text:
    Joseph H. Lackey and Dora A. Lackey, Appellants, v. First National Bank of Oblong et al., Appellees.

      Opinion filed March 1, 1941.
    Clyde L. Todd, of Chicago, and Boy E. Boley, of Olney, for appellants.
    Valmore Parker and Carroll T. Cox, both of Bobin-son, for appellees.
   Mr. Justice Dady

delivered the opinion of the court.

Plaintiffs, Joseph H. Lackey and Dora A. Lackey, his wife, brought this suit on October 15,1938, to have their deed executed August 12,1935, conveying certain land to defendant First National Bank of Oblong, hereafter referred to as “defendant bank,” declared a mortgage, and for leave to redeem therefrom and to ' have cancelled certain subsequent conveyances and transfers of the land. All defendants answered, denying the deed was a mortgage and claiming it was given in part payment of a debt due defendant bank and Oblong Motor Company. The defendants who acquired interests in the land under the subsequent transfers also alleged that they were purchasers for value, in good faith and without notice of any claim of plaintiffs. On a hearing before the court the suit was dismissed for want of equity. Plaintiffs prosecute this appeal from such decree.

In May, 1932, plaintiffs owned the premises in question consisting of 240 acres of land located in Richland county, Illinois, and also owned and resided on 230 acres in Crawford county. The Richland county land was vacant and unimproved, and with the exception of 35 acres which had been cleared, was timber land.

On May 20, 1932, plaintiffs executed and delivered to defendant bank 2 judgment notes totaling $5,637. One note was for $4,895 and represented a renewal of 4 notes aggregating a like sum evidencing money borrowed from defendant bank over a period of years. The other note was for $742, was guarantied by defendant motor company, and was a renewal of plaintiffs’ note to such motor company previously discounted at the bank. These 2 notes matured on May 20, 1934, and were both secured by 2 mortgages to the defendant bank dated May 20, 1932, and executed by plaintiffs. One mortgage covered 160 acres of the Richland county land, and the other covered the Crawford county land.

It is undisputed that after the 2 notes matured the defendant bank threatened to confess judgment-on said notes and to levy on plaintiffs’ property, and insisted that plaintiffs sell some of their land or the timber thereon to pay the debt due the bank; that the defendant bank repeatedly demanded that such notes be paid ; that throughout 1934 and part of 1935, at the insistence of the defendant bank, the plaintiffs, aided by Mr. O’Dell, who was president of the bank and Mr. Ñewlin who was manager of the motor company, endeavored to find buyers for the timber in an effort to raise money to apply toward the payment of the notes; and that all such efforts to raise money proved unsuccessful.

On June 10, 1933, plaintiff, Mr. Lackey, applied to the Federal Land Bank of St. Louis, hereafter referred to as “land bank, ’ ’ for a loan of $4,000 on the Crawford county land. Such application was on a printed form signed by Mr. Lackey and stated that Lackey’s purpose in getting the loan was “to pay debts incurred prior to June 1, 1933, — $5800” that the applicant owed the defendant bank an indebtedness of $5,600 incurred in May, 1932, due in 1934, and that Mr. Lackey authorized the land bank to pay out of the proceeds of the loan applied for such debt due defendant bank.

In November, 1933, the land bank on such application approved the making of a loan to plaintiffs for $2,500, but this loan was not accepted by plaintiffs. Thereafter and on March 19, 1935, a new commitment for a loan of $3,000 on such application was made by the land bank, subject to certain requirements, one being that all debts of the plaintiffs had to be paid from the proceeds of the loan. An appraiser for the land bank testified that he appraised the Crawford county land in 1935; that the land bank did not make loans on unimproved lands; that Lackey told him his debts were about $5,700; and that he advised Lackey that the land bank would not grant a loan unless all of Lackey’s debts were paid, and that it would be necessary to raise the balance of the debt by the sale of the Richland county land. Lackey testified that he did not know such appraiser and had never talked with him on this subject matter.

On June 18, 1935, the motor company paid the defendant bank the amount represented by the $742 note and took up such note and the motor company held such note on August 12, 1935.

The deed sought to be set aside was signed by plaintiffs in the defendant bank on August 12, 1935. There were then present the two plaintiffs, O’Dell as president of such bank, McKnight who was cashier of such bank and Newlin as manager of the motor company. There is a conflict in the testimony as to what was said and done by the respective parties shortly before and at the time of executing such deed.

Lackey testified that on August 11, 1935, with his son, Perry, he talked with O’Dell at the defendant bank; that O’Dell asked him to pay the money due the bank and became very angry and told Lackey that he was not going to wait any longer and that Lackey and his wife would have to come in the next day and make O’Dell a deed to the land. Perry, the son, testified that on August 11, 1935, O’Dell told his father it was time for Lackey to give them some security on the note; that Mr. Lackey asked O’Dell what he wanted and O’Dell said he wanted a deed to the Richland county land; that Mr. Lackey said he didn’t want to do that and O’Dell said if it wasn’t settled in 24 hours he was going to take legal action. In his testimony O’Dell did not deny or refer to such alleged conversation of August 11th.

Mr. Lackey testified that on August 12, 1935, he and Mrs. Lackey first talked with O’Dell at the bank in the forenoon, that he told O’Dell he did not like deeding the land to the bank because it was worth more money; that O’Dell told them they had to do it; that he told O’Dell he would give him a deed to the 160 acres covered by the mortgage, but O’Dell said Lackey had to put it all in, that O’Dell did some figuring and said “If I would give him $300 in money and this deed he would let me go”; that O’Dell said he would allow Lackey $2400 for the land; that he and Mrs. Lackey then went to the office of the motor company where they talked with Newlin; that Newlin and Mr. Lackey then drove to Robinson, Illinois, where Lackey obtained a draft for $300 from another bank; that Mr. and Mrs. Lackey thereafter in the afternoon went to the defendant bank and O’Dell called Newlin who then came to such bank and the deed was then executed. Lackey further testified that Newlin had told him that the defendant bank had required the motor company to take up and the motor company had taken up the $742 note, but that at the time of signing the deed he believed he owed the bank $5,637, and would not have signed the deed if he had known he did not owe the bank that much. Mr. Lackey further testified that “I made arrangements with him (O’Dell) that if I could ever redeem it within a certain time he would let me have it back, he said he would. ’ ’

Mrs. Lackey testified that on August 12th in the forenoon O’Dell told her and her husband “We had to get the money, that we had been carried long enough,” that she told O’Dell she wasn’t going to sign the deed for the 240 acres, that O’Dell said they would have to have a deed for the 240 acres because they could not get more than $10 an acre for it; that O’Dell said that if the Lackeys did not sign the deed “he would break us up and take everything we had.” She further testified that in the afternoon when the deed was executed Mr. Lackey said “if he would ever get to where he could redeem the land, if Mr. O’Dell would let him have it back,” and that O’Dell said “he would rather have the money than the land,” and Mr. Lackey said “We would sign a deed if it was understood we would get the land back.” She further testified that at the time of executing the deed she believed their indebtedness to the bank to be $5,637 and did not know the motor company had taken up the $742 note. She further testified that O’Dell told them he would turn the land back to them if they ever got the money to pay the bank, but that he did not say how long he would hold the land. She further testified that the plaintiffs had never tendered the money to the bank and that she had not said anything about it to the bank.

O’Dell testified that “We told Lackey that if he would pay us $300 in cash and convey to us 240 acres of the land in Richland County we would sign the agreement with the Federal Land Bank to accept their loan as full payment on the debt to ns.” The date of this conversation is not given. O’Dell further testified that he did not remember plaintiffs being in the bank in the forenoon of August 12th, but that in the afternoon of such date the plaintiffs came to the bank and Mr. Lackey then said he was ready to close up the deal on the proposition O’Dell had made him; that the deed was then drafted and executed by the plaintiffs and Mr. Lackey gave Mr. O’Dell the draft for $300; that Mr. Lackey then asked for and was given a receipt, which receipt is hereafter more -particularly referred to. O’Dell further testified that nothing whatever was said about any agreement to reconvey the land to the plaintiffs and that no protest was made by either plaintiff. McKnight testified that he was present when the deed was executed and nothing was said about any agreement to deed the land back to the plaintiffs.

