text:
    The People of the State of Illinois ex rel. Elmer Henryson et al., Appellees, v. City of Elgin et al., Appellants.
    Gen. No. 9,149.
    Opinion filed January 18, 1937.
    Perry D. Wells, Glenn B. Beverly and Paul G. Funk, all of Elgin, for appellants.
    Theodore N. Schnell, of Elgin, and James Herrington Scott, of Geneva, for appellees.
   Mr. Justice Wolfe

delivered the opinion of the court.

On February 19, 1935, the plaintiffs, 64 in number, filed in the circuit court of Kane county their petition for a writ of mandamus to compel the defendants, the city of Elgin, and Myron M. Lehman and Morgan M. Brightman, the mayor and the city clerk of Elgin, to draw, issue and sign city warrants in favor of the plaintiffs for the alleged unpaid balances of their respective monthly salaries, as policemen and firemen of the city. They claim pay for 10 months of the year 1932, all of 1934 and January 1935. During the time, some of the plaintiffs were policemen and the others firemen of the city of Elgin.

There is a stipulation in the record which, in part, is substantially as follows: ‘1 That all plaintiffs were duly appointed by the board of fire and police commissioners of the City of Elgin, and that they were members and officers of the police and fire departments for many years prior, to and during 1932, 1934 and January 1935, and performed their duties as such policemen and firemen, as required by law. The stipulation also states that, out of the salaries actually paid to the plaintiffs, during the time in question, the city deducted the legal amounts to be paid to the police and firemen’s pension funds.” It is not disputed that the petition correctly sets forth the positions held by the plaintiffs as officers and members of the police and fire departments of the city, during the time in question; or that some of the plaintiffs retired from the departments on pension before January, 1935, and. that some of them were appointed to their said positions after 1932. No claim is made by the plaintiffs for any unpaid salaries for the months of January and February, 1932, for reasons which hereafter appear.

The petition is drawn on the theory that the appropriation ordinances of the city of Elgin adopted at the beginning of the years 1932, 1934 and 1935, fixed and determined the salaries of the plaintiffs as policemen and firemen; that the city has paid to the petitioners less than the amounts provided for in the appropriation ordinances and that the writ of mandamus should issue to compel the payment of the balance due each plaintiff. The petition alleges that the plaintiffs were paid their salaries during January and February of 1932, according to the salaries provided by the appropriation ordinance for that year. No claim is made for unpaid salaries for those two months. The plaintiffs make no claim for unpaid salaries in 1935, other than for the month of January. Demand for unpaid balances of salaries were made on the city by the petitioners on February 8, 1935. The amounts claimed by the plaintiffs vary, and total $20,013.51. The city of Elgin operates under the commission form of government and has so operated continuously since January 21, 1911.

Paraphrasing several paragraphs of the petition, it charges that on January 4, 1932, on January 12, 1934 and on January 9, 1935, the city passed an ordinance termed “Appropriation Ordinance for the year, ‘1932,’ ‘1934,’ and ‘1935’ ” of the city of Elgin; that those ordinances made provisions in respect to salaries of police and fire departments of the city. These provisions, for each year, are set out in the petition. Thus, for the year 1932:

‘ ‘ Police Division. ’ ’
“ (a) Salary of City Marshal.............$2,400.00
(b) Salary of Lieutenants.............. 4,200.00
(c) Salary of Sergeants................ 9,390.00
(d) Salary of Patrolmen...............39,600.00
(e) Salary of Merchant Police.......... 2,796.00
(f) Salary of Special Police............ 250.00
(g) Salary of Police Matron............ 62.50
(h) Secret Service..................... 400.00
(i) Salary of Detective................ 2,100.00”
“Fire Division.”
“ (a) Salary of Fire Marshal.........•... .$2,400.00
(b) Salary of Captain No. 1 Station..... 2,100.00
(b) Salary of Captains (5)............. 9,450.00
(b) Salary of Lieutenants (4).......... 7,440.00
(c) Salary of 25 Firemen...............45,000.00
(d) Salary of Repair Mechanic......... 1,860.00”

The provisions in the Appropriation Ordinance for 1934 and 1935 are in material respects the same, excepting as to the amounts appropriated.

The petition further alleges that by ordinances passed April 23, 1907, for the police department, and on April 3, 1907, for the fire department, and subsequently amended, said city made provisions for and created the offices of captain of the fire department, first deputy marshal, second deputy marshal, lieutenant, firemen, mechanic, lieutenant of police, sergeant of police, patrolman and merchant police.

Material allegations of the petition are substantially as follows: “That said appropriation ordinances became and continued in full force and effect throughout 1932, 1934 and January 1935; that in the performance of their duties as members of said departments petitioners became and were entitled to receive their said . salaries to the full amount thereof for 1932, 1934 and January 1935; that said city in fixing said salaries and in adopting said appropriation ordinances appropriating funds for the payment of said salaries and passing a tax levy ordinance in accordance therewith and based thereon, determined the amounts thereof to be received by petitioners for 1932, 1934 and January 1935; that said sums so fixed as their salaries having been thus fixed and a fund for the payment thereof having thus been appropriated in accordance with the Statute, said amounts were not subject to change or alteration by said city or any of its officers during said years; that petitioners have at no time agreed or consented to a change or a reduction in their salaries as thus appropriated. ’ ’

Further, “That during January and February 1932, petitioners received the full proportionate amount of their said annual salaries legally provided for by said appropriation ordinance less a reduction of 1 per cent for police and firemen’s pension fund; that thereafter about March 1, 1932, an executive order was issued, which petitioners are informed and believe came from the office of the mayor of said city, and it was ordered that each of said petitioners herein shown to have been members of the police and fire departments during 1932 be compelled to take a 10 per cent reduction in their salaries beginning with March 1932; that said reduction was made during the months of March to October 15, 1932, inclusive; that thereafter on said date an executive order was issued, which petitioners are informed and believe came from the office of the mayor of said city, that each petitioner be compelled to take a further reduction in the sum of 15 per cent in their monthly salaries for the year 1932; that said 15 per cent reduction continued for the balance of 1932. ’ ’

Also, ‘ ‘ That petitioners during 1934 were compelled by executive order issued, which petitioners are informed and believe came from the mayor’s office, during the month of January 1934, to take a 10 per cent reduction in their salaries; that during January 1935, petitioners were compelled, by executive order as aforesaid, to take a 10 per cent reduction in their salaries. That petitioners objected and protested against the enforcement of all said orders, but were compelled to abide by the same by coercive threats of further reduction.”

