author: Mr. Justice Hall

text:
    Concordia Building and Loan Association, Appellant, v. Erik Andreen et al., Appellees.
    Gen. No. 39,171.
    Heard in the third division of this court for the first district at the October term, 1936.
    Opinion filed June 30, 1937.
    Rathje, Hinckley, Barnard, Kulp & Tucker, of Chicago, for appellant; Francis E. Hinckley and Joseph J. Sullivan, Jr., of Chicago, of counsel.
    Harry A. Biossat and Nels H. Olson, both of Chicago, for appellees.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from a decree of the circuit court of Cook county, dismissing a complaint in equity, filed by the Concordia Building and Loan Association, to foreclose a mortgage.

The complaint, as amended, recites in substance, that the plaintiff is and was organized as a building loan and homestead association; that on May 22, 1925, Elmer H. Thilmont and Robert S. Kenney were members of the association, and made application to the association for a loan of $3,500; that prior thereto, 35 shares of the 145th series of the capital stock of the association had been issued to them in accordance with the by-laws of the association; that on May 22, 1925, a loan was made to the persons named of $3,500, and to secure the payment, these persons made, executed and delivered to the loan association their bond dated May 25, 1925, in the sum of $7,000; that to secure the payment of the indebtedness, the persons named pledged with plaintiff the 35 shares of capital stock so issued to them, and as further security for the loan, together with their wives, on May 22, 1925, made, executed and delivered a mortgage, wherein and whereby they conveyed to the association certain real estate situated in Cook county; that by the bond, it was provided that if at any time default should be made in the payment of any sums due on the 35 shares of capital stock, or in the payment of interest, or of any amount to become due the association on fines under plaintiff’s by-laws, then the shares of stock should be forfeited to the plaintiff under the terms of the bond. It is further alleged that the shares of stock were transferred to plaintiff as collateral and further security for the loan. There are various other allegations in the complaint as to penalties provided by the plaintiff’s by-laws, which might result from the mortgagor’s defaults in payment to the association of certain amounts provided in the agreement to be paid. It is alleged that on June 23, 1925, Kenney and Thilmont, together with their wives, agreed to sell the premises to Erik Andreen and Bertha Andreen, his wife, and that the parties entered into a written agreement wherein and whereby Thilmont and his wife, as a part of the purchase price to be paid to Kenney and Thilmont for the property in question, assumed and agreed to pay and to become personally liable for the payment of the unpaid balance due on the mortgage to plaintiff, together with certain charges and costs. The complaint prays for an accounting from the defendants on the foreclosure of the mortgage, and for a sale of the premises in satisfaction of the amount found to be due, and for a deficiency decree against the defendants, in case the mortgaged premises fails to sell for a sufficient amount to pay the debt. To the complaint, defendants filed a counterclaim, in which they allege that on June 23, 1925, the mortgagors in the mortgage referred to in the complaint, entered into an agreement with Erik Andreen and Bertha Andreen, defendants, by which the mortgagors agreed to convey the property involved to the Andreens for a consideration of $6,300. In this agreement, the mortgagors are referred to as party of the first part, and the defendants, as party of the second part. The agreement, as to the payments to be made by the defendants to the mortgagors, is as follows:

“And the said party of the second part for and in consideration of the foregoing agreement on the part of the said party of the first part covenant and-agree to pay to the said party of the first part at the office of Chi. City Bk. & T. Co. Chicago, Illinois, or where directed, as the purchase price of the said premises, the principal sum of Six Thousand Three Hundred Dollars ($6,300.00) with interest thereon as hereinafter stated, in the manner following: Eight Hundred Dollars ($800.00) in hand paid the receipt of which is hereby acknowledged:
“$2,791.25, being present, paid balance by first mortgage to the Concordia Building* Loan & Homestead Association payable in monthly installments of Thirty Five ($35.00) Dollars, including interest at the rate of six (6%) per cent per annum, payable monthly, which purchasers assume and agree to pay.
“$2,708.75 remaining balance payable in monthly installments of forty ($40.00) dollars or more. Said sum to include interest at the rate of six (6%) per cent per annum, payable monthly on said sum remaining from time to time unpaid. Both monthly payments due on or before the 14th day of each month beginning Julv 4, 1925.
“Said monthly payments shall be continued until Three Thousand Five Hundred Eight & 75/100 ($3,508.75) (including initial payment) Dollars has been paid on the principal sum of said purchase price, not including 1st mortgage payments at which time warranty deed will be given subject to first mortgage balance and taxes and assessments as hereinafter mentioned.
“And the said party of the second part further agree to pay all taxes and assessments that may be legally levied or imposed on the said premises after the year 1924 and all unpaid installments of special assessments due after the year 1925 and all unpaid special assessments levied for improvements not yet to be made, and further agree as additional security to keep all buildings on aforesaid premises insured in such company or companies as the said party of the first part may direct for at least the sum of $4500.00 Dollars. But in case the said party of the second part fail to pay any or all such taxes and assessments upon said premises, or any part thereof, whenever and as soon as the same shall become due and payable, and the said party of the first part shall pay from time to time, or at any time, any or all such taxes and assessments, or cause the same to be paid, the amount of any and all such payments so made by the said party of the first part, shall thereupon become an additional consideration for the premises herein agreed to be conveyed, and shall immediately become due and payable from the said party of the second part to the said party of the first part.
‘ ‘ Said party of the second part further agree that in case they shall not make the payments on the days they are respectively due and payable, they will pay interest on all payments remaining unpaid and past due on this contract and on all taxes, assessments, and insurance premiums paid by the said party of the first part at the rate of seven per cent per annum.
“For and in consideration of said purchase price seller agrees to complete the following' repairs on said property within four months from date hereof. Construct a new back porch of new lumber, just like present back porch. Repair front porch and place same in good condition. Paint entire bldg, one coat and all new work two coats of color acceptable to owner.
“It is further stipulated and agreed by and between the parties hereto that in case of the failure of the said party of the second part to make either of the payments or perform the covenants and agreements hereby made and entered into on their part this contract shall after thirty days, at the option of the said party of the first part, or those at the time holding the legal title to the said premises, be forfeited and determined and the party of the second part shall forfeit all payments made by them, on this contract and all payments made thereon shall be retained by the said party of the first part in full consideration and liquidation of all damages by them sustained and the said party of the first part shall then or at any time have the right to re-enter and take possession of the said premises with or without process of law. . . .
“It is mutually agreed by and between the parties hereto that all the agreements herein contained shall extend to and be obligatory upon the heirs, administrators, executors and assigns of the respective parties, and that the time of payment shall be the essence of this contract and of all the conditions thereof.
“In Witness Whereof, the parties to these presents have hereunto set their hands and seals this day and year first above written.
“Robert S. Kenney (Seal)
Sara P. Kenney (Seal)
Elmer H. Thilmont (Seal)
Mary M. Thilmont (Seal)
“Erik Andreen
Bertha Andreen”

Plaintiff’s theory is that the grantees receiving a conveyance of real estate from mortgagors, subject to an existing recorded mortgage which they assumed and agreed to pay, are estopped to plead usury, even though they agreed to pay an amount less than the amount actually due thereon, especially where they had ample opportunity to ascertain the unpaid balance due on the mortgage; that when an Illinois Building and Loan Association has, by its by-laws, dispensed with the offering of its money for bids in open meeting, and in lieu thereof has provided for the loan of its money at a fixed rate of interest, and a fixed premium payable in advance, the premium is based and the interest computed not on the net proceeds of the loan actually received by the borrower (i. e., the principal amount of the loan after deducting the premium), but upon the principal amount of the loan, even though the premium is paid-by the borrower out of the proceeds of the loan instead of being paid with separate funds. Also, that defendants cannot urge usury as a defense, when by their agreement, they assumed and agreed to pay the amount of the mortgage, as shown by the by-laws of plaintiff. Defendants’ theory is that when a premium and interest may properly be charged by a Building and Loan Association upon a loan to one of its members, the premium and interest should be based upon the net proceeds of the loan available to the individual borrowers (i. e., the principal amount of the loan less the premium) even though the premium is paid to or deducted by the association out of the proceeds of the principal amount of the loan due to the borrowers ’ liability to otherwise pay the same. In other words, it is claimed by defendants that by its by-laws, plaintiff could only charge 20 per cent of the loan made for interest and premium, and that the 20 per cent should be computed on the basis of the actual loan, and that the amount of interest claimed is usurious.