Newlin testified that on August 12th Mr. Lackey came to the motor company office about 10 a. m. and told Newlin he had come in to straighten up with the bank and to notify Newlin so that Newlin could get in on the deal; that later in the afternoon he was present when the deed was executed; that “we agreed, the bank and I together,” to take the. proceeds from the land bank loan and $300 in cash in payment of the debt due the defendant bank and the motor company; that nothing was said about deeding the land back to the plaintiffs. He further testified that after the deed was executed he told the plaintiffs he wanted the money and not the land; that he may have told them he would turn the land back to them if they got the money, that he might have made such statement because he would rather have the money than the land.

At the time such deed was executed there was given to plaintiffs at their request the following receipt signed by O’Dell in behalf of the defendant bank and by Newlin in behalf of the motor company: “Received Twenty-seven hundred no/100 Dollars, $2700.00 by deed to 240 acres land in Richland Co. Ill. and cash as part payment on note of $5637.00 dated May 20, 1932. This payment to be applied $2700.00 on principal $ none on interest. Last bal. due on principal $5637.00. This payment $2700.00. Bal. now left on principal $2937.00.” After the signatures of O’Dell and Newlin this further statement appeared on the receipt: “We agree to accept $2876.00 as payment of the balance of this debt if paid within six months.”

No indorsement of the credit of $2,400 for the land so deeded was ever made on the notes. The $300 cash payment was applied and credited $260.55 on the $4,895 note and 39.45 on the $742 note.

About 10 days after the deed was signed the defendant bank at the request of the land bank executed an agreement to accept the land bank loan in full payment of the balance due on both notes.

After August 12, 1935, the bank continued to hold the two mortgages and the $4,895 note, and the motor company continued to hold the $742 note, until January 21, 1936, when the land bank loan was completed, at which time the 2 mortgages and the 2 notes were turned over to the land bank and defendant bank then received from the land bank $2,854.53 of said land bank loan. Of this $2,854.53 the sum of $2,497.56 was retained by defendant bank and the balance of $356.97 was paid by the defendant bank to the motor company.

On September 10, 1935, defendant bank conveyed to the Egyptian Tie and Lumber Company all standing timber on the land in question for $1,000 and retained $868.40 thereof and paid the balance of $131.60 to the motor company.

On November 16,1936, the defendant bank conveyed 200 acres of the land in question to the defendant Dees subject to the rights of the Egyptian Tie and Lumber Company and received therefor the sum of $2,084.40. On November 16, 1936, the defendant bank conveyed the remaining 40 acres of the land in question to the motor company as its share of the land in connection with the settlement made with the plaintiff, subject, however, to the rights of the Egyptian Tie and Lumber Company. By these transactions the defendant bank received a total of $5,710.91 on its said principal note of $4,895' and the motor company received $528.02 and 40 acres of land, subject to timber rights, on its principal note of $742.

After Dees had contracted to buy such land and shortly prior to the execution of such deed by the defendant bank to Dees, the defendant bank at the request of Dees and on November 3, 1936, released the said mortgage on such 240 acres.

After November 16, 1936, Dees and his wife executed certain oil and gas leases to the defendant Mat-tox, and other conveyances and transfers were made, all of which conveyances and transfers we do not deem material to set forth.

Mr. Lackey testified that the value of the timber in 1935 was $4,000. One of his witnesses testified that the timber in his opinion was then worth around $2,500, that he did not know what the land was worth exclusive of the timber, “there was no demand for that.” Another witness for the plaintiffs testified that in 1935 the timber was worth $2,000 exclusive of the land and that the land without the timber was worth $10 per acre. A witness for the defendants . testified he valued the timber at $1,000 and an appraiser for the land bank valued the land at $5 per acre. Another witness for the defendants valued the timber at $1,000.

After the sale of the timber, both plaintiffs learned of such sale but neither of them made any protest, and neither of them asked for a reconveyance prior to the commencement of this suit.

The question presented is whether the conclusion of the trial court that the deed in question was absolute and not a mortgage is warranted by the evidence.

It is well settled that in a court of equity it is competent to show by parol that an instrument purporting to be an absolute conveyance of real estate is in fact but a mortgage. The question is one of intention to be ascertained from all the circumstances in evidence. (Workman v. Greening, 115 Ill. 477.) The rule is that where land is conveyed in fee by a deed absolute and there is no condition of defeasance in the deed or in a collateral paper and parol evidence is resorted to as in this case for the purpose of establishing that the deed was given as a mortgage, such evidence must be clear and convincing, otherwise the presumption that the deed is what it purports to be on its face must prevail. (Keithley v. Wood, 151 Ill. 566.) If in such cases the parol evidence leaves in doubt the character of the deed as a mortgage, the doubt must be resolved in favor of the absolute character of the deed. Had there been a condition of defeasance in a collateral paper or writing, any doubt whether the transaction is a mortgage would be resolved in favor of its character as a mortgage. These rules are well established in Illinois. (Illinois Trust Co. of Paris v. Bibo, 328 Ill. 252.)

In our opinion, the plaintiffs failed to show that the deed to the bank was ever intended as, or was in fact understood to be, a mortgage. The deed was an absolute conveyance and contained no condition of defeasance. Other than the deed, the only writing executed at the time of the conveyance was a written receipt which in substance stated that the defendant bank had received and was giving credit for $2,700 on the indebtedness of the plaintiffs by way of the deed and $300 in cash. Lackey was aged about 74 and had been a farmer all his life, but it is not shown that he was under any disability. Mrs. Lackey’s age is not given, but the record shows she had taught school before she was married. Both plaintiffs testified that Mrs. Lackey asked for and was given a receipt. The plaintiffs kept this receipt for over 3 years before commencing any suit, and in the meantime made no complaint or protest to any of the defendants, and prior to the commencement of this suit did not ask for any reconveyance. If at the time of the delivery of the deed the plaintiffs understood they had the right to redeem, it seems reasonable that when they asked for and received the receipt in question they would have asked that said alleged agreement be inserted in such receipt or in a separate writing*.

There can be no doubt but that at the time of the making* of such conveyance all of the parties understood that the defendant bank and the motor company were to accept in full payment of all the moneys due them whatever amount they might later realize from the loan by the land bank. The defendant bank and the motor company carried out this understanding by the defendant bank signing an acceptance with the land bank and by later accepting such money from the land bank. When the land bank did disburse such loan the defendant bank and the motor company were paid the balance of $2,937 due them, not including interest which had accrued after August 12, 1935, by being* paid $2,854.53, at which time the defendant bank and motor company surrendered to the land bank the two mortgages and the two notes in question.

We cannot say the consideration paid was inadequate. In our opinion it was not so inadequate as to tend to show the transaction was intended as a mortgage. Land was not selling freely. One witness for plaintiff would not place a value on the land, stating that there was no demand for such land. Opinions as to its value differed and there is no evidence of fraud or unconscionable conduct.

Plaintiffs urge that defendant bank, taking advantage of its position as a creditor, unfairly coerced plaintiffs into executing the deed against their will. The evidence does not support this contention. The plan proposed by O’Dell for the liquidation of the debt, which plan was ultimately carried out, was submitted before the deed was signed, and only after other methods of raising money had been tried and failed. Plaintiffs had ample time to consider the offer and seek independent advice if deemed necessary. No fiduciary relationship existed between the parties and all of them had equal opportunity to know the facts. We find that no misrepresentation, fraud or deception was practiced on the plaintiffs to induce them to sign. It may be assumed that during the negotiations the defendant bank threatened to enforce its rights under the notes unless the debt was settled or paid. Such fact in itself will not constitute duress. (Stone’s Beauty Shops, Inc. v. Morrison Service Ass’n, 285 Ill. App. 163.) The mere statement of plaintiffs that they were acting under duress in the light of other testimony in the record was not sufficient evidence of such fact. (Hagan v. Waldo, 168 Ill. 646.)

The point is made that the failure of the defendant bank to credit the $2,400 on the note in the same way it credited the $300 cash payment on the note indicates an intent not to treat the land as part-payment. That such a credit was intended and given is fully established by the written receipt given the plaintiffs at the time the deed was signed, which acknowledged such credit and showed the balance due, and the failure to indorse such credit on the notes we consider immaterial. (Kimmel v. Bundy, 302 Ill. 514.)

Plaintiffs attach importance to the failure of the defendant bank to release the mortgage until demanded by the subsequent purchaser Dees. It is apparent from the testimony that the failure to release the mortgage was mere neglect since the notes themselves had theretofore been surrendered by defendant bank.