These allegations of the petition are denied by the answer of the defendants. The answer alleges that the fire department is an executive department of said city composed of officers and employees as provided by ordinance of April 3,1907, as amended; that the police department is an executive department of said city composed of officers and members as provided by ordinance of April 23,1907; that the salaries of said officers and employees are fixed and determined by the council of said city as an administrative or executive function.

The answer further alleges that the several appropriation ordinances were passed and adopted thereby fixing the maximum amounts to be expended by the city in the period covered by said ordinances.

The answer further alleges that on February 15, 1932, the city council by executive and administrative act changed the amount of compensation to be paid to each employee and officer by deducting from the annual pay roll a sum equal to one month’s pay for each member of said departments based upon the then prevailing rates of pay; that said action was taken in said manner for the purpose of retaining basic rates in order that members of such departments then eligible or to become eligible for pension might retire on the most favorable pension pay basis. That subsequent thereto and during periods mentioned in the petition, and in 1932, 1934 and January, 1935, said city council caused further changus in compensation, causing a total deduction of approximately 25 per cent from the basic rate of pay as fixed prior to March 1, 1932.

The plaintiffs introduced in evidence an ordinance of the city of Elgin, passed April 2, 1907, which established the fire department of the city, provided for its organization, membership and officers. Section four of the ordinance provides: “Each fireman and employe shall receive such salary and compensation as shall be fixed either annually in the Appropriation Ordinance, or from time to time lawfully by the City Council.” Plaintiffs also introduced in evidence an ordinance of the city, passed April 23, 1907, which established the police department of the city, provided for its organization, membership and officers. Section 2, of the ordinance provided: The city marshal shall receive a salary at the rate of $1,160.00 per year. “The salary of the Lieutenant shall be at the rate of $960.00 per annum; of each Sergeant at the rate of $930.00 per annum; of each Policeman employed by the year except jailor and nightwatchman, operator and clerk, merchant-police and special policeman or watchman, shall be at the rate of $870.00 per annum.”

The plaintiffs also introduced in evidence section 1 of chapter 46, of the Revised Ordinances, part of which is as'follows: “All ordinances of the city shall be construed together so that every provision thereof may stand, and no ordinance shall be held repealed, unless expressly so provided or that the older provision or part is so repugnant to the newer provision or part that both cannot stand. All general provisions, terms, phrases and expressions shall be liberally construed in order that the true intent and meaning of the ordinance may be carried out and its objects and purposes accomplished. ’ ’

There was also introduced in evidence by the plaintiffs section four, of the Revised Ordinances of the city, which provides: “The salary and compensation of all officers, clerks and employees of the city shall be lawfully fixed and determined before their term of office, duties, work or employment begins, and no further compensation or salary shall be allowed any such officer, clerk or employee.”

Plaintiff introduced in evidence the pay rolls of the police and fire departments for 1932, 1934 and January, 1935, which show the amount of salary paid each plaintiff each month and his receipt therefor; and shows the certificate of the fire marshal and city marshal in the case of the fire and police department pay rolls, stating under oath that said pay rolls are correet; and the approval in writing of the commissioner of accounts and finances and of the superintendent of the fire and police division, and also the approval by the city council.

In the fire department these pay rolls show that in the months of January to September, 1932, inclusive, there were: one fire marshal, one captain No. 1, station, one captain No. 2, station, one captain No. 3, station, one captain No. 4, station, one captain No. 5, station, one captain hook and ladder company, one lieutenant No. 1, station, one lieutenant No. 2, station, one lieutenant No. 3, station, one lieutenant No. 5, station, one mechanic and 25 pipemen and drivers. In October, 1932, during the first half of the month there were 25 pipemen and drivers, but during the second half of the month there were 19 pipemen and drivers, there was no mechanic during any part of the month, and during the second half there was no captain No. 3, station. In November and December, 1932, there were 19 pipemen and drivers, no mechanic and no captain No. 3, station. Throughout 1934, and January, 1935, there were one fire marshal, one deputy fire marshal, one second deputy fire marshal, one captain No. 2, company, one captain No. 3, company, one captain No. 4, company, one mechanic and 20 pipemen and drivers.

In the police department these pay rolls show that in 1932 there were one city marshal, two lieutenants, two sergeants, three desk sergeants, one detective, 22 patrolmen, five merchant police and one police matron each month except as follows: In J anuary there were 21 patrolmen for half of the month: in July there were 21 patrolmen except for five days; in September there were 21 patrolmen for part of the month; in October there were 18 patrolmen and for half the month there were two desk sergeants; in November and December there were 19 patrolmen and one desk sergeant; throughout 1934 and J anuary, 1935, there were the city marshal, three lieutenants, one detective, one sergeant, 19 patrolmen, five merchant police and one clerk each month except as follows: In January, 1934, there were 20 patrolmen; in February there were four lieutenants and 18 patrolmen; in March, April and May there was in addition a sergeant-detective; in June there were two lieutenants, but there were in addition two sergeant-detectives ; in July and August there were two detectives and two lieutenants and also one sergeant-detective; in September, October, November and December there were two lieutenants and two sergeant-detectives, and during half of October there were 18 patrolmen; in January, 1935, there were also two lieutenants and two sergeant-detectives.

Witnesses called by the plaintiffs testified that a committee of police and firemen interviewed the mayor in 1933, and presented a petition for an increase in pay. They were told by the mayor that he was willing that they should have it and that he would give it to them, but that they never received it.

