author: Mr. Justice Sullivan

text:
    Titus L. Thelin, Defendant in Error, v. Charles W. Marwitz et al., Plaintiffs in Error.
    Gen. No. 37,262.
    Opinion filed November 27, 1934.
    Edward H. Kubitz, for plaintiffs in error.

      Wm. J. Sheridan, for defendant in error.
   Mr. Justice Sullivan

delivered the opinion of the court.

By this writ of error defendants seek to reverse a judgment entered against them in plaintiff’s favor for $12,900 in a cause tried by the court without a jury. _

_ Plaintiff entered into a written contract and later February 7, 1930, into a written supplemental agreement with defendants, Charles W. Marwitz, Dorothy Marwitz, his wife, and Emma Marwitz, his sister, to purchase from them a certain 10-acre tract of land in Cook county for $70,000, of which $17,000 was to be paid in cash and $53,000 in notes secured by a purchase money trust deed. The trust deed was to contain a partial release provision for the release of “any lot which will show on the official subdivision plat” of the property, upon the payment to the sellers of $3,500 for each North avenue corner business lot, $1,500 for each of the twelve North avenue 25 feet inside business lots and $750 for each of the remaining 48 lots. The contract provided that, upon the payment of $17,000 cash and the delivery of plaintiff’s notes and trust deed for $53,000, defendants were to convey to him a good and merchantable title to the premises by “a good and sufficient general warranty deed.” During the period from October 7, 1927, to December 12, 1929, plaintiff paid defendants $12,900 upon the purchase price of the property. The parties met in the offices of the Chicago Title & Trust Company, February 28, 1930, to close the deal, but did not do so then nor have they done so since that time. This action was brought by plaintiff to- recover the $12,900 paid by him to defendants toward the purchase price of the land upon their refusal to close the deal and convey the property to him.

It appeared that when the parties met February 28, 1930, for the purpose of consummating the transaction, plaintiff tendered to defendants $4,100 cash to complete the $17,000 cash payment specified in the supplemental agreement and his notes and trust deed securing same for $53,000, and submitted a subdivision plat of the land; and that Marwitz, acting for and in behalf of all the defendants, refused to accept the cash, notes and trust deed.

It also appeared that, although the parties discussed the width of the North avenue corner business lots on many occasions and submitted sketches to each other indicating the width of such lots as each asserted same should appear on the official subdivision plat when prepared, both the original contract and the supplemental agreement are silent as to the width the four corner business lots on North avenue should be platted; and that a few weeks before the parties met on February 28, 1930, plaintiff had prepared by a registered land surveyor a subdivision plat of the property upon which the business lot at the corner of North avenue and First avenue (hereinafter referred to as lot No. 29) was shown to be 100 feet wide, two of the other North avenue corner business lots 29 feet wide and the fourth 30 feet wide.

Defendants ascribe this entire controversy and their refusal to consummate the deal to plaintiff’s manner of platting these four corner business lots as above indicated. They contend that, while the contract for the sale of the lots is silent as to the width of the corner business lots on North avenue that were subject to release from the security of the trust deed upon the payment of $3,500 to defendants, the parties did not contemplate a subdivision of the property that would result in one corner business lot 100 feet in width and the other three 29 or 30 feet in width, and that under a proper construction of the contract it must be determined that it was the intention of the parties that the business corners were to be equal in width or that the payments requisite for the release of same must be in proportion to the frontage of the respective lots; and that by reason of plaintiff’s failure to carry out and comply with the terms of the contract and the supplemental agreement, defendants are legally entitled to retain as liquidated damages the $12,900 paid by plaintiff to them on the purchase price of the property.

Plaintiff’s theory is that it was within the contemplation of the parties at and prior to the execution of the original contract that plaintiff intended to use corner lot No. 29 for a gasoline filling station which would require a frontage of at least 100 feet; that he was warranted under the contract in preparing and submitting to defendants the subdivision plat in question; and that, in any event, at the time the parties met to close the deal the registrar’s certificate of title to the property disclosed that it was incumbered by a trust deed securing notes for $9,000, by reason of which defendants were unable to convey the title of the property to plaintiff in accordance with the terms of the contract of purchase.

Plaintiff testified that every sketch of the proposed subdivision submitted by him to the defendant Marwitz, from the time the original contract was executed, indicated the width of lot No. 29 to be the same as shown on the subdivision plat finally submitted, and that Marwitz offered no objection. He further testified in his own behalf as follows:

“Q. What was the purpose of that lot being made 100 feet. ...
“A. Well, I told Mr. Marwitz at one time.
“Q. When was that?
“A. That was when we were negotiating the deal to begin with. That was in October, 1927.
“Q. Tes.
“A. About the time the contract was signed,— that that would be an exceptionally good corner for a gasoline filling station; that I had already built one and I intended to build one on that corner as North Avenue was paved and First Avenue came through, because that corner would have a cement highway— it has one now which it did not have when we bought the property, it has one on First Avenue and First Avenue is right up to the property and about to go past the property on the other side; and I told him it would be necessary at that time that we would have to have at least 100 feet for that filling station. That is all that was ever said about it.”
Defendant Marwitz testified on cross-examination:
“Q. And you never objected to that First and North Avenue corner of 100 feet?
“A. I never did.
“Q. Just a minute. That answers it. Isn’t it true further that the North Avenue and First Avenue corner is the choice piece in that subdivision?
“A. Yes.
“Q. Isn’t it also true that it would normally and naturally be a gas station? A. Yes.
“Q. Isn’t it further true that in the presence of Mr. Titus Thelin and Mr. Blaine Thelin discussion was had as to that corner being used as a gas station?
“A. It was in an off-hand way.
“ Q. What do you mean by ‘ off-hand? ’
“A. We discussed it, said it would make a good gasoline station.
“Q. Just an ordinary discussion?
“A. Yes.
“Q. Who said that?
“A. They said it and I said it.
“Q. That that would be a good gasoline station?
“A. Why that there would be a good corner for a gasoline station.”
Marwitz testified further “then they got this plat made up, and I submitted to it, and all I wanted is that they should go according to that plat even, and they objected to that, wanted to give me $2,000 instead of $5,000 for the corner.”
On recross-examination Marwitz testified as follows :
“Q. Tour last statement was that Mr. Thelin wanted to give you for the corner, 100 foot lot No. 29, $2000.00; is that true?
“A. To release it.
“Q. To release it, is that true?
“A. Yes sir.
“Q. Isn’t it true that Defendants’ Exhibit 2, the trust deed that was submitted to you at the Chicago Title and Trust Company, executed by Mr. Thelin, specifically provided that he would pay you $3500.00 for the release of Lot No. 29, the lot in question?
“A. Yes. Yes, but they—
“Q. Well, what I mean is, isn’t that true?
“The Witness: Yes, it is right in here, I said I would agree to this contract according to the way it was here, but not to $2000.00 there instead of $3500.00.
“Mr. Sheridan: Q. Where is any $2000.00?
'“A. That is what they said they would give me.
“Q. Didn’t they submit this trust deed with the notes and cash?
“A. No, they did not. They wanted to give me $2000.00 and I would not accept it.
“Q. Wasn’t $4100.00 submitted to you at the Chicago Title and Trust Company?
“A. They would not accept—
“Q. Just a minute. Maybe we do not understand each other, Mr. Marwitz.
£ The Court: Just listen to his question.
“Mr. Sheridan: Q. When you and I, Mr. Kubitz and Mr. Titus Thelin and Mr. Blaine Thelin were at. the Chicago Title and Trust Company and there was exhibited to you $4100.00 in cash, this trust deed, Plaintiff’s Exhibit 3,. together with certain notes that were submitted to you, didn’t you understand at that time that that particular clause was in there?
“A. Sure I did, but I wanted to settle on this basis, this contract here (indicating).
“Q. On the basis of the trust deed that was submitted?
“A. Yes, sir.
“Q. Why didn’t we settle?
“A. Because they only wanted to give me $2000.00 there.
“Q. But the notes accompanying this trust deed were made on the basis of $3500.00?
“A. On a release — I should release that for $2000.00 instead of $3500.00.
“Q. Where is any $2000.00 in there?
“A. That, is what they said they would give me.
“Q. Didn’t they submit this and the notes to you?
“A. No, they did not. They did not agree to settle on that thing there. ■
“Q. No, this was submitted to you together with the notes, wasn’t it?
“A. No sir, they would not sign it.
“Q. Would not sign what ?
“A. Would not give it to me and the notes, because I would not accept $2000.00 on that release. I said I would not release on $2000.00. They refused, not I. ’ ’

It will be noted that Marwitz testified that defendants “would agree to this contract according to the way it was here, but not to $2000.00 there instead of $3500.00,” and that he refused to comply with the contract for the sale of the land “because they only wanted to give me $2,000 there.”

