text:
    Matt Sergo, Defendant in Error, v. S. N. Bloch and John Killips, Plaintiffs in Error.
    Gen. No. 34,870.

      Opinion filed October 21, 1931.
    John P. McDonald and Jesse Marcus, for certain plaintiff in error.
    Hugh A. Caperton, for defendant in error; Ernest C. Reniff, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

Matt Sergo, plaintiff, brought his action against Arthur H. Hein, Phillip Gartner, Charles J. Wolf, Wayland W. Dayton, Sol N. Bloch and John Killips, defendants, and recovered a judgment in the sum of $2,100 against John Killips and S. N. Bloch, two of the aforementioned defendants. The cause was tried by the court without a jury. The declaration consisted of five counts.

The first count charged that on and prior to June 5, 1927, the State Discount Company, a corporation, was organized under the laws of the State of Illinois, for the purpose of buying and selling real estate and to engage in building operations in connection therewith; charges that the defendants were officers and salesmen of said corporation and that, by reason of the speculative nature of the business, the certificates of stock issued by the corporation came under Class D securities as set forth in chapter 32 of Cahill’s Revised Statutes of the State of Illinois, j| 261; charges that it became the duty of the defendants to file in the office of the secretary of state a true statement and inventory of the assets of said company, and that the defendants wilfully and maliciously failed and neglected so to do; charges that they sold the plaintiff 15 shares of stock at the par value of $100 each, for which the defendant paid the snm of $1,800; charges that the plaintiff is entitled to recover attorney’s fees.

The second count contains similar statements, but charges that the defendants wilfully, knowingly and maliciously failed to file any statement with the secretary of state at Springfield, stating that they, the defendants, were agents and salesmen of the stock of the said corporation.

The third count contains the allegations as set out in the first count, but appears to be based upon the ground that the defendants falsely pretended that the stock of the State Discount Company was Class A stock under the Securities Act of the State, Cahill’s St. ch. 32, if 257, and that the plaintiff, believing such statements, relied upon them and purchased said stock of the defendants; charges that he tendered back the certificate of stock to the defendants and demanded the return of his money.

The fourth count charges, in words practically the same as those contained in the first count, the fact that the State Discount Company was engaged in the sale of stock and further that the defendants, being officers, agents and salesmen of the corporation, wickedly, feloniously and corruptly conspired together to cheat and defraud the plaintiff; that said defendants pursuant to said conspiracy, represented that the stock was Class A stock under the Securities Act of the State, when they well knew that it was Class D stock under said act; charges further that the defendants did not file in the office of the secretary of state a true statement and inventory of the assets of the said corporation and that they did not file with the secretary of state a statement that they were salesmen of the stock of said corporation.

The fifth count consisted of the common counts. General and special demurrers of the defendants were overruled to the various counts of the declaration. Pleas of nonassumpsit were thereafter filed by the defendants to the fifth count of plaintiff’s declaration and pleas of the general issue to the remaining counts of the declaration.

A stipulation was entered into between the parties by which it appears that the State Discount'Company was incorporated under the laws of the State of Illinois prior to June 25, 1927, and that it qualified as such to sell Class D securities and that the defendants, Hein, Gartner, Wolf, Dayton and Bloch were officers and directors of said corporation.

At the end of the plaintiff’s case a motion to dismiss as to the first count of the amended declaration was sustained. Motions to dismiss as to the second, third, fourth and fifth counts were sustained as to the defendants, excepting John Killips and Sol N. Bloch, and as to them, it was denied.

The cause is before this court on a writ of error from said judgment sued out by Killips and Bloch. In our opinion the motions, by the two remaining defendants, to dismiss the second, third and fourth counts should have been sustained.

Under the stipulation of facts entered into by and between the parties, it is apparent that the State Discount Company had complied with the statute of the State of Illinois with regard to qualifying with the secretary of state in the sale of its stock. There is no evidence in the record showing that it was represented to the plaintiff that the stock was Class A stock and, consequently, there was nothing to support the third count of the declaration.

It appears from the evidence that at the time the stock in a certificate of 15 shares was sold to the plaintiff, there was present one B. H. Bloch and the defendant, John Killips. An order to purchase 15 shares of the capital stock of the State Discount Company for $1,800, directed to S. N. Bloch, dated June 24, 1927, and signed by the plaintiff, contained a notation on the back, as follows:

“June 24, ’27.
“We hereby agree to repurchase 15 shares of stock on 30 days’ notice at price paid.
(Signature) S. N. Bloch
B. H. B.
John Killips.”

The initials, “B. H. B.” were those of Bernard H. Bloch, a brother of the defendant, Sol N. Bloch. The stock certificate issued June 25, 1927, appears to have been signed by Sol N. Bloch, as president of the company.

The plaintiff at no time came in contact with Sol N. Bloch, nor had he ever had any conversation with him, and there is nothing in the record connecting in any way Sol N. Bloch with the transaction excepting the fact that the order was evidently turned over to bim and upon this order the stock certificate issued. There is nothing in the record showing that Sol N. Bloch did not comply with the statutory requirements with reference to filing with the secretary of state an application to act as dealer with regard to said stock. On the other hand, there is in the record defendants’ exhibit 2, which is a certification from the office of the secretary of state to the effect that Sol N. Bloch was registered with the secretary of state at the time of the transaction in question as á dealer or broker in accordance with the requirements set out in the Illinois Securities Law, Cahill’s St. ch. 32, lj 254 et seq.

There being no evidence against the defendant, Sol N. Bloch, under the counts of the declaration based on a violation of the Securities Act, it necessarily follows that there cannot be a joint judgment under these counts against the defendant Bloch and the defendant Killips. There being no joint liability under these counts it follows that a judgment based upon them could not stand. A joint judgment is an entirety and must stand or fall as to both defendants. Seymour v. Richardson Fueling Co., 205 Ill. 77; Woods v. Bowman, 200 Ill. App. 612. There is no evidence in the record of any conspiracy on the part of the defendants, nor is there any evidence to the effect that the plaintiff was induced by fraud to enter into the purchase of the stock in question.

There remains but one question, namely, whether or not the defendants, Sol N. Bloch and John Killips, can be held under the fifth count of the declaration consisting of the common counts.

The liability of the defendant, Killips, if any, is based upon the fact that he signed an agreement on the back of the order, to repurchase the stock upon the giving of 30 days’ notice. The liability of the defendant, Sol N. Bloch, if any, is based upon the fact that his name was signed on the back of said order by his brother, under which it was agreed that the said Bloch also obligated himself to repurchase the stock for the price paid. It is argued that there is no evidence in the record showing that the brother, Bernard H. Bloch, had any authority to sign for his brother, the defendant, Sol N. Bloch. There is evidence in the record, however, showing that after the defendant Bloch’s name was signed to said repurchase agreement, a stock certificate was issued by Sol N. Bloch, as president of the company, and it may be that, by this action, he ratified the act and became liable as principal.

The action of assumpsit lies where there is an implied agreement to pay money. It may also lie where the action is based upon a fully executed contract and nothing remains to be done. Where there is some step necessary to be taken before the action will lie, such as a condition precedent, the action should be upon the special undertaking and, in such event, should be pleaded specially. The rule is found in the< case of Henderson v. Wheaton, 139 Ill. 581. The court in its opinion in that case said:

“The rule is well settled that ‘where an act is to be performed by the plaintiff before the accruing of the defendant’s liability under his contract, the plaintiff must aver in his declaration, and prove, either his performance of such condition precedent, or an offer to perform it, which the defendant rejected; or he may aver his readiness to fulfill the condition until the defendant discharged him from so doing, or prevented the execution of the matter which was to be performed by him.’ Chitty on Contracts (11th Am. ed.), p. 1083, and cases cited in note. See, also Frey v. Johnson, 22 How. Pr. 316; Sanford v. Cloud, 17 Fla. 532; Williams v. Healey, 3 Denio, 363; Bank of Columbia v. Hagner, 1 Pet. 455; Thorpe v. Thorpe, 12 Mad. 465; Savage Manf. Co. v. Armstrong, 19 Me. 147; Brown v. Cannon, 5 Gilm. 174.”

