text:
    Julia E. Campbell, Appellee, v. The Northwestern Mutual Life Insurance Company, Appellant.
    Gen. No. 8,923.
    Opinion filed July 6, 1935.
    Samuel J. Stephens, of Aurora, for appellant ; Edrie P, Hazlett, of Aurora, of counsel,

      Lewis M. Long and David J. Pefeers, of Aurora, for appellee.
   Mr. Justice Dove

delivered the opinion of the court.

This action was instituted September 28, 1933, by Julia E. Campbell, the beneficiary named in an insurance policy issued by the defendant upon the life of her husband, Alexander M. Campbell. In both counts of the declaration the policy was set forth in haec verba and in the first count it was alleged, among other things, that the policy was issued on August 16, 1915, and that Alexander M. Campbell, the insured, thereafter died at Reno, Nevada, on August 11, 1920; that on May 23, 1933, the plaintiff gave the defendant notice of the insured’s death and at the same time furnished and delivered to it satisfactory proof of death. The additional count averred that the policy was continued in force from February 16, 1918, as extended term insurance for the sum of $2,046 until September 9, 1921. In this count it was then averred that during the years 1918 and 1919 the insured became in a bad and precarious state of health and early in the year 1919 left his family, he then living in Detroit, Michigan, and went to Reno, Nevada, for the benefit of his health; that on August 10, 1920, he wrote an affectionate letter to the plaintiff from Reno, Nevada, in which he told of the condition of his health and expressed the hope of reuniting with his family at some time in the near future ; that after the receipt of said letter, which was mailed at the Reno post office on August 11, 1920, plaintiff never received any further letters or communications from her husband, although she made diligent efforts and inquiries to locate him. In this count she averred that the insured departed this life between August 11, 1920, and September 1, 1921, while said policy was in full force and effect as extended term insurance, It was then averred that the plaintiff, in April, 1922, notified the general agent of the defendant of the disappearance of the insured and various communications which passed between the plaintiff and the defendant are set out at length.

To this declaration the defendant filed a plea of the general issue, with notice of special matters of defense, in which notice the defendant set up that the policy sued on lapsed on February 16, 1918, for failure to pay the semiannual premium due thereon at that time; that the premium due February 16, 1918, had not been paid, nor had any premiums been paid since that time; that the policy was continued in force, however, as extended term insurance for $2,046 until September 9, 1921. The defendant further insisted in its notice of special matters in defense that the insured did not die prior to September 9, 1921, that he is not dead, that no proof of death had ever been furnished the defendant as provided by the policy, that the contract of insurance is not effective and for these reasons the plaintiff was not entitled to maintain her action. The case was submitted to a jury, resulting in a verdict and judgment in favor of the plaintiff for $2,046 and the defendant brings the record to this court for review by appeal.

It is insisted by counsel for appellant, as grounds for reversal, that much incompetent evidence was admitted by the trial court over their objection, that the instructions were erroneous, that due proof of the death of the insured was not furnished appellant and finally even conceding that the objected-to evidence was competent it is insufficient to sustain the verdict and that the trial’ court should have directed a verdict in favor of appellant at the close of all the evidence.

As the judgment must be reversed for the reason last suggested, it will not be necessary for us to consider the other errors relied upon for reversal.

The evidence discloses that the policy which formed the basis of this suit was issued by appellant on August 16, 1915. It was an ordinary life policy and provided for the payments of semiannual premiums of $26.62 on the 16th day of August and February of each year during the lifetime of the insured. The policy stated that the age of the insured was 34 years and appellant obligated itself to pay to appellee, upon receipt of due proof of death of the insured, the sum of $2,000. The last premium was paid in August, 1917, but by the provisions of the policy, it continued in force for the sum of $2,046 as extended term insurance until September 9, 1921, and thereafter had no value. The evidence tends to further prove that appellee and the insured were married in 1905 at Rockwell, Iowa, and shortly thereafter came to Sandwich, Illinois, where the insured worked for several years, leaving Sandwich in 1917 for Detroit. From 1917 until April, 1919, the insured and appellee resided in Detroit. He was a good husband and he supported appellee and they never quarreled. In October, 1918, he became sick, was weak and coughed a lot and could not stand up any length of time and that condition continued until he left Detroit in April, 1919. From Detroit insured probably went to Louisville, Kentucky, as appellee received from him several post cards, all bearing the postmark of Louisville, and showing that they were mailed there during the month of May, 1919. Appellee also received one postal written by insured and purporting to have been sent from Tia Juana, Mexico. Appellee thereafter received a letter from the insured bearing the postmark of Reno, Nevada, and dated August 11, 1920: In this letter he stated that he was pretty well, weighed 132 pounds and requested a kodak picture of his wife and son. Appellee, at the time she received this letter, was visiting her sister at Glasgow, Montana, and in it he requested her not to go back East, as he would send for her, stating that he was going to Fallon the next week and would be there three or four days. In January, 1921, and again in March, 1923, appellee advertised for her husband in the Reno, Nevada, Evening-Gazette, and in April, 1922, advertised for him in the War Cry, a Salvation Army paper published in Chicago. She also wrote the chief of police in Reno in 1921 and to the Salvation Army in Chicago in 1922 about her husband and received replies to the effect that they were unable to locate him. Appellee never received any information concerning- the whereabouts of insured and had no communication from him after the letter of August 11,1921. She did not comply with the wishes of the insured when he asked her not to go back East, but left Glasgow the latter part of August, 1920, and came to Sandwich, Illinois, where she has resided ever since. Jesse F. Seamon testified on behalf of appellee to the effect that he was in Reno, Nevada, on July 4 or 5, 1920, and that he saw the insured there and that he had not shaved for a week and appeared to him to have lost weight since he had seen him in 1912; that he looked to him like a sick man as he had a bad cough and did a lot of spitting ; that he, Seamon, went with the insured into a place which he designated as a “blind pig,’-’ where the insured claimed to be working and they had a glass of beer there together. Anna May Mattison testified for appellee that during the years 1914, 1915 and 1916 she lived with the appellee and insured in Sandwich and that their family relations were pleasant up until they moved from Sandwich to Detroit in 1917.

The foregoing is substantially all the evidence offered on behalf of appellee, and the only evidence offered by appellant was to the effect that the relatives of the insured all lived in Sandwich and Aurora and that Harley Owen saw the insured in Detroit, Michigan, during the month of February, 1919, that he, Owen, went with him to the movies and that he was with him approximately three hours each of the three times that he saw him, and that at those times the insured did not cough, but looked well and appeared to be in perfectly normal health, weighing about 140 pounds.

Appellee insists that the only reasonable deduction that can be drawn from the foregoing testimony is that the insured was afflicted with consumption and that when he met Seamon on July 4 or 5, 1920, he was undoubtedly in a desperate and precarious state of health; that the inference to be drawn from the fact that no tidings have ever been received from him since the letter which was postmarked August 11, 1920, is that he suddenly departed life somewhere in the wilds of Nevada shortly thereafter and- that from all the facts and circumstances in evidence the jury were warranted in finding that he died while the policy sued on was in full force and effect as extended term insurance.

In support of this contention counsel cite Veselsky v. Bankers Life Co., 248 Ill. App. 176, and 17 0. J. 1169. In the Veselsky case, which was an action upon an insurance policy in which it was alleged that the insured died on or about July 19, 1924, it appeared from the evidence that the insured was engaged in the business of tailoring and pressing; that he was in the habit of swimming in Lake Michigan at night and when he did so he did not wear a bathing suit; that he was not a good swimmer and at times where he swam there was an undertow. He was an industrious man of good morals, sober and his family consisted of his wife and son and his domestic relations were pleasant. His place of business was in Lake Forest and their home in Berwyn. His wife assisted in the work and usually on Saturdays he went home while the rest of the time he slept at his place of business. On Saturday, July 19, 1924, his wife and son were at his shop and left him about seven o ’clock that evening and he was never seen thereafter. On the following Monday, all his clothes were found on the beach 30 or 40 feet from the water under some bushes. Sunday night was very stormy. The cot upon which he slept when he remained at the shop and which his wife had fixed on Saturday had not been touched since her visit Saturday evening. The officers dragged that part of Lake Michigan adjacent to where the clothes were found, but the body was never' recovered. The court in its opinion in affirming a judgment against the insurance company cited numerous cases from which the court concluded that the question of whether the insured came to his death by drowning on the date alleged was a question of fact for the jury to determine and then said: “When a person’s clothes are found on a lonely beach and no one is seen either on the land or in the water to whom they belong, the mind instinctively suspects that the owner has drowned. This would be the usual and a reasonable suspicion. If the clothes are subsequently identified as belonging to a nearby resident, who is never seen again even after a lapse of years, and there is nothing in his domestic or business relations to furnish a motive for voluntary disappearance, the suspicion first entertained ripens into a belief that the absent one came to his death by drowning.” In disposing of the contention that the presumption that the insured was drowned rests upon the presumption that he was in the water and that one presumption cannot rest upon another, the court said that this was not a case of two presumptions. There is simply one general presumption and that is that he lost his life in the water. We think the facts in the instant case are clearly distinguishable from the facts in the Veselshy case. The proof there was convincing to all reasonable minds, while here there are no facts or circumstances in evidence which rebut the presumption that Campbell continued to live until the end of the seven-year period. It is true that the evidence disclosed that the insured coughed and spit, but there is no medical testimony in this record or any other kind of testimony which establishes that coughing and spitting indicate any special disease and there is no evidence other than that he coughed and spit and looked bad from which it can be inferred that he had consumption and there is no proof that he was afflicted at any time with any disease likely to undermine his constitution. In the Veselshy case, from all the facts and circumstances in evidence, the jury were warranted in arriving at the conclusion that he was drowned; in the instant case we do not believe that from all the facts and circumstances all reasonable minds would conclude that the insured died shortly after August 11, 1920, or at any time between that date and September 9, 1921, and if he did so die, the query then would be, from what disease did he die ? Seamon, so far as this record discloses, was the last person who saw the insured, and that was on July 4 or 5, 1920, and the insured at that time was working in an illegal liquor dispensary and had a glass of beer with Seamon. More than a month later he wrote to his wife that he was feeling better and was going to Fallon, Nevada, 100 miles distant from Reno.