It is fair to assume that plaintiff was actuated to enter into the contract for the purchase of the 10-acre tract of land chiefly because of the desirability of the lot on the corner of North and First avenues for use as a gasoline filling station. Marwitz admitted discussing with plaintiff its desirability for such purpose prior to the execution of the original contract. Plaintiff testified that he told Marwitz “it would be necessary ... to have at least 100 feet for that filling station. ’ ’

Marwitz’s testimony to the effect that he acquiesced in the subdivision plat finally presented obviates the necessity of construing the contract for the purpose of ascertaining the intention of the parties. However, if a determination of the issues necessitated construction of the contract, a fair interpretation of its terms would have to include consideration of the evidence of both plaintiff and Marwitz as to the desirability of lot No. 29 for filling station purposes, as well as plaintiff’s expressed intention of using it for such purpose. Advised in advance as to the frontage requisite for the filling station defendants might contract for the release of the corner lots at such widths and upon such payments as they saw fit, and the mere fact that the lots as they appeared on the subdivision plat were of different widths is not conclusive of defendants’ contention that it was the intention of the parties that the lots could only be released on payment on a frontage basis. That would entail the substitution of a new contract for that made.

To ascertain the intention of the parties the courts in the construction of contracts look to the subject matter and the surrounding circumstances. They are not excluded from the light which the parties enjoyed when the contract was executed. (Hayes v. O’Brien, 149 Ill. 403; Close v. Browne, 230 Ill. 228.) In case of doubt the interpretation which the parties by their acts under the contract have given it will have weight and may be controlling provided the plain terms of the agreement are not overthrown. (Nelson v. Colegrove & Co. State Bank, 354 Ill. 408; Bishop on Contracts, 2nd ed., sec. 412.) The parties to this cause have by their own acts interpreted the only phase of the contract concerning which there could be any doubt; plaintiff by submitting the subdivision plat, and Marwitz by assenting to the plat submitted according to his own testimony.

Marwitz’s testimony that he “submitted” to the final plat tendered and would agree to “this contract according to the way it was here,” and that he refused to “settle,” “because they only wanted to give me $2000.00” for the release of lot No. 29, is in itself a complete refutation of and sufficient answer to defendants’ contention that they were entitled under the law to retain plaintiff’s $12,900 as liquidated damages because of his failure to agree to pay more than $3,500 for the release of lot No. 29.

Marwitz then seeks to avoid his acceptance of the subdivision plat presented by insisting that after he had assented to and accepted it plaintiff asserted that he would only pay $2,000 for the release of lot No. 29 instead of $3,500 as specified in the contract.

The falsity of Marwitz’s testimony that “they only wanted to give me $2000” instead of $3,500 for the release of lot No. 29 is conclusively demonstrated by the record. The trust deed admitted in evidence, as well as the notes which were tendered to Marwitz along with the $4,100 cash on February 28, 1930, provided for the payment of $3,500 for the release of each of the four corner business lots.

Defendants’ attorney saw fit to testify in their behalf and no corroboration is found in his testimony of Marwitz’s evidence that plaintiff only wanted to pay $2,000 for the release of the business corners. In fact the attorney’s testimony was in effect a contradiction of such evidence.

The contract provided for 12 25-feet inside business lots on North avenue. That left 188 feet of North avenue frontage available for the four business corners specified in the contract which might he released upon the payment of $3,500 for each. Whether this 188 feet frontage was allocated to the four corners equally, allowing 47 feet frontage to each corner lot, or was platted as was done here, the amount that defendants would have realized for the release of the four corners from the security of the trust deed would have been the same.

It is also fair to assume that if the deal had been consummated, and even though plaintiff had immediately secured the release of lot No. 29 by the payment of $3,500, he intended to fulfill his obligations under the trust deed in their entirety and that defendants would have received $70,000, the contract price they bargained for. If the deal had gone through plaintiff would have had a cash investment of $17,000 in the property, and it is unreasonable to infer that after he had secured the release of lot No. 29 by the payment of an additional $3,500 he would default as to the balance of the property, as argued by defendants, and sacrifice his investment.

The record discloses that when the parties met February 28, 1930, for the purpose of consummating the sale, the title to the property was incumbered with a trust deed securing certain notes for $9,000, and that neither Marwitz nor his attorney had in their possession a release of such trust deed. It would, therefore, have been impossible for defendants at that time to convey the title of the property to plaintiff in accordance with the terms of the contract, even though there had been no controversy between the parties as to the width of lot No. 29.

We are of the opinion that defendants are unlawfully withholding from plaintiff the $12,900 paid by him to them on the purchase price of the land and that it would be unconscionable to permit them to retail! said sum. They refused to abide by their contract, and we think the trial court was entirely justified in entering judgment against them for the above amount'.

For the reasons indicated herein the judgment of the superior court is affirmed.

Affirmed.

Gtridley, P. J., and Soanlan, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Arthur Sweet, Defendant in Error, v. Elsie Sweet, Plaintiff in Error.
    Gen. No. 37,301.

      Opinion filed November 27, 1934.
    Solomon & Borden, for plaintiff in error.
    Bzdek & Bzdek, for defendant in error; Walter Bzdek, Stephen J. Bzdek and Alexander J. Napoli, of counsel.
   Mr. Justice Sullivan

delivered the opinion of the court.

This writ of error seeks to reverse certain orders of the superior court denying defendant Elsie Sweet’s motions to vacate and set aside a default decree entered June 27, 1933, granting her husband, Arthur Sweet, a divorce on the ground of adultery. Defend-, ant’s motions were supported by verified petitions alleging lack of jurisdiction of the court to enter the decree.

Plaintiff filed his bill of complaint May 8, 1933, charging as his sole ground for divorce that defendant committed adultery May 4, 1933. The summons was returnable to the June, 1933 term, and was returned as having been personally served on defendant May 9, 1933, by Fred C. Heintz, deputy sheriff of Cook county. An order of default was entered June 22, 1933, for want of appearance and answer. The evidence was heard by the chancellor June 22, 1933, and the certificate of evidence was filed and the decree of divorce entered June 27, 1933.

Section 8, paragraph 9, Cahill’s 1931 Revised Statutes of Illinois, ch. 40, is as follows:

“If the bill is taken as confessed, the court shall proceed to hear the cause by examination of witnesses in open court, and in no case of default shall the court grant a divorce, unless the judge is satisfied that all proper means have been taken to notify the defendant of the pendency of the suit, and that the cause of divorce has been fully proven by reliable witnesses. Whenever the judge is satisfied that the interests of the defendant require it, the court may order such additional notice as equity may seem to require. ’ ’

Plaintiff testified in his own behalf as to facts and circumstances in support of his charge of adultery. The only other witnesses called by him were police officers Martin A. Sonnenschein and John Antone of Blue Island, Illinois, who not only did not corroborate plaintiff’s testimony, but flatly contradicted it. It is suggested that the court believed that these witnesses testified falsely. As to the sufficiency of the evidence to support the decree, it matters not whether the court believed the police officers or not. The fact remains that the decree of divorce was entered on the uncorroborated evidence of plaintiff alone.

In passing upon the above section of the Divorce Act in Wellington v. Wellington, 137 Ill. App. 394, 397, this court said:

“It is said further that the decree was not justified by the evidence. There is, we think, force in the contention. The finding that defendant has wilfully deserted and absented himself from the complainant for two years rests upon the testimony of the complainant alone, and is not ‘fully proven’ by the other evidence. The divorce statute (chapter 40, section 8) provides that in no case of default shall a divorce be granted unless the judge is satisfied ‘that the cause of divorce has been fully proven by reliable witnesses.’ This requires ‘the evidence of more than one witness.’ Kline v. Kline, 104 Ill. App. 274.”

No further citation of authorities is required in support of the well established rule that in case of default a divorce will not be granted unless the cause of divorce is “fully proven” by more than one witness. In our opinion the decree of divorce in this cause was illegally entered.