If plaintiffs’ own testimony is taken as true, the most that can be said is that it shows a mere option to pay the purchase price and receive a conveyance at sometime in the future should they he able to do so. Such option to repay and receive a conveyance will not convert an absolute deed into a mortgage. (Council v. Bernard, 319 Ill. 392.) In Caraway v. Sly, 222 Ill. 203, the court sustained a demurrer to a complaint on a similar allegation of fact and said: “There was a mere option to pay at some time in the future if the complainant should be able to do so, and if he should become able it would be optional to pay, or not. Such an agreement would never be barred by lapse of time and there never could be any foreclosure. The right to redeem and the right to foreclose are reciprocal, . . . but the bill shows that there was no debt which could have been enforced against the land by foreclosure, either by Sly in his lifetime or by defendants since his death. An agreement giving the complainant a mere option to pay when he should be able and desire to do so, with an agreement to reconvey upon such a payment, did not constitute a mortgage, and the averments of the bill, if proved, would not entitle the complainant to any relief.”

It is unnecessary to determine whether the grantee Dees and subsequent holders of interest in the property are purchasers in good faith for value, without notice. The consideration paid by Dees for the land is unquestioned and the record shows no evidence of relationship between Dees and defendant bank indicating any secret venture or speculation entered into by them against the plaintiffs for the purpose of defrauding the plaintiffs out of their rights in the land.

The chancellor was right in dismissing the bill for want of equity and the judgment is affirmed.

Affirmed.


source: Caselaw Access Project

author: Mr. Justice Dady

license: Public Domain

text:
    Henry Eimers, Appellee, v. Herman Gussewelle, Appellant.
    Opinion filed March 1, 1941.
    Hiles & Newell, of Edwardsville, for appellant.
    John M. Karns, and Harold J. Bandy, both of East St. Louis, for appellee.
   Mr. Justice Dady

delivered the opinion of the court.

This is a $19.50 bull calf replevin case started in justice court, tried on appeal in the circuit court and appealed to this court.

There is not involved any question of public interest or any new or unusual proposition of law.

We find no reversible error.

Affirmed.


text:
    John Hill and Frances Hill, Appellants, v. Norbert Hiles, Appellee.

      Opinion filed March 1, 1941.
    Chester H. Farthing, of Belleville, for appellants.
    Kramer, Campbell, Costello & Wiechert, of East St. Louis, for appellee.
   Mr. Justice Dady

delivered the opinion of the court.

Plaintiffs, John Hill and Frances Hill, his wife, bring this appeal from a judgment of the trial court entered against plaintiffs on a verdict finding defendant not guilty in an automobile accident case. The accident occurred in the city of Belleville, on October 8, 1938, about eight p. m., and each plaintiff was very seriously injured.

Plaintiff John Hill was driving his car east on Main street with his wife as a passenger. They were on a joint mission. Main street is a paved State highway known as route 15, is about 60 feet in width from curb to curb, and is divided into two 27% foot one-way traffic lanes by a 5-foot unpaved parkway, the northerly lane being for westbound traffic and the southerly lane for eastbound traffic. Ninety-sixth street is a northerly and southerly paved street 25 feet in width which enters Main street from the north and ends at Main street. To allow southbound traffic on Ninety-sixth street to cross to the southerly lane of Main street, there is directly south of the southerly end of Ninety-sixth street a 50-foot paved opening in such parkway. There is no stop sign on Main street. There is a stop sign on the west side of Ninety-sixth street, which sign is 43 feet north of the north curb of Main street and 25 feet north of the southeast corner of a drug store building facing south on Main street. The distance between such building and the north curb of Main street is about 14 feet.

Immediately prior to the accident the defendant drove his car southerly on Ninety-sixth street into Main street and through such opening in the parkway and then turned east on Main street in front of plaintiffs’ car.

The complaint alleged that the defendant so carelessly and negligently drove his automobile southerly on Ninety-sixth street and thence onto Main street, that he caused it to suddenly turn east in front of the automobile of the plaintiff John Hill, who was then driving easterly on Main street, and that the plaintiff John Hill in order to avoid a collision with the automobile of the defendant was forced to suddenly turn his automobile in a southeasterly direction and thereby struck another automobile parked on the south side of Main street.

The sixth paragraph of the complaint further alleged that the Division of Highways of the State had, pursuant to law, erected a stop sign on Ninety-sixth street on the northerly side of Main street, and that the defendant drove his automobile into Main street without stopping the same at said intersection. Undisputed evidence showed the erection of such stop sign as alleged.

John Hill testified that immediately prior to arriving at the intersection he was driving about 35 miles per hour; that he was from 5 to 10 feet west of the opening in the parkway when the defendant came out of Ninety-sixth street between Hill and the east side of the opening in the parkway and swerved to the defendant’s left in front of the Hill car, and that Hill then swerved to his right to avoid striking defendant’s car and crashed into a car parked on the south side of Main street. The record shows the front end of such parked car was about 88 feet east of the east edge of the opening in such parkway. Hill further testified that in entering such eastbound traffic lane the defendant came “clear over to where such parked car was,” . . . “completely over to the right to make the turn”; that defendant gave no warning or signal “before he came out there or as he came out there”; that when Hill first saw the defendant’s car it was in his path making a left turn, about 5 or 10 feet from the Hill car and going about 25 or 30 miles per hour.

Frances Hill testified that when she and her husband got in front of the drug store building defendant’s car came out in front of them at an angle, and her husband then swerved his car and struck the parked car and she was rendered unconscious.

Victor Batha, a witness for plaintiffs, testified that he was a friend of defendant; that he saw defendant drive south from Ninety-sixth street; that he first saw defendant’s car when it was 4 or 5 feet south from the north curb of Main street and that he saw the collision; that defendant “didn’t make any stop anywhere near the curb of Main Street” before coming into Main street; that defendant “pulled out in front of Mr. Hill’s car”; that defendant “just zoomed out into Main Street”; that defendant “made a second gear stop in the middle of the street, but he never stopped, he just zoomed through.”

The defendant testified that he stopped on Ninety-sixth street within about 10 feet of Main street, about 10 feet north of the north Main street curb, and that “I stopped at the parkway, not what you call a dead stop, but I wasn’t going very much, I wasn’t dead stopped.”

Other witnesses testified for both sides and there was a conflict in the testimony as to whether defendant so stopped, but in passing upon the issues raised we do not consider it necessary or material to refer to such other evidence.

At the conclusion of the plaintiffs’ case the court struck paragraph 6 from the complaint and said to the jury, “The question of negligence of the defendant as to whether he stopped on Ninety-sixth street on the north side of West Main street is not before you for consideration in this case because the Court holds, as a matter of law, that whether he made that stop sign or not it would not in any way tend to prove that it was the proximate cause or negligence, if there was any, of the defendant in this case and that is entirely eliminated from your consideration,” and that such paragraph 6 was stricken and was not to be considered by the jury. We are called upon to pass on the propriety of these rulings.

Section 165' of the Motor Vehicle Act provides that “Except as hereinafter provided motor vehicles traveling upon public highways shall give the right-of-way to vehicles approaching along intersecting highways from the right and shall have the right-of-way over those approaching* from the left.” Section 167 of the same act provides that “The Department (of highways) may in its discretion and when traffic conditions warrant such action give preference to traffic upon any of the State highways under its jurisdiction, upon which has been constructed a durable hard-surfaced road over traffic crossing or entering such highway by erecting appropriate stop signs or stop lights and in such case vehicles entering* upon or crossing such highway shall come to a full stop as near the right-of-way line of such highway as possible and regardless of direction shall give the right-of-way to vehicles upon such highway.” The undisputed evidence shows that Main street was given preference as provided by section 167. Inasmuch as section 165 specifically states that it applies “except as hereinafter provided,” it must be concluded that section 167 governed, and section 165 had no application to the facts in this case.

If the defendant did not come to a stop before, entering the intersection as required by section 167, then he violated the provisions of section 167. A violation of a statute prescribing a duty for the protection and safety of persons is prima facie evidence of negligence, if such violation caused or contributed to cause the injury. (United States Brewing Co. v. Stoltenberg, 211 Ill. 531; True & True Co. v. Woda, 201 Ill. 315.) Whether the alleged negligence of defendant in not so stopping was the proximate cause of the injury was under the facts in this case a question of fact for the jury. (True & True Co. v. Woda, supra.) What is the proximate cause of an injury is ordinarily a question of fact to be determined by the jury from a consideration of all of the evidence. It can only be raised as a question of law when the facts are not only undisputed, but also such that there can be no difference in the judgment of reasonable men as to the inferences to be drawn therefrom. (Phillabaum v. Lake Erie & W. R. Co., 315 Ill. 131; Schultz v. Henry Ericsson Co., 264 Ill. 156.) In Wintersteen v. National Cooperage & Woodenware Co., 361 Ill. 95, the court said “If a reasonably prudent person might, and ordinarily would, foresee that the omission to do a certain act or the commission of an act in a certain way would likely result in injury to another, and injury to another does follow as a result thereof, such act of omission or commission is negligence and the proximate cause of the injury.”

