear whether the petition was denied on the ground of lack of merit or because of culpable negligence. The arguments in briefs were directed to the same issues and upon the whole record we are of the opinion that these points rather than any question of negligence were determinative. In the absence of an opinion by the court, however, we are disposed to hold that plaintiff is not precluded. The motion to dismiss will be denied.

Defendant, however, further contends that the errors of which plaintiff complains may not be corrected by means of a bill of review, because these alleged errors go only to the correctness of the court’s decision ; because a bill of review cannot be made to function as an appeal or writ of error; because the petition of the bank of July 18, 1935, was taken as confessed against plaintiff; and because plaintiff is not prejudiced by the decree. The law is that a bill of review can be brought only within the time allowed for perfecting an appeal or suing out of writ of error. Under section 76 of the Practice Act here applicable, the limit for appeal, as a matter of right, is 90 days, or upon leave granted by the reviewing court, within one year. This bill was filed after 90 days but within one year from the entry of the decree complained of. Whether this bill was brought within the required time raises a question we need not decide. Knaus v. Chicago Title & Trust Co., 365 Ill. 588.

Technically the bill is one to correct errors of law apparent on the face of the decree. This is indicated by the fact that it was filed without leave first obtained. 3 Ency. of Pleading and Practice, 575; Storey’s Equity Pleading, secs. 404-411; 10 R. O. L. secs. 360-366. It is elementary that errors in a decree resulting from mistaken judgment going only to the correctness of the court’s decision (Perry v. Phelips, 17 Ves. Jun. 173 English Reports, Full Reprint, vol. 34 (p. 67); Vyverberg v. Vyverberg, 310 Ill. 599; Regner v. Hoover, 318 Ill. 169; Hoffman v. Knox, 50 Fed. 484) or errors resulting from a failure to present a defense existing at the time a judgment or decree is entered (Harrigan v. County of Peoria, 262 Ill. 36; Stasel v. American Home Security Corp., 279 Ill. App. 172) may not be made the basis upon which equitable relief by way of a bill of review may be granted. The bill of review cannot be made to perform the function of an appeal or writ of error (Regner v. Hoover, 318 Ill. 169; Hoffman v. Knox, 50 Fed. 484.) The courts are reluctant to subject decrees to review by this method, and the cases are comparatively few in which relief máv thus be obtained.