July 10, 1933, defendant filed her verified petition alleging inter alia that she had not'been served with summons and that she had no notice of any kind of the divorce proceeding until July 6, 1933; that she did not commit adultery at the time and place alleged in plaintiff’s bill of complaint nor at any time; that the court had never acquired jurisdiction over her; and that the decree was void for want of jurisdiction. The petition prayed that the decree be set aside; that defendant be given leave to appear and file her answer; and that she be granted leave to file a cross-bill and that plaintiff be ruled to answer same.

On the same day an order was entered which, after reciting that the court had heard the testimony' of Fred C. Heintz, deputy sheriff of Cook county, Elsie Sweet and H. C. Maddus, denied defendant’s motion to vacate the decree of divorce.

July 27, 1933, by leave of court defendant filed another verified petition which alleged substantially the same facts as were alleged in the petition of July 10, 1933. It also alleged that on July 10, 1933, defendant presented a petition praying that the decree of divorce be vacated and set aside inasmuch as the court never had jurisdiction of her; that she had no knowledge when she filed said petition July 10, 1933, as to the time of day on May 9, 1933, nor at what place the deputy sheriff claimed to have served her with summons; that she moved that her petition of July 10, 1933, be set for hearing, but the court caused the hearing to be had immediately; that the deputy sheriff testified that he served the summons in this cause upon her at 12043 South Western avenue, between 6:45 p. m. and 7 p. m., while the defendant was preparing a meal in the kitchen at said address; that his testimony was the first information she had received as to the exact time and place of the purported service; that she testified that she was not served with the summons at that time nor at any other time; that H. C. Maddus, who happened to be in court with her at that time, testified that he was present in her home at 12043 South Western avenue, between 6:45 p. m. and 7 p. m., May 9, 1933, and that no summons was served upon her at that time; that she moved to that address on May 9, 1933, and that two men who moved her furniture were present on the premises from 6:20 p. m. until 8:30 p. m. on said date; that these two men would testify that she was not served with summons during that time and that the deputy sheriff was not present during the period from 6:20 p. m. until 8:30 p. m. May 9, 1933, at her home, 12043 South Western avenue; and that she did not have an opportunity to present the testimony of these two witnesses at the hearing on July , 10, 1933. This petition concluded with the prayer that the order of July 10, 1933, denying defendant’s motion to vacate the decree of divorce be vacated and set aside; that the decree of divorce entered by default be vacated; that she be granted leave to appear and file her answer to plaintiff’s bill of complaint; and that she be granted leave to file a cross-bill and plaintiff ruled to answer her cross-bill. This petition also contained a prayer that plaintiff be required to answer same and that the matter be set for hearing*.

September 19, 1933, defendant moved the court for a rule on plaintiff to answer her petition of July 27, 1933, and that the petition and answer thereto be set for hearing. On the same day the court refused to order plaintiff to answer defendant’s petition and denied her motion for a hearing, but entered an order which, after denying her motion to vacate the order entered July 10, 1933, and to vacate the default decree of divorce theretofore entered, dismissed her petition of July 27, 1933.

Defendant contends that plaintiff did not establish the adultery charged as a ground for his divorce by competent witnesses as required by the statute in default cases; that the decree of divorce could not be lawfully entered on the testimony of plaintiff alone, particularly when witnesses called by him not only did not corroborate but contradicted him; that the return of the sheriff can be contradicted and contested; that defendant should have been allowed an opportunity to present*the testimony of all of her witnesses to prove, if she could, that she had not.been served with summons; and that the decree of divorce was void, inasmuch as the court had no jurisdiction of defendant.

Plaintiff’s theory is that he has proven adultery, the only alleged ground for divorce, by competent witnesses as required by statute; that the court, having once heard the testimony of defendant and denied her motion, should not again consider her petition to vacate the decree, regardless of the fact that she was not afforded an opportunity to present the testimony of all of her witnesses, which she asserts would show that the deputy sheriff neither was present nor served her with summons at the time and place testified to by him as to such service.

Defendant was entitled to her day in court and, in our opinion, was justified in filing* her second petition July 27, 1933, in which she not only asked that the decree be vacated and that she be granted leave to file an answer and cross-bill, but prayed that plaintiff be ruled to answer her petition, and that the petition questioning* the court’s jurisdiction and the answer thereto be'set down for hearing so that all of her witnesses might be permitted to testify.

We are mindful of the established rule of law that the return of an officer in due form cannot be impeached by the unsupported testimony of the party served with process. (Duffy v. Frankenberg, 144 Ill. App. 103; Moore v. Robbins Machinery & Supply Co., 252 Ill. App. 24; Marnik v. Cusack, 317 Ill. 362.)

Yet, while there is some conflict in the authorities, it has frequently been held that where a defendant has not been served as required by law and has not entered his appearance the court has no jurisdiction over him, and in such a case where the court assumes jurisdiction and enters a decree against him, he may, even after the term at which the decree was entered, upon petition and clear proof that he was not served, have the decree or judgment set aside and be permitted to defend the case on its merits. Zandstra v. Zandstra, 226 Ill. App. 293; Edson v. Edson, 108 Mass. 590; 1 Freeman on Judgments (4th Ed.) secs. 96, 97, 98, 99, 100; Feikert v. Wilson, 38 Minn. 341; Heffner v. Gunz, 29 Minn. 108; Covert v. Clark, 23 Minn. 539; see also Keeler v. People, 160 Ill. 179; City of Olney v. Harvey & Boyd, 50 Ill. 453; Kline v. Kline, 104 Ill. App. 274.

Where the sheriff or other officer has made a false return, whether wrongfully and intentionally or innocently by mistake, relief may be granted by a court of equity or law, according to the circumstances, to the person injured by the false return. Marnik v. Cusack, supra; Owens v. Manstead, 22 Ill. 161; Brown v. Brown, 59 Ill. 315; Hickey v. Stone, 60 Ill. 458; Sibert v. Thorp, 77 Ill. 43; Jones v. Neely, 82 Ill. 71; Kochman v. O’Neill, 202 Ill. 110; Hilt v. Heimberger, 235 Ill. 235.

In its desire to prevent the entry of fraudulent divorce decrees our legislature, by its enactment of section 8 of the Divorce- Act, Cahill’s St. ch. 40, If 9, conferred wide discretionary powers on the trial judge as to notice to the defendant of the pendency of the proceeding. To safeguard the rights of the defendant it declares that “in no case of default shall the court grant a divorce unless the judge is satisfied that all proper means have been taken to notify the defendant of the pendency of the suit”; and “whenever the judge is satisfied that the interests of the defendant require it, the court may order such additional notice as equity may seem to require.” Both the letter and spirit of the Divorce Act deprecate the entry of default divorce decrees without due notice to the defendant as provided by law. It is not consonant with justice and equity to preclude a defendant wife charged with adultery from a hearing on her motion to vacate a default decree entered against her when she petitions the court that she is prepared to show'by clear and satisfactory proof that she was not served with summons in the cause as provided by law, that she had no notice of the pendency of the suit, that she was diligent in presenting her petition to vacate and that she has a meritorious defense to the action.

The record discloses that the first knowledge defendant had as to the exact time and place the deputy sheriff claimed to have served her personally with the summons was from his testimony July 10, 1933, and we are constrained to hold that the court erred in not granting her request for a continuance to permit her to produce her witnesses in contradiction of the deputy sheriff’s claimed service of the summons.

The trial court dismissed her second petition without requiring plaintiff to answer same and without affording defendant an opportunity of having her witnesses heard, and we are further constrained to hold that leave was properly granted her to file her second petition on July 27, 1933, to vacate the decree, and that the chancellor erred in refusing to enter a rule on plaintiff to answer same, and in refusing to order a hearing on such petition and answer to determine whether her proof in contradiction of the return of personal service on her by the deputy sheriff was sufficiently clear and satisfactory to show that she was not, in fact, served and that the deputy sheriff had made a false return.

For the reasons indicated herein the cause is reversed and remanded to the superior court with directions to vacate the orders of July 10, 1933, and September 19, 1933, and with further directions to vacate the default decree of divorce entered June 27, 1933, and to permit defendant to appear and to file such pleadings as are deemed necessary.

Reversed and remanded with directions.

G-ridlet, P. J., and Scanlan, J., concur.


text:
    Illinois Interior Finish Company, Appellant, v. Ben Poenie et al., Defendants. Tillie H. Novak, Appellee.
    Gen. No. 37,346.

      Opinion filed November 27, 1934.
    Claude J. Dalenberg, for appellant.
    Novak, Turek & Vogel, for appellee Tillie H. Novak.
   Mr. Justice Sullivan

delivered the opinion of the court.