We have examined 17 C. J. 1169 and some of the eases there cited. There is no necessity discussing these cases. The law in disappearance cases is well settled in this State. If a person is absent from his home and no word has been received from him within seven years, such disappearance creates a rebuttable presumption that such absent one is dead. Keystone Steel & Wire Co, v. Industrial Commission, 289 Ill. 587; Apitz v. Supreme Lodge Knights & Ladies of Honor, 274 Ill. 196, aff’g 196 Ill. App. 278; Reedy v. Millizen, 155 Ill. 636. This presumption arises at the end of the seven-year period and his death is to be regarded as having’ taken place seven years from the date of his disappearance. Donovan v. Major, 253 Ill. 179; Whiting v. Nicholl, 46 Ill. 230. As a matter of law, therefore, unless there are facts and circumstances proven which are sufficient to justify an inference that he died at an earlier date, it must be presumed that the insured, Alexander M. Campbell, lived until August 10, 1927. In Donovan v. Major, supra, the rights of the parties to that litigation depended upon the death of Will C. Wright and the date of its occurrence. On April 15, 1893, he had passed his fifteenth birthday and left his home, ostensibly to go to his work as an office boy. He did not return in the evening and a search was instituted. He was a strong, healthy boy and his general health, eyesight and hearing were good. The Supreme Court, in its opinion, recited the facts relied upon to sustain the findings of the trial and Appellate Courts that Wright died prior to the expiration of seven years from the time of his disappearance, and in reversing the judgments of those courts, said:

“The presumption of the continuance of life prevails until facts are shown which make the presumption of death more reasonable. Disappearances of individuals are not uncommon, and no legal presumption of death arises from the disappearance, alone. The presumption of fact which will justify the conclusion of death before the lapse of the time required for the legal presumption must arise from evidence of circumstances tending to show death. That the absentee was exposed to some specific peril; that he sailed in a vessel which had never been heard from, though many months overdue; that he was last seen as a passenger on an ocean steamer in midocean, at night, and was never seen or heard of afterward though diligent search was made the next morning; that he made threats to commit suicide prior to his disappearance; that the condition of his health was desperate; that lie was afflicted with some disease likely to undermine his constitution, — these are circumstances which may be considered as tending to raise a just inference of death. The health, age, habits, disposition, manner of life, pecuniary circumstances and family relations of a person who has disappeared are all proper for consideration in determining whether he probably died before the expiration of seven years.”

In commenting upon this language the Appellate Court in Apitz v. Supreme Lodge Knights & Ladies of Honor, supra, said: “While it is not to be presumed that the court named all the conditions that should be considered in determining whether death occurred before the expiration of the seven-year period, it must be taken as expressing a class of evidence that must be present to justify such a conclusion.” In the Apits case it appeared that the insured was 41 years of age when he disappeared, that he kept a small grocery store in Chicago, was in good health and mentally and physically in possession of all his faculties. He had a wife and four children and appeared to be much attached to them. He had no business troubles and there was no reason suggested for his disappearance. The only indication that he intended to leave was the fact that he paid the assessment upon his insurance policy in advance and settled with his creditors. He left home about noon and was never seen or heard from by his family thereafter. These facts, the court held, were not sufficient to sustain a finding that the insured died within one year of the date of his disappearance.

In the instant case when the insured left he and his family were living in Detroit. When he last wrote his wife she was in Glasgow, Montana. Shortly thereafter she came to Sandwich, Illinois, and has since that time resided there. In April, 1925, she filed a bill for divorce on the grounds of desertion and in June of that year obtained a decree. She testified upon that hearing that the insured-left her in April, 1918, while the evidence in the instant case discloses that he left in April, 1919. Counsel for appellant insist that by instituting this divorce proceeding, appellee believed her husband alive in 1925 and that her position then is inconsistent with her position now which is that her husband died prior to September 9, 1921. We do not think the fact that she procured a divorce in 1925 makes very much difference in this case, as it appears from the evidence that the reason she did so was because her husband’s mother had died, leaving some property and she sought to reach his inheritance.

In order for appellee to recover it was essential upon her to prove that the insured died while the policy sued on was in force. The policy expired as extended term insurance September 9, 1921. The facts relied upon by appellee to shbw that the insured died at an earlier date than August 10,1927 (that being’ the date the law presumes he died, such presumption arising by reason of his absence of seven years) are that he was sick in the fall of 1918, that he was weak and coughed and when last seen in July, 1920 appeared to have lost weight, looked sick, coughed and spit and notwithstanding efforts had been made to locate him, he has never been found. These facts in our opinion are not sufficient to rebut the presumption of continuance of life until the expiration of the seven-year period. The evidence relied upon here by appellee gives rise to nothing more than a surmise or conjecture that the insured died while the policy sued on was in force and appellee having failed to prove this essential allegation, the trial court should have granted appellant’s motion for a peremptory instruction.

The judgment of the circuit court of Kendall county is therefore reversed, and the cause remanded.

Judgment reversed and remanded.


source: Caselaw Access Project

author: Mr. Justice Dove

license: Public Domain

text:
    Hannah Randall, Appellant, v. Mayme H. Randall and Lady M. Litsinger, Appellees.
    Gen. No. 8,931.

      Opinion filed July 6, 1935.
    Douglas C. Gregg and Laurence M. Fine, both of Chicago, for appellant.
    Litsinger, Healy, Reid & Bye, of Chicago, for appellees.
   Mr. Justice Dove

delivered the opinion of the court.

Hannah Randall instituted this action in the circuit court of Lake county to recover upon an appeal bond executed by Mayme H. Randall, Louis E: Randall and Lady M. Litsinger. The declaration alleged that on July 21, 1922, plaintiff recovered a judgment in the circuit court of Cook county for $25,000 against Mayme H. Randall and Louis E. Randall, her husband, and that an appeal from that judgment was perfected to the Appellate Court of the First District, where the judgment of the circuit court of Cook county was affirmed by the Appellate Court on January 3, 1923. The declaration sets out the appeal bond in haec verba and alleges that on October 7, 1922, Louis E. Randall and Mayme H.. Randall paid to the plaintiff $7,500 on account of said judgment, leaving the balance unpaid.

It is then alleged that thereafter, and on March 27, 1931, Louis E. Randall died and Mayme H. Randall is the duly qualified and acting administratrix of his estate. To this declaration the defendants Mayme H. Randall, individually and as administratrix and Lady M. Litsinger filed special pleas, alleging that the judgment of July 21, 1922, for $25,000 had been satisfied and released of record and that the plaintiff executed a satisfaction piece therefor on October 7, 1922. The plaintiff replied, traversing the allegation that the judgment had been released and denying the execution of said satisfaction piece. On August 20,1934, the defendants, by leave of court, filed a plea puis darrein continuance, which set forth at length certain proceedings had in the circuit court of Cook county in a certain cause wherein Mayme H. Randall, individually and as administratrix was the plaintiff and said Hannah Randall and said Lady M. Litsinger were the defendants. From the averments in this plea, it appears that on April 17, 1933, a decree was rendered in said cause perpetually enjoining and restraining the defendant in that proceeding, Hannah Randall, the plaintiff here, from further prosecuting this suit.

To this plea of puis darrein continuance the plaintiff demurred, and upon a hearing this demurrer was overruled. Thereafter, what counsel designates as a replication to this plea was filed, which alleged that the circuit court of Cook county was without jurisdiction to issue the injunction restraining the prosecution of this suit and that said injunction was of no force and effect. With the record in this condition, the case was, on January 4, 1935, called for trial. Thereupon the defendants filed a demurrer to the so-called replication and this demurrer was heard by a different judge than the one who theretofore had passed upon the demurrer to the plea. The court overruled the demurrer to the replication and counsel for the defendants then sought a continuance and' advised the court that they were not ready for trial, inasmuch as the court had previously held the plea' puis darrein continuaoice good and counsel were unadvised that a replication had been filed thereto until January 3, 1935, and that the action of the court in overruling the demurrer to the replication came as a- surprise. The court, however, denied defendants’ application for a continuance and the case proceeded to a trial. At the conclusion of all of the evidence, the jury, in obedience to a peremptory instruction, returned a verdict in favor of the plaintiffs and against the defendants for $26,000. On January 22, 1935, upon motion of the defendants, the court entered an order vacating the previous order overruling defendants’ demurrer to plaintiff’s replication to the plea of puis darrein contimiance and allowed defendants’ motion for a new trial and set aside the verdict of the jury and awarded a new trial. From this order of January 22, 1935, the record is brought to this court for review by appeal.

The evidence discloses that on July 21, 1922, the plaintiff recovered a judgment in the circuit court of Cook county for $25,000 against Louis Randall and Mayme Randall and that thereafter an appeal bond in the usual form was executed by these defendants and Lady M. Litsinger, in the sum of $26,000, and this bond was duly filed and approved. Subsequently the Appellate Court of the First District, on January 3, 1922, dismissed the appeal of the defendants Louis E. Randall and Mayme H. Randall. This was all of the evidence offered on behalf of the plaintiff. The defendants offered in evidence a certified copy of the final decree, which was set forth in haec verba in their plea of puis darrein continuance, which was rendered by the circuit court of Cook county on April 17, 1933. The court sustained an objection thereto and thereafter. instructed the jury to find for the plaintiff.