No recovery can be had upon an executory contract under the common counts. Brand v. Henderson, 107 Ill. 141. If the obligation to pay or perform is to arise only upon request, the request becomes a part of the claim and is a condition precedent to the action. 5 Corpus Juris, page 1391. There was some evidence on the part of the plaintiff that he asked ICillips to pay him the money, but there is nothing showing that there was any demand upon the defendant Sol N. Bloch nor any evidence excusing such a demand.

It is our opinion, under the facts in this case, a recovery, if had, must be upon a special count based upon. the written instrument with proper allegations of demand for repayment. The trial court heard evidence as to the value of attorney’s fees, based upon those counts of the declaration which were predicated upon a violation of the Securities Act. • In view of the fact that this court has in this opinion held that there was not sufficient evidence in the record to hold the defendant Bloch under these counts of the declaration, it necessarily follows that this was error. We assume that the court granted the attorney’s fees and included the amount in the judgment. It is impossible to say from the record as to whether or not any part of the $2,100 was interest or whether it was the amount paid for the stock plus attorney’s fees only.

It has been argued at length that Killips was not a salesman nor agent for the State Discount Company and was not engaged in the sale of its stock. Under the view of this court, as expressed in its opinion, it becomes unnecessary to pass upon this question.

For the reasons expressed in this opinion, the judgment of the circuit court is reversed and the cause remanded for a new trial in conformity with the views herein expressed.

Judgment reversed and cause remanded.

Hebel, P. J., and Friend, J., concur.


source: Caselaw Access Project

author: Mr. Justice Wilson

license: Public Domain

text:
    Bankers State Bank, Appellee, v. New Jersey Fidelity & Plate Glass Insurance Company of Newark, New Jersey, Appellant.
    Gen. No. 34,904.

      Opinion filed October 21, 1931.
    Philip H. Treacy, for appellant.
    John A. Bloomingston and Philip Weinstein, for appellee.
   Mr. Justice Wilson

delivered the opinion of the court.

This was an action to recover on an insurance policy-known as a burglar policy issued to the Savoy Ball Booms, Inc., under which a loss occurred in the amount of $5,110.05, on the morning of November 13, 1928. The claim under the policy was subsequently assigned to the Banker’s State Bank, plaintiff herein, as security for a loan negotiated by the Savoy Ball Booms, Inc. The policy limited the loss to $7,500 and contained, among other things, a clause entitled, “Special protection to avoid ‘Hold-up’ is adopted as follows: ‘Two Armed guards on duty at all times while said Policy is in force.’ ” The policy also contained a clause under the sub-head “Special Agreements,” which read as follows:

“D. If the Assured is unable, because of some contingency beyond his control, to maintain any service or to perform any act specified in the Schedule, thus increasing the hazard, the liability of the Company shall be limited to such proportion of the insurance provided in the Policy as the premium paid would have purchased for such increased hazard under the Company’s published Manual of Bates in force at the time of the issue of this Policy.”

The premium paid for the policy was $516.90. Evidence was introduced on behalf of the plaintiff, showing that the premium paid for the policy in question was more than sufficient under the regular manual of rates, to cover the loss without the “Armed Guard” clause in the policy. This evidence was admitted for the purpose of permitting the insured to come within the contingency clause of the policy in the event the “Armed Guards” were not present at the time of the burglary or the insured was unable to maintain the service. The policy also provided that the defendant company would not be liable for any loss “unless effected by forcible, violent and felonious means during the hours beginning at 7 a. m. and ending at 4 a. m. and only when the premises were open for business.”

From the facts it appears that the Savoy Ball Rooms, Inc. was held up by three men at about 10 o’clock on the morning of November 13, 1928. There were present on the premises at the time William Steward, the firengan, Charles Scott, Frank Miller and E. C. Hall, who were janitors and general utility men about the premises, together with Miss Eunice Smith, stenographer and secretary to the president of the company. While the hold-up was going on Faggen, the president of the company, entered the premises and he was ordered to open the safe and the inner vault contained therein. The money which was taken, and for which this suit was brought, was in this safe, which had been provided in conformity with the terms of the policy.

It is unquestioned that the amount found by the trial court was taken in the hold-up, but, upon demand by the insured, payment was refused on the ground that the Savoy Ball Rooms, Inc. had failed to provide two Armed Guards, as required by the terms of the policy. To meet this position of the defendant, plaintiff introduced evidence to the effect that Matthews was the night, watchman and chief janitor and was armed and that two others, Chilton and Hodges, carried guns. Chilton was the general manager and Hodges was the advertising manager. Matthews carried a gun in a holster. There were always two guns on the premises for use, if needed. Matthews also had an assistant by the name of Hall and when Matthews was not on the premises he would tell Hall where the guns were kept.

Faggen, the president, over objection testified that his instructions to Matthews and his assistant, who were supposed to perform the duties of Armed Guards, were to guard the place from closing time until opening time the next morning.

Matthews on the morning in question left at 9 o’clock, leaving Miller, Hall, Scott and Steward in the place. The force had been working until 5 o’clock in the morning, but Chilton, Cross and Faggen overslept and did not go on duty at 9' o’clock, as was required. Hall, the assistant to Matthews, was on duty, however, at the time.

Plaintiff insists that there is sufficient evidence to support the contention that “Armed Guards” were provided, as required by the terms of the policy and that, even though they were not on the premises at the time of the hold-up, nevertheless, the insured had fully performed the terms of the policy and was, in any event, covered by the terms of the contingency clause which provided that if the Armed Guards were not present at the time of the burglary or hold-up, the amount of the recovery could only be that amount which would have been recoverable under a premium which would have been required in the absence of this special clause.

Defendant insists that it is not liable, (a) because of the failure of the insured to maintain Armed Guards; (b) the hold-up took place when the premises were not open for business; (c) that the plaintiff’s declaration charged that the insured had fully performed when, in fact, it had not; (d) that the trial court erred in admitting evidence as to the regular manual rates; and (e) that the trial court erred in admitting certain evidence, as to the facts and circumstances surrounding the issuance of the policy.

As to the first of these contentions, we are of the opinion that there is ample evidence to support the contention of plaintiff that Armed Guards were supplied and, furthermore, we are of the opinion that, even though they may not have been present at the time of the hold-up, nevertheless, the insured was covered by the contingency clause in the policy and that, for the purpose of proving under this contingency clause, testimony was admissible as to the regular manual of rates. Under this evidence as to manual rates, it is apparent that the premium charged was amply sufficient, even in the absence of Armed Guards, to cover the loss under the policy. Both the questions, as to whether the insured complied with the provisions of the policy with regard to maintaining Armed Guards and as to whether or not the loss came under the contingency clause, were questions of fact for the trial court and the jury. Whether certain employees were designated as “porters” or otherwise, would not prevent their being used for the purpose of protecting the property, and there appears to be ample evidence in the record to the effect that they were instructed to use arms, if necessary, and were provided with guns for the purpose of protecting the property of the insured. Fee v. Zurich General A. & L. Ins. Co., 257 Ill. App. 227; Kaplan v. United States Fidelity & Guaranty Co., 343 Ill. 44.

The Supreme Court in the case of Kaplan v. United States Fidelity & Guaranty Co., supra, in its opinion, says:

“By its assignment of errors defendant insists upon a strict construction of the conditions of its policy, blit in construing policies of insurance the courts are inclined to lean against a narrow construction. (Terwilliger v. Masonic Accident Ass’n, 197 Ill. 9; Monahan v. Fidelity Mutual Life Ins. Co., 242 id. 488.) Equivocal expressions in a policy of insurance whereby it is sought to narrow the range of the obligations these companies profess to assume are to be interpreted most strongly against the company. (Niagara Fire Ins. Co. v. Scammon, 100 Ill. 644; Schroeder v. Trade Ins. Co., 109 id. 157.) The contract is always to be liberally construed in favor of the insured, so as not to defeat, without a plain necessity, his claim to the indemnity. Healey v. Mutual Accident Ass’n, 133 Ill. 556.”