Plaintiff, Illinois Interior Finish Company, filed its bill of complaint in the circuit court to enforce its claim for mechanic’s lien as a subcontractor against Ben Poenie, contractor, Tillie H. Novak, the owner of the premises described in the bill of complaint, Charles W. Novak, her husband, the Chicago Title & Trust Company, as trustee under the trust deed on record against the premises and the unknown owners of the indebtedness secured by such trust deed. Answers were filed by Tillie H. Novak, the principal defendant, and the Chicago Title & Trust Company. The other defendants were defaulted. The cause was referred to master in chancery Wm. A. Doyle. He found in his report that plaintiff was not entitled to a mechanic’s lien. The chancellor overruled exceptions to the master’s report and entered a decree approving said report and dismissing plaintiff’s bill of complaint for want of equity. This appeal followed.

Plaintiff’s bill alleged that the defendant Tillie H. Novak was the owner of the premises in question on August 9, 1929, and thereafter; that she entered into a contract with her codefendant Ben Poenie for the construction of a building thereon, the terms and provisions of which were unknown to plaintiff; that plaintiff had a contract with Poenie to furnish the lumber and millwork to be used in the construction of a building on the premises and that such lumber and millwork were furnished under its contract with Poenie or upon his order, for which there remained due and unpaid a balance of $3,386.35 and interest thereon from March 27, 1929.

The Chicago Title & Trust Company, by its answer, claimed an interest in the premises by reason of the trust deed under which it was trustee and neither admitted nor denied the allegations of the bill, but called for strict proof thereof.

Tillie H. Novak was the only defendant who participated in the hearings. She filed an answer wherein she admitted that she was the owner of the premises in question, but denied that she had a contract with her codefendant Ben Poenie for the construction of the building thereon, and neither admitted nor denied the other allegations of the bill. She then alleged as an affirmative defense that she had a contract with the Novak- Agency & Loan Company, a corporation (hereinafter referred to as the Novak Company), by the terms of which that company agreed to construct and complete the building for her at an agreed price of $82,475.40, free from “all claims, liens and charges.”

There was no contest at the hearings before the master or the chancellor except as to the issues raised by the affirmative defense set np in the answer of defendant Tillie H. Novak.

Plaintiff contends (1) that the purported contract between Tillie H. Novak and the Novak Company was fraudulent and a subterfuge because she and the Novak Company were in reality one and the same interest and therefore the alleged building contract was not effective to bar its lien right; (2) that, if the contract between Tillie H. Novak and the Novak Company had any effect as between the parties thereto, it would not operate to bar the lien right of plaintiff because the preponderance of the evidence does not show that plaintiff had any notice of such contract; and (3) that evidence relating to any agreement on plaintiff’s part to give a waiver of lien as a condition to its being awarded the contract for the lumber and millwork by Ben Poenie should have been disregarded as being inadmissible under the pleadings and incompetent under the law.

The theory of the principal defendant, Tillie H. Novak, is that, under her contract with it, the Novak Company as the original contractor agreed to construct the building in question and deliver it to her free from liens; and that before plaintiff made its contract with Ben Poenie, a subcontractor, to furnish the millwork and lumber for the building, plaintiff had notice of the no-lien provision of the original contract and expressly agreed to claim no lien.

It appeared that on September 1, 1928, Tillie H. Novak acquired title to the property at 11932-36 Stewart avenue, Chicago, upon which the building in question was thereafter erected; that negotiations for its acquisition by her were carried on by the Novak Company for more than a month prior to the above date; that during August, 1928, the Novak Company made arrangements for the erection of a three-story 19-apartment brick building on the property; that Poenie was given the contract for the carpenter work; that plaintiff was awarded the contract to furnish lumber and millwork by Poenie and supplied same to the amount of $11,073.28; and that it was paid $7,686.93, leaving a balance of $3,386.35 due and unpaid. Evidence was offered in Tillie H. Novak’s behalf that she had no contract with Poenie, but that she entered into a contract with the Novak Company July 14, 1928, whereby it undertook to construct the building and deliver it complete to her free of liens for $82,475.40; and that it in turn awarded the contract to Poenie for the carpenter work.

The general contract between Tillie H. Novak and the Novak Company, received in evidence by the master, purported to have been signed by Tillie H. Novak and the Novak Company, by Charles W. Novak, treasurer, who was Tillie H. Novak’s husband. It was attested by E. E. Novak, assistant secretary of the company, who was the son of Charles W. and Tillie H. Novak.

It appeared that the Novak Company was incorporated November 29, 1920; that John W. Novak, Tillie H. Novak and E. V. Novak comprised its first board of directors; and that Tillie H. Novak, John W. Novak, Frank Novak and E. V. Novak were its incorporators.

The following syndicate agreement involving the premises in question was received in evidence by the master:

“August 1st, 1928
“We the undersigned agree to enter into a syndicate to erect an nineteen-apartment building on Stewart Avenue between 119th and 120th Streets, Chicago, Illinois, and each will have an interest in the said real estate according to the amount set opposite their respective names.
“It is understood that the undersigned are to be subcontractors on the said building and that the amounts set opposite their names shall be deducted from their contracts.
“Below are listed the by-laws of the syndicate and are understood by all the members thereof.
“First: In case any member wishes to sell his interest in the said building he is to offer his interest to the syndicate itself.
“Second: If the syndicate does not wish to purchase same then the member can offer same to any member of the syndicate with the majority consent of same.
“Third: The selling member has the privilege to sell his interest to an outsider providing the syndicate or any member refuses to purchase his interest with the approval of the syndicate.
“It is further understood that the Novak Agency and Loan Co. are making arrangements for a sixty thousand dollar first mortg. bond issue at six per cent interest and five per cent commission with prepayments starting two years after date. Such further and other financing to be made with the approval of the syndicate. The total cost of the ground being 75 x 125 is $8,900 cash.
“Novak Agency Loan Company, By E. E.
Novak, Asst. Treas. $3000.00
“M. J. O’Donnell 2500.00
“J. P. Boggeveen 2500.00
“Kensington Concrete Co. by A. Lagerwey 3000.00 “Harper & Barce, by Geo. Harper 2500.00
“Bernard Poenie 3000.00”
Poenie’s proposal to do the carpenter work on the building and its acceptance is as follows:
“August 2,1928; Novak Agency.
“I propose to furnish lumber and millwork, stain, rough hardware and all carpenter work and labor on the 19 flat apartment to be erected by a Syndicate and agree to come in the Syndicate for the sum of $3000.00 and will do the job for the sum of $20,000. It is understood that I am to have an interest in the above building to the extent of $3000.00.
“Signed Ben Poenie.
“Above accepted
Novak Agency and Loan Company
By E. E. Novak
Assistant Secretary.”

That portion of par. 21, chapter 82, Cahill’s Illinois Bevised Statutes, pertinent to this controversy, is as follows:

“If the legal effect of any contract between the owner and contractor is that no lien or claim may be filed or maintained by any one, such provision shall be binding; but the only admissible evidence thereof as against a sub-contractor or material man, shall be proof of actual notice thereof to him before any labor or material is furnished(by him; or proof that a duly written and signed stipulation or agreement to that effect has been filed in the office of the recorder of deeds of the county or counties where the house, building or other improvement is situated, prior to the commencement of the work upon such house, building or other improvement, or within ten days after the execution of the principal contract or not less than ten days prior to the contract of the sub-contractor or material man. ’ ’

There is neither proof nor contention that any written no-lien stipulation or agreement was filed in the office of the recorder of deeds as provided in the above section of the statute. Whether or not plaintiff received actual notice of the no-lien provision of the purported original or general contract must be determined from the conflicting testimony of various witnesses as to what transpired at a certain conference held at the office of the Novak Company the latter part of July or early in August, 1928.

Garrett Yonker, general manager of plaintiff, testified that while others were in the office the only participants in the conference were Poenie, Charles W. Novak and himself.

Edward E. Novak, assistant secretary of the Novak Company, and Dwight M. Nelson, a salesman for the company, testified that they were present and participated in the conference.

Charles W. Novak testified that he told Yonker at that conference that the building was not completely financed and “before we let Mr. Poenie have this contract we would have to . . . before we could let him have the contract for this carpenter work for this building, the millwork and the lumber work, that this building not being financed and that the contract between Tillie H. Novak and the Novak Agency & Loan Company provided that there should be no liens against these premises and that if they wanted to furnish Poenie the lumber ... if they wanted to furnish the lumber on this job, there could be no lien filed for those reasons and that the Sterling Lumber & Supply Company, who had furnished material for us for a good many years, were willing to have . . . were willing* to furnish this job under those circumstances and conditions.”