Copies of- the appropriation ordinances of the city for the years 1932, 1934 and 1935, are attached to the pleadings filed by the parties. In addition to the items appropriating amounts for salaries of policemen and firemen as stated in the petition, the ordinances provide many other items with appropriations for other expenses of these departments, such as “Repairs and renewals on automobiles”; “Operating automobiles and motorcycles,” etc., “Chemicals, waste, oil, sponges and chamois”; “Replacement of hose and nozzles,” etc. The appropriation ordinances provide: ‘ ‘ The following sums or so much thereof as may be authorized by law, be and the same are, hereby appropriated for corporate purposes for the City of Elgin, Illinois, for the fiscal year commencing January 1st, . . . and ending December 31st. . . . ” The appropriation ordinances also provide: ‘1 That the Council of the City of Elgin or any commissioner is hereby required to limit the expenditure of the different items in each division to the amount above authorized, as prescribed by law. ’ ’ The appropriation ordinances were general appropriation ordinances and made provisions for all the expenses of the city for the respective fiscal years in question.

The defendant introduced in evidence an ordinance passed August 31, 1918, section 1 of which is as follows: “That from and after the 15th day of August, 1918, the salaries and compensation of the members of the Police and Eire Divisions of the city shall be as follows :

Police Division
Salary of City Marshal at the rate of...........................$1,660.00 per annum
Salary of Lieutenant at the rate of 1,300.00 per anm-im
Salary of Two Sergeants (each) at rate of ...................... 1,260.00 per annum
Salary of Thirteen Patrolmen (each) at rate of.............. 1,200.00 per annum
Salary of Three Merchant Police (each) at rate of.............. 330.00 per annum
Fire Division
Salary of Fire Marshal at the rate of ...........................$1,660.00 per annum
Salary of Captain No. 1, Station at the rate of.................... 1,320.00 per annum
Salary of other Captains (each) at the rate of.................... 1,260.00 per annum
Salary of Twenty Firemen (each) at the rate of................. 1,200.00 per annum

Defendant introduced in evidence an ordinance passed January 26, 1925, which amended an “Ordinance Concerning the Police and Fire Department,” passed by the council of the city on April 22, 1907. Section one of the ordinance passed January 26, 1925, establishes the police department and the membership thereof. Section two thereof fixes the annual salaries of the officers and members of the police department.

Ordinances passed on December 27, 1932, changed the personnel in the police and fire departments. An ordinance of February 15, 1932, provides for a change in the salaries of officers and members of the police and fire departments by deducting one month’s pay from the annual pay roll.

The ordinance of August 31, 1918, fixed the salaries of officers and members of the police and fire departments at less, in each instance, than was paid during the time in question; the ordinance of January 26, 1925, fixing salaries in the police department were, in general, slightly more than is claimed by plaintiffs as due them for 1934, and January, 1935, but which were considerably less than plaintiffs ’ claim for 1932.

Morgan H. Brightman, commissioner of accounts and finances, testified that the appropriation ordinances of the city are prepared by determining, so far as possible, the expected revenue, and allocating the same among the different departments in proportion to what the city council believes to be their requirements; that the amounts relative to salaries in the police and fire departments in the appropriation ordinances were based largely on the requirements submitted by the head of those departments; that in the 1934 appropriation, the total figures for salaries were increased to enable the city to pay an increase provided the revenue warranted it; that the salaries of members of the police and fire departments are fixed by action of the city council whenever it is necessary, in some instances by resolution, and in others by agreement among the commissioners, carried out by the heads of the departments, followed by council action and approval of the pay rolls; that subsequent to the ordinance of February 15, 1932 (changing salaries) further curtailments in revenue made necessary further changes in salaries and they were reduced by agreement of the members of the city council after which the reduced pay rolls were formally approved by the council and made a part of the minutes of the council proceedings. This reduction was substantially 25 per cent of the wages prevailing prior to January 1, 1932; that he is the city clerk and keeper of the records of the city and the city council; that no other action by the city council was taken other than testified to by him.

After this evidence was introduced, the court gave his opinion indicating that the writ should issue. Final judgment was thereafter entered, finding the issues for the plaintiffs except as to their right to one month’s salary for 1932. The plaintiffs excepted to that part of the final order finding the ordinance of February 15, 1932, a valid ordinance and they have filed a cross appeal attacking* that part of the final order.

It is clear from the plaintiffs’ petition and their proof that their claim to additional pay from the city as unpaid balances of their monthly salaries rests solely on the soundness of the proposition that the appropriation ordinances fixed the amount of their salaries. Section 101 of the Cities and Villages Act, Ill. State Bar Stats. 1935, ch. 24, 92; Jones Ill. Stats. Ann. 21.192 (Smith-Hurd, Ill. Bev. Stats.) provides as follows: ‘ ‘ The city council of cities . . . shall, within the first quarter of each fiscal year, pass an ordinance, to be termed the annual appropriation bill, in which such corporate authorities may appropriate such sum or sums of money as may be deemed necessary to defray all necessary expenses and liabilities of such corporation, and in such ordinance shall specify the objects and purposes for which such appropriations are made, and the amount appropriated for each object or purpose.” This provision of the statute is mandatory and has been held to have been enacted for the protection of the taxpayer. People v. Sergei, 269 Ill. 619; City of Cairo v. Campbell, 116 Ill. 305. The object of the statutory requirement is to enable the taxpayer to compel the application of public funds to the purposes for which they were appropriated; to. prevent the application of such funds to other purposes and to prevent the raising or expenditures of greater sums of money than are necessary for legitimate corporate purposes. Siegel v. City of Belleville, 349 Ill. 240. Neither from the historical view, nor under definitions of the courts, is it justifiable to extend the object of an appropriation act, or law, beyond the scope of its purpose as above stated, unless by terms of the act directly, or their repugnance with other laws, as a matter of judicial construction, a different or broader meaning is found in the act.