Counsel for appellant insist that no error was committed by the court upon the trial of the case in the circuit court and therefore the motion for a new trial was improperly granted and that the trial court also erred in vacating the order entered on January 4, 1935, overruling the demurrer to the replication to the plea of puis darrein continuance, and likewise erred in sustaining the demurrer to said replication. In their argument, counsel say that a motion for a new trial will be granted solely for occurrences during the trial and not on account of errors or defects in pleadings ; that in settling the pleadings, the court may at any time, before trial, alter, modify or reverse any former ruling, but where a litigant abides by such rulings and goes to trial under the pleadings and there is a verdict entered and the jury discharged, that then the trial judge is barred from going into the question of pleadings and cite in support of this statement Guyer v. Davenport, R. I. & N. W. Ry. Co., 196 Ill. 370, and People v. Fox, 346 Ill. 374. In the Guyer case, supra, the court did say that a motion for a new trial is designed to bring in review before the trial court the occurrences of the trial and to present for consideration alleged errors during the course of the trial and that motions upon pleadings and other matters arising before the trial is actually entered upon furnish no basis for the motion for a new trial. The court also quoted from 14 Ency. of PL and Pr., 827-829 to the effect that a new trial will not be granted on account of errors or defects in the pleadings and that errors in rulings on demurrers and motions relating to the pleadings may be reviewed on exceptions without a motion for a new trial. In People v. Fox, supra, the court cited the Guyer case in holding that it was improper to incorporate in a written motion for a new trial an allegation or assignment to the effect that the court erred in denying defendants’ motion to quash the indictment. "What the court held in these cases was that rulings by the trial court upon demurrers to common law pleadings and upon a motion to quash the indictment in a criminal case may be reviewed by an Appellate Court without a motion for a new trial. These cases do not hold that a trial court may not, after a verdict has been returned, but before any judgment has been entered thereon, set aside that verdict and reverse a previous holding and vacate an order previously made overruling a demurrer to a pleading and enter an order sustaining such demurrer.

In most instances a motion for a new trial is addressed to the sound legal discretion of the trial court and is not a mere matter of form. If errors have occurred in the course of a trial, those errors should be corrected by the court in which they were committed and where it is evident that the trial proceeded on an erroneous view of the law, a new trial is properly granted. 20 R. C. L. 227, 228. In the instant case the trial court concluded upon the hearing of the motion for a new trial that in overruling the demurrer of the defendants to the replication to the plea puis darrein contimiamce, it was in error and the court did what any courageous judge should do and that was to correct such error. At that time the only way open to him to correct it was to grant the motion, set aside the verdict and reverse his former ruling which he did. In our opinion the action of the trial court was eminently proper. The allegations in the replication “that the injunction relied upon by defendants in said plea is void and of no force and effect and that the circuit court of Cook county did not have and could not assume jurisdiction of the subject matter of said cause” are conclusions of the pleader. This replication did not conclude either to the contrary or with a verification. Its allegations were repetitions of those contained in appellant’s demurrer to this same plea, which demurrer had theretofore been overruled by the same court, but by another judge. Whether the circuit court of Cook county had jurisdiction to enter the decree set forth in appellees’ plea puis darrein continuance was a question of law and not of fact, and that question had been passed upon adversely to the appellant’s contention when the court which heard the demurrer to the plea overruled the demurrer. If appellant in good faith believed the circuit court of Cook county did .not have jurisdiction of the subject matter of the litigation set forth in appellees’ plea puis darrein continuance, then she should have abided by her demurrer to such plea and should not have taken a change of venue from the judge who overruled her demurrer and then before another judge of the same court sought to have the former ruling reversed by filing what counsel term a replication. Upon this record we are not called upon to review the order overruling the demurrer to the plea. By filing her so-called replication and not abiding her demurrer, appellant admitted that the plea was good and sufficient in law. Garden City Sand Co. v. Christley, 289 Ill. 617; Stearns v. Cope, 109 Ill. 340. And by pleading over after her demurrer to this plea was overruled, she waived her demurrer. Gardner v. Haynie, 42 Ill. 291. Appellant had no right to raise the same question presented by her demurrer to this plea by any subsequent pleading. By this so-called replication appellant attempted to again raise the same question of law presented by her demurrer to this plea and the replication was therefore bad both in form and substance. Berry v. Turner, 279 Ill. 338. The office of a replication is to traverse the allegations of the plea or to confess or avoid the matters of fact set forth therein and thereby tender an issue of fact. Puterbaugh PI. and Pr., 10th Ed., sec. 119.

The verdict in this case, which the court set aside, was the result of a peremptory instruction given by the court. In granting appellees’ motion setting aside that verdict and awarding a new trial and in vacating its former order overruling a demurrer to the replication and in sustaining appellees’ demurrer to that replication, the court ruled on a question of law, and such rulings are properly before us upon this appeal. The rule that the granting of a new trial is within the trial court’s discretion which will not be disturbed unless abused applies only when the discretion is exercised on the facts, and the correctness of a ruling on a question of law will be determined on appeal, independently of the judgment of the trial court. 4 C. J. 833.

For the reasons heretofore given, the trial court properly sustained the démurrer to the replication and committed no error in setting aside the verdict and granting a new trial. In order to prevent a miscarriage of justice, trial courts should be encouraged to correct, upon a motion for a new trial, such errors as this record discloses occurred prior to the time appellees’ motion to set aside the verdict was granted. The order appealed from is therefore affirmed.

Order affirmed.


text:
    James S. Dexter, Appellee, v. Burt Baxter, Appellant.
    Gen. No. 8,943.

      Opinion filed July 6, 1935.
    Madden & Laden, of Rockford, for appellant.
    Seyster, Fearer & Fearer, of Oregon, for appellee.
   Mr. Justice Dove

delivered the opinion of the court.

On June 7, 1920, Burt Baxter and wife Blanche E. Baxter executed a real estate mortgage, by which they conveyed certain premises in Rockford to Horace Dexter, named therein as mortgagee. This mortgage was given to secure the payment of a note of that date for $2,500 payable to the order of Horace Dexter five years after date. On June 8, 1934, James S. Dexter, filed his complaint in equity to foreclose this mortgage. The complaint, among other things, recited that on or about December 8, 1920, Horace Dexter, being the owner and-holder of said note and mortgage, died and that thereafter and on August 28, 1923, said note and mortgage were duly assigned to the plaintiff, James S. Dexter. The complaint further alleged that on August 10, 1926, Burt Baxter and Blanche E. Baxter conveyed the premises therein described to Alfonso Fanara and Concetta Fanara, subject to said mortgage; that thereafter the Fanaras executed a mortgage upon the same premises to Burt Baxter, subject to the Dexter mortgage. The complaint demanded judgment against Burt Baxter and Blanche E. Baxter for the amount due upon the $2,500 note, together with costs and solicitor fees, and in default of such payment that the mortgaged premises be sold.

Burt Baxter, Blanche E. Baxter, Alfonso Fanara and Concetta Fanara filed answers, in which they admitted the material allegations of the complaint, but as a defense to the demand of the plaintiff for a personal judgment against Burt Baxter and Blanche E. Baxter, these defendants alleged that after the sale of the premises described in the mortgage by them to Alfonso Fanara and Concetta Fanara, the plaintiff, without the consent of Burt Baxter or Blanche E. Baxter, extended the date of the maturity of the note and mortgage secured thereby. The cause was referred to the master, who found that there was due the plaintiff the principal sum, together with interest thereon from December 7, 1932, and that Burt Baxter is obligated to personally pay the principal note and with Alfonso Fanara and Concetta Fanara is liable for the accumulated interest thereon since June 28, 1928, and recommended a decree of foreclosure and sale. Upon a hearing before the chancellor, the master’s findings were approved, and a decree was rendered on January 19, 1935, finding, among other things, that the amount due on that date was $2,832.43 and decreed that the plaintiff have and recover of Burt Baxter said sum, together with attorney fees and all the costs of the proceeding, and that the plaintiff have execution therefor. The decree further provided that in default of such payments, the master should at once make and deliver to the plaintiff a certificate as provided by the statute in effect at the time this mortgage was executed. From this decree Burt Baxter has perfected this appeal.

It is earnestly insisted by appellant that the decree is erroneous in two respects: First, in finding that he is personally liable for the payment of the amount found due, and second, in providing that execution should issue therefor.

The evidence so far as material to the disposition of the issues raised on this appeal discloses that on August 10, 1926, appellant and his wife conveyed the mortgaged premises to Alfonso Fanara and Concetta Fanara. This conveyance was made subject to the mortgage of June 7, 1920. Upon the same day that the conveyance was made to the Fanaras, the Fanaras executed to appellant a second mortgage upon the same premises. Prior to this time and on June 6, 1925, appellant and appellee signed an extension agreement. This instrument recited that appellee had agreed to extend the date of the maturity of the $2,500 for a term of three years from June 7, 1925, in consideration of which appellant, as owner of the real estate described in the mortgage, agreed to pay the interest to appellee on the said principal note at the rate of six per cent semiannually until June 7, 1928, and at the rate of seven per cent thereafter. On June 28, 1928, another extension agreement was signed by Alfonso Fanara and Concetta Fanara only. This instrument recites that appellee has agreed to extend the date of the payment of the $2,500 for a period of two years from June 6, 1928, and that the Fanaras were to pay interest on the principal note at the rate of seven per cent per annum after June 6, 1928. Appellee did not execute this instrument. The names of Alfonso Fanara and Concetta Fanara appear thereon, they each having signed by mark, and the name of appellant appears thereon as a witness to said signatures. A similar instrument was again executed on June 6, 1931, extending the date of payment of the $2,500 note for three years from June 7, 1931. Appellee did not execute this instrument, but the names of Alfonso Fanara and Concetta Fanara appear thereon and they signed their names by mark and appellant signed his name thereto as a witness to their signatures. The evidence further discloses that these three extension agreements were on printed forms and that all the writing that appears thereon was written by appellant, except the signature of appellee on the first extension agreement, which is dated June 6, 1925. All of these extension agreements were delivered by appellant to appellee immediately following their execution and on the same day and accepted by him. It further appears from the evidence that appellant, at the time he delivered the last instrument to appellee, wrote on the back of the $2,500 note the words, “This note is hereby extended to June 7th, 1934.”