Ben Poenie testified in reference to the same conference that this meeting came about because Yonker wanted to sell the lumber on this job; that “Mr. Novak says ‘if it doesn’t make any difference to you, I would like to have the Sterling Lumber Company furnish the lumber. We know about how far they go and if we don’t have enough’ — he didn’t have all his bids in— ‘it made up a lien on the agent.’ ” He further testified “Mr. Novak got the bills together and figured out how much each and every item is and counted it up and probably they would be a little money short, so Mr. Novak said if we buy lumber off of the Sterling Lumher Company, which company we very well know, we could always get a hand from them people, but we must have a waiver of lien in full which each and every of their boys are willing*' to give and we can bank on the Sterling Lumber Company that he will do as he says.”

Edward E. Novak testified that they had placed a $60,000 first mortgage on the property through a Mr. Bell; that as a consequence there would be a considerable shortage of money; that they contemplated further financing; that he was wondering what Yonker would do about his bill; that Yonker then said “why if you can get along with one lumber company, there is no reason why you can’t go along with us.” Edward E. Novak further testified that there could be no liens filed against this building; that Yonker asked why and he said that he would not go into a lot of detail but that there absolutely could not be any liens because it would jeopardize the interest of the first mortgage holder and they couldn’t stand for it.

Dwight M. Nelson testified: “Edward E. Novak and myself brought up the discussion. We wanted an understanding* that, if the lumber and millwork was to be furnished by the Illinois Interior Finish Company, they would furnish us with waivers of lien before we gave them a final payment of money, because the building at the present time was not thoroughly financed; that it was only financed by a first mortgage of -$60,000; that a second mortgage couldn’t be made until we had the building* completed. ’ ’

Garrett Yonker testified that the conference was about the purchase of material; that Mr. Novak had been buying his material from the Sterling* Lumber and Supply Company and that the Sterling Lumber and Supply Company was inclined to be more or less lenient with him; that they were limited in the amount that they could draw from the loan from time to time, and that Mr. Novak wanted plaintiff to be satisfied to go along and get part of the money due on the 10th of the month following deliveries, instead of getting all that was due.

It was disclosed that, although the purported original contract was executed in duplicate, no copy of it was ever given to Tillie H. Novak, both copies remaining in the office of the Novak Company.

Did Tillie H. Novak enter into a bona fide contract with the Novak Company for the construction and completion of the building in question free from liens, and did plaintiff have actual notice of such contract and its no-lien provision?

The record discloses that the Novak Company corporation was a family affair, the directing head being Charles W. Novak, the husband of Tillie H. Novak. None other than members of the Novak family appears to have any interest in the corporation, either as stockholders, officers or directors. Tillie H. Novak was one of its incorporators and a member of its first board of directors. The record is silent as to whether she was a stockholder and officer at the time her alleged contract with the Novak Company was executed. Although, according to Novak, both copies of the contract between Tillie H. Novak and the Novak Company reposed in the office of the Novak Company at that time, it is not even suggested that the contract or a copy of it was exhibited to plaintiff’s manager, Yonker, on the occasion of the conference or at any other time prior to the award of the contract to plaintiff by Poenie for the lumber and millwork, or prior to the time plaintiff delivered same.

It is significant that in Poenie’s contract for the carpenter work, approved by E. E. Novak, assistant secretary of the Novak Company, no mention was made of an original contract between Tillie H. Novak and the Novak Company containing a no-lien provision. It is also significant that no mention of such a no-lien original contract was made in plaintiff’s contract with Poenie to furnish the lumber and millwork.

Novak & Company was not authorized under its charter powers to engage in the building business, and it does not appear in this cause that" it actually performed any of the construction work on the building in question. It appears rather that it simply awarded the contracts for the various phases of construction necessary to complete the building.

Yonker, plaintiff’s manager, testified that neither Charles W. Novak, nor any of the other Novaks, nor any other person advised him on the occasion of the conference or at any other time that there ever had been executed a contract between Tillie H. Novak and the Novak Company containing a no-lien provision. He testified further that he was informed at the conference that the building was to cost $82,475.40; that the Novaks were able to secure a first mortgage building loan of but $60,000; that such loan constituted all of the money available for the erection of the building, and that it would be insufficient to pay all of the contractors, subcontractors and material men in full; and that it would be necessary to secure additional funds through a second mortgage, but that same could not be negotiated until the building was completed. He also testified that the only request made of him by any of the Novaks was that plaintiff indulge them to the extent of not insisting upon the payment of the full amount due it each month for materials furnished under its contract, because of their limited financing, and that plaintiff did so indulge them.

The contract between Tillie H. Novak and the Novak Company purports to have been executed July 14, 1928, yet the syndicate agreement of August 1, 1928, which recites that $8,900 was paid for the vacant property, the title to which was thereafter taken in the name of Tillie H. Novak, is absolutely silent in so far as evidencing any equitable interest of Tillie H. Novak in the property. That agreement does set forth the various beneficial interests of the members of the syndicate and evidences the fact that several contractors, including Poenie, agreed to have certain portions of the amounts due them under their building contracts withheld and applied to their interests under the syndicate agreement.

It unmistakably appears from the evidence that Til-lie H. Novak had no interest in the property except as a nominal owner and that she was holding title to the property in secret trust for a syndicate consisting of the Novak Company and others. We seriously doubt from the evidence that the purported contract between Tillie H. Novak and the Novak Company was in existence either when plaintiff was awarded the contract to furnish the lumber and millwork or when it delivered such material that went into the construction of the building in question. If there was such a contract, the evidence, in our opinion, is conclusive that its existence was secret, and that it was first brought to light in support of Tillie H. Novak’s defense to this proceeding. If in any conceivable case a court of equity should look through the form to the substance, it should do so in a case like this.

If we assume that Tillie H. Novak was the equitable owner as well as the legal holder of the title to the premises, still the contract between her and the Novak Company could not avail to deprive plaintiff of its lien right. The record is replete with convincing evidence that the interests of the Novaks, husband, wife and sons, are to all intents and purposes identical. If Tillie H. Novak was the equitable owner of the property, or had any equitable interest therein, there is ample justification for holding that the corporation was a mere agency or instrumentality for her and could not legally contract with her as a principal for the erection of the building.

In such cases as this the courts will not permit themselves to be blinded nor deceived by mere forms of law, but, regardless of the fictions, will deal with the substance of the transaction involved as if the corporate agency did not exist and as the justice of the case may require. (Chicago, M. & St. P. Ry. Co. v. Minneapolis Civic & Commerce Ass’n, 247 U. S. 490.)

If we consider this case in what we think is its true aspect, i.e., that Tillie H. Novak had no equitable interest in the property but was simply a nominal holder of the title in secret' trust for the benefit and use of the Novak Company and others, the conclusion is inevitable that the contract between Tillie H. Novak and the Novak- Company, whenever it was executed, was nothing more than a device calculated to circumvent the rights of plaintiff and other subcontractors. In our opinion, in its legal effect, it amounted to nothing more than a contract of the Novak Company with itself and was merely an attempt, through the subterfuge of using the corporate name and entity, to deprive plaintiff of its lien right.

A corporation is often organized and used to act as a cloak for fraud. Such cases are becoming common and the courts are becoming more and more inclined to ignore the corporate existence, when necessary, in order to circumvent fraud. (Donovan v. Purtell, 216 Ill. 629; Lachman v. Martin, 139 Ill. 450; Cook on Corporations, 5th edition, section 663.)

The following pertinent portion of the opinion in Bank v. Trebein, 59 Ohio St. 316, is quoted with approval by Justice Magruder in the case of Donovan v. Purtell, supra, at page 639:

‘ ‘ The fiction, by which an ideal legal entity is attributed to a duly formed incorporated company, existing separate and apart from the individuals composing it, is of such general utility and application, as frequently to induce the belief that it must be universal, and be, in all cases adhered to, although the greatest frauds may thereby be perpetrated under the fiction as a shield. But modern cases, sustained by the best text writers, confine the fiction to the purposes for which it was adopted- — convenience in the transaction of business and in suing and being sued in its corporate name, and the continuance of its rights and liabilities, unaffected by changes in its corporate members; and have repudiated it in all cases where it had been insisted on as a protection to fraud, or any other illegal transaction.”