We believe that the fact that Main street was a preferred street, and the fact that Ninety-sixth street, as it connected with Main street, was not a preferred street, within the meaning of the Motor Vehicle Act, were facts that were material to the issues.

Assuming that defendant did not “come to a full stop as near the right of way line of” Main Street “as possible” and “give the right of way to vehicles upon” Main street, as required by section 167, and assuming that in so doing the defendant “zoomed” into the intersection as testified to by the witness Batka, and assuming that as defendant made his left turn into the south lane of Main street in front of the Hill car he was going between 25 and 30 miles per hour as testified by John Hill, all of which we are required to assume as true in passing upon such rulings, we cannot say as a matter of law that all reasonable men would agree that defendant was not guilty of negligence which was the proximate cause of the injury, and cannot say that such failure of the defendant to so stop and give preference to traffic on Main street, as required, was not directly connected with and a part of such negligence. Under the terms of section 167, in order to make Main street a preferred street, it was necessary that the Department of Highways erect the stop sign in question. Therefore, it was proper for the plaintiffs to allege and prove the erection of such stop sign, and the trial court erred in striking paragraph 6 of the complaint and in so instructing the jury.

At the conclusion of the. case the court, at the request of the defendant, instructed the jury that if the jury believed that the automobile of the defendant entered the intersection before the Hill automobile reached the intersection, then the defendant would have the right of way. The giving of this instruction is assigned as error.

This instruction was based on said section 165 of the statute. Inasmuch as section 165 did not apply to the facts in the case the instruction was not proper and should not have been given.

The defendant contends that the giving of this instruction was at most harmless error because the defendant’s car was “at and through the intersection before” the Hill car. We do not agree with this contention. The undisputed evidence shows that the front end of the defendant’s car crossed the north side of the so-called intersection before the Hill car reached the west side of the intersection. Therefore, the instruction in effect told the jury that the defendant, under the facts in the case, had the right of way and that the Hill car did not have the right of way. The instruction emphasized the importance of the right of way and was very misleading. Even if Main street had not been a preferred street the instruction was an inaccurate statement of the law. The statute does not authorize the assertion of the right of way regardless of circumstances, distance or speed. (Riddle v. Mansager, 254 Ill. App. 68; Scott v. Vurdulas, 264 Ill. App. 495.)

Over the objection of plaintiffs the court permitted the defendant to prove that the plaintiff John Hill paid the cost of repairing the damages to the parked car which plaintiff’s car ran into. Plaintiffs urge that the court erred in admitting this evidence. Defendant argues that such payment could be construed as an admission of negligence by plaintiffs which would preclude them from recovering in their action against defendant.

It should be observed at the outset that the payment was made by the plaintiff John Hill, and that there is no evidence that the plaintiff Frances Hill authorized such payment. In this state of the record we do not see how under any theory this evidence could have been competent against the plaintiff Frances Hill. However, in the view we have taken of the case we do not believe that this evidence was competent as to either party.

The only Illinois case called to our attention as bearing on the question whether a payment made to a party involved in an accident may be competent as an admission of liability upon the part of the person making such payment in a suit brought or defended by another party involved in the same accident, is Chicago City Ry. Co. v. Cooney, 95 Ill. App. 471, in which case the trial court admitted evidence of a settlement made by the defendant with another passenger involved in the same accident. Although the Appellate Court did not consider the error sufficient for reversal, this statement appears at page 477 of the opinion: “We are inclined to view the testimony of Miss Gebhard, a witness called by appellee, who was upon the car in question and was also injured, to the effect that the appellant company had settled with her for her injury, as incompetent and improperly admitted over the objection of counsel for appellant.”

The question has been fully considered by the courts of highest authority in a number of other jurisdictions and it has been generally held that evidence of settlements made with third parties involved in the same accident is inadmissible.

In Powers v. Wiley, 241 Ky. 645, 44 S. W. (2d) 591, the court says: “The rule is well settled that, if in the same accident two or more persons are injured, a compromise with one cannot be shown in an action by the other. 22 C. J. p. 320, Par. 354, note B, and cases cited: Ferry’s Adm’r v. Louisville Railway Co., 165 Ky. 747, 178 S. W. 1087. The reason for the rule is that the law favors the settlement of controversies out of court, and, if a man could not settle one claim out of court without fear that this would be used in another suit as an admission against him, many settlements would not be made. For this reason, offers of compromise are always held inadmissible, and for the same reason a man’s buying his peace from one party can no more be used against him in the suit of another party than the defendant could use the settlement against the plaintiff in the action to reduce his recovery if for only a nominal amount.”

The principle underlying the rule excluding such evidence is stated by Justice Lamar in the case of Georgia Ry. & Elec. Co. v. Wallace & Co., 122 Ga. 547, 50 S. E. 478: “It costs time, trouble and money to defend even an unfounded claim. Parties have a right to purchase their peace. The fact that they have entered into negotiations to secure that end, admissions, or propositions made with a view to a compromise are not admissible in evidence for or against either litigent, in the event there is a failure to adjust and a suit follows. For a much stronger reason, evidence of a settlement with a third person injured in the same casualty ought to be excluded. . . . The rule against allowing evidence of compromise is founded upon recognition of the fact that such testi- . mony is inherently harmful, for the jury will draw conclusions therefrom in spite of anything said by the parties at the time of discussing the compromise, and in spite of anything which may be said by the judge in instructing them as to the weight to be given such evidence. ’ ’

Other cases in which such evidence has been held incompetent are: Ferry v. Louisville Ry. Co., 165 Ky. 747, 178 S. W. 1087; Colburn v. Town of Groton, 66 N. H. 151, 28 Atl. 95, 22 L. R. A. 763; Hanks v. Yellow Cab & Baggage Co., 112 Kan. 92, 209 Pac. 977; Cargall v. Riley, 209 Ala. 183, 95 So. 821; Hawthorne v. Eckerson Co., 77 F. (2d) 844; Ashley v. Safeway Stores, 100 Mont. 312, 47 P. (2d) 53; Curtis v. McAuliffe, 106 Cal. App. 1, 288 Pac. 675.

The Illinois courts have consistently refused to permit evidence of mere offers and negotiations for settlement to reach the jury on the ground that public policy favors the settlement of claims outside of court. (Gehm v. People, 87 Ill. App. 158; Edwin S. Hartwell Lumber Co. v. Bork, 138 Ill. App. 506; Graff v. Fox, 204 Ill. App. 598.) We think that this same public policy applies when an actual settlement is made with a third party. A person making such a settlement should not be required to explain his conduct before a jury where apart from the mere act of payment there is no other act or statement on his part which could be construed as an admission of liability. If such evidence is not excluded and is allowed to go to the jury it may be extremely prejudicial even where an explanation is made showing that the only purpose .of the payment was to avoid litigation without reference to the question of liability.

We do not regard it as material in the instant case that so far as the record shows the payment was made by the plaintiff John Hill before the owner of the parked car had started or threatened any litigation. In this connection we agree with the statement made by the court in the case of Finn v. New England Telephone & Telegraph Co., 101 Me. 279, 64 Atl. 490: “In cases of tort the proper rule should be that, when a party has reasonable grounds for anticipating that a demand will be made against him for damages, the claim may then be said to so far exist as to authorize him, without any move on the part of claimant, to seek a settlement of it and to be protected in so doing by the general rules of law applicable to compromise settlements.” There can be no question in the instant case that the plaintiff John Hill had reasonable grounds for anticipating that the owner of the parked car might make a claim against him for damages.

We think that the rule as announced in the foregoing cases excluding evidence of settlements made with third parties is a sound one and should be applied to the instant case. We hold that it was error for the trial court to admit this evidence.

Because of the errors indicated, the case will be reversed and remanded.

Reversed and remanded.


text:
    Eli B. Ring, Receiver, Appellant, v. Charles E. Palmer et al., Appellees.
    Opinion filed March 1, 1941.
    John C. Ritter, of Olney, for appellant.
    Mills, Umfleet & Mills, of Fairfield, for certain appellee.
    Dohovau D. McCarty, of Olney, for certain other appellee.
   Mr. Justice Dady

delivered the opinion of the court.