From this evidence the master found that the original extension agreement signed by appellant and appellee extended the period of payment of the principal note and interest thereon to June 7, 1928; that Blanche E. Baxter was not a party thereto and that she therefore has been released from any personal liability thereon; that the last two extensions were made with the consent of appellant and at his request and procurement, and therefore appellant is not released from personal liability upon the original note.

It was the contention of appellant before the chancellor and it is his contention here that appellee, in accepting the several extension agreements executed by the Fanaras, released appellant from all personal liability upon his note, notwithstanding the fact that appellant procured the execution of said agreements and consented thereto, and notwithstanding the fact that these instruments were not in fact executed by appellee. Counsel in their argument state that a like question has never been passed upon by the Supreme or any of the Appellate Courts of this State, but that an analogous question was presented in the case of Prudential Ins. Co. v. Bass, 357 Ill. 72, and this case and Kransz v. Uedelhofen, 193 Ill. 477, are the only Illinois cases cited in their brief and argument upon the first question presented for review by this appeal.

In Prudential Ins. Co. v. Bass, supra, it appeared that Arthur S. Bass and wife executed a mortgage to the Prudential Ins. Co. to secure the payment of a promissory note which became due December 10,1926. On October 26, 1924, the mortgagors conveyed the mortgaged premises to Harry E. Buckles and C. R. Hawkins, who assumed and agreed to pay the note theretofore executed by the Basses to the insurance company as part of the purchase price. On December 29, 1926, Buckles and Hawkins and their respective wives entered into an extension agreement, by the terms of which the interest was reduced to five per cent and the payment of the principal sum was extended to December 10, 1931. The only question presented for determination was whether this extension agreement had the legal effect of discharging the mortgagors from personal liability for the debt. The Supreme Court held that it did, stating that they never consented, expressly or otherwise, to the extension agreement and had no knowledge thereof until December 30, 1931. We are unable to see how the holding in this case sustains the appellant’s contention here as in the instant case the Fanaras, in obtaining title from appellant to the mortgaged premises, took the same subject to appellee’s mortgage and did not assume or agree to pay the debt secured thereby. Furthermore, the only extension agreement executed by appellee was also executed by appellant and the two subsequent extension instruments were not executed by him, but were prepared by appellant, and after having been executed by the Fanaras only were delivered to appellee by appellant. If, however,, it is assumed that appellee was bound by their provisions from the fact that he did receive them, they were as a matter of fact delivered to him by appellant, who prepared them, knew of their contents and such acceptance must be held to have been with his, appellant’s, procurement, knowledge, consent and approval. Counsel for appellant insist that even though the last two extension agreements were executed only by the Fanaras, still the acceptance of interest by appellee would amount to a ratification and acceptance of such extension and call our attention to Kransz v. Uedelhofen, supra. That case was an ejectment proceeding brought by the trustee in a trust deed given to secure the payment of a promissory note against the mortgagors or grantors who executed the trust deed. It was contended by appellees that the action was prematurely brought as the payment of the indebtedness secured by the trust deed had been extended. . Appellant insisted that the extension was invalid as it was only signed by the makers of the note and trust deed and not by the trustee or holder of the note. In holding against appellant’s contention, the court said that the note itself bore an indorsement to the effect that its time of payment had been extended for three years as per agreement attached, and that while the evidence did not show who made this indorsement, it would be presumed that it was made by appellant as it was in his possession; that the acceptance by appellant of interest during the period of extension and his indorsement in writing of the extension referring to the agreement itself amounted to a ratification and acceptance of the agreement even though the agreement itself was not signed by him.

■What the court held in Prudential Ins. Co. v. Bass, supra, was that where a mortgagor conveys mortgaged property to a third person and the grantee assumes and agrees to pay the mortgage debt, the mortgagor then occupies the relation of a surety for the payment of the debt and the grantee who assumes the payment of the debt becomes the principal debtor and if thereafter the mortgagee enters into a contract with the grantee to extend the time of payment without the consent of the mortgagor, that then the mortgagor is discharged from personal liability for the debt.

In Reeve Illinois Law of Mortgages and Foreclosures, vol. 1, sec. 310, it is said that ■ a mortgagor is released from liability for the mortgage debt when he conveys the property subject to the mortgage, which the grantee assumes to pay, and thereafter without the knowledge of the mortgagor, the mortgagee enters into an agreement with the grantee, extending the time for paying the mortgage debt, the reason for the rule being that by making such a contract with the mortgagor’s grantee, the original obligation of the mortgagor is materially changed. In sec. 298 of the same work, the author states that if a mortgagee, with knowledge of the conveyance of the property and the assumption by the grantee of the mortgage debt, extends the time of payment by a valid agreement between him and the grantee, such extension operates to discharge the original mortgagor if he does not consent to the extension.

In 19 R. C. L. 384, it is said: “The mortgagor or intermediate grantee may consent to an extension and thereby waive his right to claim a discharge; and his consent need not be by express agreement but may be by tacit acquiescence or ratification” and in Williams v. Gooch, 73 Ill. App. 557, in commenting upon the rule which relieves a surety on a promissory note from liability where an extension of payment has been granted, the court says: “It was never intended to relieve from liability a surety who had induced the extension or had connived at it.”

In the instant case the Fanaras did not assume the payment of appellee’s mortgage, but they bought only appellant’s equity of redemption. The extension agreements of 1928 and 1931, if binding upon appellee, were made by the procurement of and with the consent of appellant. Furthermore, the evidence discloses that the Fanaras never paid appellee anything, but that all of the money that was ever paid to appellee upon this note was paid by appellant. Appellant has a second mortgage on these premises and it is a reasonable inference that what was done by appellee in delaying foreclosure was done with the consent of appellant. There appears indorsed on the note in appellant’s own handwriting the words “This note is hereby extended to June 7th, 1934.” From the undisputed facts as they appear in this record, appellant is estopped from now insisting, in this proceeding, that he has been exonerated from personal liability and in so far as the decree found that appellant was not released from personal liability upon the note executed by him in 1920, it is clearly right and sustained by the authorities.

The decree, however, erroneously awards an execution against appellant. Appellee concedes this could not be done under the former practice but insists that under section 44 of the Civil Practice Act, Cahill’s St. ch. 110, Ti 172, appellee had a right tó a judgment and an execution against appellant without waiting for a sale of the mortgaged property. We do not think so under the allegations of this complaint. It discloses that this was an ordinary proceeding in equity to foreclose this mortgage and not a proceeding at law upon the note secured by the mortgage. There is no necessity, however, of reversing the decree and remanding the cause, as all that need be done is to strike therefrom the words, viz.: “and that the plaintiff have execution therefor” which appear in the decretal portion of the decree.

The decree appealed from will be modified as indicated in this opinion and as modified it will be affirmed. • Appellee will pay the costs in this court.

Decree modified and affirmed.


author: Mr. Justice Huffman

text:
    A. B. Culhane, Appellant, v. The Swords Company, Appellee.
    Gen. No. 8,867.
    Opinion filed July 6, 1935.
    0. H. Linscott, of Rockford, for appellant.

      Large & Reno, of Rockford, and Earl K. Sohiek, of Chicago, for appellee.
   Mr. Justice Huffman

delivered the opinion of the court.

This was a suit on two notes, brought by appellant against appellee. One note was for $20,000. No controversy existed regarding appellee’s liability on this note. The second note was for $50,000, executed on behalf of appellee by S. E. Smith and Thos. H. Connors, its vice presidents.

At the time the Rockford National Bank, of which appellant is receiver, suspended business, appellee had on deposit therein to its credit the sum of $16,790.28. Appellant in this suit sought to apply an offset for the above amount against the $50,000 note, .thus leaving a balance claimed due thereon of $33,209.72. Appellee denied liability upon the $50,000 note and claimed that its set-off should be allowed against the $20,000 note. The cause was heard before the court, without a jury. The court gave judgment in favor of appellant and against appellee for the sum of $3,777.47. The judgment was rendered upon the $20,000 note after allowing appellee a set-off for its bank deposit, and including in such judgment the interest due at the time of rendition thereof. The court found that appellee was not liable upon the $50,000 note, and appellant has prosecuted this appeal from the above judgment of the trial court.

An examination of this record presents a most unusual situation, and one that is difficult to solve. It contains many inconsistent transactions which are left unexplained.

Mr. Dennis F. Swords was president of appellee corporation. He negotiated with the First National Bank of Chicago, through the Rockford National Bank, for the purchase of 7,025 shares of the common stock and 125 shares of the preferred stock of the National Refrigeration Corporation. He had had an individual deposit account of $175,000 in the Central Trust Company of Chicago. It appears that he had expected to pay for the above stock from that account. Upon making arrangements for the purchase of this stock, it was discovered that the above account in the Central Trust Company was exhausted. The Rockford National Bank procured the stock for Mr. Swords from the First National Bank of Chicago, paying therefor a purchase price of $54,941.66. This purchase was completed by the Rockford National Bank by having the First National Bank of Chicago send to it the stock and charge its account at that bank with the purchase price therefor.