In our opinion the contract which purported to have been executed by Tillie H. Novak and the Novak Company, even if in existence at and prior to the date of the award of the contract for the lumber and millwork by Poenie to plaintiff, was ineffective to bar plaintiff’s right to recover in this cause, even though actual notice had been given plaintiff predicated upon the no-lien provision of such contract. We think that the contract was conceived in fraud by the Novak Company and its officers and was, therefore, ineffective and of no legal force for any purpose.

If the legal effect of any contract between the owner and the original contractor is that no lien or claim may be filed or maintained by anyone, such a provision is binding upon subcontractors or material men if they receive the notice required by statute. In the case of those furnishing material “the only admissible evidence as against . . . material man shall be proof of actual notice thereof to him before any . . . material is furnished by him.” Both the master in his report and the chancellor in his decree found that prior to the acceptance of its contract plaintiff had actual notice that the contract between the owner and the original contractor provided that the building in question when completed should be delivered to the owner free from all liens.

We are convinced, after a painstaking examination and careful consideration of all the evidence produced before the master, that such findings of the master and court are erroneous and against the manifest weight of the evidence. There is not a scintilla of evidence in the record as to such actual notice except that of Charles W. Novak, who testified that on the occasion of the conference he told plaintiff’s manager of the existence of the contract between Tillie H. Novak and the Novak Company and its no-lien provision. Neither his son nor any other person claiming to have participated in that conference corroborated him in the slightest degree as to the alleged statement made by him to plaintiff’s manager relative to the existence of such a contract. If, as is now asserted, both copies of the contract were in the office of the Novak Company at the time of the conference it would have been an easy matter to have exhibited the contract itself to Tonker. Charles W. Novak’s evidence is discredited by reason of the nature of the entire transaction.

The burden was upon Tillie H. Novak to prove actual notice to plaintiff of the no-lien provision of the contract in question. We think that she utterly failed to shoulder that burden. In our opinion, both the master and the trial court were confused-by the attempt of Tillie H. Novak to show that plaintiff, prior to the acceptance of its contract and the delivery of the material by it, agreed to sign a full and complete waiver of lien, even though it had not been paid in full for the material furnished. No such issue was raised by her answer. The only defense alleged in Tillie H. Novak’s answer was that plaintiff was bound by the no-lien provision of the contract between her and the Novak Company, and the cause proceeded to hearing upon that one issue.

It matters not that evidence was admitted by the master to the effect that plaintiff agreed to waive its right to the lien. The defendant in chancery is bound to apprise the plaintiff by his answer of the defense he intends to set up and he cannot avail himself of any matter of defense which is not stated in his answer, even though it should appear in evidence. (Crone v. Crone, 180 Ill. 599; Johnson v. Johnson, 114 Ill. 611.)

Under general allegations specific facts may be proven, provided the general charge is sufficient to apprise the adverse party of the nature of the evidence to be introduced. (21 C. J. 553, section 677.) There were no allegations in her answer that could have been interpreted as apprising plaintiff that Tillie H. Novak was going to offer the defense that plaintiff agreed to waive its right to a mechanic’s lien.

The very object of pleadings requires that the parties be confined to the matters contained therein, and therefore no evidence will be considered except that relating to matters alleged in the bill or answer. (C. J. 552, section 676.)

We are constrained to hold, under all the facts and circumstances of this cause, that Tillie H. Novak did not enter into a bona fide contract with the Novak Company for the erection and completion of the building in question free from liens, and that, regardless of the character or nature of such a contract, if it were executed, plaintiff did not receive actual notice, either of its existence or of its no-lien provision.

For the reasons indicated the decree of the circuit court is reversed and the cause is remanded with directions to enter a decree in conformity with the views herein expressed.

Reversed, and remanded with directions.

G-ridley, P. J., and Scanlah, J., concur.


text:
    The People of the State of Illinois ex rel. Oscar Nelson, Auditor of Public Accounts of the State of Illinois, Complainant, v. Equitable Trust Company of Chicago, Defendant. First National Bank of Chicago et al., Appellants, v. Wm. J. Maresh, Receiver of Equitable Trust Company of Chicago, Appellee.
    Gen. No. 37,382.
    Opinion filed November 27, 1934.
    Sidney J. Wolf, for appellants.

      Roy D. Keehn and W. M. Keeley, for appellee.
   Mr. Justice Sullivan

delivered the opinion of the court.

By this appeal the First National Bank of Chicago and Garabed T. Pushman, intervening petitioners, seek to reverse an order of the circuit court entered November 4, 1933, approving and confirming the election by the receiver of the Equitable Trust Company of Chicago, an insolvent bank, to vacate the premises, to abandon the improvements on such premises to lessor and not to accept but to reject the lease under which the Equitable Trust Company of Chicago occupied the premises where it had conducted its banking business.

December 21, 1931, the auditor of public accounts of the State of Illinois filed a bill of complaint for the dissolution of the Equitable Trust Company of Chicago (hereinafter referred to as the Equitable Bank). The bill alleged that Wm. J. Maresh was appointed receiver for the Equitable Bank by the auditor of public accounts December 7, 1931; that pursuant to his appointment the receiver took possession of the books, records and assets of the bank; and that the furniture and fixtures and the building occupied by the bank were owned by it. The bill prayed that the receiver be authorized to dispose of the real estate and personal property of the bank; that he be vested with the title to all of its assets; and that the same be converted into money and distributed.

It is admitted that the Equitable Bank was the owner, through assignment and conveyance, of the unexpired estate for years in the property located at 2218 South Michigan avenue, Chicago, Illinois, which was originally demised under the terms of a written lease for a term of 99 years, commencing March 1, 1910, and ending February 28, 2009, by Garabed T. Pushman, as lessor, to Landon C. Rose, lessee; that the lease provided that the rentals stipulated therein be paid quarterly by the lessee on the first day of March, June,' September and December of each year, and that the lessee shall pay all water rates and taxes, charges or assessments, general or special, which may be assessed against the property; that the lease also provided that at its termination or expiration all buildings, fixtures, etc., then on the property, shall be and remain the property of the lessor, and that no compensation shall be paid therefor to the lessee; that February 26,1923, G-arabed T. Pushman sold and conveyed to the Union Trust Company, as trustee, the property described in the lease; that through merger and consolidation the First National Bank of Chicago became the successor of the Union Trust Company, as trustee; that when the unexpired estate for years in the property was assigned and conveyed to it June 27, 1923, the Equitable Bank agreed in writing to accept and assume all of the terms, covenants and agreements contained in the lease; that the premises are improved with a bank building, which was occupied and owned by the Equitable Bank until the appointment of the receiver for said bank; and that the receiver took possession of the property December 7, 1931, and remained in possession thereof continuously until November 9, 1932.

January 28, 1932, the receiver filed a verified petition asking leave to make payment of the quarterly instalment of rent due under the lease December 1, 1931, in which he set forth the terms of the lease and alleged that under the lease the lessor might declare a forfeiture without notice if default in payment of rent continued for 60 days; that the bank building was carried on the books of the Equitable Bank at a value of approximately $70,000; that an instalment of rent became due December 1,1931, and was unpaid; that in the opinon of the receiver this instalment of rent should be paid to prevent the forfeiture of the lease and to preserve the value of the building as an asset in the receivership; that such payment should be accompanied by a statement that the payment would not constitute an election to accept or adopt the lease; and concluded with the prayer that the receiver be authorized by the court to pay the quarterly instalment of rent due December 1,1931, with interest thereon.

January 28, 1932, an order was entered by the chancellor that the receiver make payment of $546.88, the quarterly instalment of rent, which became due under the lease on December 1, 1931, for the months of December, 1931, and January and February, 1932, with interest thereon, and that the payment be accompanied by a statement in writing that such payment is not an election to accept or adopt the lease, and that the question of the adoption of the lease by the receiver would remain for determination and decision after such payment.

April 1, 1932, the receiver filed a second petition containing allegations substantially similar to those contained in his petition of January 28, 1932, and asking leave to make payment of the quarterly instalment due March 1, 1932, under the terms of the lease.

An order substantially the same as the order of January 28, 1932, was entered by the court April 1, 1932, authorizing the receiver to make payment of the quarterly instalment of rent which became due March 1, 1932, for the months of March, April and May, 1932, with interest thereon, and that the receiver should accompany the payment with a statement in writing that such payment did not constitute an election to accept or adopt the lease, and that the question of such adoption of the lease by the receiver would remain for determination after said payment.