The cause was referred to a master, and on July 16, 1936, the master filed his report, in which he found that the complainant was entitled to the relief prayed'in the complaint. Objections and exceptions were filed to the report, and upon a hearing, the court, as stated, dismissed the complaint for want of equity. After hearing evidence, the master concluded that the defendants had failed to establish the defense of usury, and that such defense was not available to them, and that the material allegations contained in the complaint, as amended, were true, and were sustained by the evidence. There seems to be no question as to the facts. The only question is as to the conclusion that should be reached therefrom. Therefore, we will act on the presumption that the master’s finding of facts is correct. These findings are to the effect that:

“On May 22, 1925, Robert S. Kenney, Sara P. Kenney, his wife, Elmer H. Thilmont and Mary M. Thilmont, his wife, hereinafter referred to as ‘mortgagors’, were members of said plaintiff association, and that 35 shares of the 145th series of the capital stock in said association had been issued to them in accordance with the by-laws of said association, and that on May 22, 1935, the plaintiff granted a loan to said mortgagors in the sum of $3,500.00; that thereupon the said mortgagors, to secure the payments of the said amount so loaned, made, executed and delivered to plaintiff their certain bond dated May 22, 1925, and then and thereby promised to repay to plaintiff the penal sum of $7,000.00, according to the tenor and effect of said bond, and
“That to secure the payment of said indebtedness the said mortgagors then and there pledged with plaintiff the said 35 shares of capital stock, and for further security, on May 22, 1925, made, executed and delivered their certain mortgage, wherein and whereby they did convey and warrant to the plaintiff certain premises situated in the County of Cook and State of Illinois; and
“That said bond provides that if at any time default should be made in the payment of the principal sum or interest thereon, or of any amount to become due on said shares of stock or fines under plaintiff’s by-laws, which said shares of stock were with said bond transferred to plaintiff, as collateral security, and if such default should continue for a period of six months, then said shares of stock may be declared forfeitéd to plaintiff in accordance with the terms of said bond; and
“That under and by virtue of plaintiff’s by-laws, it is provided that every borrowing member who shall neglect to pay his or her monthly installments at the time they may become due shall pay to plaintiff a fine of five cents per share for each past due installment, and every borrowing member who shall neglect to pay the interest on his or her loan when the same shall become due, shall also pay to plaintiff the sum of five cents per share on each share of stock upon which he or she may have obtained a loan for each such delinquency ;
“That the monthly installments of principal and of interest due in accordance with the terms of said bond and mortgage were the sums of $17.50 each, respectively, and that said mortgagors at the time of securing the loan hereinbefore mentioned, paid unto plaintiff as a premium therefor under and in accordance with the by-laws of plaintiff the sum of $700.00; and
“That on and prior to April 15, 1935, said mortgagors defaulted in the payment of the installments of principal and of interest that became due in accordance with the provisions of said bond and mortgage, and that neither the mortgagors nor anyone in their behalf, have paid said interest or principal or any part thereof, and that said default has been continued for a period of more than six months prior to October 15, 1935, and that on October 15, 1935, said default amounted to a sum in excess of a sum equal to six contractual monthly payments due as aforesaid; and that on to-wit: the 15th day of October, 1935, there were fines which accrued to plaintiff under the terms of said bond, mortgage and by-laws in the sum of $10.50; that past due accrued interest on said bond and mortgage amounted to $105.58; that there was also due plaintiff for money advanced for insurance the sum of $5.25; and that after allowing to said mortgagors all just credits to which they were entitled, including the sum of $2,135.00 for installments paid on said bond and the sum of $297.34 as profits allowed by the plaintiff on said shares of stock, there was due and owing to the plaintiff on October 15, 1935, the sum of $1,188.99 with interest thereon from and after said date at the rate of 5% per annum; and
“That on October 15,1935, the Board of Directors of plaintiff association at its regular meeting* ordered that said 35 shares of the 145th series of the capital stock of plaintiff association issued to said mortgagors be forfeited unto plaintiff by reason of the defaults hereinbefore mentioned and that proceedings be instituted upon and against the securities of said loan according to law; and
‘ ‘ That the plaintiff was at the time of the filing of the complaint herein and is now the legal holder and owner of said bond and mortgage, and that by reason of said defaults, which defaults continued for a period of more than six months prior to October 15,1935, amounted to a sum in excess of a sum equal to six contractual monthly payments due as aforesaid, and pursuant to the terms and conditions of said bond and mortgage, and in pursuance of plaintiff’s by-laws, plaintiff herein elected to and did, by the filing of its complaint herein, on November 6, 1935, exercise its option to foreclose the lien of said mortgage; and
“That subsequent to the filing of its complaint herein, the plaintiff was reimbursed in the sum of $5.25, for said sum so paid by it as and for premium on insurance policy covering the said premises, which the Master recommends be credited on account of the indebtedness hereinafter found due and owing under the said mortgage herein sought to be foreclosed; and-
“That the plaintiff, in connection with these proceedings, was compelled to engage the services of a court reporter herein; that the usual, reasonable and customary charge for the services of said court reporter is the sum of $16.00, that the usual, reasonable and customary fee for the services of plaintiff’s attorneys herein is the sum of $200.00, and the Master recommends that said sums be allowed the plaintiff as an additional portion of the indebtedness secured by the said mortgage; and
“That the Master finds ánd states the account of the amount due the plaintiff herein as the legal holder and owner of said bond and mortgage herein sought to be foreclosed, to be as follows:
Amount due under said bond (after allowing all credits, including the withdrawal value of said shares)......................$1,183.74
Interest thereon at 5% per annum from October 15, 1935 to May 6, 1936.................... 33.05
Sub-total.....................$1,216.79 .
Court reporter’s charge........ 16.00
Attorney’s fees................ 200.00
Grand Total . $1,432.79
together with all costs and expenses of these proceedings; and
‘ ‘ That the defendants herein contend that the actual loan granted by the plaintiff: amounted to the principal sum of $2,800.00; that the exaction of a $700.00 premium therefor amounted to a 25% charge; that said loan was unauthorized, exceeded the 20% premium allowed to be exacted by Article 13, Section 2 of the bylaws of the plaintiff and was thereby rendered usurious ; said defendants further maintain that said loan is usurious in that interest at the rate of 6% was charged by the plaintiff on the sum of $3,500.00 instead of the sum of $2800.00, which was actually received by the defendants; and
“That Article 13, Section 2 of the plaintiff’s by-laws in force at the time of the granting and consummation of said loan, provided as follows: ‘All loans, by this association to borrowing stockholders shall be made at a premium of 20% payable in advance, and at the rate of 6% per annum, payable in equal monthly installments. ’ That on or about May 6,1925, Elmer H. Thilmont and Robert S. Kenney executed and delivered to the plaintiff a certain application in writing, requesting ‘a loan of $3500.00 on 35 shares of the capital stock, 145th series of said Association . . . at a premium of $700.00, payable in advance, in accordance with the by-laws of said Association . . . ’; and
“That the Master finds that on June 3, 1925, pursuant to the application, plaintiff executed and delivered to Elmer Thilmont and Mary Thilmont, Robert S. Kenney and Sara P. Kenney, its check in the sum of $3500.00, representing the proceeds of said loan; that said payees thereupon endorsed said check and caused the proceeds thereof to be deposited in the Chicago City Bank and Trust Company; that thereafter the funds represented thereby were distributed for the use and benefit of said borrowers, including the payment to the plaintiff of a premium in the sum of $700.00, on or about July 3, 1925; that thereafter the payment of said preminm was recorded on the first page of the pass book to said borrowers. ’ ’

His conclusion is as follows:

“That the loan granted by the plaintiff herein to Robert S. Kenney, Sara P. Kenney, Elmer Thilmont and Mary M. Thilmont, was consummated in accordance with the statutes in such case made and provided, and pursuant to the provisions of the by-laws of the plaintiff association; that said loan was fully authorized; and that the defendants Erik Andreen and Bertha Andreen, his wife, grantees of said Thilmonts and Kenneys, have failed to establish the existence of uspry herein or that said defense is available to said defendants. ’ ’

Upon the findings and conclusion, the master recommended that a decree be entered in accordance therewith. The objections and exceptions filed by defendants were to the effect that the master was in error in finding that the loan to the Kenneys was $3,500, when, in fact, it was $2,800, and objects to the amount found to be in default. Upon a hearing before the court, the objections and exceptions were sustained, and as stated, a decree was entered, dismissing the bill for want of equity.

It seems not to be disputed that the original loan made by the association to Thilmont and Kenney was $3,500, and that they gave to the association the sum of $700 to be applied on account of premium, and that interest had been charged by the association on $3,500 from the inception of the loan, at the rate of six per cent per annum, and that this interest charged included six per cent on the $700 paid as premium. The record further indicates that Thilmont and Kenney, together with their Avives, on June 3, 1925, Avere given a check by plaintiffs for $3,500. The by-laws of the association provide that a loan made to a borroAving stockholder “shall be made at a premium of 20%, payable in advanee, and at the rate of 6% per annum, payable in equal monthly instalments. ’ ’

Chapter 32, par. 393, section 19, Cahill’s Illinois Be-vised Statutes, 1933, provides:

‘ ‘ The board of directors shall hold such stated meetings not less frequently than once a month, as may be provided by the by-laws. At which meeting the money in the treasury shall be offered for loan in open meeting, and the shareholders who shall bid the highest premium for the preference or priority of loan, shall be entitled to receive a loan of one hundred dollars ($100.00) for each share of stock held by said shareholders; the said premium bid may be deducted from the loan in one amount, or may be paid in such proportionate amounts or installments, and at such times during the existence of the shares of stock borrowed upon, as may be designated by the by-laws of the respective associations; provided, that any such association may, by its by-laws, dispense with the offering of its money for bids in open meeting, and in lieu thereof loan its money at a rate of interest, or interest and premium, to be fixed by the directors, deciding the preference or priority of the right to a loan by the priority of the approved applications therefor of its shareholders.” See also Franklin County Bldg. & Loan Ass’n v. Blood, 255 Ill. App. 175.