On September 8, 1931, a judgment was entered in the circuit court for the use of creditors of the Bank of Noble and against Charles E. Palmer for the snm of $8,433.33. No proceedings were had to revive snch judgment.

On March 9, 1932, an execution was issued on such judgment, which execution was on June 8, 1932, returned by the sheriff “no property found.” On April 15, 1938, an alias execution was issued which was returned unsatisfied by the sheriff on May 25, 1938.

On September 2, 1938, plaintiff appellant, as receiver of such bank, filed in the circuit court his affidavit for garnishment based on such judgment and on said executions so returned, which affidavit was in the usual form and stated that Owensboro Corporation was indebted to Palmer and prayed that said corporation be summoned as garnishee. So far as the record shows, Owensboro Corporation was never served with summons.

On April 22, 1939, plaintiff filed his amended affidavit stating that “since the filing of the plaintiff’s affidavit herein the Owensboro Corporation, garnishee, has changed its corporate name and is now the Sohio Corporation, and has succeeded to the possession and ownership of all the property and effects formerly owned and held by the Owensboro Corporation.” The affidavit prayed that Sohio Corporation be summoned as garnishee. Sohio Corporation, as garnishee, was served with summons on April 26, 1939.

On September 28, 1938, Fairfield National Bank obtained a judgment by confession in said circuit court against said Palmer in the sum of $805.62. On June 9, 1939, execution was issued on such judgment and placed in the hands of the sheriff, which execution was returned by the sheriff on June 9, 1939, endorsed “no property found.”

On June 29, 1939, by agreement of parties and by leave of court, Fairfield National Bank filed in this garnishment proceeding its answer and counterclaim. By such answer and counterclaim Fairfield National Bank denied that plaintiff in the garnishment proceeding was entitled to the relief sought for the reason that Fairfield National Bank was the owner of a prior lien and entitled to preference under its said judgment, and asked that the lien of Fairfield National Bank be declared a lien superior to the lien of plaintiff, and that Sohio Corporation, as garnishee, be ordered to pay Fairfield National Bank all sums due Palmer from such garnishee.

On August 17, 1939, Sohio Corporation filed its answer stating that it had $779.19 in its custody belonging to Palmer.

On final hearing in the garnishment proceeding the circuit court found the lien of the judgment of Fair-field National Bank superior to the claim of plaintiff and entered judgment for all of the moneys in the hands of the garnishee, in favor of Palmer and against the garnishee for the use of Fairfield National Bank. Plaintiff is the only one that complains of such judgment.

Plaintiff first contends that the judgment of Fair-field National Bank was not entered by the court but by the clerk of the court. We find no basis for this contention. The record shows that such judgment was duly entered in term time by the court and not by the clerk of the court.

The only other question presented is whether plaintiff is entitled to recover under a garnishment proceeding commenced within 7 years from the date of the rendition of his judgment, where during the pend-ency of such proceeding and before service of the writ, his judgment, upon which such proceeding is based, becomes dormant by the expiration of 7 years from the time the same became a lien so that no execution could issue thereon.

Plaintiff’s rights in the garnishment suit must be predicated upon the original judgment obtained by plaintiff against Palmer. In First Nat. Bank of Pala-¿me v. Hahnemann Institutions of Chicago, Inc., 356 Ill. 366, the court said “The existence of a valid judgment against the principal defendant is therefore a jurisdictional prerequisite in a proceeding under the Garnishment Act.” It follows that a valid judgment within the meaning of the garnishment statute is a judgment upon which an execution can issue for the satisfaction thereof against the principal debtor. Manifestly it does not mean a dormant judgment which has ceased to be a lien by lapse of time and which will not support an execution for its enforcement until it is revived. In Pierce v. Wade, 19 Ill. App. 185, an attempt was made to garnishee on a judgment which was 10 years old and had not been revived. The court held such a judgment would not support a garnishment proceeding and in so holding said “If the judgment could not have been enforced in its then condition against the defendant therein by execution,, it should not be used for the purpose of taking from him a demand against the garnishee, by a proceeding to which he is not a party, and of which he has no notice. Such proceedings are in the nature of an execution and enable the creditor to reach a species of property not usually subject to levy on the ordinary process of execution.”

When the plaintiff made no effort to revive his judgment as permitted by section 25, chapter 83 of our statutes, he took the risk that his garnishment proceeding would be left without an enforcible judgment to support it after September 8, 1938. The mere commencement of the garnishment proceeding within the 7-year period did not toll the running of the statute which made the principal judgment against Palmer dormant after the lapse of 7 years. The statute on garnishment makes no provision for the retention or the revesting of jurisdiction of a garnishment proceeding after the judgment in aid of which it was instituted can no longer support such proceeding. (First Nat. Bank of Palatine v. Hahnemann Institutions of Chicago, Inc., supra.)

The statute of 1845 contained a provision similar to our present statute as to a judgment being a lien for 7 years but did not (as does our present statute) contain a provision that real estate levied upon within such 7 years might be sold at any time within 1 year after the expiration of such 7 years. In Tenney v. Hemenway, 53 Ill. 97, the court held that, in the absence of such a provision, a pending levy of an execution issued on a judgment, which levy was made during the existence of the lien, did not operate to continue the lien of the judgment beyond the statutory period of 7 years. In that case the court said, in substance, that the lien of a judgment on real estate became effective only in the mode prescribed by statute; that the statute did not in terms or by implication give the same force to the levy on land under an execution, to create a lien, that arises from the rendition- of a judgment; that the statute has said the latter shall create the lien but has not said the levy may; that it would be absurd to suppose the law designed to give the execution more vitality than the judgment on which it was issued; that the levy of the execution did not prolong the lien of the judgment beyond the period limited by the statute, and that if the levy operated as a lien it expired with the lien of the judgment. (See also Jemes v. Wortham, 88 Ill. 69; Weis v. Tiernan, 91 Ill. 27.)

Garnishment is also a statutory proceeding. It is ancillary in nature and is designed for the purpose of aiding the collection of a judgment rendered in the principal action. Both an execution and the proceedings in garnishment derive their support from the main judgment. Under the decisions, if the main judgment fails, the rights acquired under the garnishment cease. It is not the province of the court to legislate. We must merely interpret the statute as it now exists. There is no provision in the statute that the commencement of a garnishment proceeding during the 7-year period shall operate to continue the life of such garnishment proceeding after the judgment on which it is based has become dormant by limitation.

The same question was presented in the case of Grace v. Pierce, 127 Miss. 831, 90 So. 590, where recovery was denied. The court said: ‘' The judgments rendered in 1911 were long since barred by the Statute of Limitation, and the issuance of writs of garnishment before the bar of the statute attached did not serve to extend or keep alive the lien of these judgments. . . . A valid judgment is essential to the validity of a garnishment proceeding, and when a judgment upon which a writ of garnishment is founded is extinguished by the bar of the statute, the garnishment proceedings likewise fail. No effort was made to revive the judgments upon which these garnishment proceedings were based, the garnishments had been allowed to lie dormant until the foundation upon which they rested had been swept away, and thereafter appellees had no valid claim to the funds in controversy. ’ ’

In the view that we have taken of the case, the trial court properly held that Fairfield National Bank and not the plaintiff was entitled to the funds in the hands of the garnishee. The judgment is accordingly affirmed.

Affirmed.


text:
    Thomas W. Moore, Appellee, v. Monarch Distributing Company, Appellant.
    Opinion filed March 1, 1941.
    JOHN M. Karns and Harold J. Bandy, both of Bast St. Louis, for appellant.
    Egbert Butledge and Philip G. Listeman, both of East St. Louis, for appellee.
   Mr. Justice Dady

delivered the opinion of the court.

This is an appeal by defendant from two orders of the city court of East St. Louis denying defendant’s motion and petition to vacate a judgment by confession taken by plaintiff against defendant.

Plaintiff has filed a motion to dismiss the appeal on the ground that defendant has failed to include in the concluding subdivision of the statement of the case, a brief statement of the errors relied upon for reversal, in violation of rule 39 of the Supreme Court and rule 9 of this court. Each of such rules, so far as the point in question is concerned, provides that ‘ ‘ The concluding subdivision of the statement of the case (in the printed brief of appellant) shall be a brief statement of the errors or cross-errors relied upon for a reversal.” While the language used in the brief of appellant is informal, and while more formal language is preferred, we do not understand that either of such rules requires the use of any particular language. We have examined such brief and in our opinion it sufficiently complies with such rules. The motion to dismiss is accordingly denied and we shall proceed to consider the case on the merits.