Pursuant to the orders of January 28, 1932, and April 1, 1932, the receiver forwarded checks to the First Union Trust & Savings Bank, the then trustee under agreement with Pushman, the lessor, in payment of the quarterly instalments of rent as specified in those orders, accompanied respectively by letters which included the following statement:

‘ ‘ This payment is not an election by this Receiver to accept or adopt the said lease above referred to or its provisions, and the question of such adoption by this Receiver of the said lease and/or its provisions will remain for determination and decision hereafter.”

. July 13, 1932, the receiver filed a petition for leave to reject the obligations of the lease. The intervening petitioners (hereinafter referred to as petitioners) filed an answer to this petition wherein they prayed that the court find that the lease had been accepted by the receiver and that he be ordered and directed to pay and discharge all of the obligations of the lease. The cause was thereupon referred to a master in chancery.

October 15, 1932, an order was entered by the chancellor, without prejudice to the rights of the petitioners, authorizing the receiver to move from the bank building to another office.

December 10, 1932, the petitioners filed a petition setting forth the terms of the lease in question and praying that the receiver be authorized and directed by the court to pay the rent due to date, as well as the general taxes and special assessments which had accrued ; that the receiver be required to perform all the covenants and agreements contained in the lease; and that an order be entered finding that the receiver has elected to adopt the provisions of the lease. The receiver filed an answer denying the right to the relief prayed in the petition.

At the hearing before the master evidence was introduced by the receiver that the fair rental value of the bank building was approximately $175 a month. The receiver testified that on several occasions he informed Garabed T. Pushman that he would not adopt the lease, which testimony was denied by Pushman and his former attorney, who testified in behalf of the intervening petitioners.

The receiver remained in possession of the bank building until November 9, 1932, at which time he delivered the keys to the petitioner, the First Union Trust & Savings Bank, which later, through consolidation, became the First National Bank of Chicago.

The master found in his report that the receiver elected within a reasonable time after taking possession of the premises to reject the terms of the lease, and recommended “that an order be entered by the court . . . directing the receiver to pay rent according to the terms of the said lease for the period between the payment of the last rent in May, 1932, to and including November, 1932, during which time the property of the estate actually remained on the premises, and also directing the receiver to reject the lease and vacate the premises.”

November 4, 1933, the chancellor entered an order finding that the receiver had paid the rent up to and including the month of May, 1932, at the rental rate provided for in the lease; that the receivership estate is liable for the reasonable rental of the premises during the time the receiver used same; that the leasehold was not a valuable asset of the receivership estate; that the receiver should be ordered to reject the lease and to vacate the premises; that the receiver did not adopt or accept the lease or its obligations, but within a reasonable time elected not to adopt the lease. The receiver was directed in and by the order to make payment as compensation for the use of the premises for the period from June 1, 1932, to and including November, 1932, in the sum of $1,093.75. The court also ordered the receiver, when he paid the rent, to deduct therefrom $150 taxed against the petitioners as part of the master’s fees and charges which had theretofore been paid by the receiver. The amount of rent which the court ordered the receiver to pay for the period from June 1, 1932, to November 30, 1932, is the amount required under the lease, but does not include the taxes for the period that the receiver was in possession of the premises.

The law is settled that the receiver was entitled to a reasonable time after he took possession of the premises to elect whether to adopt or reject the lease.

The petitioners contend that the receiver accepted and affirmed the lease by remaining in possession of the bank building from December 7, 1931, to November 9, 1932; by filing verified petitions January 28, 1932, and April 1, 1932, asking leave of the court to pay the rent provided in the lease in order to prevent its forfeiture; by having orders entered January 28, 1932, and April 1,1932, authorizing him to pay the rent provided in the lease to prevent a forfeiture thereof; by the receiver attempting to sell the leasehold for the benefit of the receivership estate; by the receiver’s failure to disaffirm the lease within a reasonable time; by the receiver’s failure to obtain an order of court dis-affirming the lease within a reasonable time; and by the receiver remaining in possession and paying the rent stipulated in the lease.

The receiver’s theory is that he never adopted or accepted the lease or its obligations; that he expressly and repeatedly stated within a reasonable time that he would not adopt or accept the lease; that the lessee’s interest under the lease was not an asset, but a liability with which the receivership estate should not be burdened; and that for the use and occupancy of the premises described in the lease the receiver should pay only the reasonable rental value thereof during the time he occupied the premises.

To support their contentions petitioners rely especially on DeWolf v. Royal Trust Co., 173 Ill. 435, and the Link Belt Machinery Co. v. Hughes, 174 Ill. 155, with the holdings of which we are in full accord. However, we deem these cases inapplicable and we think they are readily distinguishable from the instant case where the facts are so essentially different.

In the DeWolf case it was stipulated that, included in the property taken over by the receiver there was a leasehold interest in certain storerooms and basement in Chicago, held under a lease made by the owner to the firm in receivership, from May 1, 1896, until April 30, 1897, by the terms of which lease the firm agreed to pay $75 a month rental in advance; that when the receiver was appointed on October 26, 1896, the business of the firm was being carried on in the premises and the receiver took possession and continued to occupy the premises under the lease; that on January 22, 1897, the receiver served notice upon the lessor that it would on January 30, 1897, surrender the premises as being no longer required by it; that on February 1, 1897, it delivered to the lessor part of the keys and left the remainder at his office February 3, 1897; and that the receiver paid the rent to the lessor from the time it took possession to February 1, 1897. It was also agreed that the leasehold estate was at the time of the receiver’s appointment and during his occupancy valuable and available for the benefit of the creditors of the estate, and that the receiver, at the time of its appointment, elected to take possession of the premises and occupy same, as receiver, under the order and direction of the court.

On the facts in the DeWolf case the following clear pronouncement of the principles that control a receiver’s election to accept or reject a leasehold, with which he is vested by reason of his appointment, is found at pages 437 and 438:

“The rule is, that a receiver does not simply, by virtue of his appointment, become liable upon the covenants of a lease made prior to his appointment by the party for whom he is receiver, but he has a right to elect whether he will accept the lease and make it his own or whether he will refuse to accept it. It might be that it would be valueless for the purpose of the trust, or even a burden, and if so, it could not be forced upon him. It is for this reason that he has, subject to the order of the court, the right of election whether he will perform the covenants or not. For the purpose of making such election he is entitled to a reasonable time to ascertain whether the lease would be desirable. The mere acceptance of the trust does not render a receiver liable for rent of the premises, and he cannot be held until he elects to hold possession as receiver or does some act which is equivalent to such election. (Spencer v. World’s Columbian Exposition, 163 Ill. 117.) If he remains in possession beyond a reasonable time to make the election, he, by implication, elects to accept the lease and becomes bound, as receiver, under its terms, and the remedy of the landlord for rent may be sought against the estate of which he is receiver.”

In the Link Belt Machinery Co. case the lease was for the period from March 13, 1893, to April 30, 1895. On January 2,1894, the Link Belt Machinery Company filed a creditor’s bill to enforce the collection of a judgment against the lessee and asked for the appointment of a receiver. A receiver was appointed, who took possession of the leased premises January 2,1894, and continued therein until January 24, 1895. He was directed by the court to carry on the business of the lessee and pay the rent. It was represented to the court that the lease was one of the valuable properties of the insolvent lessee. The receiver paid the rent under the lease for January, 1894, and thereafter the lessor filed his claim with the court for payment of rent under the lease, which claim was allowed. On the facts in this case the court held on page 160:

“There can be no denial of the proposition that a receiver has, subject to the order of the court, the right to elect whether he will perform or comply with the provisions of the lease held by the party for whom he is acting, and that he is entitled to a reasonable time after taking possession in which to make the election whether he will continue such lease. (Railroad Co. v. Humphreys, 145 U. S. 82; Park v. Railroad Co., 57 Fed. Rep. 799; Railroad Co. v. Railroad Co., 58 id. 268; United States Trust Co. v. Wabash Railway Co., 150 U. S. 287; Central Trust Co. v. Wabash Railway Co., 34 Fed. Rep. 259; Express Co. v. Railroad Co., 99 U. S. 191; Ellis v. Railroad Co., 107 Mass. 1; In re Metz, 6 Ben. 571; In re Hamburgher, 12 Nat. Bank Reg. 277; In re Lynch, 7 Ben. 26; Spencer v. World’s Columbian Exposition, 163 Ill. 117.) But in a case where the lease or contract is of itself a thing of value and the receiver, under the order of the court, takes possession of the premises and conducts the business which the insolvent had been unable to continue, and, without any act of disaffirmance or notice to the owner of the premises indicating that he would not be bound by the contract or terms of the lease, continues to hold the premises and conduct the business under the order of the court, receiving all the benefits of the possession of such premises, he has no right to repudiate the contract and pay rent for the premises only on the basis of quantum meruit.