Defendant sought to introduce evidence showing that at the time the policy was written, the risk was a dangerous one and had been rejected by other insurance companies and that the rate was based upon the fact that it was a dangerous risk because of the location of the premises. The premises in question were located at 4733-37 South Parkway, Chicago, Illinois. We are of the opinion that the court correctly ruled out this proffered testimony. The policy speaks for itself and the terms written therein constitute the agreement of the parties. It should not be varied by parol evidence. The jury found the issue in favor of the plaintiff and assessed its damages at the sum of $5,593.13, upon which verdict judgment was entered and we see no reason for disturbing the judgment.

For the reasons stated in this opinion the judgment of the circuit court is affirmed.

Judgment affirmed.

Hebel, P. J., and Friend, J., concur.


text:
    M. L. Berkemeier, Appellee, v. Dormuralt Motor Sales, Inc., Eastern Automobile Insurance Underwriters, Appellants.
    Gen. No. 34,917.

      Opinion filed October 21, 1931.
    Nicholson, Crandall & Snyder, for appellants.
    Estelle M. Wells, for appellee.
   Mr. Justice Wilson

delivered the opinion of the court.

The complainant M. L. Berkemeier, an attorney at law, recovered a decree against the defendants, Dormuralt Motor Sales, Inc. and Eastern Automobile Insurance Underwriters, in the sum of $937.50. The action was based upon a bill of complaint filed in the superior court, charging that one Philip Becker had sustained injuries by reason of the negligent operation of a motor vehicle by the Dormuralt Motor Sales, Inc.; that the said Dormuralt Motor Sales, Inc. had a policy of insurance taken out with the defendant, Eastern Automobile Insurance Underwriters, under which the said Dormuralt Motor Sales, Inc. was insured against loss by reason of injuries inflicted upon others in the operation of its motor vehicles; charges that the plaintiff was an attorney at law and represented the said Philip Becker, and served notice in accordance with the provisions of an act entitled, “An Act creating attorney’s lien and for enforcement of same,” chapter 13, paragraph 13, Cahill’s Illinois Revised Statutes 1927; charges that the complainant was the attorney for said Becker in the prosecution of his claim and that it was the duty of the defendants to withhold out of any settlement with Becker an amount equal to 25 per cent of the total amount recovered or received by Becker in settlement of said claim for the use of the complainant as attorney’s fees.

From the facts it appears that Becker was injured on or about July 25, 1927; that Gfuerine & Brust, attorneys at law, were visited by the wife of Becker early in August, 1927, and were asked to take charge of the case and represent Becker; that thereupon they filed a praecipe in the case of Becker v. Dormuralt Motor Sales, Inc., bearing date of August 31, 1927. The declaration in the cause was filed September 9, 1927, and the appearance of the defendant entered September 17, 1927.

Mrs. Becker, the wife of the plaintiff in the personal injury accident, visited the office of the Legal Aid .Bureau and was referred to complainant, M. L. Berkemeier, and, thereupon, the said Berkemeier on September 15, 1927, procured a contract from the plaintiff Becker, under which he retained the said Berkemeier as his attorney to prosecute the suit and take charge of his claim against the Dormuralt Motor Sales, Inc. At the time his contract was entered into complainant knew that Mrs. Becker had been to see the firm of Guerine & Brust.

It appears from the evidence that Becker was unable to sign his name, and fixed his mark to the contract in question. There is some conflict in the evidence as to whether this mark was made by him at the time or at all. Complainant stated that it was made at the time alleged, and Becker says that he does not remember putting his cross to the contract. In the view we take of the matter, however, this fact is not material.

From the evidence, however, it appears that Ghierine & Brust proceeded with the litigation and succeeded in procuring a settlement in the amount of $3,750. This sum was paid to Becker by the defendant, Eastern Automobile Insurance Underwriters, and a release obtained from him in favor of Dormuralt Motor Sales, Inc. for damages sustained by reason of the negligent operation of the truck of the Sales Company.

It is charged in the bill of complaint that the defendant Dormuralt Motor Sales, Inc. is insolvent and that, by reason of the service by the complainant of her lien notice, the Eastern Automobile Insurance Underwriters, defendant, as well as the Dormuralt Motor Sales, Inc., became liable to her for the amount of her attorney’s fee, by reason of the settlement, without her knowledge and consent. The decree was a joint decree entered against both defendants. The rule at law is that a joint judgment, which is entered against all of the defendants, if void as to one, is void as to all. Singer v. Cross, 257 Ill. App. 41. This proceeding was before the chancellor in the superior court on a bill of complaint and answer thereto, and the appeal is from the decree entered in the proceeding. The action, however, is not an equitable action but is a statutory action. The enactment creating the lien provided that it might be enforced in any court of competent jurisdiction on five days’ notice to the adverse party. While the order of the trial court is entitled a decree, it is in no respect, in our opinion, different from a judgment and should be governed by the same rules as those applicable to judgments. In the case of a decree this court would affirm as to one or more defendants and reverse as to others, but, in the case of a judgment, it is considered as an entirety and not separable.

The Supreme Court of this State in the ease of Standidge v. Chicago Rys. Co., 254 Ill. 524, in its opinion says:

“None of the above cases are in point here. They all recognize the power of the legislature to provide other methods of enforcing a lien than by a resort to a court of equity. The Attorneys’ Lien Law contains the following provision: ‘On petition filed by such attorneys or their clients any court of competent jurisdiction shall, on not less than five days’ notice to the adverse party, adjudicate the rights of the parties and enforce such lien in term time or vacation.’ Without this language in the act, undoubtedly a court of equity would be the only court that would have jurisdiction to enforce such liens. The legislature must be presumed to have used the language above quoted for some purpose. If appellant’s position is sustained and a court of equity is the only court that has jurisdiction to enforce the lien, then the clause above quoted has no effect. The clause above quoted was manifestly used by the legislature to confer jurisdiction to enforce such lien upon courts that-could not exercise it without such provision. The provision for enforcing the lien by petition and on five days’ notice strengthens the conclusion that the legislature intended this jurisdiction should be exercised by law courts as well as courts of equity. The bill in chancery and the declaration at law are usually the pleadings by which those respective jurisdictions are invoked, while a ‘petition’ is common to both courts.”

The right is a statutory, and not an equitable one, and, while it may be heard in a court of equity, it can also be heard in a court of law and is not controlled by principles of equity pleading. It is insisted, however, that by pleading jointly to the merits by their answer, the question of misjoinder is waived.

The question is, however, whether or not there are any allegations in the bill, or proof on the trial justifying a decree against the defendant, Eastern Automobile Insurance Underwriters. If there is not, then it becomes the duty of this court to reverse as to that defendant, and this affects the entire judgment or decree.

Upon the trial of the cause it appears that notice had been served upon the defendant, Eastern Automobile Insurance Underwriters, to produce the policy of insurance. The policy was not produced, but testimony was taken showing that these policies were not preserved longer than a year after an adjustment had been made thereunder. It is insisted that this court should presume that the policy contained provisions which would entitle the plaintiff- to recover in this proceeding. No such presumption, however, can be indulged in. Upon failure to produce the policy, counsel for complainant had the right to produce secondary evidence, or counsel could have served a subpoena duces tecum before the beginning of the trial. Consequently, there is nothing in the record showing the terms of the policy nor is there.anything in the record showing upon what the liability of the defendant, Eastern Automobile Insurance Underwriters, is predicated, except the bare fact that it conducted the proceedings which resulted in a settlement with Becker.

We are referred to the case of Meyer v. Iowa Mutual Liability Ins. Co., 240 Ill. App. 431. An examination of that case, however, discloses the fact that the judgment of this court was based on a provision of the policy which expressly provided that the judgment creditor should have a right of action against the insurance company in the event the judgment was not paid by the insured, or execution against the insured returned unsatisfied. As a general proposition it may be said that a stranger to a contract has no such interest therein as would entitle him to an action on said contract. Bain v. Atkins, 181 Mass. 240.

As far as we have been able to ascertain, the right to recover against an insurance company by a third person has only been recognized where provided by statute or by the express terms of the policy. It may be also stated that certain rights under the policy or claims arising thereunder have passed by assignment. In some cases the courts have recognized the right of persons to reach the unpaid money of . the insured in the possession of an insurance company. Aside from these exceptions, we have been unable to find any cases which recognize the right of a stranger to the agreement to look to an insurance company for the payment of a claim. We have been referred by counsel to no cases, but the rule has been recognized by this court in the case of Kinnan v. Fidelity & Casualty Co., 107 Ill. App. 406. The court in its opinion in that case, said:

“The injury to appellant did not render the amount, or any portion thereof, for which appellant, by reason of said injury, might recover a judgment against his employer, Griffith Hunter, a trust fund for the benefit of appellant, or a thing upon which he had any right or claim.