Defendant is an Illinois corporation. Plaintiff is a former president of the corporation. On February 20,1940, plaintiff filed his attachment affidavit in which he alleged that the defendant was indebted to him in the sum of $3,000 for which defendant had given him promissory notes and that defendant was about to fraudulently conceal, assign or otherwise dispose of its property so as to hinder or delay its creditors. Plaintiff’s attachment bond required by statute was duly filed and approved on same day. Thereupon, on the same day, a writ of attachment was issued returnable March 18,1940, which writ was returned by the sheriff on February 24, 1940, showing service upon defendant and a levy upon defendant’s account in the sum of $1,708.66 in the First National Bank of East St. Louis.

On March 9, 1940, plaintiff filed his complaint in the attachment proceeding alleging that defendant was indebted to him upon its 4 judgment notes for $500 each, executed by Lee E. Miller, president of the defendant corporation. Each note provided for attorney’s fee of $15 upon a confession of judgment, and each note by its terms was due at the time of the commencement of the suit. On the same date plaintiff filed a separate cognovit, that is a cognovit not attached to the complaint, in and by which cognovit judgment was confessed, and the court entered judgment on such complaint and cognovit against the defendant for $2,060 and costs. Both the complaint and cognovit were filed and the judgment was entered before any appearance was filed by defendant or its attorneys, and without any actual notice having been given to defendant or its attorneys.

On March 11, 1940, defendant filed a traverse to plaintiff’s affidavit of attachment, and a demand for a jury trial.

Defendant’s attorneys withdrew a copy of the complaint from the court files on March 9, 1940, but did not secure a copy of the cognovit and apparently did not become aware that such cognovit had been filed or that such judgment had been entered until June 12, 1940, when the case was called for trial. In the meantime, on March 14,1940, defendant had filed its answer denying the material allegations of the complaint and alleging as a further defense that defendant received no consideration for the notes and that the notes had been executed without proper authority.

When the case was called for trial on June 12, 1940, one of plaintiff’s attorneys in his opening statement to the jury stated that the attachment issue was the only question to be tried because the plaintiff had already obtained judgment by confession on March 9, 1940. Defendant’s counsel thereupon moved for a continuance on the ground that they had no knowledge of the confession and wished to present a defense, which motion was granted and the cause was continued.

On June 17,1940, defendant filed its motion and affidavit to vacate plaintiff’s judgment, which motion set up two distinct grounds for vacating the judgment: (1) that the court had no jurisdiction to render a judgment by confession in an original action of attachment; and (2) that the defendant had a meritorious defense to the action in that the notes had been executed without any consideration received by the defendant and without proper authority.

On July 9, 1940, without filing any counteraffidavits, plaintiff filed his motion to strike defendant’s motion and affidavits. On July 11, 1940, a hearing was held on both motions and an order was entered under which plaintiff’s motion was allowed and defendant’s motion to vacate was stricken.

On July 13, 1940, defendant filed a petition to open up the judgment and to permit the defendant to answer, which petition set forth substantially the same grounds for vacating the judgment as defendant’s earlier motion, but certain additional affidavits were attached thereto, the effect of which we shall later consider. On July 15, 1940, the court denied the prayer of the petition. This appeal is brought to review the orders of July 11,1940, and July 15, 1940.

Defendant first contends that there is no authority under the attachment statute for taking a confession of judgment and that a judgment by confession rendered in an attachment suit is null and void. Section 1 of the Attachment Act provides in part as follows: “. . . a creditor having a money claim, whether liquidated or unliquidated, and whether sounding in contract or tort, may have an attachment against the property of his debtor. ...” The act then goes on to provide that the creditor seeking an attachment shall file an affidavit setting forth the nature and amount of his claim, after which a writ is issued specifying a particular return date. The creditor is then required to file his complaint 10 days before such return date, and if the complaint is so filed defendant is required to file his answer or otherwise make his appearance on or before the return date. Plaintiff followed all of this procedure and up to the time of taking judgment by confession clearly brought himself within the scope of the act. The affidavit filed by plaintiff was a proper affidavit, and the complaint which plaintiff later filed did not differ from the ordinary complaint based on a note or any other contractual • indebtedness except that the complaint alleged the execution of the power of attorney contained in such judgment notes, and asked for a judgment for the amount alleged to be due to him including attorney’s fees.

We find nothing in the Attachment Act which prevents the filing in an attachment proceeding of such a complaint and the taking in such proceeding of a judgment by confession thereon. The suit for judgment by confession in this case was no more than an ordinary common-law action differing from the ordinary suit only in the fact that summons was unnecessary. (Schwartzs v. Schwartz, 366 Ill. 247.) The benefit of the provisions of our Attachment Act is not confined to any particular form of action. (Humphreys v. Matthews, 11 Ill. 471.) The act has been construed to permit a suit by attachment upon a judgment upon which the plaintiff is entitled to execution at the time of issuing the writ. (Young v. Cooper, 59 Ill. 121.) We do not consider that the case of French v. Wilier, 126 Ill. 611, in which it was held that the court had no jurisdiction to enter a judgment by confession for the possession of premises under a warrant of attorney contained in a lease, as opposed to our views in this case. The basis for the decision in that case was that there was no warrant either under the statute or the- common law for taking such a confession, and that the court was, therefore, without jurisdiction to act. No such question can be raised as to the power of the court to permit a confession of judgment upon a note. In fact the practice of entering judgments in debt on warrants of attorney is so old that the date of its origin is unknown. {French v. Wilier, 126 Ill. 611; Schwarts v. Schwarts, 366 Ill. 247.)

We do not think that the rights of the defendant in this case were prejudiced in any way by the entry of the judgment by confession. The defendant, by its judgment notes, authorized a confession of judgment without notice. After the judgment was taken the defendant had and exercised its right to make a proper defense both to the attachment and to the judgment by confession. The trial court permitted the defendant to file its motion to vacate the plaintiff’s judgment even after the commencement of the trial and defendant was not deprived of any of its rights by reason of the procedure which was followed in this case. It is our conclusion that the trial court did not exceed its jurisdiction in entering the judgment by confession although plaintiff commenced his suit under the attachment statute.

Defendant’s next point is that the trial court should have opened up the judgment taken by plaintiff and allowed the defendant to plead.

After striking the defendant’s original motion to vacate plaintiff’s judgment, the court permitted defendant to file its petition to vacate, which petition set up all of the grounds urged in the original motion and differed in substance only in the nature of the affidavits which were attached to the petition. The order of July 15,1940, was the final order entered in the case and we deem it unnecessary to consider the propriety of the earlier order of July 11, 1940.

Buie 26 of the Buies of Practice and Procedure of the Supreme Court prescribe the procedure to be followed to open up a judgment by confession, and the sufficiency of the petition and affidavits filed by defendant on July 13, 1940, must be judged by the requirements set forth in such rule. In substance, defendant’s petition stated that defendant had a meritorious defense to the whole of plaintiff’s demand, and the nature of this defense was set forth in the attachment affidavit of Joseph S. Meyer, the president of the defendant corporation. In this affidavit, the affiant in effect reaffirmed the statements made by him in the earlier affidavit attached to the original motion and also stated that if he were called upon as a witness he could competently testify as to the truth of the statements made in his original affidavit. The form of this petition and affidavit sufficiently met the requirements of.rule 26 and the only question is the legal sufficiency of the facts therein set forth.

These alleged facts (which we are required to assume to be true) appear from the face of the affidavit and are that: Plaintiff was president of defendant corporation and owner of 248 of its 250 outstanding shares of stock until July 1, 1939, when he transferred said shares of stock to Lee E. Miller; the unpaid part of the purchase price of said shares to be paid to plaintiff was $2,000; the said Lee E. Miller on July 1,1939, was elected president of defendant corporation and on said date he delivered to plaintiff the 4 promissory notes which are the basis of this suit, signing them Monarch Distributing Company, Inc., by Lee E. Miller, president; defendant did not receive any consideration for said notes from plaintiff or any other person and said notes were delivered to plaintiff to pay the debt of Lee E. Miller and not the debt of defendant; the act of the said Lee E. Miller in signing defendant’s name to said notes was beyond the power conferred upon him as president of said corporation; said transaction did not have the sanction of the board of directors or the stockholders of defendant; the said Lee E. Miller was acting for himself and not for defendant when he signed said notes; no action was ever taken by the officers or directors of defendant authorizing Lee E. Miller as president or otherwise to execute said notes, and that the charter of defendant did not empower it to execute notes of this kind.