“Where a receiver has continued the business of the insolvent for a reasonable time, paying to the owner of the premises the 'rent specified in the lease held by the insolvent, and has raised no question as to the terms or conditions of the lease, it will be considered as an adoption by him of the terms of the lease during the time he was occupying such premises, under the order of the court, for the continuance of the business of the insolvent.”

What is such reasonable time within which the receiver shall elect to accept or reject the lease must necessarily be determined by the facts and circumstances of the particular case. In the instant case the receiver consistently and persistently refused to accept the lease and its obligations. It remains only to determine whether from all the facts and circumstances he can be held by implication to have accepted the lease and its obligations. Upon his appointment by the State auditor December 7, 1931, the receiver took possession of the assets of the Equitable Bank contained in the leased premises. His appointment was confirmed by the court December 22, 1931, and his possession of the assets was not for the purpose of conducting the business of the insolvent bank, but for the sole purpose of liquidating its affairs. December 22, 1931, the attorneys for the petitioners wrote the attorneys for the receiver requesting an answer to a previous letter, which asked for the payment of the instalment of rent due December 1, 1931, “in order to make a decision of whether or not we should exercise the right of the trustee to forfeit the leasehold interests of the Equitable Trust Company, in which event, all improvements would go to the trustee.” In the same letter they “suggest that if time is necessary for you to work this matter out, a court order be obtained in the meantime to pay the trustee the installment of rent which matured on December 1, 1931.”

The receiver testified at the master’s hearing that at a conference with Pushman and his attorneys January 13, 1933, he told them “that it was impossible for me to adopt the terms of the lease, but iiiasmuch as I needed the space to carry on the liquidation of the bank and there was a movement under way to organize a new bank, I would be glad to remain in the present banking quarters in an effort to see if it were not possible to salvage anything for the depositors out of the amount invested in the building, as well as the banking fixtures. ... It was my desire, if I could, to find a market for those banking fixtures and that furniture. ’ ’

With reference to the same conference the receiver testified further as follows: “We told Mr. Pushman and Mr. Reinwald that it appeared as though there would not be any possibility of organizing a bank in that district at this time, and that we would be willing — that, inasmuch as we had to use the building, on account of people coming in there and filing their claims, we would continue our efforts temporarily in the organization of another bank. . . . The question, well, all along the line, in all the conferences with reference to that particular building, the whole point was the organization of another bank, in every conference that we had. ... To lease the building .... Well, they agreed we were working in the best interests of all parties by endeavoring to go along in our efforts to get this group who were interested in the organization of a new bank to carry out such a program.”

Referring to the same conference, the lessor, Push-man, testified: “That you did not want to say anything about the bank lease at that time because you were negotiating with some people to establish a new bank there. ... We were glad to know there was a possibility of there being a new bank there. . . . I don’t remember whether' I expressed anything, but I certainly was glad to know and would be glad to know there was another bank coming there.” He also testified that the idea of a possible new bank was conveyed to his mind at that conference.

The receiver found himself in possession of fixtures in which the Equitable Bank had invested $15,000 and the building owned by it that was carried on its books at a value of $75,000. The building was constructed for use as a banking office and it could not be rendered suitable for other business purposes without the expenditure of considerable money for alterations. He discovered that the Equitable Bank was lessee of the premises for an unexpired term of 77 years under the terms of a lease which called for the payment of rent for that period of over $260,000, as well as the payment of taxes. The lease contained a provision for the forfeiture of the building and fixtures to the lessor upon 60 days’ default in the payment of any rent instalment.

We think it was not only the right but that it was the duty of the receiver, before recommending to the court the acceptance or rejection of the lease, to explore the probabilities of the situation for the purpose of determining whether the lease was an asset or a liability of the receivership estate. He recognized his duty to secure a purchaser for the furniture, fixtures and the lessee’s interest under the lease, if it were possible for him to do so. After all, he was simply the agent of the court with prescribed duties to perform, among which was the conservation and preservation of the assets of the insolvent bank, for the benefit of its depositors and creditors, under the sanction, guidance and direction of the court.

He was almost immediately harassed by petitioners for the payment of rent, under threat of forfeiture of the lease, which would entail the loss of the building and fixtures, without being afforded an opportunity to ascertain whether the building, fixtures and leasehold were in fact assets of the estate. Then the petitioners suggested to him, in effect, that if more time was necessary to determine the problems confronting him that he request permission of the court to pay the rent pending his decision to accept or reject the lease. This suggestion, we think, in legal effect carried with it the lessor’s consent and approval to the occupancy of the premises by the receiver pending his decision to adopt or disaffirm the lease within a reasonable time.

The record discloses that, in the meantime, with the apparent approval of petitioners, the receiver was negotiating with business men of the neighborhood to organize a new bank, which would purchase the building, fixtures and furniture from the receiver and assume the obligations of the lease. It appeared, for a time, that the negotiations would culminate successfully, until a succession of bank failures during May and June, 1932, brought the negotiations to an abrupt termination.

The receiver asked the court’s approval to pay two instalments of rent to prevent the forfeiture of the lease, pending his determination of the value, if any, of the leasehold and his attempt to conserve all possible assets of the receivership estate, with the express understanding that such payments would not constitute an acceptance of same, and the court ordered the payments on that understanding.

On July 13, 1932, after the negotiations for the organization of a new bank to occupy the premises had fallen through because of additional bank failures, and when it was definitely determined that the lease was a liability to rather than an asset of the estate, the receiver asked leave of court to reject the lease. Pending the hearing on this petition to reject and the answer thereto, the receiver continued to occupy the premises. October 15, 1932, the chancellor ordered him to move to another office, which he did, and the keys to the premises were delivered to one of the petitioners November 9, 1932, after all the furniture of the insolvent bank had been removed from the premises.

The receiver could not accept the obligations of the lease without the approval of the court, and it is not contended that he expressly adopted it. It is, however, strenuously urged that, under the doctrine enunciated in the DeWolf and Link Belt Machinery Co. cases, supra, he must be held to have accepted the lease by implication.

We find no merit in this contention and are of the opinion that the findings of the master and the chancellor that the receiver could not be held to have accepted the lease were entirely justified by the facts and circumstances disclosed by the record. The receiver was in a difficult position and, in our opinion, it cannot be said that he acted unreasonably or delayed an unreasonable length of time in reaching his decision to reject the lease and asking the court’s judgment on same.

The court ordered the receiver to pay the rent specified in the lease for the period of his occupancy. There was evidence that the reasonable value of the premises approximated the rent specified in the lease. It is insisted that, in any event, the receiver should be ordered to pay the taxes assessed against the property during the period of his occupancy, as well as the rent provided under the terms of the lease.

We are unable to agree with this contention. The authorities generally recognize the rule that,' if the receiver elects to reject the lease within a reasonable length of time he can only be held liable for the reasonable rental value of the premises during the time of his occupancy.

In Fisher v. Columbia Nat. Bank, 54 Ind. App. 558, 103 N. E. 119, 121, the court said:

“The receiver had a right to conduct the business during a reasonable period in order to ascertain whether it would be profitable to the insolvent estate to retain the lease. During the time of his occupancy he would be liable for the reasonable rental value of the premises for that period. The fact that he paid rent according to the terms of the lease may be taken as an indication that he believed the premises to be reasonably worth the agreed amount, and not as an indication to elect to adopt the lease for its entire term. ’ ’

In Bell v. American Protective League, 163 Mass. 558, 28 L. R. A., 452, at page 455, the court said:

“We regard the question presented in the case at bar as an open one in this commonwealth; and, on principle, it seems to us that, if a receiver of an insolvent corporation takes possession of its leasehold estate, he is liable only for a reasonable rent during the time that he retains possession; that he does not become an assignee of the term, and is not liable on the covenants of the lease. As the receiver paid the rent to the satisfaction of the lessor while in possession, we are of opinion that he is not liable for any further rent.”

In our opinion it would be a perversion of justice to impose on this receivership the burden of carrying the obligation of this lease for its unexpired term of 77 years.

For the reasons indicated herein the order of the circuit court approving and confirming the election by the receiver to reject the lease was properly entered and should be and is affirmed.

Affirmed.

G-ridley, P. J., and Scahlait, J., concur.