We are of the opinion that the report of the master was correct. Defendants cannot escape the manifest terms of their agreement and the terms of plaintiff’s contract with the borrowers. The decree is, therefore, reversed, the cause is remanded, and the court is directed to enter a decree confirming the master’s report.

Reversed and remanded with directions.

Denis E. Sullivan, P. J., and Hebel, J., concur.


source: Caselaw Access Project

author: Mr. Justice Hebel,

license: Public Domain

text:
    Sarah E. Coons, Appellee, v. Home Life Insurance Company of New York, Appellant.
    Gen. No. 39,266.
    Heard in the third division of this court for the first district at the December term, 1936.
    Opinion filed June 30, 1937.
    Rehearing denied July 12, 1937.
    Winston, Strawn & Shaw, of Chicago, for appellant; Benjamin R. C. Low, George T. Evans, George B. Christensen and Gerard E. Grashorn, all of Chicago, of counsel.
    Nicholas J. Mascha, of Chicago, for appellee.
   Mr. Justice Hebel,

delivered the opinion of the court.

This is an appeal by the defendant from a judgment of $3,614 entered in the municipal court of Chicago in favor of the plaintiff, the beneficiary named in the life insurance policy issued by the defendant. A trial was had before the court, without a jury.

The facts are substantially that the policy was issued on March 27, 1914, in the face amount of $5,000. Premimas were payable quarterly in the amount of $43.15, on the 25th day of June, September, December and March. The policy provided:

(a) All premiums were payable in advance and the payment of a premium or instalment thereof did not continue the policy in force beyond the date when the next premium or instalment was due.

(b) A grace of one month for the payment of each premium after the first; if death occurred within the grace period the unpaid premium was to be deducted from the amount payable.

(c) “This policy shall participate in the surplus of the Company and the proportion of the divisible surplus accruing hereon shall be ascertained and distributed annually by the Company. ’ ’

(d) At the option of the insured “such dividends on the 25th day of March of each year” might be: (1) Paid in cash; (2) Applied toward Premium; (3) Applied to purchase paid-up additions; (4) Left to accumulate at interest.

(e) “ After this policy shall have been in force three full years, the owner, within three months after any default in payment of premium, but not later, may elect (a) to surrender the policy of its Cash Value; or, (b) to have the insurance continued in force as term insurance from the date of such default . . . for an amount equal to the face amount of this policy . . . less any indebtedness; or (c) to purchase participating paid-up life insurance. . . .”

(f) Automatic extended insurance. “On default in the payment of any premium hereon the insurance shall be continued ... as paid-up non-participating Term Insurance as provided in option (b) aforesaid if the insured shall not within three months after such default surrender this policy . . . for its Cash Value, or paid-up insurance. ’ ’

(-g) “In lieu of automatic extended insurance the Company will, on receipt of a satisfactory request from the owner . . . advance the amount of any unpaid premium as a lien on the policy with interest in advance at the rate of six per cent, ... if, after deducting from the cash value all existing indebtedness and interest, . . . the balance shall equal or exceed the overdue premium with interest. Subsequent premiums will in like manner be advanced from time to time . . . until the Cash Value ... is not sufficient to cover the accumulated indebtedness and advance the premium. If the Cash Value . . . be . . . insufficient to pay an entire quarterly premium any excess of the Cash Value hereon over the indebtedness shall be used to purchase extended term insurance as aforesaid.”

Until September 28,1923, insured paid his premiums regularly and had no loans. On that day he obtained a loan of $838 on the policy. This loan was never repaid. Although assured made some payments on account and paid some premiums in cash, most of the premiums from that time on were advanced by the company under the automatic premium lien provision, that is, in substance, were paid out of the equity in the policy.

When the September 25, 1932, premium was due the total amounted to $1,869.27. This premium was paid by a further automatic loan on the policy thereby increasing the total loan to $1,913.71.

When the December 25, 1932, premium became due the cash value of the policy was only $11.36 over the amount of this loan of $1,913.71, which was reduced to $1,885.39 by crediting back unearned interest. This equity of $11.36 was applied by the Company to the purchase of nonparticipating term insurance under the provisions of the policy. The face amount of the policy less the indebtedness at that time was $3,114.61 ($5>,000 minus $1,885.39), and with the $11.36, $3,115 worth of nonparticipating term insurance for one month was purchased. This term insurance expired January 25, 1933. The assured died on February 21, 1933.

Defendant made an apportionment based on its earnings for the calendar year 1932, and to meet its dividend requirements for the calendar year 1933. Upon this calculation the sum of $40.75 was “the recorded preliminary calculation of a dividend that would have been allotted and become due and payable on March 25, 1933, if on that date the assured had been alive and the policy been in full force and all premiums due had been paid. ’ ’

The plaintiff concedes that the facts contained in defendant’s statement give a sufficient outline of the matters in controversy with respect to the finding of the court followed by the judgment for the plaintiff on the proposition that the defendant was bound to apply the divisible surplus toward the payment of premiums. However, the plaintiff relied for recovery on four additional theories, which were rejected by the trial court. Since the entire record is before this court, the plaintiff requests that these points be considered and urges that the trial court erred in finding against the plaintiff on the following propositions:

That the defendant was not obliged by the terms of the policy to keep same in full force and effect for three months after the default in premium on December 25, 1932, in the event that there was insufficient equity in the policy to purchase automatic extended insurance for that period of time;

That the defendant was not obliged to notify the insured that the policy sued upon had lapsed;

That the defendant did not waive compliance with any of the terms of the policy sued upon; and

That the terms of the policy sued upon did not require the defendant to commence the computation of extended term insurance commencing’ from the last day of the days of grace.

Counsel for the defendant argues that the policy provides that the insured was not to share in the divisible surplus of the company except annually, and by failing to pay premiums insured failed to fulfill essential conditions precedent for the last policy year.

The plaintiff however does not accept this as a proper. construction of the provisions of the policy, and replies by saying that every member of a mutual insurance company has an interest in the surplus funds of the company and when the share that an individual member is entitled to has been ascertained it constitutes a credit to the policy and the insurer must apply it toward the payment of premiums to prevent a forfeiture.

On this controverted question of annual dividends, the policy provides:

“This Policy shall participate in the surplus of the Company and the proportion of the divisible surplus accruing hereon shall be ascertained and distributed annually by the Company.
“Dividend Options. At the option of the Insured or the owner of this Policy such dividends on the 25th day of March of each year be either (1) Paid in cash; or (2) Applied toward the payment of any premium or premiums; or, (3) Applied to the purchase of paid-up additions to the Policy; or (4) Left to accumulate to the credit of the Policy with interest at the rate of three per centum per annum and payable at the maturity of the Policy, but withdrawable on any anniversary of the Policy.”

The contract further provides that where there is a default in the payment of any premium the insurance shall be continued without action on the part of the insured as paid-up nonparticipating term insurance. The provision is headed “Automatic Extended Insurance” and the language used is as follows •;

“On default in the payment of any premium hereon the insurance shall be continued, without action on the part of the insured, as paid-up nonparticipating term insurance as provided in option (b) aforesaid if the insured shall not within three months after such default surrender this policy to the Company at the Home Office for its Cash Value, or paid-up insurance.”

There is evidence in the record which indicates that the defendant, insurer, made an apportionment based on its earnings for the calendar year 1932, and it further appears from the evidence that this was done to meet its dividend requirements for the calendar year 1933; that according to the calculation of the defendant there was a credit to the insured of $40.75 dividend, which appears on the books of the company.

Now then, we find that when the premium of December 25, 1932, was due, there was an equity of $11.36 which had accrued for the benefit of the insured, and this equity was applied by the company toward the purchase of nonparticipating* term insurance under the provisions of the policy, and carried the life of the policy to January 25,1933.

When this dividend or surplus which has been termed accrued was due, the policy was still in force, and the language of the policy used as to automatic extended insurance is that ‘ on default in the payment of any premium hereon the insurance shall be continued,” if there is a credit appearing on the books of the company, which, according- to the contract of insurance, must be applied toward the purchase of paid-up nonparticipating term insurance. Now, applying this $40.75 toward the purchase of term insurance, this credit was a part of the insurance policy, the subject of this litigation, using the word “credit” in its usual meaning — a sum credited on the books of a company to a person who appears to be entitled to it.

There has been an effort by counsel for the defendant to. distinguish between what is termed dividend and divisible surplus. The construction we shall adopt is that contained in the policy itself when reference is made to an “annual dividend” in this language, “divisible surplus accruing hereon shall be ascertained and distributed annually.” Therefore there is not much difference if we apply the words of the contract. When we speak of a dividend we mean a surplus and when we refer to a surplus we mean a dividend, and there is not enough difference to disturb the construction we have followed.

Counsel for both litigants have cited cases upon the questions involved, but our conclusion is that at the time of the death of the insured, and when the policy was still in force, there was a credit of $40.75 which could have been applied as provided for under the terms of the policy issued to the insured, since, as we have heretofore stated, the policy provides that when there is a default, the amount of the dividend or the amount of a divisible surplus accruing shall be used to purchase further nonparticipating term insurance provided for in the contract. Therefore, the insurance policy had not expired because of a default in payment of premium; on the contrary, there was a credit which should have been applied to pay for nonparticipating term insurance.