We think that this affidavit sufficiently set forth the lack of any authority on the part of the then president of the defendant corporation to execute the notes on behalf of the company and that said petition and affidavit disclosed a prima facie defense to plaintiff’s complaint. An affidavit setting forth facts substantially similar to those contained in defendant’s affidavit was held sufficient to support a motion to vacate, in the case of Ross v. Wrightwood-Hampden Bldg. Corp., 271 Ill. App. 22.

The record does not show any lack of diligence on the part of the defendant in asserting this defense after receiving actual notice of the confession, and it is our conclusion that the trial court erred in refusing to open up plaintiff’s judgment and in refusing to allow the defendant leave to plead. The case is accordingly reversed and remanded with directions to proceed in conformity with the views expressed in this opinion.

Reversed and remanded.


text:
    Florence W. Ropiequet, Appellee, v. Aetna Life Insurance Company, Appellant.

      Opinion filed March 1, 1941.
    Opinion amended and rehearing denied April 18, 1941.
    Oehmke & Dunham, of East St. Louis, for appellant; E. Fred Gerold, Jr., of East St. Louis, of counsel.
    Beasley & Zulley, of East St. Louis, for appellee.
   Mr. Justice Dady

delivered the opinion of the court.

Plaintiff, after a trial before a jury, recovered a judgment for $1,682.32 on a life insurance policy issued by defendant. The policy was dated January 13, 1925> and provided that, in consideration of a quarterly premium of $12.62 to be paid on or before the 13th of January, April, July and October of each year, defendant agreed on the death of insured, Harold W. Ropiequet, to pay $2,000 to plaintiff, the insured’s mother.

The insured and his father and mother lived in East St. Louis, Illinois. The home office of defendant was in Hartford, Connecticut, but it had a branch office in St. Louis, Missouri. The insured died at 4:00 a.m. on January 9, 1939.

On March 3, 1936, the St. Louis office of defendant mailed a letter from the St. Louis office addressed to the father of the insured at East St. Louis, stating that at the request of such father the St. Louis office was inclosing in such letter “loan application form” to be signed by the insured, “date and place of signing inserted and the completed form returned to us. We will then request the Home Office to make the loan for the maximum amount available at the present time.” The loan application form was inclosed in such letter.

On March 5,1936, the insured’s father, R. W. Ropie-quet in behalf of the insured mailed a letter from East St. Louis to the St. Louis office of defendant stating that he was returning the loan application form duly signed by the insured, and that he understood that upon receipt of such letter the St. Louis office would instruct the home office to make the loan for the maximum amount available. This letter was received by the St. Louis office on March 6, 1936. The loan application form referred to was dated March 5, 1936, and was signed by the insured, and was inclosed with the letter. The insured in this loan application left the amount blank, and it is evident the amount was later filled in by the defendant. By this loan agreement, with the amount so filled in, the insured agreed to pay defendant the sum of $379.41, “with interest at the rate of six per cent per annum, payable on the next anniversary of the policy and annually on each anniversary thereafter,” and that “when any interest on this note becomes due and is not paid, the same shall be added to and become a part of the principal indebtedness evidenced by this note and subject to the same rate of interest.” Said agreement pledged the policy as security for the payment of such indebtedness. It also authorized and requested that a previous loan of $282.88 and accrued interest thereon be deducted from the amount of the loan.

An employee of the St. Louis office testified that on March 13, 1936, she mailed at St. Louis a letter addressed to the father of the insured at Bast St. Louis, Illinois. She identified and there was admitted in evidence a copy of such letter, which stated: “Loan under your above numbered policy has been increased to $379.41. Previous loan and interest were deducted, netting you $78.53. We enclose the company’s check for the above amount, cancelled note covering the previous loan and a statement outlining the transaction.” Such statement of loan was admitted in evidence and was dated March 10, 1936, and showed the amount of the previous loan to be $282.88 and' accrued interest of $18 or a total of $300.88, leaving a balance available of $78.53 for the insured on the new loan. She testified such check and such canceled note were inclosed in such letter. She further testified that Bast St. Louis was across the river from St. Louis and that it would take about 1 day for such letter to get from St. Louis to Bast St. Louis. The insured’s father testified that he “received the check on the 18th of March,” and thereupon secured the insured’s indorsement on the check and on the same day deposited the check in his bank account for collection. He further testified that he received nothing with the check. The check was dated March 10, 1936, and was for the sum of $78.53. An indorsement on the check shows it was deposited in an Bast St. Louis bank on March 18, 1936. The insured never made any payment on the last loan.

All premiums on the policy due prior to April 13, 1937, were paid. . The premium due April 13, 1937, was never paid and therefore on April 13, 1937, the policy lapsed by its terms because of such nonpayment except that by the terms of the policy the insurance continued automatically as extended term insurance' from April 13, 1937, the due date of the defaulted premium, for the sum insured, less the indebtedness against the policy, for such a period as the cash value of the policy less the indebtedness would purchase according’ to the American Experience Table of Mortality and 3% per cent interest.

Defendant assigns as error the trial court’s failure to grant defendant’s motion for a directed verdict after the close of all of the evidence and the refusal of the court to grant defendant’s motion for judgment notwithstanding the verdict. The defendant contends that these motions should have been granted on the strength of calculations made by its actuary who was corroborated by an actuary of another insurance company. These calculations showed that the amount available for the purchase of such extended insurance was only sufficient to continue the insurance until some time on January 8, 1939.

"When the policy so lapsed on April 13, 1937, for nonpayment of premium, it became necessary to ascertain and deduct the amount of the then indebtedness against the policy from the cash value thereof so as to determine the amount left for the purchase of extended insurance. The parties agree that the cash value of the policy when it so lapsed on April 13,1937, was $428, but disagree on the amount of indebtedness against the policy on the date when the last loan was made. Their differences arise principally over when the last loan was made and what method should be pursued in computing the interest due on the then indebtedness.

Defendant’s actuary testified that he took the effective date of the loan as being March 10, 1936, on the theory that the check was issued by the home office that day. He first computed interest on $379.41 (the principal amount of the last note) at 6 per cent per annum from March 10, 1936 to January 13, 1937, the next anniversary date of the policy. He then added such interest which he found to be $19.16, to the principal, making a total of $398.57. He next computed interest at 6 per cent on $398.57 from January 13, 1937, to ■ April 13, 1937, the date when the policy so lapsed, and added the interest, which he found amounted to $5.98, to $398.57, making a‘total indebtedness of $404.55 on the date when the policy lapsed. He then subtracted the sum of $404.55 from the cash value of $428, which left the sum of $23.45 for the purchase of extended insurance. He then testified that it required $13.66 to provide such extended insurance for 1 full year, that is from April 13, 1937 to April 13, 1938; that he deducted $13.66 from $23.45, which left $9.79 to apply on the last year, that is the year the insured died, he not having lived such full year; that the actual cost of such extended insurance on $1,595.45 for such full last year would have been $13.26; that therefore $9.79 divided by $13.26 times 365 (days in a year) would produce 269.4 days that the policy would actually remain in force after April 13, 1938, and that by so doing the policy as extended continued in force to some time on January 8, 1939, but did not continue in force into January 9, 1939, the day when the insured died.

Such witness was corroborated by the testimony of another actuary who also testified for defendant, but such last actuary testified that the extended insurance according to his computations only continued in force until some time on January 7, 1939.

To sustain her recovery plaintiff relies on the calculations of Boland L. Schmidt, who testified in her behalf. He testified over objection that he first computed interest from March 10, 1936, at 6 per cent per annum on the sum of $379.41 for 1 year instead of merely to the next anniversary date of the policy, as was done by defendant’s actuary, and he found such interest to be $22.76; that he then added such interest to the principal making a total of $402.17. He then computed interest on the sum of $402.17 from March 10, 1937, to April 13, 1937, which interest he found amounted to $2.21, making a total indebtedness of $404.38, as of April 13, 1937. By this method of calculation the amount available for the purchase of extended insurance he found to be $23.62 or 17$ in excess of the amount arrived at by defendant’s actuary. It is claimed this additional 17$ would be ample to extend the insurance beyond the date of insured’s death. Schmidt also testified, on direct examination that he had also used the same dates and method of computation as that used by defendant’s actuary and that by so doing he had arrived at the same mathematical result as such actuary so testified to.