The transaction is first reflected upon the books of the Rockford National Bank under date of November 4, 1930, .upon which date the said Dennis F. Swords gave his individual note to the Rockford National Bank for the sum of $54,941.66, representing the purchase price of said stock. Subsequently, and on November 14, 1930, the records of the bank disclose a shifting of this liability from Swords to appellee corporation. This was accomplished by crediting Swords with the payment of his note and entering upon the liability ledger sheet of appellee corporation a debit for said amount, which is evidenced by its note No. 26,676. This note was signed by Smith and Connors, as above stated. While it bore date of November 4, 1930, it did not appear upon the note journal sheet of said bank as having come into the bank, until November 14,1930. These two notes were held by the bank and the liability was switched back and forth between Swords and appellee company a number of times. Long subsequent to the above dates, the note of Swords for $54,941.66 was split into two notes, one for $50,000 and one for $4,941.66. This last named note was paid by Swords through appellee corporation and charged to his personal account therewith. A new note of appellee came into the possession of the Rockford National Bank, in the sum of $50,000, representing the same indebtedness as evidenced by the original transaction above set out. The note transactions as carried on by the bank will be discussed later, it being the purpose at this time to identify the subject matter of this litigation.

Appellee filed seven pleas to which, appellant filed replications. The first plea was the general issue. The second plea was to the effect that appellee was indebted to appellant upon only the $20,000 note and that as against this note appellee was entitled to a set-off of $16,739.90, because of money which it had on deposit in the bank at the time it suspended business, and averred that it was in no manner indebted to appellant because of the $50,000 note. The third plea set up that the $50,000 note was executed without consideration and denied that apppellee ever received any consideration for such note. It alleged that it was an individual transaction of D. F. Swords and that any consideration therefor that might have passed was received by him. To this plea appellant replied that appellee did receive valuable consideration therefor because of the fact that appellee received from appellant the stock of the National Refrigeration Corporation and alleged that appellee took and used same for its own benefit. The fourth plea denied the right and authority of Smith and Connors to sign the name of appellee to the $50,000 note. To this plea appellant replied double, first, that Smith and Connors were authorized to sign the note; and second, that it had been the habit and custom of appellee in dealing with this bank, for Smith and Connors to sign appellee’s notes in the manner in which this one was signed, and that the bank relied upon this custom in accepting this note. The fifth plea set up the purpose of the corporate existence of appellee and alleged that no power was granted to it by its charter nor by any power incident to the expressed powers, giving it the right to make accommodation contracts such as this one, or to become a guarantor or surety or otherwise lend its credit as in this case. The plea again denied any consideration or benefits received by appellee, and averred that the note as signed by Smith and Connors was solely for the purpose of lending credit to D. F. Swords as an individual, and that appellant bank had knowledge of this fact. The plea further alleges the act of Smith and Connors in signing the corporate note was ultra vires and not binding on appellee. The sixth plea was the plea of the general issue, sworn to. The seventh plea alleged that Smith and Connors at the instance of appellant and D. F. Swords, executed the $50,000 note and in so doing were induced by fraud and undue means; that it represented the personal indebtedness of D. F. Swords; denied any consideration therefor passing to appellee; averred that appellant and Swords fraudulently interchanged the note of D. F. Swords and that of appellee corporation in the assets of said bank, from time to time, for the purpose of concealing facts from the national bank examiners, and for the purpose of misrepresenting the true status of the personal account of D. F. Swords with said bank; and further averred that the interchange of these notes in the assets of the bank was done not only for the purpose of misleading the bank examiners, but for the additional purpose of falsely and fraudulently misrepresenting the financial condition of D. F. Swords to the creditors and stockholders of appellee corporation. The plea set up and alleged various shifting or interchange of the note of D. F. Swords with that of appellee from time to time by said bank, alleging knowledge on the part of appellant and that the transaction with respect to the $50,000 note was fraudulent and unauthorized on the part of appellee corporation; that the acts of the bank in substituting one note for the other from time to time were not the deeds of appellee nor done at the instance of appellee, but to bolster the credit standing and solvency of the bank and of D. F. Swords as the occasion required.

The replications filed by appellant, other than as above noted, were of general denial.

The facts in this case as disclosed by the evidence present a most unusual situation with respect to the transaction involving the National Refrigeration Corporation stock, which cost $54,941.66, and for which D. F. Swords gave his note to appellant bank, and which was later replaced by substituting appellee’s note for said amount, together with the subsequent manipulations whereby the note was changed to the sum of $50,000 and D. F. Swords retired the difference of $4,941.66. It is apparent that the bank had in its possession at all times both the note of D. F. Swords and the note of appellee corporation for the same indebtedness, originally incurred by D. F. Swords as an individual, and for which he at the time of the purchase of said stock placed his individual note in the bank evidencing his indebtedness for the purchase price thereof.

The liability ledger sheet of Dennis F. Swords shows his note for $54,941.66 charged against him under date of November 4, 1930, and indicates that the same was paid on November 14, 1930. His ledger sheet further shows that on December 28,1930, he was again charged with his note of $54,941.66 and his ledger sheet indicates that this note was again paid on March 14, 1931. The entry of December 28, 1930, charging him with his note for the second time, does not appear upon his liability ledger sheet until subsequent to regular entry made thereon under date of February 23, 1931. The entry of December 28, 1930, therefore could not have been made in the regular course of business, otherwise it would not follow regular entries made prior thereto, the last of which was on February 23, 1931. Furthermore, December 28, 1930, fell upon Sunday, which is an additional reason why this transaction nor the entry thereof is correctly reflected by the bank’s records.

The note journal sheet of the Rockford National Bank for November 14, 1930, discloses that Dennis F. Swords is credited with payment of his note for $54,-941.66 by substituting therefor a note of appellee company for the same amount.

The liability ledger sheet of appellee company discloses that it was charged on November 4, 1930, with its note for $54,941.66. However, the note journal sheet of the bank shows that this note of appellee company did not come into the bank as an actual transaction until November 14, 1930, upon which date Swords is credited with the payment of his note for said amount. Subsequently, the liability ledger sheet of the appellee company indicates that its said note was paid on December 28, 1930 (which was on Sunday), and the liability ledger sheet of Swords discloses that upon said date he was again charged with said sum of money and his note again placed among the assets of said bank. This entry of December 28,1930, clearly shows an erasure and alteration of the record. Under date of November 4, 1930, a second entry is made against appellee company for its note for the same amount, which is indicated by the records of the bank as having been paid under date of November 3, 1931.

The note journal sheet for March 6, 1931, shows the appellee company credited with payment of its note for $54,941.66 and this amount again charged to Dennis F. Swords upon his note, and the same again placed in the assets of the bank. It is apparent that the Rockford National Bank had these two notes in its possession during the entire time; that they both represented the same indebtedness; and that when the bank placed one of the notes in the assets of the bank and charged the maker thereof with liability thereon, that at such time it credited the maker of the other note with payment thereof and took such other note out of the assets of the bank. The bank’s records do not disclose at any time that either of these notes was taken or held as security for the payment of the other, but each transaction discloses that it was an individual liability, which upon the records of the bank is reflected as being owed solely by the maker of the note that was then being held in the note file and assets of the bank. There is nothing upon either note nor in the transactions of the bank as disclosed by its records, to indicate that either note was taken or held at any time as security for the other.

Mr. Burpee had been president of the Rockford National Bank for many years and had had many dealings with D. F. Swords. It appears that Swords was anxious to secure control of the National Refrigeration Corporation by the purchase of its stock. Mr. Burpee had communicated with the First National Bank of Chicago, wherein he advised this bank that Mr. Swords had arranged for the purchase of this stock, and that it was his understanding that the same was held by that bank as collateral to a loan. The First National Bank of Chicago wrote Mr. Burpee that it held the stock and in the manner in which he was advised, and that it had instructions to deliver the stock to D. F. Swords through the Rockford National Bank, upon payment of $54,941.66. Following this, and on November 3, 1930, the First National Bank of Chicago advised Mr. Burpee, as president of appellant bank, that they were forwarding to him under separate cover the aforesaid stock, and that they had charged to the account of Ms bank the sum of $54,941.66 in payment of same. Mr. Burpee acknowledged receipt of this letter, and this stock was paid for by his bank, the Rockford National Bank. The bank thereupon took the personal note of D. F. Swords for the above amount of money, which note was No. 27,299, dated November 4,1930, and duly entered against him upon his liability ledger sheet at said bank.

Under date of November 14, 1930, the ledger sheet of appellant bank containing the account of D. F. Swords, indicates the payment of the above loan and the assumption of the same liability on the part of appellee corporation, which liability appears upon its ledger sheet in said‘bank, and is evidenced by note No. 27,676, which note bears date of November 4,1930. The bank kept daily records of note and loan transactions in addition to the liability ledger sheets of its customers. These daily records of note and loan transactions were kept in the note journal, and the transactions for each particular day were entered upon the proper sheet in this journal, and thereafter entered upon the liability ledger sheets. The note journal sheet for November 14, 1930, shows the entry of said note No. 27,676 of appellee for the sum of $54,941.66 and the payment of note No. 27,299 of D. F. Swords, for the same amount. It is not explained how appellee’s note came to be dated November 4, 1930, and if it was received on that date, why it was not duly entered on the records at such time. The debt was subsequently switched back to D. F. Swords’ individual account and his note given a new number of No. 2,309, under date of December 28, 1930. This note does not appear to have been entered on the liability ledger sheet of the bank under the account of Mr. Swords until after regular banking entry of other transactions made thereon under date of February 23, 1931. It i's apparent that the above entry was not made in the due course of business on December 28, 1930, but had to be made on a date after February 23, 1931. The liability ledger sheet of appellee corporation indicates that the payment of its note No. 27,676, dated November 4, 1930, and received on November 14, 1930, was made on December 28, 1930. This entry date of December 28, 1930, is written over an erasure, which is left unexplained. December 28, 1930, fell on Sunday, which is additional proof that the entry could not have been made in the regular course of business. The switching of the liability under the above date does not appear upon the note journal of the bank until March 6, 1931, when appellee corporation’s account is credited with $54,941.66 as' of December 28, 1930, being payment of note No. 27,676, and upon the next line following such entry appears a debit of such amount to D. F. Swords, charging him individually with said amount by virtue of his note with the new number of No. 2,309, under date of March 5, 1931. Again, on the ledger sheet of D. F. Swords appears an entry under date of March 14, 1931, whereby his note is credited with payment by again substituting appellee’s old note No. 27,676, dated November 4, 1930, and assigning to appellee’s old note a new number, No. 2,622, and again entering the same upon the liability ledger of appellee corporation as having been received under date of November 4, 1930. The ledger sheet shows this note paid under date of November 3,1931.