“The obligation of appellant’s employer, because of his injury, was entirely to him. The obligation of the Casualty Company, under its policy, was entirely to Griffith Hunter and no one else. ’ ’ To the same effect see Bowers v. Gates, 201 Mich. 146; Eberlein v. Fidelity & Deposit Co., 164 Wis. 242; Hollings v. Brown, 202 Ala. 504; Van Reen v. Aetna Life Ins. Co., 209 Fed. 691.

The Attorney’s Lien Act, Cahill’s St. ch. 13, 13, provides that the attorney shall have a lien upon notice upon the party against whom their clients may have suits, claims or causes of action. In the case at bar Becker had no claim, suit, or cause of action against the Eastern Automobile Insurance Underwriters, but only against the Dormuralt Motor Sales, Inc. We are unable to agree that the Attorney’s Lien Act should be extended so as to include others than those expressly named therein. The lien being a creature of statute must follow it strictly. Dreyfuss v. Freud, 209 Ill. App. 345; Mayer v. Yellow Cab Co., 247 Ill. App. 42. If Becker had no claim, then it must follow that complainant could have no greater rights. It may be that upon a retrial of the cause, a liability of the defendant, Eastern Automobile Insurance Underwriters, might be established growing out of the policy. From the evidence it appears that notice was served on both defendants. There is sufficient evidence in the record to justify a finding against the Dormuralt Motor Sales, Inc. The decree being a joint decree, however, it will be reversed and the cause remanded for a new trial.

For the reasons stated in this opinion, the decree of the superior court is reversed and the cause remanded for a new trial.

Decree reversed and cause remanded.

Hebel, P. J., and Friend, J., concur.


author: Mr. Justice MoSurely

text:
    Oscar F. Mayer, Appellee, v. William M. Collins, Impleaded with Dario L. Toffenetti, Appellant.
    Gen. No. 35,411.

      Opinion filed October 26, 1931.
    Rehearing denied November 6, 1931.
    Rosenthal, Hamill & Wormser, for appellant; Lessing Rosenthal, F. Howard Eldridge and George W. Gale, of counsel.
    Mayer, Meyer, Austrian & Platt and Schein & Beckwith, for appellee; Carl Meyer and M. Paul Noyes, of counsel.
   Mr. Justice MoSurely

delivered the opinion of the court.

Complainant, who is the lessee of defendant Collins under a 99-year lease expiring in 1991, filed his bill seeking to have the defendant enjoined from terminating or forfeiting the lease. Upon application the chancellor granted an interlocutory injunction to this effect upon the complainant filing a bond in the penal sum of $75,000, which bond was duly filed. From this order defendant appeals.

The premises involved are numbered * 57-59 West Randolph street, Chicago, and prior to June 1, 1931, were improved with a four-story building erected shortly after the Chicago fire in 1871. Defendant’s brief goes largely to the merits of the controversy and an agreement by us with his contentions would virtually decide the issues presented by the bill and answer.

At the outset, it cannot be too strongly stated that in an appeal from an interlocutory order this court does not necessarily determine the rights of the parties upon the merits of the cause, but only determines whether the interlocutory order was probably necessary to preserve the equitable rights of the parties. While occasionally this may involve a consideration of whether the bill is obnoxious to a general demurrer, yet the essential test should be the probabilities of the complainant having a case and a consideration of the situation presented, balancing the practical advantages against the disadvantages of maintaining the status quo until final disposition. Among many cases so holding are Love v. Love, 145 Ill. App. 150; McDougall Co. v. Woods, 247 Ill. App. 170; People v. Standidge, 333 Ill. 361. In this latter case the court said that: “An interlocutory injunction is merely pro-

visional in its nature. . . . Its object is to preserve the subject in controversy, but it is not decisive of the cause upon the merits.” See also Fishwick v. Lewis, 258 Ill. App. 402; Kuhl v. Clark, 261 Ill. App. 491. In Pago v. Village of Melrose Park, 161 Ill. App. 18, it was said that injunctions pendente lite will be granted “If it appears that less harm from this course will result to the enjoined party if he should be finally victorious than would accrue to the complainant from the absence of the injunction if he were the winning party. ’ ’

In Young v. Federal Union Surety Co., 183 Ill. App. 278, the opinion quoted from City of Newton v. Levis, 79 Fed. 715: “When the questions to be ultimately decided are serious and doubtful, the legal discretion of the judge in granting the writ should be influenced largely by the consideration that the injury to the moving party will be certain, great and irreparable if the motion is denied, while the inconvenience and loss to the opposing party will be inconsiderable and may well be indemnified by proper bond if the injunction is granted. ’ ’

Defendant’s principal assertion is that whatever rights the complainant may have can be as well asserted and protected in a court of law as in a court of equity. To determine this it is necessary to refer somewhat briefly to the allegations of the bill.

Complainant became the owner of the leasehold estate in 1910 and at the same time purchased the building. . In 1921 the defendant Collins took from complainant a ten-year sublease of the land and building and, in turn, made a sublease of the premises to a Chinese restaurant which occupied the property until about April 28, 1931. It is alleged that when this latter subtenant moved out, the building was left in a very bad and unsafe condition. The bill states in great detail and at length the particulars of the condition of the premises and asserts that it was the duty and obligation of defendant Collins, then the lessee of the complainant, to keep said building in good repair and in a safe, clean and wholesome condition and in conformity with all the regulations and requirements of the City of Chicago, but that defendant failed in this respect. Among other items, in which it was alleged that the building was unsafe, are that the basement walls were unsound and incapable of sustaining the loads per floor as required by the ordinances of the City of Chicago; that the wooden joists were overstressed; electric system obsolete; heating plant unsafe; steam piping exposed; and in very many other respects the alleged unsafe and deplorable condition of the premises is set forth.

In 1925, defendant Collins became the owner of the fee and the lessor of complainant.

Shortly prior to the expiration of the ten-year sublease to defendant, complainant negotiated a new sublease expiring in 1991 with Dario L. Toffenetti. By its terms Toffenetti was obligated to expend not less than $60,000 in improving, repairing and remodeling the building in order to put it in good condition and repair, for the purposes of a restaurant business to be conducted in the building, which was to be completed by November 1, 1931, fully paid for and free from liens, all in accordance with plans and specifications submitted to complainant.

Complainant was advised by competent architects and engineers that the only portion of the building having any value were the side walls; that reconstruction of the building piecemeal was not practical, and that unless complainant was permitted to erect a new building except for the side walls, he would not be able to comply with the terms of the lease to maintain upon the premises a building worth not less than $35,000.

Complainant wrote to the defendant to the effect that the proposed improvements would give as security for the rents a building in first class condition and repair and worth at least $60,000, instead of the $35,000 building called for by the lease, and offering to provide defendant with ample security as a guaranty for the payment of ground rent, taxes, etc., during the period of building operations and for the performance of all the covenants of the lease including the completion of the improvements fully paid for and free from liens. Defendant asked for an opportunity to examine the plans and specifications, which was granted, and thereafter wrote complainant rejecting his offer and stating he would not give his consent to the changes proposed. Thereafter the alterations were commenced on June 1, 1931, and, it is asserted, have been in progress ever since. June 17, defendant served notice on complainant, reciting that the building was then wholly destroyed and demolished, which was a violation of one of the material and important terms of the lease, and in consequence defendant had elected to determine the lease and complainant was notified to quit the premises and deliver possession within ten days. Following receipt of this notice the instant bill was filed and a motion made for a preliminary injunction, which after one or two continuances was granted upon the filing of a bond for $75,000, which was approved and filed.