The defendant cites the case of Rawson v. Hancock Mut. Life Ins. Co., 288 Ill. App. 599, and calls this court’s attention to the folloiving language:

“The plaintiff seriously insists that the defendant was indebted to the insured more than $10.74, which was the quarterly premium on the policy, and therefore, the company should have used that to pay the premium for another quarter and kept the policy in full force and effect. They arrive at this conclusion, that by the admission of tlie defendant, the cash surrender value of the policy was $4.06, and they further contend that there was an apportionate part of a dividend amounting to $8.19 which was due insured, and the two sums equalled $12.25, or more than enough to pay the premium due April 18, 1933. The plaintiff introduced in evidence the resolution of the board of directors of the defendant company, Avhich was passed on November 14, 1932. It provided for a dividend for policies, ‘which shall be in force on their respective anniversaries in 1933.’ The anniversary of the policy in question is the date that it was issued; namely, July 18.” Then follows this pertinent language of the court: “This policy was not in full force on that date and was not entitled to participate in any dividends. Therefore, it was not entitled to have this amount applied on the payment of the past due premium. ’ ’

It is evident from the opinion of the court that at the time in question, under the terms of the policy the $4.06 remaining of the cash surrender value was applied by the defendant to the purchase of paid-up insurance on the life of William II. Rawson, which sum Avas sufficient to buy a paid-up policy for the sum of $7, which together Avith post mortem dividends and interest, was tendered to the plaintiff. Such Avas not the fact in the instant case. The insurance policy was in force, and accordingly the plaintiff as the beneficiary was entitled to have the amount in question applied as suggested, which is in accord Avith the insurance contract.

There is another feature of the insurance contract and that is, the contract provides that “on default in the payment of any premium” the insurance shall be continued as paid-up nonparticipating term insurance. Then the contract makes paragraph (b) on Loan and Surrender values controlling, wherein it is provided: “(b) to have the insurance continued in force as term insurance from the date of such default, without future participation and Avithout the right to loan or cash values, for an amount equal to the face amount of this policy and any outstanding dividend additions, less any indebtedness to the company hereon.”

It is to be noted that this provision continues the insurance as term insurance, and in the instant case the policy was continued by applying $11.36 as premium for the extended period of one month to January 25, 1933, which contract for this class of insurance could be continued by the payment of a premium. Being so, when the time expired the insured was entitled to a grace period of 30 days. The insured died within the period, and when death occurs within the period of grace the premium shall be deducted from the amount payable thereunder.

The parties to this insurance contract agreed upon its terms and to the payment of the sums provided for in the contract.

The law abhors a forfeiture. This applies to the defendant insurance company. While the company admits that there is $40.75 due, still by its theory this sum cannot be applied to continue the insurance. In other words the contract is forfeited and the insurance company retains the amount.

The judgment entered in the trial court was proper and is accordingly affirmed.

Judgment affirmed.

Denis E. Sullivan, P. J., and Hall, J., concur.


author:
Mr. Justice Hebel
      Mr. Presiding Justice Denis E. Sullivan

text:
    The People of the State of Illinois ex rel. Robert M. Sweitzer, Appellant, v. Joseph L. Gill, Appellee.
    Gen. No. 39,318.

      Heard in the third division of this .court for the first district at the December term, 1936.
    Opinion filed June 30, 1937.
    Otto Kerner, Attorney General, I. Harvey Levinson and Louis Kosenfeld, both of Chicago, for appellant.
    Thomas J. Courtney, State’s Attorney, for appellee; Hayden N. Bell, William J. Tuohy, Jacob Shamberg and William P. Kearney, Assistant State’s Attorneys, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

This cause on appeal is in this court by order of the Supreme Court of Illinois transferring the case for want of jurisdiction, the original appeal having been taken direct to the Supreme Court. The order states:

“The only question this record presents is, Did the legislature empower the county board of Cook County to remove a county treasurer from that office for defaults alleged to have occurred in connection with his prior office of county clerk and independent of Ms office as county treasurer ? The appellee contends that section 15 of the County Treasurers act (State Bar Stats. 135, chap. 36, par. 15; 36 S. H. A. 15); expressly confers the power upon the board, and the appellant denies that it has such an effect. No construction of the constitution is involved but merely a construction of the section named. We have, therefore, no jurisdiction to entertain this direct appeal.”

The proceedings as the basis for the litigation were upon the petition of the attorney general of the State of Illinois, who at the instance of Robert M. Sweitzer, presented his petition to the circuit court of Cook county, praying for leave to file an information in the nature of a quo warranto to require the defendant, Joseph L. Grill, to show by what warrant he claimed to execute the office of county treasurer and ex oficio county collector for Cook county, Illinois. Upon examination the court found that there was probable grounds for the proceedings, ordered that an information in the nature of a quo warranto be filed and that summons issue. The attorney general of the State of Illinois, in compliance with the direction, filed an information, which is, in substance, that at the relation of Robert M. Sweitzer, the attorney general gives the court to understand and to be informed, that on the 3rd day of December, A. D. 1934, Robert M. Sweitzer, the relator as aforesaid, was duly inducted into the office of county treasurer for the county of Cook, Ulinois, for a term of four years next ensuing and until his successor shall have been duly elected and qualified for office; that the said Robert M. Sweitzer was theretofore duly elected, took the oath required of him by law, and executed bond with security as reqMred by law, and thereupon entered upon the discharge of his duties and proceeded to faithfully execute the office of county treasurer for the county of Cook, Illinois; and on the 6th day of June, A. D. 1934, and forever thenceforth, the defendant, Joseph L. Gill, well knowing the premises aforesaid, did and does unlawfully hold, usurp, intrude into and execute the office of county treasurer for the county of Cook, Illinois, and to the exclusion of said Eobert M. Sweitzer, the said Joseph L. Gill does unlawfully hold, usurp, intrude into and execute the office of county treasurer for the county of Cook, Illinois, without warrant, title or right whatsoever, and during all of said time has unlawfully intruded into, usurped, held and executed said office, against the People of the State of Illinois, and against the peace and dignity of the same, to their detriment, damage and prejudice.

After service of summons, the defendant, on, June 24, 1935, filed his pleas, and on June 28, 1935, a demurrer was filed by the relator to these pleas. Subsequent thereto, an amended and additional plea was filed.

The first plea filed by the defendant alleged that the board of commissioners of Cook county, Illinois, after investigating and considering the action of the relator as county treasurer and ex officio county collector, did, on the 6th day of June, 1935, adopt a resolution and order removing the relator from the said office for the reason that he was guilty of misconduct in said office, which said misconduct was alleged to be as follows:

“The Eelator ‘was in default as collector and custodian of money belonging to the county of Cook and appertaining to the office of the County Clerk of Cook County, by his own admissions made to the Board in the sum of $335,000.00, and by an audit of E. L. Pearce & Company in the sum of $414,129.41, which he failed ... to turn over, and by reason of which failure . . . ’ he ‘was rendered ineligible to hold the office of County Treasurer and ex officio County Collector of Cook County, under Section 11 of Article 9 of the Constitution of Illinois, and being so ineligible, and Ms resignation . . . having been demanded by the said Board,’ the Delator ‘continued to hold the said office ... in defiance of the Constitution of Illinois and the authority of the said Board’; that the Delator ‘ Stated to the Board . . . that the moneys and funds due to the County of Cook and appertaining to the office of the County Clerk were in his possession or under his control, to be turned over to his successor in the office of County Clerk when the said audit of D. L. Pearce & Company had been examined by him or his auditor; whereby, it became material for the Board to determine the identity and source of said funds so promised to be turned over to prevent’ the Delator ‘from using the funds in his hands as County Treasurer and ex oficio County Collector of Cook County, to make the turnover to his successor in the office of County Clerk; and thereupon, the Board asked or caused to be asked’ of the said Delator ‘if he had the money to turn over to his successor, and when’ he responded ‘in the affirmative, the Board asked him the following questions: . . . (1) Where is such money ? and (2) Where did you get the money? both of which questions’ the Delator ‘refused to answer;’ that the Delator has ‘failed and refused to pay over to himself as County Treasurer of Cook County, moneys due said County from himself individually or as County Clerk;’. Thereafter, on the 6th day of June, 1935, the Board of Commissioners appointed the defendant County Treasurer and ex oficio County Collector, to fill the vacancy caused by the removal of the Delator following the adoption of the resolution aforesaid; that the defendant has given bond in the penalty fixed and with security approved by the Board of Commissioners of Cook County, Illinois, has filed the requisite oath of office, and on the 7th day of June, 1935, entered upon the duties of County Treasurer and ex officio County Collector; and thereafter, on the 21st day of June, 1935, the defendant was commissioned by the Governor of the State of Illinois, and proceeded to execute the office by virtue of this warrant, and still continues to do so; without this, the defendant has usurped and unlawfully intruded into the office of County Treasurer and ex officio County Collector of Cook County, Illinois.”