The history and origin of provisions of law requiring legislative bodies to make appropriations of public funds, which are to be expended by public officers, is well known. Relative to a constitutional provision of the State of California that, “No money shall be drawn from the treasury but in consequence of appropriation made by law,” in the case of Humbert v. Dunn, 84 Cal. 57, 24 Pac. 111, the Supreme Court of California say: “It had its origin in parliament in the seventeenth century, when the people of Great Britain, to provide against the abuse of the king* and his officers of the discretionary money power with which they were vested, demanded that the public funds should not be drawn from the treasury except in accordance with express appropriations therefor made by parliament; and the system worked so well in correcting the abuses complained of, that our forefathers adopted it, and the restraint imposed by it has become a part of the fundamental law of nearly every State in the Union.” The statement of the object of an appropriation act as given by our Supreme Court follows closely the historic reasons for the demand that public funds should not be expended, unless the legislative body made an appropriation therefor. We do not know of any cases extending the object or meaning of an appropriation act beyond the limits as herein staled.

In the case of United States v. Langston, 118 U. S. 389, 30 L. Ed. 164, it is held “that a statute fixing the annual salary of a public officer at a named sum, without limitation as to time, should not be abrogated or suspended by subsequent enactments which merely appropriate a less amount for the services of that officer for particular fiscal years, and which contain no words that expressly or by clear implication modified or repealed the previous law.” In the case of State v. Steele, 57 Tex. 200, it is held that the appropriation of a less sum than is fixed by law as the salary of an officer does not operate as a repeal or amendment of the act fixing the salary. The court in that case says, “It is not the policy of the law to leave salaries of state officials to be fixed only where the appropriations are made for their payment.” (City of Joliet v. Petty, 96 Ill. App. 450.)

Under the .commission form of government, a city may fix the salaries of firemen and policemen by ordinance, resolution or otherwise. People v. Kapp, 355 Ill. 596; Eigler v. City of Cairo, 245 Ill. App. 383. A general ordinance of the city of Elgin provides that no ordinance of the city shall be held repealed unless expressly so provided or that the older provision or part is so repugnant to the newer provisions or part that both cannot stand. We find no repugnance between the ordinance fixing the salaries of the plaintiffs, nor the commissioner’s actions in determining the salaries of the plaintiff by adopting* the pay rolls, and the appropriation ordinances in question. (U. S. v. Langston, supra; City of Joliet v. Petty, supra; People v. Downers Grove Sanitary District, 359 Ill. 601.)

The plaintiffs having failed to show a clear legal right to the writ of mandamus, as prayed for in their petition, the judgment awarding the writ is reversed.

Judgment reversed.


source: Caselaw Access Project

author: Mr. Justice Wolee

license: Public Domain

text:
    Hanna Bechtel, Appellee, v. Jeff Rocke et al., Appellants.
    Gen. No. 9,160.
    Opinion filed January 18, 1937.
    George Jochem, of Peoria, for certain appellant.

      George W. Hunt, of Peoria, and W. H. Foster, for certain other appellant.
    Richard H. Radley and Ren Thurman, both of Peoria, for appellee.
   Mr. Justice Wolee

delivered the opinion of the court.

This suit was originally one to foreclose a mortgage on two tracts of land in Woodford county. The case was before us at a former term of court, under the title Bechtel v. Roche, Gen. No. 8,907, 280 Ill. App. 631, which is not reported in full. At that time, we reversed and remanded the case to the circuit court, with directions. The case was reinstated in the trial court and a decree entered in conformity with the directions of this court in the remanding order. The property was ordered sold at public sale on Saturday, June 27, 1936, at 10 o ’clock a. m. Public notice was given of the time and place of the sale and the master sold the premises on that date. The Farmers’ State Bank at Eureka, which was the holder of the first mortgage on the premises, bid $8,800 for tract A, and $3,050 for tract B. The master issued his certificates of purchase to the said bank and reported the sale to the trial court.

At the hearing before the court on confirmation of the master’s report of sale of the premises, verbal objections were filed to the report, which were later certified by the judge, as being* a statement made in relation to said objections. The Honorable Ren Thurman, attorney at law, of Peoria, Illinois, representing* the appellee, Hanna Bechtel, stated his objections were that the property was sold for a grossly inadequate sum; that the sale was irregular and that it was hard for prospective bidders to comply with the order of sale; that Mr. Hunt, one of the attorneys representing the appellants, bid in the property for,the bank at $110 per acre and a Mr. Distler, who was present, bid $115 an acre for the same property, but on account of Mr. Distler’s misunderstanding the terms of the sale, Distler could ndt pay cash at the time of the sale; that Mr. John Distler, who was a very wealthy man, would probably have bid $24,000 for the property. He asked the court to give them 10 days in which to get Mr. John Distler to submit a bid for the property.

The court ordered that the report of the sale by the master in chancery be continued for confirmation. The master was again ordered and directed to offer the land at public sale on the same terms and provisions as originally decreed. The master was not to receive or accept any bids at the resale for any amount less than $20,000 as the total to be paid for both tracts. The expense of readvertising of the resale was to be taxed and payable by the complainant, Hanna Bechtel. Mr. Distler was ordered to file a written proposal of his bid on the premises at the resale and ordered to appear in court on July 7, to make arrangements to bid on the land.

On July. 7, 1936, a supplemental decree was filed, a part of which is as follows: “Now on this day this cause coming on to be heard upon the special master’s report of sale heretofore filed herein, and the request or motion of Hanna Bechtel made by and through her attorneys of record for a re-sale of said premises, on the grounds that substantial prospective bidders were unavoidably absent from sale and misunderstood or were ignorant of the printed terms of notice of said sale, and on the further grounds of the inadequacy of the bids received by the special master in connection with which motion or request, the said Hanna Bechtel has submitted to the court a guaranteed bid in case of re-sale.” Incorporated in the decree was the bid of J. P. Distler of $12,000 for tract A, and $8,000 for tract B, who filed a certified check for $2,000 showing his good faith in his bid. The decree then provides how the $2,000 shall be handled in case the property does not sell for more than $20,000. It then continues with directions to the master how to proceed with the sale and what to do with the money derived therefrom. The master again advertised the sale and Mr. J. P. Distler bid the sum of $20,000 for the properties. This the master reported to the court, and on a hearing of objections of the appellants, the report was approved and a decree entered confirming the sale. An appeal from that decree has been perfected to this court.