A reading of the bill apparently shows equitable considerations which would not be available to complainant in an action at law. Among these are the alleged breach by defendant of his covenant while he was a sublessee in respect to keeping the building safe and in good repair; the unsafe condition of the building resulting from the occupancy by defendant’s subtenant, the Chinese restaurant; the advice of the architects and engineers of the necessity for a complete reconstruction of the building and the impracticability of piecemeal reconstruction; the execution of a sublease by complainant to Toffenetti obligating him to reconstruct the building by November 1, 1931, costing not less than $60,000, and the offer of ample security guaranteeing to defendant the payment of all rent and taxes and the completion of the building free from liens.

It is a well recognized principle that it does not follow that, because a remedy at law is afforded in a case, equity will not also take jurisdiction of the same state of facts. If the remedy in equity is more adequate because of special circumstances in the situation, the jurisdiction of equity will be sustained. Warfield-Pratt Howell Co. v. Williamson, 233 Ill. 487. In Chapman v. American Surety Co., 261 Ill. 594, it was said: “No branch of equity jurisdiction is more frequently invoked. The use of injunctions to stay actions at law was substantially coeval with the establishment of chancery jurisdiction. That jurisdiction was largely built up through the instrumentality of injunctions in restraining the prosecution of legal actions where the aid of chancery was sought because the equities of the case could not be considered in the common law action.” And, further, that equity jurisdiction is for the purpose of prohibiting litigants from resorting to legal jurisdiction, “because the controversies involve equitable features which can only be fully and finally determined in a tribunal having equitable jurisdiction.” There are many other similar cases.

We cannot agree with the proposition advanced by defendant that a court of equity will not grant relief from the forfeiture of a lease for a cause other than the nonpayment of money in the absence of fraud, etc. In Illinois Merchants Trust Co. v. Harvey, 335 Ill. 284, it was argued that because of certain sections of the Landlord and Tenant Act, Cahill’s St. ch. 80, equity could not enjoin a threatened forfeiture. The Supreme Court did not agree with this, saying: “The source of the right in the landlord to declare a forfeiture is not important. ... We are unable to see any difference between a right given by statute and one arising from any other source. The basis of the relief is that the defendant is seeking to exercise a right which he has but which he should not be permitted to exercise.”

Many other points are presented which go to the merits, which upon the present appeal it is not necessary for us to determine. We can only repeat that upon this appeal we are called upon to determine only whether the party probably is entitled to the relief sought and whether the preliminary injunction was granted as necessary to preserve the rights of the parties in statu quo until a hearing can be had upon the merits of the cause. Upon the showing made we cannot say that the granting of the temporary injunction was an abuse of the discretion lodged in the chancellor, and it is therefore affirmed.

Affirmed.

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


author: Mr. Justice Wolfe

text:
    John W. Murphy et al., Appellants, v. Ward L. Candor et al., Appellees.
    Gen. No. 8,289.

      Opinion filed October 20, 1931.
    Clarence Shoemaker and Marsh, Lewis & Thompson, for appellants; Burrell B. Barash, of counsel.
    Church & Califf and Walter L. Mannon, for appellees.
   Mr. Justice Wolfe

delivered the opinion of the court.

This is a suit in equity brought by the appellants against the appellees, in the circuit court of Mercer county, on November 20, 1929. The only assignment of error is the sufficiency of the bill of complaint raised by a general and special demurrer filed to the bill which was sustained by the lower court. On that date the appellants, and name of a person now deceased, which appears as an appellant by his administrator, were stockholders of the Mercer County State Bank, an Illinois' corporation conducting a banking business in the City of Aledo, in Mercer county, Illinois. It in nowise appears in the record for what period of time the appellants were such stockholders prior to the filing of the bill, except inf erentially from the allegations of the bill. The appellees, including the name of one deceased person, whose executor of his will appears as a defendant and an appellee, were directors of the bank; the bank also appears as a defendant and an appellee.

Expressed in general terms, the purpose of this suit is to secure a money decree, or judgment, against the appellees for their alleged negligence in conducting the affairs of the bank. Before stating the substance of the bill and the reasons urged in support of the general and special demurrer, which would be the usual and logical method of presenting the issues involved, it is deemed advisable to state now that a suit of this character must be brought, prosecuted and maintained for and on behalf of the corporation — in this case, the Mercer County State Bank. The appellants, as stockholders of the corporation are given no right either in law or equity, to sue for, or on their own behalf individually or as a group, for redress against the directors of the corporation for alleged negligence of the latter in the performance of their duties as such directors. The wrong, if any, has been done, in the theory of the law, to the corporation. The stockholders are members of the corporation and they cannot step out of the corporation and bring an action or suit, either piecemeal or otherwise, to recover damages to them, or because of depreciated value of their shares of stock of the corporation, alleged to be caused by the negligence of the directors of the company. The right of action is in the corporation. This principle of law is well established, salutary and based on sound rules and reasons controlling corporate management and government and as a protéction for creditors of the corporation. (Bruschke v. Der Nord Chicago Schuetzen Verein, 145 Ill. 433; Eldred v. Ripley, 97 Ill. App. 503; Smith v. Hurd, 53 Mass. 371; Brinckerhoff v. Bostwick, 88 N. Y. 52; Craig v. Gregg, 83 Pa. St. 19; Allen v. Curtis, 26 Conn. 456; Evans v. Brandon, 53 Tex. 56; Dorrah v. Pemiscot County Bank, 213 Mo. App. 541, 256 S. W. 560.) The money recovered in such a suit belongs to the corporation and not to.the stockholders. Evans v. Brandon, supra; Dewing v. Perdicaries, 96 U. S. 193; Williams v. Neville, 98 Miss. 268, 53 So. 594; Smith v. Poor, 40 Me. 415; Carter v. Ford Plate Glass Co., 85 Ind. 180.

With this principle in mind, we will give attention to the allegations of the bill. We do not purpose to give a summary of all of the allegations contained in the bill, and to avoid confusion and multifariousness in discussion, certain charges in the bill will be first disposed of. The bill alleges that the defendant directors, “failed to direct the cashier of said bank in the management of the bank’s assets, thereby causing losses which resulted in its insolvency to the extent of more than $60,000.00.” That this purported charge is a mere conclusion of the pleader is obvious, and plainly subject to the special demurrer that the bill lacks particularity of the acts complained of.

The bill also alleges the duty of the directors not to make loans of the funds of the bank “in excess of the limitation fixed by the statute- of the State of Illinois.” Yet said directors “negligently, carelessly and recklessly made or permitted by the officers of said bank the making of loans to many and divers persons' where the amount loaned by said bank to the said persons was in excess of the amount that could be loaned by said bank under the laws of the State of Illinois. By reason whereof a loss of $60,000.00 was lost to said bank, and constituted losses to complainants as stockholders of the said bank.” We are of the opinion that this charge is also a mere conclusion of the pleader. Former section 10 of the Banking Act of this State, Cahill’s St. ch. 16a, If 10, and which was in force during the major portion of the time the acts complained of were committed, namely, from 1920 to 1925, specified and defined the conditions and circumstances when a loan of a bank, under the provisions of the section, was excessive. No facts appear in the bill showing the existence of such conditions or circumstances, or a suggestion of them. The bill sets forth not a single transaction from which it appears that the statute had been violated by the directors, or any excuse for not doing so although the appellants as stockholders had access to the books and papers of the corporation. Section 10 then, as now, placed the directors of a bank -under heavy liability for making loans which the statute by its terms declares excessive. Certainly no director should be compelled to submit to trial without further information than as set forth in this bill. Before transactions or loans, out of a multitude made in the course of several years, should be called into question, the bill should clearly state the transactions complained of so that he could, with some degree of certainty, prepare for his defense; although the suit may in general ask for an accounting.

As before stated, we shall not set forth the allegations of the bill, in toto. It suffices to say that the appellants strongly urge that the bill state a cause of action against the appellees by its allegations that the said directors made loans to persons, naming them, who were insolvent and not entitled to the credit given them by the appellees; that snch persons were notoriously known in Aledo to be insolvent and not entitled to such credit.