The second plea was identical with the first, except that it added: “The reasons of the Board for the removal of the relator were explained and strengthened by many circumstances and details appearing in the proceedings of the Board leading to the removal, amongst which . . . were the following: That the said Relator, while holding the office of county clerk" of the County of Cook, during the month of March 1922, converted to his own use and embezzled the sum of $200,000 of public funds belonging to the County of Cook as fees earned and collected by the said county clerk for the extension of taxes for the different taxing bodies of the county, and that on to-wit: June 3, 1926, the said Relator, while holding the office of county clerk as aforesaid, unlawfully transferred from the public funds and moneys belonging and appertaining to the office of county clerk ’ namely the redemption fund, ‘to the fee fund in the office of the county clerk, to take the place of the said $200,000, embezzled from that fund as hereinbefore stated. ’ ”

The third plea merely denied the eligibility of the relator to hold the office, but made no reference to the defendant’s rights to exercise the office.

The demurrers of the relator were overruled as to the first and second pleas, and sustained as to the third plea.

Thereafter, the People filed four replications: The first was a general traverse, and concluded to the country; the second denied seriatim the allegations contained in the first plea, and concluded to the country; the third denied seriatim the allegations of the second plea, and concluded to the country; the fourth replication denied that the board of commissioners investigated and considered the actions and doings of the relator as county treasurer, or that they adopted a resolution on the 6th day of June, 1935, as set forth in the pleas, or that the records and proceedings of the said board contained evidence of the findings as purported to be set forth in the resolution as pleaded, and then continued:

“That at a general election held on the 8th day of November, A. D. 1910, the relator was duly elected to the office of county clerk of Cook County, Illinois, and having duly qualified therefor, was thereafter inducted into office on the 5th day of December A. D. 1910, for a term of four years next ensuing, as provided by law, and thereafter, the said relator was duly elected to succeed himself in such office for the next five succeeding terms, and having duly qualified for each succeeding respective term, he continued to discharge the duties of said office as required of him by law until the 3rd day of December, A. D. 1934, when his last term of office terminated, and he thereupon relinquished the said office of county clerk to his duly elected, and qualified successor, Michael J. Flynn; and the said relator was theretofore duly (at a general election held on the 6th day of November, A. D. 1934) elected to the office of county treasurer and ex officio county collector for Cook County, Illinois, and having been duly qualified and commissioned as such, was, on the 3rd day of December, A. D. 1934, duly inducted into office as county treasurer and ex officio county collector, of Cook County, Illinois; as aforesaid, for a term of four years next ensuing and until his successor shall have been duly elected and qualified;
“And thereafter, during the month, to-wit, of May, A. D. 1935, a controversy arose between the relatólas late county clerk as aforesaid, and Michael J. Flynn, his successor, the said Michael J. Flynn claiming that he (the said Michael J. Flynn) had caused an audit to be made by one R. L. Pearce & Co. of the books and records of the office of the county clerk of Cook County during the incumbency of the relator as such county clerk, and that it appeared therefrom that the said relator as late county clerk, was still indebted to his successor in the sum of $414,129.41, which said amount the said relator disputed;
“Whereupon, on, to-wit, the 27th day of May, A. D. 1935, the said Michael J. Flynn, as county clerk for the County of Cook, Illinois, caused a report of such controversy to be made to the Board of Commissioners of Cook County, Illinois; and thereupon, on the 27th day of May, A. D. 1935, the said Board of Commissioners of Cook County, Illinois, convened as a finance committee to consider such controversy between the relator as late county clerk and his said successor in office; and thereupon, the said Michael J. Flynn appeared and presented to the said committee a copy of the report from the said R. L. Pearce & Company, together with a copy of a letter dated May 27, A. D. 1935, and alleged to have been forwarded to the relator. ’ ’

A trial was had without a jury, a jury having been waived, and evidence was submitted that the relator was duly elected, qualifiéd and acting as county treasurer. An audit was made of the books and accounts of the office of county clerk. For this purpose, Michael J. Flynn, who ivas elected and qualified as county clerk, retained R. L. Pearce & Company. The auditor submitted a report to Mr. Flynn on May 9, 1935, and Mr. Flynn turned this report over to his attorney. Finally, on May 23,. 1935, R. L. Pearce & Company reported that the relator collected the sum of $414,129.41 received by him as county clerk of Cook county, which had accrued during his incumbency in that office. After the receipt of the report Mr. Flynn reported the controversy to the county hoard and sent a letter to the relator. The substance of this letter, which was dated May 27,1935', called to the relator’s attention the audit of R L. Pearce & Company of the office of the county clerk for the period from December 3, 1910 to December 1,1934, a copy of which was delivered to the relator on May 23,1935, and that the audit shows that the sum of $414,129.41 of funds and moneys appertaining to the office of county clerk was received by the relator during his incumbency and had not been surrendered and delivered to Michael J. Flynn his successor. There ivas also a demand made that the relator surrender and deliver to Michael J. Flynn as successor in office said funds and moneys immediately, together Avith all books, papers, moneys or other things belonging to said county or appertaining to said office.

The board of commissioners of Cook county requested Mr. Howard, the county auditor, to make an analysis of the Pearce report. On May 27, 1935, the finance committee, constituting the entire membership of the board of county commissioners of Cook county, Illinois, met. To this hearing were summoned Mr. Flynn and Mr. Sweitzer, as well as the State’s attorney. Mr. Howard submitted to the board his analysis of the Pearce report, concluding that it appeared therefrom that the relator on May 9, 1935, was indebted to the redemption fund in the sum of $341,-885.84, and that the total interest earned and not received by Cook county aggregated $72,243.57, covering the following items: Interest earned on tax redemption $39,626.76, escrow funds $685.22, and fee accounts, $31,931.59.

The matter again came up before the board of county commissioners, and, on June 5, 1935, at a meeting of the county commissioners, Mr. Sweitzer, Mr. Courtney, the State’s attorney, and two of his assistants were present, and during the course of the proceedings Mr. Sweitzer announced that he was before the board Monday morning at the request of the finance committee, “and I am here this morning at the request of the board members as per the resolution just read.” He stated that at his appearance before the county board he had no opportunity for conference with any attorney; that he had no attorney and was hopeful that it would not be necessary for him to employ one. He further stated at this meeting: “I have never . . . denied there was an obligation to the County Clerk’s office. I have never refused to make good on whatever the amount due might be. However, I do not agree that the amount shown by the audit is a correct amount, as I have stated to this Board previously. ...” And during the course of this proceeding this colloquy took place between Commissioner Miller of the Board and the relator, Mr. Sweitzer:

“Commissioner Miller: Now, if that was public money, which it was, where is that money, if you have to have a couple of days to do it? It ought to be in your possession at all times, as a public official, hadn’t it?
“Mr. Sweitzer: As a public official, what do you mean by that? Commissioner Miller: Now, you as County Clerk, knew that this money was owing? Mr. Sweitzer: Yes. Commissioner Miller: And you were asked where it is and you said you would have to have a few days time. Now, that is public money. Where is that public money now that you claim you owe? Mr. Sweitzer: In my possession. Commissioner Miller: Well, then, if you have the money — have you got it' in the bank somewhere? Mr. Sweitzer: Don’t you think that is more or less a personal matter, Mr. Commissioner? Commissioner Miller: Well, no. That might be personal if the money was yours personally, but that is the public’s money.”

Finally, on June 6, 1935', at a meeting of the board of county commissioners of Cook county, Illinois, it appears from the record that the relator was present, and questioned by commissioner Kavanagh as follows :

“Commissioner Kavanagh: We are down here to learn if you will settle. We are merely a committee and we would have to report back to the Board. The letter is plain in itself and the resignation or ouster referred to is in the event no settlement is made. Mr. Sweitzer: I want to know what demand the committee will make when I pay this over. I am going to pay it over. I will pay it by noon or a little later in the afternoon. Can’t you hold your meeting over for a few hours? Commissioner Kavanagh: We are demanding payment of $414,129.41. Mr. Sweitzer: I will pay today the sum of $325,000.00. Commissioner Kavanagh: $335,129.41? Mr. Sweitzer: Yes. Whatever the odd dollars and cents are. I will place the balance in escrow. I will handle this with Mr. Flynn in any way he thinks best in order to satisfy him and your Board. Commissioner Miller: Fix a date for this escrow payment, so that we will have something definite. Mr. Sweitzer: I will make escrow of the balance and have it all ready to pay next Monday. I am agreeable that the escrow agreement shall provide that as the auditors are working from day to day and as various sums are verified that these sums be withdrawn from escrow and paid over to Mr. Flynn. I am 100% in good faith. As the auditors go along, these funds can be released, whenever the auditors find verification. ’ ’

Subsequently, upon default of the relator to account for the public funds in his possession, the. board of county commissioners of Cook county, Illinois, adopted the following resolution:

“Resolved, that Robert M. Sweitzer, as County Treasurer and ex-officio County Collector of Cook County, has been guilty of misconduct in said office in this:
“That, the said Robert M. Sweitzer is in default as collector and custodian of money belonging to the County of Cook and appertaining to the office of the County Clerk of Cook County, by his own admission made to this Board, in the sum of $335,000.00, and by an audit of R. L. Pearce & Company, in the sum of $414,129.41, which he has failed and refused to turn over, by reason of which failure and refusal the said Robert M. Sweitzer has been rendered ineligible to hold the said office of County Treasurer and ex-officio County Collector of Cook County, under Section 11 of Article IX of the Constitution of Illinois, and being so ineligible, and his resignation from said office having been demanded by this Board, the said Robert M. Sweitzer has, and does, hold the said office of County Treasurer and ex-officio County Collector of Cook County, and continues to perform the duties thereof, in defiance of the Constitution of Illinois and the authority of this Board:
“That, the said Robert M. Sweitzer stated to this Board, in a meeting of the Board, that the said moneys and funds due the County of Cook and appertaining to the- office of County Clerk were in his possession, or under his control, to be turned over to his successor in the office of County Clerk, when the said audit of R. L. Pearce & Company had been examined by him or his auditor, whereby it became material for this Board to determine the identity and source of said funds, so promised to be turned over, to prevent the said Robert M. Sweitzer from using funds in his hands as County Treasurer and ex-officio County Collector of Cook County, to make the turn-over to his successor in the office of County Clerk, and thereupon the Board asked, or caused to be asked, the said Robert M. Sweitzer, in substance, if he had the money to turn over to his successor, and when the said Robert M, Sweitzer had answered this question in the affirmative, the Board asked Turn the further and following questions, in substance, in relation to said money, to-wit: (1) Where is such money? and (2) Where did you get the money? both of which questions the said Robert M. Sweitzer refused to answer.
“That, the said Robert M. Sweitzer has failed and refused to pay over to himself, as County Treasurer of Cook County, moneys due said County from himself individually or as County Clerk of Cook County;
“AH of which foregoing facts this Board hereby finds to be true;
“Therefore, It is Resolved And Ordered, that said Robert M. Sweitzer, as County Treasurer and ex-officio County Collector of Cook County, ought to be, and he is hereby removed from his said office.”

After the adoption of this resolution by the county board, a resolution was adopted whereby the defendant was appointed county treasurer and ex-officio county collector of Cook county to fill such vacancy, which is as follows:

“Whereas, a vacancy exists in the office of the County Treasurer and Ex-Officio County Collector of Cook County, Joseph L. Grill, 3240 Lake Shore Drive, Chicago, Illinois is hereby appointed County Treasurer and Ex-Officio County Collector of Cook County to fill such vacancy, and to hold said office until his successor is elected and qualified according to law.
“The bond of the said Joseph L. Grill, the said Treasurer and Ex-Officio County Collector, is fixed in the sum of Three Million Dollars. ’ ’

His bond was filed and approved and he took the oath of office and assumed the duties of county treasurer of Cook county and ex officio county collector of Cook county, Illinois.

At the conclusion of the evidence, the relator moved the court to find the issues for the People. This motion was denied and the court entered a judgment finding the issues for the defendant, dismissing the information and taxing the costs against the relator. Motions were made by the relator to vacate the judgment, for a new trial and in arrest of judgment, all of which were overruled.

Subsequently, on motion of the attorney general of Illinois, at the relation of Robert M. Sweitzer, this court entered an order making Horace Gr. Lindheimer a codefendant and coappellee in this cause, and that summons issue returnable in 10 days, on the ground that on the 3rd day of November, A. D. 1936, a special election was held by which Horace Gr. Lindheimer was elected to fill the vacancy caused by the removal of the relator as aforesaid, and thereupon Horace G-. Lindheimer by being duly elected assumed the duties of county treasurer and ex officio county collector for Cook county, Illinois, by taking the oath of office and furnishing a bond which was approved as provided by law, and is now in that office.

Thereafter, defendant Horace Gr. Lindheimer moved the court to quash the summons against him, which motion was denied, and thereupon this defendant filed a suggestion in the proceedings in which he contends that in support of his motion to quash the summons against him, and the return thereon, and to vacate this order making him a party defendant, he relies on the argument and authorities cited in his suggestions. It also appears from his brief filed in this cause that he has adopted the brief and argument of the appellee, Joseph L. Grill, and relies on whatever was said in the brief to the same extent as though it were fully set forth, and submits that this proceeding be dismissed, or, in the alternative, that the order of. the circuit court of Cook county be affirmed. In other words, his appearance in this case is a general one and he submits himself to the jurisdiction of this court and adopts the brief of the defendant-appellee.

Counsel for the relator make this statement in their brief, which we take the liberty of quoting:

“At the threshold of the case we concede that authority may be delegated by the legislature to the County Board empowering the removal of constitutional officers elected for a fixed tenure. The jurisdiction, however, is a delegated power rather than an inherent authority. Consequently, an amotion must be for specified cause; otherwise jurisdiction to remove is wanting and the act of amotion is a nullity.”

Our attention is directed to this statement by the relator:

“The instant cause devolves around an alleged delinquency by the Relator in the office of County Clerk during his incumbency the'rein from 1910 to 1934. Having relinquished that office to his successor, he was duly inducted into the office of County Treasurer and served as such for six months, when he was ousted. The causes assigned for such removal are twofold in character: the first is grounded upon the constitutional ineligibility of a defaulting office holder to occupy a position of honor and trust; the second seeks to find predicate in the supervisory powers lodged in the County Board by legislative grant over County Treasurers.” It is further contended that “If the entire proceedings show a want of jurisdiction, then the same, of course, cannot be cured by a document artfully drafted.”

In the consideration of the appeal to this court, we are controlled by the order of the Supreme Court transferring the cause. The Supreme Court in its order has stated that the question to be considered is: Did the Legislature empower the county board of Cook county to remove a county treasurer from that office for defaults alleged to have occurred in connection with his prior office of county clerk and independent of his office as county treasurer?

The authority upon which the board of county commissioners of Cook county acted is provided for by ch. 36, par. 15, sec. 15, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 35.17, in these words:

“If any county treasurer shall neglect or refuse to render an account, or make settlement at any time when required by law, or by the county board, or refuse to answer any question propounded to him by the county board, or is a defaulter, and in arrears with the county, or is guilty of any other misconduct in his office, the county board may remove him from office, . . . ”

This provision empowers the board of commissioners of Cook county to act in a cause or causes governed by this provision of the statute, and in determining a question much depends upon the construction placed upon the language of the act as applied to the particular facts.

In the instant case it is admitted that the relator has failed to account for or to pay over the sum which he admits he has not turned over to his successor, Michael J. Flynn, the now county clerk of Cook county. This sum which he possesses was money received by him — as appears from the audit of R L. Pearce & Company — during the time he was the county clerk of Cook county. In other words, by his admission and failure since to pay or account for, although a demand ivas made and not complied Avith, he has converted public moneys to his oavu use. It is rather startling when we examine the record to find that by his admission he received this money, but now insists that being the county treasurer of Cook county, such default and failure to turn over the sum to his successor as county clerk, does not make him subject to the provision empowering the board of county commissioners to remove him from office. While admitting that he is a defaulter and in arrears with the county, he insists that the county board is limited in its powers to remove bim for acts committed by him while in the office he now occupies.

The outstanding fact is that after the relator had assumed the office of county treasurer and ex officio county collector for Cook county, he for the first time admitted that he was a defaulter of public funds. When a demand was made on him after he acknowledged his default he offered no excuse for the retention by him of $335,000, while performing his duties as county treasurer.

As to the right of removal provided for by section 15, cited above, it is suggested by the relator that failure to account for public moneys by the relator, as required by the Constitution of the State of Illinois, does not mean that he is required to refund because of a mere pecuniary liability, but rather it must be a debt with dishonor. The provision of the Constitution having a bearing in this matter is sec. 4 of Article 4 of the Constitution of the State of Illinois of 1870, which is:

“No person who has been, or hereafter shall be, convicted of bribery, perjury or other infamous crime, nor any person who has been or may be a collector or holder of public moneys, who shall not have accounted for and paid over, according to law, all such moneys due from him, shall be eligible to the general assembly or to any office of profit or trust in this state.”

Then again the further provision contained in sec. 11, Article 9, as follows:

“No person who is in default as collector or custodian of money or property belonging to a municipal corporation, shall be eligible to any office in or under such corporation.”

To carry out the thought expressed in sec. 4 of Article 4 and sec. 11 of Article 9, section 15 of the County Treasurers Act was passed by the Legislature of the State of Illinois, conferring power upon the board of county commissioners to remove the county treasurer for any of the causes therein shown. This section does not require the necessity of establishing any fact other than required by this act. It is admitted that the power to remove is provided for by section 15 of the County Treasurers Act, and was conferred upon the board by the State Legislature, and it is not necessary that there be established a liability for the amount converted by the relator other than that provided for by the section in question. This grant of power to remove is not judicial, but is administrative in character. People v. Welty, 75 Ill. App. 514. While the county commissioners can remove an official from office for one of the causes specified in the act in question, still where no mode of inquiry is provided for by the act, the county board may determine whether the cause of removal exists, from the best lights the board can get, and no mode of inquiry being prescribed, it rests with the board to adopt that method of inquiry and ascertainment as to the charg’e involved which its judgment may suggest as the proper one, acting under its official responsibility. It is not for the courts to dictate to the Board in what manner it shall proceed in the performance of its duty in this regard, its action not being subject to revision. Wilcox v. People, 90 Ill. 186.