The appellants insist that the trial court erred in setting aside the first order of sale and ordering the property re-sold. They claim that the first sale was open and aboveboard and that the inadequacy of the price was not a legal cause to set aside the first sale. There are numerous cases that state the general rule to be that where a sale has been conducted in accordance with the order of the court, and a purchaser is a stranger to the order of the sale, the mere inadequacy of the price will not justify the court in not confirming the sale and depriving the purchaser of the benefits of his bargain, unless the inadequacy is such as to amount to fraud. There are numerous exceptions to this rule. The first one is that the sale must be fairly conducted and all bidders have an equal chance to purchase the property. As far as we have been able to observe in all the cases cited by the appellant, the purchaser was a stranger to the order of sale. In the present case, the purchaser was a holder of the first mortgage and not a stranger to the sale.

The trial court in its supplemental decree quotes from the objections filed by the appellee to the report of the first sale as follows: “That substantial prospective bidders were unavoidably absent from the sale and either misunderstood or were ignorant of the printed terms of notice of said sale and the inadequacy of the bids received by the master.” It is noted that the total of the appellants’ bids at the first sale was $11,850; that the total of the bid at the second sale was $20,000 or a gain of $8,150. In the case of Moeller v. Miller, 315 Ill. 454, at page 459, the court in discussing the earlier case of Rader v. Bussy, 315 Ill. 226, after announcing the general rule, says: “In the case of Rader v. Bussey, just cited, the rule is laid down that where the bid at a judicial sale is so inadequate as to shock the conscience of the court or to amount to sufficient evidence of fraud in law, the sale will be set aside on that ground, alone. In determining this question no definite rule is laid down as to what per cent of the value of the property must be bid at the sale in order to amount to such gross inadequacy as to be evidence of a legal fraud but each case must be determined by its own circumstances. ’ ’

The Appellate Court of the First District in the case of Levy v. Broadway Carmen Bldg. Corp., 278 Ill. App. 293, and also in the case of Martin v. Crews, 279 Ill. App. 37, sustained the trial court in setting* aside a sale of mortgaged property and ordering a resale of the same, solely on the ground that the sale price at the first sale was grossly inadequate. In the present case, at the first sale of the property, the bid of $11,850 was so grossly inadequate that for this reason alone the trial court was justified in setting aside the first sale and entering an order to resell the same at a guaranteed price of $20,000 or more.

In addition to the inadequacy of the sale price, we do not consider that the appellant, the Farmers’ State Bank of Eureka, stood in the position of a strang*er to the transaction. While they were entitled to bid at the sale, and should properly have the benefit of a good bargain, the sale was not completed until approved by the court. What effect the statement of the attorney of the bank had upon the sale price of the land‘is purely conjectural, but- such sales should be conducted openly and aboveboard with an equal chance for all to bid upon the property. We therefore conclude that the court properly found that the first sale was not a fair one, and that the property should be resold.

We find no reversible error in the case, and the decree of the trial court is hereby affirmed.

Affirmed.


author: Mr. Presiding Justice Denis E. Sullivan

text:
    Polish National Alliance of the United States of North America, Appellant, v. Paul B. Lipinski et al., Appellees.
    Gen. No. 38,765.
    Opinion filed January 27, 1937.
    George Gillette and Elmer M. Leesman, both of Chicago, for appellant.
    Harry Z. and Bernard Perel, of Chicago, for appellees ; Abraham H. Haller, of Chicago, of counsel.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

The question to he decided in this case is: Which of the parties to this suit, the complainant or the defendants, shall have a prior lien on the premises described in the bill of complaint? The trial court found for the defendants and that the lien of their trust deed was not destroyed by the wrongful action of the trustee in releasing the same.

The facts as set forth in the briefs and abstract are substantially as follows:

The complainant is the owner of notes secured by a mortgage from Paul B. Lipinski and wife to Polish National Alliance securing a note for the sum of $17,000, dated November 26, 1928. The defendants are the owners of real estate bonds issued by said Lipinski amounting to $10,000, secured by a trust deed on the same property, dated January 17, 1928.

Mary Czaszewicz was the owner of the note secured by a trust deed made to her, dated March 21,1924, payable three years after said date, for the sum of $11,000, upon which $1,000 was paid, which was a first lien upon the same premises, and concerning which there is no dispute.

The controversy in this case arises because of the action of the trustee, the Northern Trust and Savings Bank of Hammond, Indiana, executing and filing for record in the recorder’s office of Cook county, a release deed dated October 17, 1928, purporting to release the lien of the second trust deed dated January 17, 1928, from Lipinski and wife to the Northern Trust and Savings Bank, trustee, and this was done without the payment of the bonds secured thereby or obtaining possession thereof, or having same produced, and without the knowledge or consent of the owners thereof.

About that time a loan was made by the plaintiff Polish National Alliance of the United States of North America (for brevity hereinafter referred to as Polish National Alliance) on, to wit, November 26, 1928, to Paul B. LipinsM and Lottie LipinsM, his wife, evidenced by one principal note for the sum of $17,000 and 10 interest notes for $510 each, payable semiannually beginning May 26, 1929, secured by a mortgage from LipinsM and wife to the Polish National Alliance dated November 26, 1928, on the property involved. The note for $10,000, secured by a first trust deed to Mary Czaszewicz, was paid off by the said Polish National Alliance out of the said $17,000, and the said Mary Czaszewicz is not concerned in tMs suit, nor is there any dispute but that the Polish National Alliance should have a first lien on these premises as successor to the rights of Mary Czaszewicz.

When the Polish National Alliance in 1931 commenced the foreclosure suit in the circuit court for failure of LipinsM and his wife to pay the interest claimed to be due according to the terms of their note and trust deed, the owners of the bonds under the trust deed of January 17, 1928, by name, were made parties defendant. Plaintiff must have learned their names by this time.