The bank’s records regarding these two notes cannot be reconciled. The officers and employees of the bank who were called as witnesses and who had charge of the records in question, could offer no explanation or solution thereof. The cashier of the bank admitted that the records indicated no indebtedness due from either D. F. Swords or appellee on December 30, 1930, "and that the entries made with reference to the above transactions could not be possible. He denied having anything to do with same or knowing who handled them.

The original note of appellee No. 27,676, and which had been changed to No. 2,622 on March 14, 1931, was carried on the bank’s records until October 30, 1931, when two notes were substituted therefor in the principal sums of $50,000 and $4,941.66. The smaller note was later paid by D. F. Swords through appellee, and charged to his personal account with appellee company. The $50,000 note was signed by Smith and Connors, vice presidents of appellee corporation. The interest thereon as it was paid was charged to the personal account of D. F. Swords.

Connors was in charge of the plumbing and heating department of appellee corporation. He severed connections with the company in February, 1933. He gave no testimony as to the nature of the transaction out of which the $50,000 note arose or what knowledge he had of same. Smith had charge of the electrical division of appellee company. He states he had nothing to do with the financing of the company; that Mr. T. E. Swords looked after this part of the business until his death in September, 1930, whereupon Mr. Dennis F. Swords took charge of the general operation and supervision of the company. He states that Mr. Swords would bring in a note and say ‘ ‘ sign it, ’ ’ whereupon he would sign it. He had no knowledge of what was done with respect to the notes involved in this case. He says that he signed what he was told to sign by Mr. Swords. He remembers no date on the note and he is unable to say when the same was signed. He remembers taking the notes to the bank and bringing back and delivering to D. F. Swords General Refrigeration Corporation stock. The witness states that while acting as vice president, he signed approximately 200 notes payable to different banks; that all he was told was to sign, and that was all there was to it.

It appears that the last shifting of the notes of D. F. Swords and appellee corporation occurred during the month of March, 1931. The note journal sheet for March 6, 1931, shows appellee credited with the payment of its note No. 27,676, and the debt shifted to D. F. Swords, and his individual note substituted for appellee’s note. Following this, the note of D. F. Swords appears to have been replaced by appellee’s note on March 14, 1931. This was appellee’s note No. 27,676, dated November 4, 1930. A new number was assigned to this old note at this time and it was then designated as No. 2,622, and was again entered upon the liability ledger sheet of appellee as having been received under date of November 4, 1930, and the individual note of Swords was then credited with payment upon his liability ledger sheet. The officers and employees of the bank were unable to explain the handling of these two notes and the discrepancies existing in the records with respect thereto. This court is likewise unable to reconcile the transactions, due to the fact that, as the cashier of the bank stated, they could not have occurred as reflected by the records.

While appellant makes no statement of errors relied upon for reversal, as required by the rules, yet appellant argues that appellee corporation is bound by the acts of its officers in respect to the $50,000' note, and that no one should be permitted to take advantage of his own wrong, and therefore appellee is estopped from any defense against the note in the hands of the receiver in this case. ■

A receiver of a national bank is a mere trustee for creditors, and he takes the assets subject to all claims and defenses that might have been interposed against the insolvent corporation. Scott v. Armstrong, 146 U. S. 499, 36 L. Ed. 1059; Williams v. Green, 23 F. (2d) 796; Hatch v. Johnson Loan & Trust Co., 79 Fed. 828; Cutler v. Fry, 240 Fed. 238. Appellant urges that the bank had no notice or knowledge that the purchase of the National Refrigeration stock was by Swords as an individual and that the note of appellee corporation which came into the bank was an accommodation paper executed as security for the personal obligation of D. F. Swords, and that the bank proceeded upon the theory that such note was a bona fide transaction. We are not impressed with this argument. Swords was dealing with the bank in his own individual capacity at the time he purchased this stock. He had intended to pay for it with his own funds. When it was discovered that these funds were exhausted, the bank secured the stock for him and had the cost price thereof deducted from its balance at the First National Bank of Chicago. The stock was transmitted to the Rockford National Bank, and that bank took Swords’ individual note for the purchase price thereof. Nothing is reflected by this transaction to disclose that Swords was in any way acting as an officer or agent of appellee corporation.

The president of the bank knew that Swords was buying this stock, and had corresponded with the First National Bank of Chicago on behalf of Swords, relative thereto. In addition to this, he had the First National Bank of Chicago send the stock to him and to acquire payment therefor by charging his bank’s deposit account in the First National Bank of Chicago, with the price of the stock. When he received the stock, Mr. Swords came in and gave his personal note for the purchase price of the same and the note went into the assets of the bank and was entered upon D. F. Swords’ liability ledger sheet. The evidence also shows that the president of the bank knew of Swords ’ transactions and purpose regarding this stock; and that Mr. G-oodwillie, vice president of the bank, also knew of Swords’ plans and intentions. In addition to this, the bank is chargeable with notice of the fact that when appellee’s note was brought to the bank, appellee did not receive a loan of $54,941.66, or a loan of any amount of money because of such note. The subsequent substitution of the one note for the other, with the resulting entries of the bank showing payment each time of the note that had been taken out, and a recharging of the liability against the maker of the note that was substituted, and the retention at all times by the bank of the two notes, for the same debt, certainly was sufficient notice to it that both of these parties were not indebted for the same liability. Neither can it be argued that appellee’s note was held as collateral security for D. F. Swords’ note, because each note when it appeared upon the bank’s records as a liability against the maker thereof, was an individual and original obligation without having any reference to the other note as security therefor. In other words, when D. F. Swords’ note appeared as an obligation due by him to the bank, it appeared alone, and appellee’s note by the bank’s records was credited with payment; and when appellee’s note appeared as a liability against the maker thereof upon the bank’s records, D. F. Swords’ note was by the same records credited with payment. Neither of these notes by the records of the bank appears to have been held as security for the other, but on the contrary, the records of the bank refute any such argument.

D. F. Swords was desirous of securing enough stock in the Winnebago Company, a corporation, to bring such company under control or into a merger with appellee corporation. In his plans to effect this result, he brought under his control 51,682 shares of the General Refrigeration Corporation stock. He then made an offer to the Winnebago Company that the General Refrigeration Corporation stock would be transferred and conveyed' to the Winnebago Company for common stock of that company at the ratio of 10 shares of Refrigeration Corporation stock for one share of the Winnebago Company stock. This offer was accepted by the Winnebago Company and pursuant to the exchange of stock, Mr. Swords personally received 4,377,-125 shares of the common stock of the Winnebago-Company. The Refrigeration Corporation stock which was transferred to the Winnebago Company included the 7,025 shares of the Refrigeration Corporation stock, which had formerly been held by the bank as security upon Swords ’ note given therefor at the time of the purchase of such stock. D. F. Swords owned 43,771.25 shares of the 51,681.75 shares of the Refrigeration Corporation stock, which was traded to the Winnebago Company for shares of its capital stock as above. This transaction did not occur until the latter part of December, 1930, which was about two months subsequent to November 4, 1930, when appellee’s note found its way into the bank in connection with D. F. Swords’ note. The Winnebago Company subsequently surrendered to appellee corporation the General Refrigeration Corporation stock which it had received from D. F. Swords and others, and conveyed all of its assets to appellee corporation in lieu of 21,534 shares of new common stock of appellee corporation. Mr. Goodwillie, vice president of the Rockford National Bank, knew about the above transactions and Mr. Burpee, the president of the bank, assisted in the plans as carried out. There is an absence of any showing that appellee corporation ever secured any property right in the 7,025 shares of the National Refrigeration Corporation stock in question in this case, until after D. F. Swords and his associates had transferred the stock to the Winnebago Company in consideration of the transfer of its shares of stock to them as individuals, and subsequently thereto when a merger of the two companies was had, and appellee corporation issued new shares of common stock to the Winnebago Company for its assets. The shareholders of the Winnebago Company stock thereupon received their proper number of appellee corporation’s new issue of common stock.

An audit of appellee corporation made by Edward Gore and Company, certified public accountants of Chicago, as of December 31, 1930, in its schedule listing the investments of appellee company, does not list any General Refrigeration Corporation stock, although it does list various other stocks held by appellee corporation at that time, the cost of which is shown to have been $120,589.51. This audit also shows the notes payable by appellee corporation at banks, which notes total the sum of $930,000. No note appears payable to the Rockford National Bank of Rockford, Illinois. The evidence shows that Mr. Burpee, president of the bank, received a copy of this audit and acknowledged receipt and examination thereof, and stated that the same had been placed in the confidential file of the bank. It was also examined by Mr. Baker and Mr. Adkinson, assistant cashiers of said bank.