The bill states that the bank has been insolvent for many years, indeed, insolvent from shortly after its incorporation in 1920; that in 1923, the capital stock of the bank was reduced from $130,000 to $65,000. Some of the appellants own % share, others 2% shares, etc., up to 10 full shares of stock. The appellants took no interest in the affairs of the bank except to vote for the directors thereof, the appellees herein being at all times a majority of such directors. The appellees live in Mercer county, where the bank conducted its banking business. These facts are striking and have given this court cause for serious reflection. But we let that pass, content with the statement made in the case of Wallach v. Billings, 277 Ill. 218, 235, “They,” the stockholders of a bank, “have something else to do besides drawing dividends.”

The bill alleges that, “Tour complainants further represent that on or about December 7, 1925, at the direction of the State Auditor of the State of Illinois and his agents, said defendant Directors were required to pay to said Mercer County State Bank the sum of $60,000.00 by reason of their negligent, careless and inefficient management of said bank, and to enter into a certain agreement with the Aledo State Bank of Aledo, Illinois, for the transfer of the assets of the Mercer County State Bank to the said Aledo State Bank. At the time of said transfer, and a long time prior thereto, the assets of said Mercer County State Bank were largely worthless, and that said Mercer County State Bank at that time, and for a long period of time prior thereto, had been insolvent. ’ ’

It would seem, therefore, that the only asset of any value which the bank possessed on December 7, 1925, was its right of action against the directors for negligence. To reimburse the bank for that negligence the directors paid into that bank the sum of $60,000 which is the exact amount which the appellants now claim is due the bank for the loss sustained by the bank because of such negligence. These appellees, who own about one-fifth of the capital stock of the bank, now seek a judgment against the directors for another $60,000 for loss to the bank alleged in the bill to be sustained by that negligence. The appellees must show that they are within their rights in an attempt to bring about such a result. In fairness to appellants it should be stated that they brought the suit on behalf of themselves and all other persons similarly situated who care to join in the suit. The amount paid by the directors to the bank for their negligence is almost equal to the total capital stock of the bank. Each stockholder of' the bank was liable, for the purpose of raising a fund for creditors of the bank, up to an amount equal to the par value of his stock. Suits against directors for negligence, it is well known, are difficult to successfully maintain; directors are not liable for slight negligence, nor for errors of judgment while acting in good faith; some consideration must be given to the view that directors of banks must not be held to a too high degree of care; otherwise responsible persons will not assume that position. Illegal acts, fraudulent practices, ultra vires acts which cannot be ratified by the majority of the stockholders, or the profiting personally by the directors because of their negligence, are of a different character, and not before this court. We do not attempt to excuse any man for his acts for which the law holds him accountable; the alleged acts of the directors complained of in the bill are not sanctioned by this court and it cannot be said that this court holds that directors of a bank, or any other corporation, can negligently manage their company and escape liability to the company, and through it, to its stockholders.

The alleged negligent acts of the directors of the bank were inter vires not alleged to be fraudulent, illegal, or resulting in personal gain to the directors. That a majority of the stockholders, acting in good faith, could have approved, or now ratify the payment of $60,000 by the directors to the bank in settlement of their liability to the bank for their negligence, seems to us undisputable. (14 O. J. page 850.) As is said in Venner v. Chicago City Ry. Co., 236 Ill. 349: “And in Purdy’s Beach on Private Corporations (vol. 2, sec. 681, p. 998) it is said: ‘If the thing complained of is a thing which, in substance, the majority of the members are entitled to do, or if something has been done irregularly which the majority are entitled to do regularly, or if something has been done illegally which the majority are entitled to do legally, there can be no use in having a litigation about it, the end of which is only that a meeting has to be called and then ultimately the majority gets its wishes. ’ ” (Hawes v. Oakland, 104 U. S. 450.) In Continental Securities Co. v. Belmont, 206 N. Y. 7, 99 N. E. 138, it is said: “If the subject matter of the stockholder’s complaint is for any reason within the immediate control, direction, or power of confirmation of the body of stockholders, it should be brought to the attention of such stockholders for action, before an action is commenced by a stockholder, unless it clearly appears by the complaint that such application is useless.”

There is no allegation in the bill that the payment of $60,000 by the directors to the Mercer County State Bank in payment of their liability for their said negligence was not or is not satisfactory to the majority of the stockholders of the said bank; nor is there an allegation in the bill that the majority of the stockholders of the bank in meeting, or otherwise, have either approved or disapproved of any payment or settlement, or compromise, of the directors of the hank for their negligence by the payment of the $60,000; no allegation that a meeting of the majority of the stockholders could or could not be called to approve or disapprove of the payment of that sum to discharge the liability of the directors for their liability in that behalf; nor that such a meeting would be useless; no allegation that a majority of the stockholders have acted fraudulently, illegally or oppressively; no allegation that the defendant directors own a majority of the stock. In short, nothing is alleged to indicate that the majority of the stockholders of the bank, who are the ultimate ruling body, do not regard the liability of the directors to the bank discharged by the payment of the $60,000 to the bank. The bill, as it stands, calls upon a court of equity, without the slightest intimation of the will of the majority of the stockholders, no fraud, illegality or ultra vires acts being alleged, to interfere with the inter vires acts of the corporation. This a court will not do.

The defendants in this case brought their suit in a court of equity, but their cause of action is based upon a tort or negligence of the directors of the bank. The executor of one of the deceased directors is made a party to the suit. The defendants by their demurrer challenged the right of the complainants to maintain their action and claim that there is a misjoinder of parties. At common law, tort actions abated at the death of the tort-feasor and did not survive. The common law rule prevails in this State unless it is otherwise provided for by statute. (Shedd v. Patterson, 312 Ill. 371.) We know of no statute that would justify the complainants in making an executor of the estate of one of the alleged joint tort-feasors a party to this action. We think it was proper for the court to sustain the demurrer to the bill on that ground.

This suit is based solely upon the right of a stockholder in a defunct bank to sue the directors for the fraudulent management of the same. An entirely different situation exists in reference to depositors and other creditors of the bank. They should, and do, have a right of action against the directors and officers of a bank for their negligence and fraudulent use of the funds intrusted to them if a loss has been incurred to such creditors and depositors by such negligence.

The bill does not show that the appellees are within their rights in bringing this suit and they have not shown any right on their part to bring this suit on behalf of the corporation. The demurrer, according to legal principles, and we believe with justice, was correctly sustained. Judgment of lower court affirmed.

Affirmed.


text:
    Charles W. Gelino et al., Appellants, v. Fred O. Swannell et al., Appellees.
    Gen. No. 8,326.

      Opinion filed October 20, 1931.

      A. L. and C. M. Granger and Gower, Gray & Gower, for appellants.
    Hunter & Minor, for appellees.
   Mr. Justice Wolfe

delivered the opinion of the court.

This is an appeal from the circuit court of Kankakee county. The bill filed by the complainants averred in substance that Fred O. Swannell et al. were the owners of certain real estate in the City of Kankakee, on which there was located a three-story building; that on February 3, 1913, the appellees rented the premises to the appellants for a term of 20 years; that the lease gave the appellants the privilege of an extension of 10 years; that the premises were to be used as a department store.

The bill further alleges that the appellants entered into .possession of the premises under their lease and spent more than $40,000 in improving the property; that they conducted a department store as provided in the lease until July, 1927; that they paid the rentals and fully complied with the terms of the lease. The lease contained a clause prohibiting the lessees from subletting or assigning the lease without the consent of the appellees, with a proviso as follows: “the lessee will have the privilege of subletting or assigning the lease for the conduct of the same or a similar line of business, provided the lessors are assured of the responsibility and character of the assignee and that the lessors will be reimbursed by the lessee for any additional charges for insurance during the life of the lease, caused by such subletting or assignment of the lease to others.”

For the purpose of carrying on their business the appellants in June, 1927, caused to be incorporated “Gelinos Incorporated.” The appellants were the principal owners of the new corporation, and with the knowledge and consent in writing of the appellees the appellants sublet the premises to the G-elinos Incorporated at an increased annual rental of $5,000. The corporation entered into possession of the premises and fulfilled all obligations of the lease. The appellants continued to pay the rentals to the appellees, who accepted and retained them until November 15, 1928. On that date the building was partially destroyed by fire which damaged the merchandise and rendered untenable a large portion of the building.