Subsequently, a bill was filed in the superior court by Sarah B. Pinkowsky and others to foreclose the lien of the trust deed which had been released by said Northern Trust and Savings Bank, as trustee. This bill to foreclose was filed by the said Sarah B. Pinkowsky et al., who was one of the defendants in the bill to foreclose theretofore filed in the circuit court by the Polish National Alliance. This latter bill was subsequently transferred under the statute to the circuit court on September 29, 1933, and consolidated with the former suit and by proper orders, the issues were made as between the plaintiff and defendants. No question is raised now as to any of these pleadings.

The Northern Trust and Savings Bank of Hammond, Indiana, was the trustee. LipinsM, the owner of the land, was also the president of said bank. Lipinski was also the fee owner of the land here in question. The defendants to the suit to foreclose filed by the Polish National Alliance were the owners of the bonds issued under the trust deed and sold to them by Lipinski or said trustee bank. Lipinski, evidently intending to defraud the owners of said 12 bonds secured by the trust deed of January 17, 1928, arranged to make a loan from the Polish National Alliance, and on October 10, 1928, had caused the trustee bank to execute a release of the said trust deed securing said bonds of January 17, 1928, which release deed was placed of record in the recorder’s office of Cook county, on October 17, 1928. The contest narrows down to the question of priority of lien as between the mortgage securing the $17,000 notes dated November 26, 1928, and recorded November 30, 1928, to the Polish National Alliance and the prior dated trust deed securing the $10,000 bond issue. Said trust deed dated January 17, 1928, and duly recorded January 31,1928, secured said $10,000 bond issne.

It being agreed that the Polish National Alliance should have a first lien to the extent of the $10,000 paid to Mary Czaszewicz that leaves the remaining $7,000 and interest and costs in dispute.

For clarity we will recapitulate in each instance the relative order as to the date under which the various notes, bonds and incumbrances appear.

First, the mortgage securing the promissory note to Mary Czaszewicz for $11,000, upon which $1,000 was paid, was dated March 21, 1924, and was recorded in the recorder’s office on March 28,1924. The balance of this $10,000 note was subsequently paid on December 2, 1928, by the Polish National Alliance to Mary Czaszewicz out of the $17,000 which they loaned to Lipinski and his wife on November 26, 1928, and that mortgage was duly released by Mary Czaszewicz. This release deed was filed for record in the office of the recorder of Cook county on January 2, 1929. It is agreed that the former interest of Mary Czaszewicz need not be considered in this case. It is agreed that as to the sum of $10,000 paid to Mary Czaszewicz by the Polish National Alliance, the latter became subrogated to her rights and entitled to a first lien on the said premises to the extent of $10,000.

Second, the trust deed from Lipinski and his wife to the Northern Trust and Savings Bank of Hammond, Indiana, as trustee, dated January 17, 1928, and recorded January 31, 1928, on the property herein involved, securing eight bonds signed by Paul B. Lipinski and Lottie Lipinski to the said trustee or bearer of $1,000 each and also four bonds signed by Paul B. Lipinski and Lottie Lipinski to the said bank, as trustee, for $500 each, all of which bonds were payable three years from the date appearing thereon, and are owned and held by the various defendants in this consolidated suit.

Third, the note dated November 26, 1928, to the Polish National Alliance for $17,000, which was signed by Paul B. Lipinski and Lottie Lipinski, his wife, and which was due and payable five years from its date, was secured by a mortgage deed dated November 26, 1928, from Lipinski and wife to the Polish National Alliance recorded November 30, 1928, and involved the same property.

The owners of the bonds claiming under the trust deed dated January 17, 1928, who were defendants in the foreclosure suit of the Polish National Alliance, take the position that the wrongful release of the trust deed securing their bonds is not sufficient to deprive them of their lien; that the complainant is not an innocent purchaser or lienor and is not entitled to priority, except as to the $10,000 which it paid to Mary Czaszewicz and that the record of title as disclosed was sufficient to put the complainant upon notice as to its rights for several reasons, amongst which are the following :

(1) The trust deed which was wrongfully released shows the fact to be that it was given to secure 12 bonds payable to said bank as trustee or bearer, eight of which were for $1,000 each and four of which were for $500 each, all of them being due three years after date without the privilege of prepayment before that time and that these bonds were negotiable.

(2) They further contend that the fact that the bonds were for differing amounts, raises the presumption that they were intended to be sold to the public and the further inference that these bonds might be in the hands of the public.

(3) The signers of the bonds did not reserve the right to pay the said bonds before maturity.

(4) The title to the property being vested in a trustee and the real estate bonds which were made payable to said bank as trustee were notice to the world of the trustee’s limited power to act in the matter.

No .question is raised that a fraudulent release is void as between the original parties. This holding is substantiated by the decisions reached in the following cases: Vogel v. Troy, 232 Ill. 481; Ogle v. Turpin, 102 Ill. 148; Mann v. Jummel, 183 Ill. 523; Havighorst v. Bowen, 214 Ill. 90.

The various owners of the bonds claiming under the trust deed dated January 17,1928, in which the Northern Trust & Savings Bank of Hammond, Indiana, is the trustee, further contend that the fraudulent release of the trust deed would have no effect upon the trust deed because of the failure of the Polish National Alliance to ask to see the bonds that the trustee said were “paid, cancelled and surrendered.”

The Polish National Alliance, owners of the subsequently dated note and trust deed for $17,000, contend that they have a right to rely upon the release of the trust deed made by the Northern Trust and Savings Bank of Hammond, Indiana to Lipinski which release deed was of record in the recorder’s office; that they relied upon the same at the time they made the loan to Lipinski; that the statute relating to the recording of deeds protects them as against the claim of the bondholders under the trust deed from Lipinski to the Northern Trust and Savings Bank of Hammond, Indiana, trustee.

Therefore, the controlling questions to be decided in this case are: Did the subsequent purchasers or lienors have notice of the rights of the said bondholders? Did the subsequent purchasers or lienors have such notice or were they chargeable with having had such notice as if they had exercised the care a prudent man would use to put himself on inquiry as to the validity of the release? In cases of this nature the facts and circumstances surrounding the entire transactions of the parties must be considered as they are different in each case, and whether the subsequent purchasers or lienors had notice, either actual or constructive, or whether it or they could have had notice by the exercise of that diligence which the law requires, must be determined by the evidence in each case.