Plaintiff contends that the method used by defendant’s actuary in computing the interest resulted in charging interest at a rate in excess of 6 per cent per annum because the interest for the period from March 10, 1936 to January 13, 1937, was compounded and added to the principal, instead of being computed for 1 year from March 10, 1937, and thereafter compounded. Plaintiff says that this could not be done under the policy and that interest could only be charged and added to the principal annually, as was done by Schmidt.

We are of the opinion that the method of, but not the dates used in, calculating interest on the indebtedness used by defendant’s actuary is the correct one. The policy and loan agreement must be read together. We find no inconsistency between the provisions of the policy and the loan agreement executed by the insured. The terms are plain and unambiguous and must be construed as written. Both the policy and loan agreement provide that interest shall be at the rate of 6 per cent per annum and that when interest is not paid when due it shall be added to the principal and bear the same rate of interest. With reference to when the interest shall become due and payable the policy provides that interest shall be paid at the end of each policy year while the loan agreement states that it shall be paid on the next anniversary and each anniversary thereafter. We interpret the word “anniversary” to mean the same as “at the end of each policy year,” which date was the 13th of January of each year. The parties in this case fixed a definite time for the payment of interest and the time so fixed controls. That such provision has the effect of making the first payment of interest come due in a period less than a year, with the result that such interest if not paid will be compounded for the first period in less than a year, does not alter the situation any since the contracts in question specifically provide for such a result. Our statute in force at the time of the issuance of the policy and at the time when the last loan was made specifically authorized the compounding of interest in insurance policy loans (ch. 73, par. 263, Smith - Hurd 1935 Illinois Statutes). Schmidt’s method of calculating the interest was unauthorized and it was error to admit his testimony in that regard.

Schmidt also testified that if the effective date of the loan was taken as March 18,1936, the amount available for extended insurance would be 18^ in excess of •the amount found by the method used by the defendant’s actuary. His testimony is not clear in what manner and for what period he computed the interest in arriving at the amount of the indebtedness under the last calculation, and his testimony in this respect was at most a conclusion.

In finally disposing of this case it is necessary to determine from what date interest should be computed on the last loan. This involves the question as to when the loan became effective, as we are of the opinion that the computation of interest should begin from such date. The policy specifically provides that interest on loans “shall be at the rate of six per cent per annum . . . .” If the company were permitted to charge interest at 6 per cent per annum before the loan was completed, it would in effect be charging interest in excess of the policy rate.

Plaintiff contends that the loan became effective on March 18, 1936, and that interest should be computed from that date. This contention is based on the testimony of the father of the insured who testified that he first received the check on March 18, 1936. Defendant contends that interest should be computed from March 10, 1936, which was the date of the check.

Defendant also urges that no difference in result would obtain even though the effective date of the loan was taken as March 18,1936, instead of March 10,1936. To sustain this argument defendant points to the testimony of one of its witnesses who testified to such effect but gave no figures, and to the offer of testimony by its actuary on the same subject and to the same effect, which offer was rejected by the court and is one of the errors assigned. We do not believe that such excluded testimony was necessary in order to make the computation in this case. Once the effective date of the loan is determined this court, on its own initiative, may calculate the interest. (People ex rel. Com’rs of Highways v. Board of Sup’rs of Madison County, 125 Ill. 9.)

Neither party has cited any precedent or authority whatever to aid us in deciding the point involved. The respective briefs contain no argument on the point but amount to a mere statement of the respective contentions. Defendant makes no claim that interest should be computed from March 5, 1936, the date of the last loan agreement. The contract for the loan required an offer and acceptance. In determining the date of the loan we must take into consideration the surrounding facts and circumstances in order to ascertain when the minds of the parties met and the contract became complete. The insured made his offer for the loan by mail and by his conduct, in the absence of contrary instructions, impliedly if not expressly, authorized the defendant to accept the offer by the same medium or mode of communication. [Geary v. Great Atlantic & Pacific Tea. Co., 366 Ill. 625, 17 C. J. S., p. 400, par. 52.) Talcing the evidence most favorable to defendant, the earliest date when it can be said the contract was complete was on March 13,1936, the date when the defendant first communicated its acceptance of the offer by mailing at St. Louis its letter inclosing check and statement of loan to the insured. It is, therefore, our opinion that the loan first became effective on and began to draw interest from March 13, 1936.

The manner of computing time and interest is governed by section 10, chapter 74 of our statutes, which provides in substance that, first, in all computations of time and of interest a month shall be considered to mean a calendar month and a year shall consist of 12 calendar months, and second, in computations of interest for any number of days less than a month a day shall be considered a thirtieth part of a month and interest shall be computed for such fractional part of a month upon the ratio which such number of days shall bear to thirty. This statute was construed in Collins v. Montemy, 3 Ill. App. 182, where the court held that under this section a note dated February 12, 1875, due nine months after date, matured November 15, 1875, when the defendant was allowed 3 days’ grace. In interpreting the word “month” in 62 Corpus Juris, p. 970, par. 18, it is said: “Where ‘month,’ as employed in a statute ... or contract . . . means calendar month, a period of a month or months is to be computed not by counting days, but by looking at the calendar, and it runs from a given day in one month to a day of the corresponding number in the next or specified succeeding month, except where the last month has not so many, days, in which event it expires on the last day of that month.” See also Daly v. Concordia Fire Ins. Co., 16 Colo. App. 349, 65 Pac. 416; McGinn v. State, 46 Neb. 427, 65 N. W. 46; Griffith v. Griffith, 31 Del. 1, 108 Atl. 209; English v. Osburn, 59 Ga. 392; In re Albrecht’s Estate, 118 Misc. 737, 194 N. Y. S. 432.

While the defendant, as we have held, had the right to compound interest, it could, of course, waive or abandon such right as to any period. In its statement of loan dated March 10,1936, mailed by its branch office to the insured on March 13, 1936, the defendant stated that the interest “accrued” as of March 10, 1936, on the prior loan of $282.88 was $18.00. The insured had the right to accept and act upon this statement as being true. On the trial the defendant’s witness Keffer, its statistician, testified “I have the company record concerning details of the loan of $379.41 of which I have testified. I have made a calculation of interest on a previous loan of $282.88 from February 21, 1935, to March 10,1936, and according to my calculations it was $18.01. The records show that the amount of $18.00 interest was charged on that previous loan.” No issue was made in the trial court as to the correctness of this calculation, and we therefore accept defendant’s figure of $18.00 as the proper interest charge on the previous loan.

Following the statute and such decisions, and using the method of computation used by defendant’s actuary, our computation based on the effective date of the loan as being March 13, 1936, and with interest at the rate of 6 per cent per annum is as follows: The prior loan of $282.88 plus interest of $18 as computed by defendant’s actuaries to March 10, 1936, plus interest on $282.88 from March 10, 1936, to March 13, 1936, amounting to $.14, together with the new advance of $78.53 makes a total loan of $379.55 as of March 13, 1936. Interest on $379.55 from March 13, 1936, to January 13, 1937, would be $18.98, which added to $379.55 would make $398.53. Interest on $398.53 from January 13, 1937, to April 13, 1937, would be $5.98, which added to $398.53 would make $404.51, or the amount of principal and interest due defendant on the last loan at the time when the policy lapsed. Deducting $404.51 from $428, the admitted cash value of the policy at the time the policy lapsed, would leave $23.49 as the amount available for extended insurance. Subtracting from $23.49 the sum of $13.66, which was the amount charged by defendant’s actuaries for extended insurance for the first year or from April 13, 1937, to April 13, 1938, would leave a balance of $9.83 left to apply on the last year, that is the year during which defendant died. Adopting the method used by defendant’s actuaries, dividing $9.83 by $13.26 times 365 equals 270.5 days that the extended insurance would carry during such last year beginning April 13, 1938, which 270.5 days would expire sometime after 4:00 a.m. on January 9, 1939.

Therefore we find that the extended insurance was in force at the time the insured died.

In the view we have taken, although it was error to admit the testimony of the witness Schmidt as to his first method of calculation, we find that the exclusion of such testimony would not have changed the result and therefore its admission did not constitute reversible error.

The trial court did not err in overruling the motions of defendant for a directed verdict and for a judgment notwithstanding the verdict.

No question has been raised as to the amount of the judgment being for the proper amount if plaintiff is entitled to recover, so we do not consider such question.

There being no reversible error, the judgment of the trial court is affirmed.

Judgment affirmed.