The lease provided that the lessors maintain insurance against fire for 80 per cent of the value of the buildings, the proceeds in the event of loss to be available to the lessors for the restoration of the premises to the condition pertaining before, and if the restoration extend beyond 30 days, as a consequence, any portion of the premises be not available for use by the tenant, a proper abatement of the rent to be made to the lessee for such excess of the time over 30 days for the portion of the premises untenantable. The purpose and meaning of this clause, the bill averred, was to keep the premises insured for appellants’ benefit and to make the appellees trustees of the proceeds of the insurance to apply the same to the restoration of the building.

. The bill further alleges that the appellants conducted a department store for a great number of years and had -spent large amounts in advertising and by reason thereof had acquired a valuable good will which would be lost to them if their business was discontinued. The appellants, therefore, immediately after the fire called upon the appellees and urged them to make available the insurance money as early as possible. They relied upon the appellees to do so, and spent -large sums in cleaning up the premises, and making temporary repairs so they could continue the business.

The bill alleges that the appellees did not make available the insurance money within a reasonable time, but in pursuance of a conspiracy to deprive the appellants of their then valuable lease, engaged in a pretended controversy with the insurers of the building relative to the compromise of the insurance; that this controversy continued for 10% months before the matter was adjusted and before the appellees commenced to restore the building. Upon information and belief the appellants charged the appellees with negotiating with strangers to lease the premises; that despite the large expenditure by the appellants for temporary repairs the premises were inadequate and unfit to be occupied for business purposes during the 10 months’ period, and were not more than 30 per cent tenantable during that time; that as a result thereof the defino Company suffered large losses and was finally thrown into bankruptcy ; that by reason thereof the appellants lost their entire investment as well as the $5,000 per year additional rent; that the sublease was at once forfeited to the appellants and the appellants re-entered the premises under its terms.

The appellants further averred that the company’s losses during the 10% months’ period were so heavy that appellants realized that the business could not continue, and in an effort to save the-business, the appellants sought to dispose of their lease to others. As a result McLelland Stores Company, Lock & Kuehl, W. T. Grant Co. Stores, all averred to be responsible firms, and all of good character and engaged in the same or similar fines of business as appellants had been engaged when the lease was made, made offers for the premises. The bill averred that one of these parties had guaranteed a minimum annual rental equal to the rents reserved in the original lease with a percentage of the gross profits added. The others guaranteed a minimum rent in excess of the rent reserved in the original lease.

The appellants, having accepted certain of the proposals made subject to appellees’ consent, communicated them to appellees and assured them of the re1 sponsibility and character of the- offerors, but appellees notwithstanding refused their consent to the occupancy of the premises by any of these persons, giving as their reason that they had the right to deny occupancy to chain stores or to persons whom they classed as objectionable because of their nationality. Ten and one-half months after the fire the work of restoration was begun, but the appellants did not expend all of the insurance money to restore the building. As a result the building was not reconstructed as before the fire and Avas not suitable for the purpose of the lease and in numerous stated particulars, was inadequate and untenantable for the purposes for which it was leased. All this diminished the rental value at least $100 per month, by reason whereof it was alleged the rental should under the terms of the lease be abated. The parties were unable to agree on a proper abatement of the rent.

The bill further alleges that on February 3, 1930, while the appellants were in possession of the premises the appellees forcibly re-entered the same and expelled the appellants therefrom, claiming a forfeiture of the lease because of nonpayment of $1,672.78, which they claimed was additional rent for the period of partial occupancy of the building. The bill averred that the appellants had performed all of their undertakings in full compliance with the terms of their lease, and aver a Avillingness “to do, perform, or pay to the appellees whatever the court may order in equity and good conscience” under the circumstances.

The appellee prayed for general and specific relief. The defendants filed a general demurrer to the bill, which was sustained by the court and dismissed the bill for want of equity. The original complainants bring the case to this court on appeal for review.

We are of the opinion that the bill states a good cause of action. It asks for a court of equity to determine what, under the circumstances, would be an adequate rental on the premises during the time that the building was partially untenantable on account of the fire. The general demurrer admits the facts well pleaded and taking the allegation of the bilffto be true, the complainants are entitled to an adjustment of the rent. We do not see how a court of law could give ade(píate relief to the complainants in this matter. The allegations of the bill show an effort on the part of the owners of the premises to prevent the lessee from complying with the terms of their lease, and to compel a forfeiture thereof. Under the lease the appellants have a right to an additional 10 years’ occupancy of the premises and the bill alleges a number of distinct matters which entitle the appellants to a specific performance of the lease.

The insurance clause which was inserted in the lease was for the sole benefit of the appellants. The only interest that they could have in this insurance money would be to have the owners of the premises restore the building to its condition previous to the fire. They had the right to demand that this, or as much as was necessary of the fund derived from the insurance be used to rebuild the building. They had no right or title to the money, but they did have the right to compel its use in the repair work. If the owners were to put the building in as good condition as it was prior to the fire, the appellant had a right to an accounting of the proceeds of the insurance. If not expended for that purpose they could compel the owners to use as much of the insurance as was necessary to fully restore the building. The bill alleges that the building was not fully restored, and all of the insurance money was not used for that purpose. We think that the bill stated a good cause of action, and the appellants entitled to equitable relief‘under this charge in the bill.

It is charged in the bill that appellants notified the appellees that they had procured subtenants who were engaged in the same kind of business as the appellants had conducted at the time of the signing of the original lease, and that said subtenants were financially reliable ; but, that the appellees refused to give their permission to the assignment of the lease for the reason that they were opposed to the nationality of the parties, and that they were opposed to chain stores. It is argued by the appellees that this does not state a cause of action; that it is a conclusion of the pleader, and does not state facts, but should state more facts about their business, financial standing, etc., so that the appellees could judge of the responsibility of the proposed subtenants. We are.of the opinion that the facts as stated are sufficient to fully apprise the appellees of the charge in the bill and are not the conclusions of the pleader. ' 1

The bill charges specific grounds on which the appellees refuse to permit the assignment, and they cannot, on a general demurrer to the bill, be heard to say that this is not the reason that they refused to consent to the assignment of the lease. (Alexander v. Boyle, 68 Ill. App. 139, 140; Udell v. Slocum, 56 Ill. App. 216, 220.) Under the terms of the lease the dwners of the premises had no right to refuse to permit an assignment of the lease or the subletting of the property to anyone on purely racial grounds, or their dislike to a particular method of conducting a business, unless they were not of good moral character, or were not conducting a business similar to that of the appellants, or were not financially responsible.

We are of the opinion that this bill states facts sufficient to give a court of chancery jurisdiction in this case, and having been acquired it has the power to and will adjust all the legal and equitable differences between the parties growing out of the subject matter. (Thomas v. Thomas, 250 Ill. 354; McIntyre v. MeIn tyre, 287 Ill. 544.) It is our opinion that the chancellor erred in sustaining the demurrer to the bill, but should have overruled it and required the owner to answer the same.

The case is hereby reversed and remanded to the circuit court of Kankakee county with directions to overrule the demurrer, and to enter a rule on the defendants to answer the bill.

Reversed and remanded with directions.


text:
    Charles E. Moore, Appellee, v. Dorothy Martin Braun et al., Appellants. Dorothy Martin Braun and Ada Martin Wintermann, Appellants, v. Charles E. Moore, Appellee.
    Gen. No. 8,373.
    Opinion filed October 20, 1931.
    Connelly, Walker, Searle & HttbbIrd, for-appellants; Franklin P. Searle, of counsel.

      Marshall & Marshall, for appellee.
   Mr. Justice Wolfe

delivered the opinion of the court.

This is a proceeding in chancery to construe the will of Gilpin Moore, who died, a resident of Bock Island county, Illinois, on February 9, 1900. His will, a construction of which is sought in this litigation, is as follows:

“I, Gilpin Moore, of the City of Bock Island in the County of Bock Island in the State of Illinois, being of sound mind and memory do make, publish and declare this my last Will and Testament in the manner following, to-wit:

“First: It is my will that all my debts be first paid as soon after my decease as practicable.

“Second: That there shall be set off to my beloved wife, Jennie B. Moore, her rights in my real estate and that she shall be paid her rights in my personal estate.