One of the main cases upon which counsel for the bond owners rely is a comparatively recent case which was before the Supreme Court of Illinois, entitled, Kennell v. Herbert, 342 Ill. 464. In that case Herbert executed a trust deed to Peterson to secure certain notes. Subsequently Herbert entered into a written contract to convey the premises to Kruse free and clear of all incumbrance. The abstract showed that there was a trust deed on the property to Peterson and that the trust deed was given to secure four notes dated October 18, 1919, all of which were due five years after date. The attorney for Kruse notified Herbert that he would have to obtain a release of the trust deed. Herbert applied to Peterson for a release of the trust deed, although the notes were unpaid and he was without authority from the holder of the trust deed to do it. Herbert was told by Peterson that before Peterson would execute a release Herbert would either have to pay the $17,000 and interest or execute another trust deed on other property owned by Herbert. Herbert executed another trust deed on other property to Peterson as trustee. Peterson, as trustee, executed a release of the trust deed first above mentioned and delivered it to Herbert, who delivered it to the attorney for Kruse. The trust deed was released in 1919 and secured notes due five years from its date. It was released while Kennell was the holder of the notes secured by the trust deed. He had no knowledge of the release and had retained possession of the notes since they were purchased by him. At the time of the release Peterson did not have the trust deed and notes and so advised Herbert, but told Herbert they would get them and destroy them. After the release was executed the interest on the mortgage and the notes was paid regularly by the trustee. In December, 1925, the trustee filed a petition in bankruptcy and Kennell inquired of Herbert as to when the notes would be paid. He brought a bill to foreclose the trust deed, which bill was dismissed by the trial court and the decree of dismissal was affirmed by the Appellate Court. The Supreme Court reversed the judgment of the Appellate Court and the decree of the circuit court and remanded the cause with directions to enter a decree of foreclosure as prayed in the bill.

The sole question in that case was as to the validity of the release executed by Peterson, as trustee, in April, 1921, which was about two years after the note and trust deed were executed and about three years before the maturity of the notes. The court said in Kennell v. Herbert, 342 Ill. 464, at page 468:

“The term (trustee) is a warning and a declaration to everyone who reads it that the person so named is not the owner of the property to which it relates, that he holds it for the use and benefit of another, and that he has no right to deal with it except in accordance with the terms of the trust. Owens v. Nagel, 334 Ill. 96; Henshaw v. State Bank, 239 Ill. 515.” The court, continuing on page 470, said: “This abstract was sufficient notice to Kruse and his attorney that the trustee held title for some third party and that the notes were not due at that time. It was a warning that the authority of the trustee to release was limited and that a mere release without the surrender of the notes might not be sufficient. The attorney advised Herbert that he must secure the release but paid no attention to the question of the surrender of the notes and trust deed. Under these facts Kruse occupied no better position than Herbert, and the release was invalid as between Herbert and Kruse on the one hand and Kennell on the other. Kruse, as purchaser of the premises, had notice of the terms of the trust deed on record that the notes were not due and contained no pre-payment privilege, and that the trustee for that reason had no authority from such trust deed to receive payment of the notes and release the trust deed before maturity. Therefore, when he, Kruse, purchased the property and accepted the release without also requiring the surrender of the notes he did so at his peril.”

In support of the contention of the complainant Polish National Alliance that being without notice that the bonds had not been paid, it was entitled to rely upon the information which the public records vouchsafed, namely, that the bonds had been paid and that the trust deed under which defendants claim was no longer existent as a lien upon the property. The evidence discloses plaintiff made no investigation or inquiry beyond the terms of the release deed. They cite Vogel v. Troy, 232 Ill. 481, and Ogle v. Turpin, 102 Ill. 148, 152. In the latter case the court said at page 152:

“The ruling of this court has been, under our recording laws, that a purchaser or incumbrancer may rely on, and be protected by, a clear and regular title of record, unless affected by notice of secret adverse titles or liens. Such was the manifest object and purpose of this law, and it has ever been so enforced. The very object is, that all persons having any deed, mortgage, or other instrument in writing relating to or affecting the title to land, shall record it, or failing to do so, as against innocent subsequent purchasers or lienholders he must be precluded from asserting his claim. Bunyan’s release of the mortgage held against Allen was prima facie a satisfaction, — that the bank, in the absence of notice, or what is equivalent to notice, might act. . . . When the attorney of the bank found it thus satisfied, in this case, without circumstances to put him on inquiry, he had a right to rely on the record of satisfaction. As the record stood, it showed that Bunyan was the owner of the title, free from incumbrance.”

In considering cases submitted to them, of this general character, the Supreme Court of this State has laid down 'certain legal principles which govern in similar cases and some of these principles are applicable in part to the case at bar.

Beferring again to the case of Kennell v. Herbert, 342 Ill. 464, at page 469 the court said:

“In equity, a release by the trustee, unauthorized by the terms of the trust deed or by the cestui que trust, will have no effect upon the trust deed as between the original parties or subsequent purchasers with notice. (Connor v. Wahl, 330 Ill. 136; Vogel v. Troy, 232 id. 481; Havighorst v. Bowen, 214 Ill. 90; Lennartz v. Quilty, 191 id. 174; Ogle v. Turpin, 102 id. 148.) ”

Where the mortgagee, after having assigned the mortgage, acquires the equity of redemption and thereafter releases the mortgage, even though before maturity, subsequent purchasers or lienors have a right to presume that the release was regular because of the merger of interests, in the absence of notice of the assignment. Ogle v. Turpin, 102 Ill. 148; Havighorst v. Bowen, 214 Ill. 90.

In the case of Mann v. Jummel, 183 Ill. 523, the court at page 532, said: “And we think the law is, that when the record shows that the release was executed after the indebtedness was past due, in the absence of all evidence of notice to the subsequent purchaser he will be protected.”

Where a release is executed before maturity, and the notes secured by the mortgage or trust deed are payable on or before a certain date, subsequent purchasers or lienors have a right to presume that the makers exercised the option to pay before maturity, and that the release is regular. Lennartz v. Quilty, 191 Ill. 174.