And in Donahue v. County of Will, 100 Ill. 94, the court said:

“As to the question whether an officer can be removed from office for misfeasance or malfeasance without a judicial sentence, there could seem to be little doubt. It has been held they may, by many respectable courts. In the case of The State v. McGarry, 21 Wis. 496, it was held the board of supervisors, under the statute conferring the power, and for the causes specified, might remove the incumbent of the office of inspector of the house of correction. In the case of The State v. Prince, 45 Wis. 610, it was held the board of supervisors might, on statutory grounds, remove the clerk of the board. In the case of McGregor v. The Board of Supervisors, 37 Mich. 388, it was held that the board of supervisors had power, under the statute, to remove the county treasurer. In Kernan v. Perry, 24 Tex. 253, it was held that under a law conferring the power on the executive to appoint a superintendent of a lunatic asylum, without fixing his term of office, the Governor had the power to remove the incumbent, and his action in doing so could not be reviewed. In the case of Taft v. Adams, 3 Gray, 126, it was held the legislature had power to shorten the term of any officer, when the term is not fixed by the constitution. The case of The State v. Daugherty, 25 La. Ann. 119, held that power conferred by statute on the executive to remove an officer for cause, implies the power to judge of the existence of the cause. Having been invested with both the power to appoint and to remove for cause, his action was not subject to review. The same, rule is announced in Alabama and Georgia, that officers, when the constitution has not required impeachment, may under statutory provisions be removed without a proceeding by quo warranto, or judicial trial and judgment. See Ex parte Wiley, 54 Ala. 226; Thompson v. Holt, 52 id. 491; State v. Frazier, 48 Ga. 137.”

It may be suggested, in passing, that Mr. Sweitzer did not claim or offer the defense that the retention of the funds which he collected as an official was legal, nor did he claim that he had any interest in the funds; but his only defense is that being in the office as county treasurer, having assumed the duties of that office, and having admitted possession of the funds when a demand was made while in that office, there was want of authority in the board of county commissioners to act.

That the relator is a defaulter is not disputed, and of course if he is a defaulter there can be no doubt that he is in arrears in paying over the funds in his possession.

As we view it, the only question necessary to consider is whether the funds received by the relator when he was in office as county clerk come within the provisions of section 15. We must bear in mind the fact, and it affirmatively appears that the relator failed to turn over the funds to his successor, who was entitled to receive them, upon demand made after his term of office as county clerk had expired. Dreyer v. People, 176 Ill. 590.

There is a very good reason why this should be so, for until his term of office had expired it was not necessary for the relator to turn over the funds in his possession, and when it did expire, then to his successor. His term of office as county clerk having expired, a demand was made upon him during his term of office as county treasurer of Cook county to account for or pay the funds which he admitted he possessed. He defaulted in failing to turn over these funds to his successor or to account for them as directed by law.

Section 15 which we have considered in this appeal does not direct the course of procedure to be followed by the board of commissioners of Cook county. The board entered an order of removal, which we believe is sustained by the facts as they appear in the record, and, under the circumstances, it is our opinion that there is but one thing for this court to do, and that is affirm the order — the subject of the controversy in this case. The order finding for the defendant is affirmed.

Judgment order affirmed.

Hall, J., concurs.

Mr. Presiding Justice Denis E. Sullivan

specially concurring:

I concur in the conclusion reached in the foregoing opinion, but not with all the views therein expressed. I do not believe any particular sections of the constitution need be considered in deciding the question before us.

The relator admitted in his briefs filed in this court and in his oral argument by counsel that he was a defaulter to the extent of $335,000, said sum being moneys which came into his hands by virtue of his former office. This defalcation did not become known until after his election as county treasurer.

It is to be noted that chapter 36, par. 15, sec. 15, Illinois State Bar Stats. 1935, Jones Ill. Stats. Ann. 35.17, is a portion of an act entitled, “An Act to revise the law in relation to county treasurer,” yet the language employed in this paragraph of the act is very broad and inclusive. I have in mind the rule- that a grant of power to a municipal body should be strictly construed, but the manifest purpose of this section is to give to the board of county commissioners a supervisory power over the revenues of the county to insure the safety of such funds at all times.

I am of the opinion that the intent and purpose of the legislature as set forth in chapter 36, par. 15, sec. 15, Ill. State Bar Stats. 1935, was also to give to the board of county commissioners power and authority to investigate the acts and conduct of the county treasurer in safeguarding the public funds entrusted to his care. The best guide as to the future is the experiences of the past. The board had good reason to be concerned about the safety of the funds in the custody of the county treasurer and into whose care said funds should continue to be entrusted. In that regard they had the right to consider the acts of the county treasurer both past and present in relation to his handling of public funds, as well as to consider the possible future danger to public moneys which would come into his hands. In other words, I do not think the power vested in the county board by the legislature was intended to be used merely as a corrective measure, but I believe it ivas intended that it also be used as a preventive measure to avert future loss of public moneys when danger to same was apparent.

In the case of People v. Gill, 364 Ill. 344, which is the instant case, the Supreme Court is referring this case to the Appellate Court asked this question: “Did the legislature empower the county board of Cook county to remove a county treasurer from that office for defaults alleged to have occurred in connection with his prior office of county clerk and independent of his office as county treasurer?” My answer to that query is — Yes.

Therefore, if the county board believed that, in order to safely guard present and future public revenues in the offic.e of the county treasurer and that this could only be accomplished by the removal of the county treasurer — which the record justified — I feel that the act as passed by the legislature is broad enough to authorize the action taken by the board of county commissioners.


author: Mr. Presiding Justice Denis E. Sullivan

text:
    Moulding-Brownell Corporation, Appellee, v. E. C. Delfosse Construction Company et al., Defendants. Katharine Sherwood Trumbull, Appellant.
    Gen. No. 39,065.
    Heard in the third division of this court for the first district at the December term, 1936.
    Opinion filed June 30, 1937.
    Ryan, Condon & Livingston, of Chicago, for appellant; James G. Condon, John M. Tuohy and Edwin W. Burch, of Chicago, of counsel.
    Alfred Lubin, McInerney, Epstein & Arvey, A. S. & E. W. Froehlich, Thomas H. Haddock, Joseph Fitzgerald, Wyatt B. Angelo and H. C. Rumery, all of Chicago, for appellee; Alfred Lubin, John L. McInerney and E. W. Froehlich, of counsel.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

Two causes were consolidated in the circuit court, one being a bill to foreclose a mortgage and the other being a bill to foreclose certain alleged mechanics’ liens. Upon consolidation the two causes were referred to and heard by a master who made a report recommending that a decree of foreclosure and sale be entered against the defendans both as to the first mortgage holder and all the mechanics’ lien claimants. Objections were filed to the master’s report as to the allowance of the mechanics’ liens which later became exceptions and a decree was entered by the court overruling the exceptions of defendants. No error is assigned with respect to the lien of the holder of the first mortgage, but it is claimed that the decree with respect to the mechanics ’ lien claimants is erroneous and should be reversed.

The owners of the property who were defendants in the trial court were Charles W. Trumbull and Grace Sherwood Trumbull. Subsequent to the filing of the above mentioned causes, the defendant, Grace Sherwood Trumbull, departed this life and her heirs Rose Trumbull, Betty Trumbull, Jean Trumbull and Katharine Sherwood Trumbull, became parties defendant to the suit. The defendant Katharine Sherwood Trumbull resided outside of the State, and had no knowledge of the proceedings. Within the year after entry of the decree the case was brought to her attention and she filed a petition for leave to appeal in this court, which was granted.

The basis of the case is as follows:

During the early part of the year 1933, Charles W. Trumbull and Grace Sherwood Trumbull, father and mother of the defendant, Katharine Sherwood Trumbull, were the owners of certain property located at 2257 Silverton Way, which was held by said defendants subject to a first mortgage of $30,000 then and now held by the National Fraternal Society of the Deaf, a corporation. The property was located just west of the Illinois Central tracks at the 23rd street entrance to the World’s Fair,

The Trumbulls entered into an agreement with the Fridstein Engineering Comjpany, known as the contractor, for the construction of a restaurant building. This agreement is now before this court for interpretation. The agreement was duly executed and thereafter recorded in the recorder’s office of Cook county as provided by law. The contractor thereupon proceeded to. enter into agreements with subcontractors, who agreed and did furnish materials and labor for the building.. The building was constructed at a total cost in excess of $105,000. The Fridstein Engineering Company subsequently assigned their alleged cause of action to the National Builders Bank of Chicago as trustee.

After the completion of the building the property was operated at a loss from the outset until August 22, 1933, when the original bill to foreclose certain mechanics’ liens upon the real estate and improvements was filed. On October 6,1933, that suit was followed by a suit to foreclose the first mortgage on the property. Both suits were later consolidated and are known as the instant case.

Plaintiff contends that the words used in the contract did not constitute a waiver of the liens.

Defendant contends that the provisions of the contract constituted a waiver of liens as to the contractor and also as to the subcontractors.