The petition of the bank to be substituted as plaintiff clearly set up the facts upon which it was based. Plaintiff had notice of the presentation of the petition and an order was entered that all defendants within a time certain should plead, answer, except or demur. The hearing was set for a specific day and at 9:30 a. m. Plaintiff allowed the petition to be taken as confessed. The court had jurisdiction to decide who was the proper party plaintiff. It decided and entered an order accordingly. Two days thereafter plaintiff G-ray made a motion to set the decree aside and for leave to answer the petition. The motion was supported by affidavit in which the reasons therefor were fully set up. The court decided that the affidavit was insufficient and the motion was denied. If the court erred in its judgment in these respects or in the exercise of its discretion, the error might have been corrected upon appeal which, under our present statute, is a matter of right. Defendant did not avail himself of this remedy. Moreover, we think the trial court may well have sustained the motion to dismiss the petition for the reason that it fails in any respect to show wherein plaintiff is prejudiced in any way. Not only does the bill fail to allege prejudice, it affirmatively sets up facts showing that plaintiff has not been prejudiced. The bill does not disclose wrong to plaintiff visible to the judicial eye. Plaintiff presents a purely technical complaint to the effect that the successor trustee is not as a matter of law the legal successor of the First Union Trust & Savings Bank, the original plaintiff. He rjnes not show any detriment to him or his rights thereby or any advantage which would be obtained by substituting the one plaintiff for the other. Indeed, if both banks should be held to be disqualified as trustees under the trust deed, the court would not allow the trust to fail. Under well recognized rules and for obvious reasons it would appoint a successor. It might appoint the First National Bank, which the bill shows to be qualified. However, an examination of the bill and the authorities cited by both parties leads us to the conclusion that the alleged errors pointed out by the bill are not such errors as may be corrected by a bill of review. The contention of plaintiff is that the alleged consolidation of the First Union Trust & Savings Bank, an Illinois corporation, with the First National Bank of Chicago, a corporation created under the laws of the United States, is illegal and void because it was unauthorized by any Illinois statute. As plaintiff in his ingenious brief says: ‘1 This is the prime, the first, the outstanding and necessarily controlling issue in this case, this issue as to the power of First Union Trust & Savings Bank under the Illinois statute, that bank’s only source of power. In fact it is the only issue in this Honorable Court on the merits of this case.” If it is conceded that this question is debatable it would not follow that the alleged error was one that might be corrected by a pure bill of review, and this for the reason that the alleged error is not “apparent.” The bill does not show any unquestioned violation of the provisions of the statute. It does not point out any decision of a court by which the proposition of law for which it contends is unquestionably established. Manifestly, a bill of review is not designed to correct such supposed errors which, under our Civil Practice Act, may be reviewed by appeal. Storey, Equity Pleadings, sec. 405, illustrates the kind of supposed errors which may be reached by bill of review, such as if a decree is against the statute law in directing a legacy belonging to a child who had died an infant intestate without wife or children to be distributed to his mother, brothers and sisters, where by the statute it was vested entirely in the father, or where an absolute decree was made against a person who upon the face of it appeared to have been an infant. As Lord Chancellor Eldon said in Perry v. Phelips, 17 Ves. Jun. 173, 177: “There is a great distinction between error in the Decree and error apparent. The latter description does not apply to a merely erroneous judgment; and this is a point of essential importance; as, if I am to hear this cause upon the ground that the judgment is wrong, though there is no error apparent, the consequence is, that in every instance a Bill of Review may be filed; and the question, whether the cause is well decided, will be argued in that shape: not, whether the Decree is right or wrong on the face of it. The cases of error apparent, found in the books, are of this sort; an infant not having a day to show cause, etc.; not merely an erroneous judgment.”

The supposed errors alleged in the bill are not of this character. Plaintiff cites authorities such as Gunggoll v. Outer Drive Athletic Club, 349 Ill. 406, and California Bank v. Kennedy, 167 U. S. 362, 367, 42 L. Ed. 198, 200, to the effect that consolidation of corporations without statutory authority is void, and argues that Casey v. Galli, 94 U. S. 673, 24 L. Ed. 168, has been overruled by Hopkins v. Cleary, 296 U. S. 315, 80 L. Ed. 251, and by the same reasoning argues that the opinion of the Attorney General of Illinois (see Opinions, 1927, p. 316) to the effect that this consolidation was legal should be disregarded. The question decided in Hopkins v. Cleary did not arise out of the consolidation of a State bank with a national corporation. McCulloch v. Maryland, 4 Wheat. 316, has never been overruled. Even if upon a consideration of all the cases we were disposed to agree with the validity of the argument presented by attorney for the plaintiff it would by no means follow that the alleged error was “apparent” within the rule limiting errors which may be corrected by a bill of review. If the supposed error is debatable it is not “apparent.” Much less would we be able to hold these errors to be “apparent” in view of the fact that pending this appeal the third division of this court, in the case of First National Bank of Chicago v. Lindberg, 293 Ill. App. 474, on the appeal of Edward F. O’Brien (a case where the Appellate Court was unrestricted by rules of law applicable to bills of review and where the appellant was represented by the same counsel as appear for plaintiff here) held in a carefully considered opinion by Presiding Justice Hebei that the defendant in a foreclosure suit was without standing to question the right of the consolidated plaintiff’s successor trustee to maintain its bill to foreclose; the exclusive right to raise that question being in the State. We agree with the conclusion reached in that opinion. It is unnecessary to repeat here what was said there. For these reasons the decree is affirmed.

Affirmed.

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