Under the facts and circumstances existing in this case, we are not of the opinion that the doctrine of estoppel can be applied to appellee. We are of the opinion from the facts as disclosed by the record, that the officers of the Rockford National Bank at all times had knowledge of what was going on and acted with this knowledge. An officer of a corporation does not have authority to execute a corporate note for a personal obligation. Dobson v. More, 164 Ill. 110; Leigh v. American Brake-Beam Co., 205 Ill. 147; Merchants’ Nat. Bank of Peoria v. Nichols & Shepard Co., 223 Ill. 41. The general rule is that the powers of a corporation are limited to those which are express or implied, and that such corporation can only do those acts which are within the scope of its charter. A corporation has no implied power to indorse notes for the mere accommodation of another, when such transaction is foreign to the objects for which such corporation was created. Fletcher Cyc. Corp., vol. 2, p. 1911. In the absence of express authority, a corporation has no power to enter into a contract as surety or guarantor for another. Such an act subjects the assets of the corporation to risks wholly different from that for which it was created. Fletcher Cyc. Corp., vol. 2, p. 1869. And it can make no difference that the corporation might possibly be indirectly benefited by the contract, if the same is not within the scope of its business. Fletcher Cyc. Corp., vol. 2, p. 1870; Best Brewing Co. v. Klassen, 185 Ill. 37; Calumet & Chicago Canal & Dock Co. v. Conkling, 273 Ill. 318, 324. A corporation has no power to become the surety for another or to pledge its corporate assets for the payment of a debt of another, for which it is not responsible. Such acts are ultra vires and void. Wheeler v. Home Savings & State Bank, 188 Ill. 34; Mazer Co. v. Blauer-Goldstone Co., 259 Ill. App. 305; Mercantile Trust Co. v. Kastor, 273 Ill. 332; Calumet & Chicago Canal & Bock Co. v. Conkling, supra. If there is no power to make the contract there can be no power to ratify it. An ultra vires act cannot be ratified and there can be no estoppel to such act. Acquiescence by a corporation in the unauthorized acts of its officers in a matter outside of its corporate powers, cannot give rise to an estoppel. Wheeler v. Home Savings & State Bank, supra; National Home Bldg. & Loan Ass’n v. Home Savings Bank, 181 Ill. 35; Mercantile Trust Co. v. Kastor, supra; Calumet & Chicago Caned & Dock Co. v. Conkling, supra; Steele v. Fraternal Tribunes, 215 Ill. 190.

It is urged by appellant that in surrendering the stock which had been purchased by D. F. Swords and for which it held his note, the same was surrendered to appellee corporation and that therefore it should be estopped from denying liability upon its note, having-received the collateral pledged to secure the note of D. F. Swords. We are of the opinion from the evidence that the stock when surrendered by the bank was surrendered at the instance of D. F. Swords and upon his request and at his instructions. In addition to this, it passed directly to his individual' control. We are of the opinion from the evidence that the officers of said bank fully understood that the stock was being-surrendered to Mr. Swords as an individual for the purposes that he thereafter used it for, and that the same was not only with the knowledge of the officers of the said bank, but pursuant to a plan which had been discussed by Swords with them and which they fully understood and agreed to.

Severe financial and economic depressions bring about a redistribution of property and a new grouping- of ownership and control thereof. In the midst of sudden disaster, men resort to extreme measures in an effort to prevent their life savings from being-swept away. It is with an understanding compassion that we view such attempts to thwart failure. Under such circumstances, men are not disposed to resign tomorrow’s tangle to the winds, but they resort to divers attempts to avert impending- misfortune. Unfortunately, they can only gauge the future by their experience in the past, with the result that their efforts to escape the threatening danger often result in greater misfortune. Mr. Thomas -B. Swords and Mr. Dennis F. Swords were brothers and built up appellee corporation which was commonly called the Swords Brothers Company. Mr. Thomas E. Swords, now deceased, was president of the company for many years. After his death in September, 1930, he was succeeded by Mr. Dennis F. Swords, who severed his connections with the company in February, 1933. Appellant bank is in receivership.

The evidence in this record presents such a state of facts as are incompatible with any other conclusion than that reached by the trial court. The judgment of the trial court is therefore affirmed.

Judgment affirmed.


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    Elmira Swain, Appellee, v. William Hoberg, Appellant.
    Gen. No. 8,924.

      Opinion filed July 6, 1935.
    Oscar W. Hoberg, of Peru, and Arthur H. Shay, for appellant.
    Hollerich & Hurley, of La Salle, and H. L. Richolson, of Ottawa, for appellee.
   Mr. Justice Huffman

delivéred the opinion of the court.

This was an action brought by appellee against appellant to recover damages for personal injuries sustained in a collision between an automobile in which appellee was riding and an automobile owned by appellant. The cause was tried by jury, which returned a verdict for $4,000 in favor of appellee. Judgment was entered upon the verdict, and appellant prosecutes. this appeal from such judgment.

The evidence in the case is not in dispute. Appellant was the owner of the automobile in question that collided with the one in which appellee was riding. Appellant’s family consisted of his wife, a son 19 years of age, and himself. Appellant bought the automobile in May, 1928. The accident happened on August 1, 1930. Neither appellant nor his wife could drive the car. Their son lived with them, and he drove the car. Appellant was 51 years old. He had lived in Peru for 49 years. He was foreman of a machine shop located in said city, which position he had held for the last 18 years. His hours of work were from 7:00 a. m. until 4:30 p. m. Appellant’s son was employed at the Western Clock Company. His hours of employment were from 7:30 a. m. to 4:30 p. m. Appellant and his son were both working on the day of the accident, and appellant knew nothing of the accident until upon his return home from work. It was the usual habit and custom of appellant and his son to walk to work. They did not use appellant’s car for the purpose of going to their places of employment. During the daytime, while appellant and his son were at work, the car was left in appellant’s garage at his residence. On the day of the accident, appellant and his son went to work as usual, except that appellant rode to his place of employment at the Peru Wheel Company with one Dale Pitzer, who worked at the same place as appellant. Appellant states that when he left his residence that morning to go to work, his automobile was in the garage; that he did not know that any person was to take the car from the garage or use it in any way on that day; and that he did not instruct any person to take or use the car for any purpose that day.

The facts disclose that on the afternoon of the day of the accident, appellant’s wife went to a: party, and that her cousin, Alberta Pitzer, took her to the party in appellant’s car. The evidence is conclusive that appellant did not know his wife was going to the party, or that Alberta Pitzer was going to drive his car, until upon his return from work that afternoon after the accident. This is the first time that appellant ever knew Alberta Pitzer to drive his car. She had lived in his home for about three months in the fall of 1929. She did not drive the car during any of that time so far as appellant knew.

Appellant filed special pleas denying operation and control of the car at the time of the accident and denying operation and control thereof at such time by any agent, servant or employee. The burden was upon appellee, under the pleas, to establish agency. The family purpose doctrine is not in force in this State, and the fact that the owner of an automobile keeps the same for the convenience of his family and is aware that certain members of his family may use the same for their pleasure and convenience, does not of itself establish agency. Andersen v. Byrnes, 344 Ill. 240; White v. Seitz, 342 Ill. 266; Arkin v. Page, 287 Ill. 420. Mere permission or lack of objections by the owner of an automobile, to another’s use thereof for their own pleasure and convenience, when the same is not connected in any way with the business of the owner, does not establish agency. Arkin v. Page, supra; Stumpf v. Montgomery, 101 Okla. 257, 32 A. L. R. 1490; Landry v. Richmond, 45 R. I. 504, 32 A. L. R. 1500. The most that can be said in this case is that appellant owned an automobile for the pleasure of his family; that during his absence and without his knowledge, his wife desired to use the car for her own convenience; that her cousin drove the car for her upon a mission peculiar to her personal desires; and while so in the use of said automobile, this accident occurred.

Appellee’s husband in company with Mr. Krueger and with Miss Roseberry, who was driving the car in which appellee was riding, went to appellant’s home to talk with him about the accident. These parties testified that appellant stated he was the owner of the car; that the members of his family had his consent to use it; that it was agreeable with him for Alberta Pitzer to have used it; and that he said, “I will back her up in anything she says or does.” This, in substance, constituted appellee’s proof of agency. Appellant knew nothing about the party or the use of his car until after the accident and his return from work. The fact that he raised no objections to the use of his car in the manner in which it was used is-insufficient to establish agency. The proof does not establish the fact that appellant had given any instructions to anyone to nse his car for any purpose on that day. On the contrary, it discloses that he had no notice or knowledge of such use thereof until as above stated.

Other objections are raised by appellant with reference to certain instructions given for appellee with respect to the assumption of agency and the rule of damages; and to certain instructions of appellant which the court modified. A consideration of these objections raised by appellant, and the other errors assigned, is not deemed necessary for the disposition of this case. Furthermore, they are such as are not likely to again occur.

We are of the opinion that the evidence herein fails to establish agency as required under the rule in this State. The judgment of the circuit court is therefore reversed and this cause remanded.

Reversed and remanded.


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    W. G. Wood et al., Appellants, v. W. J. Kelley et al., Appellees.
    Gen. No. 8,945.

      Opinion filed July 6, 1935.
    Dyer & Dyer, of Hoopeston, Egbert F. Goodyear and W. S. Kay, both of Watseka, for appellants.
    Morris & South and Jno. P. Pallissard, all of Watseka, for appellees.
   Mr. Justice Huffman

delivered the opinion of the court.

Appellants filed their bill of complaint in chancery against appellees praying for an accounting and other equitable relief. Appellees filed their motion to dismiss the bill of complaint, which motion was granted and the plaintiffs below prosecute this appeal, from the order of the court dismissing their bill.

In the city of Watseka,' Illinois, was a banking institution known as the First National Bank of Watseka. One H. T. Eiddell was president of this institution for the last 10 years of its business existence. It suspended business on June 21,1931. This bank was possessed of 11 promissory notes, aggregating the total sum of $13,200, all executed by George F. Gregory. Riddell solicited certain of appellants who had money deposited in the bank to purchase divers of said notes, recommending them to be a desirable investment which would be promptly paid when due. The notes were sold by said bank to various purchasers, some of whom in this case are appellants and some of whom are appellees.