After describing in detail the work which was performed by the contractor and the payments to be made, paragraph 12 construes the contract in the following words:

“12. The purpose and intent of this agreement is that the Contractor shall remodel and construct on the above described premises the buildings shown on the Plans and shall provide and install the' restaurant equipment, on or before June 15th, 1933, free and clear of all claims or liens, except the claim of the contractor pursuant to the terms of this agreement, . . . Payment shall be made to the Contractor from time to time of all rentals, proceeds and avails that may become due pursuant to the contracts, leases, etc., entered into by the Owner as hereinbefore described. To secure such payment to the Contractor, the Owner hereby assigns all his right, title and interest in such contracts, leases, etc., to the Contractor until the Contractor shall have been paid the cost of the work plus a Contractor’s profit of $10,000.00 ...”

Did the words, “free and clear of all claims or liens, except the claim of the contractor pursuant to the terms of this agreement, ’ ’ constitute a waiver of liens under the Illinois Mechanic’s Lien Statute 1 In the case of Rittenhouse & Embree Co. v. Warren Const. Co., 264 Ill. 619, at page 624, the court said:

" The contract in question, here provides, in its first paragraph, that the Warren Construction Company is to construct, furnish and deliver to the Chicago, Burlington and Quincy Railroad Company, ‘free from all claims, liens and charges, etc., all of the rough carpentry work required in the construction and completion of the fifteen-story and basement fireproof office building to be erected at the southwest corner of Jackson boulevard and Clinton street, in the city of Chicago. ’ It is plain that under the provisions of this contract had the Warren Construction Company performed its contract no lien could have attached in favor of any sub-contractor. (Brown Construction Co. v. Central Illinois Construction Co., 234 Ill. 397.) The language of the contract, ‘free from all claims; liens and charges, ’ is too plain and specific in this respect to leave the matter open to question on that subject. When appellee contracted with the Warren Construction Company to furnish the materials for use in this building it is presumed to have done so with knowledge of the provisions of the contract between the Warren Construction Company and the Chicago, Burlington and Quincy Railroad Company and with the expectation that the Warren Construction Company would fully perform its contract with the railroad company. At the time appellee made its contract with the Warren Construction Company it did so with the full knowledge that if the Warren Construction Company complied with its contract it must look to the Warren Construction Company alone for its pay, and that no lien could attach to the premises in favor of appellee or any other sub-contractor under the Warren Construction Company. (Brown Construction Co. v. Central Illinois Construction Co., supra.) That the Warren Construction Company failed and became a bankrupt did not alter the situation. Appellee acquired no superior rights in the premises by reason of the failure of the Warren Construction Company to perform its contract with the railroad company. ’ ’

In interpreting the contract it is the duty of the court to consider all the language employed by the makers of the contract in order to properly construe its meaning.

What did the parties mean by the language, “free and clear of all claims or liens, except the claim of the contractor pursuant to the terms of this agreement?” Manifestly the parties to the contract could not intend an interpretation of the contract which would call for the delivery of the building free and clear of all claims or liens and then, by the exception, use language which would provide that the contractor should have a lien.

Paragraph 8 of said contract provides:

“8. The Owner has entered into a contract.with the Prima Company for a sign display on the sign structure and has entered into a lease with the John P. Harding Restaurant Company for the use of the space in the buildings to be constructed and remodeled hereunder, and proposes to enter into agreements for the sale of time and space in connection with an Electric Newspaper to be located on the sign structure and may enter into other leases for the use of part of the above described premises. Copies of the Prima Company contract, and the John P. Harding* Restaurant Company lease are attached hereto and made a part of this agreement. The Owner hereby assigns to the Contractor all rentals, proceeds and avails as they may become due pursuant to the terms of said contracts and/or leases until all moneys due the Contractor under the terms of this agreement shall have been in full, subject however to the payment to the Cord Tire Company and others, of the sum of $15,000.00 in accordance with a certain agreement entered into by and between this Cord Tire Company and others, and the owner, a copy of which is attached hereto and made a part of this agreement. The Owner in addition to the foregoing payments agrees to pay to the Contractor 25% of the gross receipts received from contracts for the sale of time and space on the Electric Newspaper, toward liquidation of the sums to become due to the Contractor until he shall be paid in full. ’ ’

The obligation of the owner of the premises, as set forth in the latter part of the foregoing paragraph, would necessarily mean claims against the owner and against the income from the leases, the sale of space and the receipts, and would properly be referred to as a “claim” in favor of the contractor against the owner of the building and the income from said building. There is a well-known distinction in the meaning of the words “claim” and “lien.” The former is but a demand while the latter is understood to be a legal hold on property as security for a debt. When the parties made use of the language set forth in the contract that the Engineering Company would remodel and construct the premises or building as shown on the plans and provide and install the restaurant equipment “free and clear of all liens and claims excepting the claim of the contractor pursuant to the terms of the agreement,” we are inclined to believe that the word “claim” means the claim which the contractor had upon the income, the leases, the advertising space and receipts therefrom as provided in the contract and that the contractor did not intend to retain a lien on the premises as coming within the purview of the Mechanic’s Lien Act of this state. To give it any other construction would be contradictory to the language employed. We think the parties intended the usual meaning and well-known distinction between the words “claim” and “lien.”

Plaintiff s-appellees in their brief at page 13, frankly admit that at the time the contract was made the parties to said contract had in mind the waiving of liens (paragraph 12) and in their brief say: “The parties contemplated a waiver of the liens of subordinate contractors, but not the general contractor’s lien which is expressly, reserved.” We fail to see how the subcontractors ’ liens could be waived by the language employed and at the same time preserve the lien of the general contractor.

It is next contended by plaintiff-appellee that the defendants-appellants are seeking to escape liability under the contract in question by contending* that the general contractor agreed to accept payment solely from the rentals, income, proceeds and avails of the operation and use of the real estate but that when the foreclosure of the mortgage took place the rents, issues and profits were diverted from the use and benefit of the contractor and became part of the security for the debt under the mortgage, through the fault and negligence of defendants-appellants who failed to pay interest and taxes according to the terms of the trust deed. This situation was evidently in the minds of the makers of the contract for they provided for the same in section 11 of the contract, which reads as follows:

“11. The Owner also agrees that he will promptly pay all interest and principal payments as they fall due on the first mortgage now on the above described real estate and all payments for taxes as levied and assessed by the proper authorities. Should the Owner be unable to make such payments, during the period that there is any money unpaid and due to the Contractor under the terms of this agreement the Contractor shall have the right to pay such, interest, principal and/or taxes and such sums shall be added to the total sum then due to the Contractor, together with 6% interest thereon until paid. ’ ’

It is quite evident from this language that the parties had in mind that at some future time the owner of the building might not be in a position to pay his taxes and interest and provision was made therefor by giving the contractor the privilege of paying such expenses and adding the amount thereof to his debt, he to be repaid therefor out of the income from said building as a result of operating the same as a restaurant and the other specified sources of income.

Reference is made by defendant in its argument to the equities in the case. The entire enterprise has every appearance of being a typical promotional adventure fostered by energetic contractors, for use during a “Century of Progress,” rather than the usual ordinary contract entered into with owners who desire a building erected for normal purposes during normal times. The Fridstein Engineering Company, by their lawyers, prepared the contract and each provision thereof and submitted it to the owner of the premises. That contract provided as to how said company should receive payment and instead of relying* upon a lien on said premises, it chose to take an assignment of the income, assignment of the lease to the tenant in the restaurant, the advertising* space on the top of the building as well as the publication of the electric newspaper and made them all part of the contract. The Fridstein Engineering Co. then commenced the erection of the building. It alleges that it did not intend to waive its lien, but only intended after obtaining all the material from the subcontractors to waive the subcontractors’ lien. We are not impressed with the equity of this position, and we believe the contractor intended to and did waive its lien and consequently the subcontractors’ as well.

There is one item in this decree which stands in a different position than the claims of the other subcontractors and that is the claim of John A. Scribbins, surviving partner of Graves & Scribbins. The Scribbins ’ contract for the architectural work performed was entered into with the owner and not with the Fridstein Engineering Co. Apparently the right to such lien is not contested and the only reference thereto is that plaintiff asks that the decree be reversed as to all mechanics’ liens which were included by its terms. No objection or assignment of error as to the lien of John A. Scribbins is made by defendant. The master’s report found that the sum of $5,200, together with interest at the rate of five per cent was due from August 29, 1933, for said work and no part of which has been paid. This claim stands in a different position from any of the others and we think it was properly allowed by the master and in the decree by the trial court. The decree as to John A. Scribbins is affirmed.

From a review of the entire record we are satisfied that an error was committed by the trial court in construing the said contract and in holding that Fridstein Engineering Co., general contractor, had not waived any liens on its own behalf or on behalf of the subcontractors. We think the trial court erred in failing to sustain the objections and exceptions filed by the defendant to the master’s report which allowed the contractors ’ and subcontractors ’ lien and in entering a decree thereon.

For the reasons set forth in this opinion the decree is affirmed as to the claim of John A. Scribbins and the lien of the mortgage and as to the balance of the decree relating to mechanics liens, it is reversed and remanded with directions to sustain the objections and exceptions to the master’s report and as to the remaining claimants for liens, that the bill be dismissed at intervening petitioner’s costs.

Decree affirmed in part; reversed in part and remanded with directions.

Hebel and Hall, JJ., concur.