“Third: I give, devise and bequeath one-fourth of the remainder of my estate to Truesdale L. Moore as Trustee to have and to hold the same in trust for the benefit of my son, Charles Moore, with instructions to said Trustee to invest such portion of my estate so coming into his hands and preserve the same using from the income of the same and if necessary from the principal thereof for the proper support and maintenance of my said son, and he shall do this under the control and direction of the Court of Bock Island County having competent jurisdiction of such matter, to which he shall make an annual report of his acts and doings as such Trustee.

“He shall also give a bond with good security in such sum as the said Court shall fix and determine for the faithful performance of his duties as such Trustee.

“And I do hereby direct that in case that my said son Truesdale L. Moore cannot serve as such Trustee or dies in such case I do hereby direct that the said Court shall appoint a Trustee in his place and stead, to carry out said Trust.

“Fourth: The remainder and residue of my estate both real and personal and mixed and wherever situated shall be divided into three parts and I give, devise and bequeath one part to each of my remaining, children, viz.:

“One share to my son Truesdale L. Moore of Kansas City, Missouri; one share to my beloved daughter, Mrs. Ada Martin of Davenport, Iowa, and one share to my beloved daughter, Anna Moore, to have and to hold unto them and their heirs forever.

“Fifth: I do hereby nominate and appoint my beloved daughter, Mrs. Ada Martin and my beloved wife, Jennie B. Moore, Executrices of this my last Will and Testament.

“In Witness Whereof I have hereunto set my hand and seal this 11th day of November, A. D. 1898.

Gilpin Moore (Seal) ”

This will was admitted to probate in the connty court of Rock Island county on March 7, 1900. Truesdale L. Moore, the trustee nominated in the will, having declined to accept the trusteeship, on or about October 1, 1900, the circuit court of Rock Island county appointed one Wellington H. Martin as trustee under said will., The executors of the estate of Gilpin Moore, deceased, turned over to him a fourth of the assets of the estate remaining after the payment to the widow of her share. He continued to act as trustee until his death in December, 1927, when the Peoples Savings Bank and Trust Company of Moline, Illinois, was appointed by the circuit court as his successor in trust.

The beneficiary, Charles E. Moore, is still living. The Peoples Savings Bank and Trust Company of Moline continues to act as trustee under direction of the circuit court of Rock Island county. The trust estate administered by it is composed entirely of personal property, and the present value of the trust estate is in the vicinity of $350,000.

At his death Gilpin Moore left surviving him as heirs his widow, Jennie B. Moore, and four children, Charles E. Moore, Truesdale L. Moore, Adah Martin and Anna Moore. Ada Martin Wintermann and Dorothy Martin Braun, the appellants here, are the daughters of Adah Martin, and by virtue of the will of their mother and a declaration of trust executed by Wellington H. Martin, their father, have succeeded to the rights of their mother in the trust estate in question here.

The controversy in this case arises between Charles E. Moore, the appellee here, on the one hand, and Ada Martin Wintermann and Dorothy Martin Braun, appellants on the other hand, who made conflicting claims as to the true construction of the will of Gilpin Moore, and the controversy centers around the third clause of this will. It was contended by the appellants in the trial court, and is on this appeal, that the trust created by this third paragraph of the will is an active one continuing for the lifetime of Charles E. Moore; that no disposition was made of the remainder after the death of Charles E. Moore, and that therefore such remainder passed by the residuary clause of the will, the fourth clause, and vested in the residuary legatees therein named; that therefore Charles E. Moore has merely an equitable life estate in the trust estate, and that at his death the residuary devisees named in the fourth clause of the will, or their heirs or legatees, will come into possession of said trust fund, to the exclusion of the heirs or legatees of Charles E. Moore, the " life tenant. These contentions were made below by the appellants in their answer to the bill of complaint, and in a cross-bill filed by them.

Charles E., Moore, appellee here, on the-.other hand,has contended that the-third paragraph of-, the will of Gilpin Moore created in. him an equitable fee in the trust estate therein provided for; that at any time he is entitled to demand and call on the trustee of said trust for a conveyance of the trust property to him; that at his death any part of the trust estate remaining undisposed of will descend to his heirs or legatees, in fee.

Both appellants and appellees prayed a construction of the will according to their respective contentions. Charles E. Moore, prior to the filing of his bill, acquired releases from Anna Moore, now Spear, one of the residuary legatees in the will of G-ilpin Moore, and from Elizabeth Clare Moore, who inherited all the interest in said trust fund of Truesdale L. Moore, another of the residuary legatees.

The chancellor below, in his decree, held that it was the testator’s intention to devise and bequeath a one-fourth part of the remainder of his estate, after his wife’s claim had been satisfied, to his son Charles E. Moore and his heirs, but to withhold from said Charles E. Moore during his lifetime the active management and control thereof, which management and control it was the intention of the testator should be vested in a trustee during the life of Charles E. Moore, as provided in the will; and also held that Charles E. Moore was seized of an equitable fee in the trust estate (and not a mere life estate), and that in the event that he. should die intestate the trust property remaining in trust shall pass to and vest in fee, as intestate property to the heirs and surviving widow, or that in the event that he die testate, then.that such trust property shall vest in and pass to his legatees, as his will may provide.

From this decree the appellants are prosecuting their appeal to this court. In their brief their principal contention is that the remainder after the life of Charles E. Moore was entirely undisposed of by clauses of the will; that an equitable life estate, merely, was created in Charles E. Moore; that the remainder of the trust estate created in the third paragraph of the will has become vested in the residuary legatees named in the fourth paragraph, who, or the heirs of whom, will come into possession of the remainder upon the death of Charles E. Moore, to the exclusion of his heirs or legatees.

There are no disputed facts in the case, so the sole question to be decided is the construction to be placed upon the will of Gfilpin Moore. The appellant and appellee have each cited many authorities in support of their respective contentions. In our opinion the facts in the case of Wagner v. Wagner, decided by this court and reported in vol. 149 Ill. App., page 73, and later affirmed by the Supreme Court and reported in vol. 244 Ill., page 101, are very similar. In the Wagner case, as in this case, the devise created a spendthrift trust for the benefit of the testator’s sons. In the Wagner case as in the Moore case no provision was made for the distribution of the trust estate upon the termination of the trust. In the Wagner case, as in this case, the trustees could, at their discretion, use any part or all of the principal fund in caring for the cestui que trust if they deemed it advisable. The Wagner sons filed a bill asking the court to construe the language of the will and declare the different interests of the parties. This court through Justice Dibell held that because the devise was made for the benefit of the sons and the trustee was empowered to use not only the income but to invade the principal, even to the extent of its entire consumption, showed an intention on the part of the testator to devise and bequeath an equitable fee. In affirming the decision of the Appellate Court, Justice Farmer, who wrote the opinion said, “Neither do we think it necessary to the creation of a spendthrift trust that there should be a gift over upon the termination of the trust. As we read and understand the codicil, it was the intention of the testator that the whole of the property might be used by the trustees for the support and maintenance of the sons, or they might terminate the trust during the lifetime of the sons and deliver over the corpus to them. Whether the trust was terminated by the voluntary act of the trustees or by the death of the sons, if at the time of such death there remained all or a portion of the fund, it was the intention of the testator that it should go to their heirs, and a failure to make a gift over to the heirs does not render the trust invalid, as being in violation of any rule of law or public policy. This construction renders testate the entire estate, and constructions of wills producing this effect are favored in law.”

The appellants contend that the language used by Justice Farmer in this case is mere dicta, and it was not necessary to decide this point to dispose of the case. Justice Dibell seemed to be of the opinion that it was not necessary to pass upon this question, but left it to be disposed of in the future. The Supreme Court seems to be of the opinion that it was a part of the case and decided the point in question. We are of the opinion that a study of this case discloses that the language used by the Supreme Court in this case is not dicta, but is one of the controlling points in the proper construction of the Wagner will. In our opinion the language used in the Wagner case is applicable to the facts in this case and should be controlling in regard to the construction of the Moore will.

We are of the opinion that the chancellor properly held that Charles Moore, by the will of his father, had an equitable fee in the trust estate; that he had a right to dispose of it by will in the event he cared to do so, and if he did not make a will the funds should pass to his heirs at his death. The judgment of the circuit court of Rock Island county is hereby affirmed.

Affirmed.