Mr. George F. Gregory, the maker of said notes, died intestate in September, 1927. Administration was had upon his estate in the county court of Iroquois county. The said Riddell filed a claim against the estate for the total amount of the principal and interest due upon all 11 of these notes, which claim aggregated the sum of $14,334.88. To the claim he attached copies of each of said notes. This claim was allowed, and on February 18, 1930, the administrator of the estate paid to the said Riddell thereon the sum of $11,849.95. Riddell deposited this money in his bank under an account headed, “H. T. Riddell, Trustee, Gregory.” The amount collected by Riddell was equal to about 82 per cent of the total amount of the claim.

Appellants had no notice or knowledge that Riddell had collected this money from said estate upon the notes held by them. Some of the noteholders, however, did learn of this action of Riddell. They went to him about the matter, and he paid them from said deposit in said bank, the full amount due them upon their respective notes. These parties are appellees in this case. The said Riddell thus paid out all of the fund except $257.52, which remained on deposit at the time the bank closed. It was the purpose of the bill in this suit to compel the bank and the noteholders who had received full payment of their notes, to come in and give an accounting of how much they had received, and that the appellants be permitted to share therein in the proportion that the total amount collected by B-iddell bore to the total amount due upon the 11 notes as evidenced by the claim filed. The defendants to said bill filed their motion as aforesaid, to dismiss same for want of equity, which motion the court granted. The appellants elected to stand by their bill and the case is now before this court upon the pleadings. The motion to dismiss the bill was in the nature of a demurrer, and therefore admits of the facts set out therein.

A trust may arise by operation of law, where fraud enters in and where the transactions have been carried on mala fide. Such trusts are frequently termed as trusts ex maleficio. Equity has always recognized the fact that one may by a fraudulent act constitute himself a trustee, and in such cases equity will compel such trustee to act with fidelity.

Where a person intermeddles with property of another, by taking possession thereof without authority, he will be held to account to the rightful owners as trustee therefor. Neither Riddell nor the bank had any right, title, or interest in the notes which they had negotiated and for which Riddell filed claim and collected money thereon from the administrator. A person who wrongfully or fraudulently obtains title or possession to property in which he has no right cannot equitably retain such property. Equity will impress a trust upon the same in favor of the true owners and will compel the possessor thereof to properly account therefor. Riddell could not have secured the allowance of the claim filed by him, had the county court known the true facts. Neither could he have obtained the money from the administrator.

These claims were allowed upon each of the notes separately. The personal property being insufficient to pay more than 82 per cent of the total thereof rendered them subject to being pro rated. The rights of no innocent third parties have intervened herein. Bid-dell did not pay the money to appellees to satisfy any private debt of his own. They knew and understood that the money they were receiving was a part of the funds he had collected as herein set out. Knowing these facts, they were chargeable with knowledge that the law impressed a trust upon such funds in the hands of Biddell, for the benefit of all persons entitled to share in the trust.

One who acquires property from a trustee, with actual or constructive notice that it is trust property, will be held to properly account therefor to others who are entitled to share in the benefits of the trust, and persons so receiving such property cannot do so to the injury of the other cestuis ' que trustent. Persons entitled to share in a trust fund must share therein as their equitable rights appear.

A receiver of a national bank is a mere trustee for creditors, and he takes the assets subject to all claims and defenses that might have been interposed against the insolvent corporation. Scott v. Armstrong, 146 U. S. 499, 36 L. Ed. 1059; Williams v. Green, 23 F. (2d) 796; Hatch v. Johnson Loan & Trust Co., 79 Fed. 828; Cutler v. Fry, 240 Fed. 238.

We are of the opinion that the bill stated sufficient facts upon its face to require an answer, and that the order of the circuit court dismissing the bill upon motion of defendants was erroneous. The order and judgment of the trial court are hereby reversed and this cause is remanded with directions that the motion of defendants to dismiss the bill of complaint be denied, and for such further proceedings as the parties may elect to take.

Reversed, and remanded with directions.


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    A. Bowman, et al., Trading as Peat, Marwick, Mitchell and Company, Appellants, v. W. J. Obee and Albert Larson, Appellees.
    Gen. No. 8,948.
    Opinion filed July 6, 1935.
    Zane, Morse, Zimmerman & Norman, of Chicago, and Hall & Hulse, of Waukegan, for appellants; Franklin D. Trueblood, of Chicago, of counsel.
    Marvin W. Wallace, of Chicago, for appellees.
   Mr. Justice Huffman

delivered the opinion of the court.

This is a mandamus proceeding brought by appellants to compel appellee Larson, as town clerk of the town of Deerfield, in Lake county, to issue a certificate for the payment to appellants of their claim for the audit of the township records and accounts for the fiscal years of 1932 and 1933, and to compel appellee Obee to sign and pay such certificate.

The petition alleges that appellants are a firm of certified public accountants; that they were employed to make the above audit; that the same was duly made and the full and complete audit presented to the board of town auditors; that the verified charge therefor was duly filed by appellants with said board of town auditors, and the account as rendered duly audited and approved by said board; that all of the members of the board of town auditors were present at this meeting except appellee Obee, and all those present voted for the allowance of appellants’ claim. The petition further alleges that the audit disclosed delinquencies on the part of appellee Obee, in the performance of his duties as supervisor of said town of Deerfield, and that Obee disputed the accuracy of the audit and refused to sign and pay a certificate to appellants for the services as same was allowed by the board of town auditors. The petition charges that appellee Larson is ready and willing to issue the certificate pursuant to. section 10 of article 13 of the Township Organization Act, Ca-hill’s St. ch. 139, If 126, and that appellee Obee refuses to sign or pay such certificate. The petition further sets out that Obee upon one occasion agreed to sign and pay the certificate if appellants would furnish him an indemnifying bond in the sum of $2,000, whereupon appellants did, on June 6, 1934, present to the said Obee such a bond issued by the Fidelity and Casualty Company of New York, but that Obee then stated he had changed his mind and would not pay appellants’ claim until he was forced to do so. The petition charges that the said town of Deerfield has had on hands at all times sufficient funds available under the law for the payment of the petitioner’s claim; that repeated demands had been made, all of which have been refused; that petitioners have no adequate remedy except by mandamus, and pray that the town clerk shall issue the certificate in the sum of $1,577.90 (the amount approved by the town board), and that Obee be commanded to sign and pay such certificate.

General and special demurrers to the petition were filed. The special demurrer charged that the town meeting intruded into the affairs of Obee; that the action of the town meeting was without authority; that the audit could be made only by the town board, and that no legal liability could arise on account of such services performed by any other person or persons; that the law made it the duty of the town board to make the audit and this duty could not be delegated to others; that no funds are shown to be on hand with which to pay the claim; that certain portions of the audit and of the allegations contained in the petition were scandalous and impertinent; that the allegation of the petition that the town had sufficient funds on hand available for the payment of the account was a mere conclusion of the pleader; and that the town of Deerfield was a necessary party to the suit.

The general and special demurrers were overruled, whereupon Obee filed his answer denying the legality of the employment of the petitioners, and the necessity therefor; alleging that the services were of no value to the town; and charging that the petitioners were engaged in a “fishing expedition.” The answer admits the audit and the allowance of petitioners’ claim; admits demand for payment, but charges that the claim is illegal. It denies the correctness thereof; admits the tender of the indemnifying bond, but alleges the same was worthless. The answer denies that the town has on hands money available for the payment of the claim, and alleges that the petitioners have an- adequate remedy at law. Appellee Larson filed a separate answer in which he asserted that the petitioners should not have a writ of mandamus against him because of the fact that he is indifferent to the matters contained therein and has not refused to sign the certificate required. He filed three special pleas which are similar to those filed by Obee. These special pleas charge that it was the duty of the board of town auditors to make the audit and denied their right to delegate this power to others; second, that there are no funds available with which to pay the claim; and third, that the petitioners have an adequate remedy at law. A fourth plea was filed claiming that the town of Deerfield was a necessary party to the proceedings.

Appellants filed demurrers to all answers and special pleas of the appellees. Following this, Obee made affidavit for a change of venue before Judge Dady, who had heard the proceedings up to that time. A change of venue was granted pursuant to such affidavit. Honorable Theodore Forby, city judge of Zion City, Illinois, was called in to hear the case. On January 30, 1934, appellees made motion before the trial court that the demurrers filed by the petitioners to the answers and special pleas be carried back to the original petition for mandamus. Pursuant to this motion, the trial court entered its order to the effect that the demurrers filed by appellants to appellee’s answers and special pleas were each overruled, and further ordered that the motion of appellees to carry said demurrers back to the original petition was granted and sustained, and that each of said demurrers was so carried back to the petition for mandamus and sustained as to said petition, thereby dismissing the petition.

From this order of the trial court the appellants prosecute this appeal. It was error for the court to carry the demurrers filed by appellants to appellee’s answers and special pleas back to the original petition, when demurrer to such petition had already been made and overruled. People v. Powell, 274 Ill. 222, 228. The question of lack of available funds may be properly raised by answer. DeWolf v. Bowley, 355 Ill. 530. It appears from the petition in this case that the supervisor, Obee, is the only person who has refused to perform his duty; therefore we do not consider the town of Deerfield to be a necessary party on the present record. People v. Rice, 356 Ill. 373, 377; People v. Whealan, 269 Ill. App. 281; Spelling, Extraordinary Relief, vol. 2, sec. 1640, page 1338; High, Extraordinary Legal Remedies, sec. 358, page 347.

It was error for the court to carry the demurrers to ■ the answers and pleas back to the petition to which a demurrer had already been overruled. The judgment of the trial court is reversed and this cause is remanded with directions to deny the motion of the defendants below to carry petitioners’ demurrers to the answers and special pleas back to the original petition, and for such further proceedings herein as the parties may elect to take.

Reversed and remanded with directions.