Where a subsequent purchaser finds a release executed before maturity and demands to see and is shown the canceled notes described in the trust deed, bearing the genuine signature of the makers, such innocent purchaser has done all that the law required him to do, and will be protected, even though the notes exhibited to him are a duplicate set and even though the release is fraudulent. Vogel v. Troy, 232 Ill. 481.

In the instant case the property was conveyed to a trustee and our Supreme Court distinguishes between property in the name of a trustee and that of a conveyance to an individual as a mortgagee. In the case of Owens v. Nobel, 334 Ill. 96, the court at page 102 said: “. . . the word ‘trustee,’ when appended to the name of the payee of a bill or note, is sufficient to charge a purchaser with notice of restrictions and limitations imposed on the trustee’s power to dispose of the instrument. The term is a warning and a declaration to everyone who reads it that the person so named is not the owner of the property to which it related, that he holds it for the use and benefit of another, and that he has no right or power to sell or dispose of it except in accordance with the terms of the trust. . . . A trustee is one to whom property is legally committed in trust. . . .” Henshaw v. State Bank, 239 Ill. 515; Chicago Title & Trust Co. v. Brugger, 196 Ill. 96.

In the instant case the deed of conveyance from Lipinski and his wife to the Northern Trust and Savings Bank of Hammond, Indiana, as trustee, contained no specific clause authorizing it to release the trust deed at any time.

Did the subsequent mortgagee have notice? If facts appeared in the chain of title which would cause an ordinarily prudent man to investigate, he cannot close his eyes and refuse to go further than the release deed. As was said in German-American Nat. Bank v. Martin, 277 Ill. 629, at page 648: “Bach case is governed by its own particular facts. While it is sometimes difficult to determine what acts are sufficient to put a party on inquiry, there has never been any departure from the rule controlling the question as it was first stated in this State in Doyle v. Teas, 4 Scam. 202. The rule as there announced is as follows: ‘Where the court is satisfied that the subsequent purchaser acted in bad faith, and that he either had actual notice or might have had that notice had he not willfully or negligently shut his eyes against those lights which with proper observation would have led him to knowledge, he must suffer the consequences of his ignorance and be held to have had notice so as to taint this purchase with fraud in law. It is sufficient if the channels which would have led him to the truth were open before him, and his attention so directed that they would have been seen by a man of ordinary prudence and caution if he was liable to suffer the consequence of his ignorance. The law will not allow him to shut his eyes when his ignorance is to benefit himself at the expense of another, when he would have had them open and inquiring had the consequences of Ms ignorance been detrimental to Mm-self and advantageous to the other. ’ This rule has been consistently followed; repeatedly re-affirmed and never departed from. Among the cases in wMch it has been followed and applied are Rupert v. Mark, 15 Ill. 540; Merrick v. Wallace, 19 id. 486; Morrison v. Kelly, 22 id. 609; Hatch v. Bigelow, supra; Harper v. Ely, 56 Ill. 179; Babcock v. Lisk, 57 id. 327; Chicago, Rock Island and Pacific Railroad Co. v. Kennedy, 70 id. 350; Bent v. Coleman, 89 id. 364; Morrison v. Miles, 270 id. 41.”

In this case the pertinent facts which we think affect the question of notice are:

1st. The fact that the land was conveyed to a trustee, and the bonds issued by Lipinski under said trust deed were payable to the said bank as trustee, all of which would reqrnre an investigation as to its power in relation thereto.

2nd. The bonds which were issued were 12 in number and were for different amounts, making it probable that the bonds were issued for sale to different investors.

3rd. The bonds were all due three years after their date of issue and had no prepayment privileges.

4th. The release deed was executed October 10, 1928, less than 10 months from the date of issuance of said bonds and certified “that the notes secured by said trust deed have been paid, canceled and surrendered. ’ ’

5th. It is a well known custom for investors in bonds to purchase them for the income wMch they would receive therefrom, according to the terms of the bond. Why should they surrender these bonds when they still had two years and two months to run at a good rate of interest ?

6th. Some of the bonds might have been in the hands of minors, guardians for insane persons or executors (one of the defendants here is an executor) and admimstrators of estates whose power to dispose of their ward’s investments, would not be presumed but must appear affirmatively.

7th. Looking at the release of the trust deed executed by the trustee and the clause certifying that the bonds had been paid, canceled and surrendered, a reasonably prudent man would inquire who paid the bonds? By whom were they canceled and to whom were they surrendered? And, if paid by the signers of the bonds it would present the unusual spectacle of parties having funds to pay for their loan before maturity and, yet within a week, are in the market to make another loan on the same property.

All of these questions could have been answered by the Polish National Alliance, requiring that the paid, canceled and surrendered bonds be produced for their inspection.

It is further suggested by the plaintiff that they had a right to rely on a paragraph in the trust deed which would justify them in assuming that the bondholders had been paid before maturity. That paragraph is as follows:

“Said mortgagors agree to keep all buildings upon said premises insured against loss or damage by fire and tornado for the full insurable value in some responsible Insurance Company, with mortgage clause running to said trustee, attached, and to deposit said policy with said trustee and to keep the same insured as aforesaid as long- as said indebtedness, or any part thereof remains unpaid; also to pay all taxes, special assessments, mechanic’s, laborer’s or material men’s liens, which may be or may become a lien upon the real estate described; also to pay any prior liens or encumbrances which may at the time this mortgage is executed be a lien upon said premises, and to buy up outstanding claims lessening the legal or equitable title to said premises.

“Should said mortgagor neglect or fail to make any of said payments said bonds shall, at the election of the holders thereof, or said trustee, thereupon, become due and collectible.” A reading of the language just quoted discloses that it does not refer to the subject of prepayment.

It is suggested by plaintiff that some notice should have been placed of record in the recorder’s office as to the ownership of the bonds by the owners thereof, either by placing of record an assignment of the trust deed or of the bonds. Plaintiffs quote in support of their position the specially concurring opinion written by Mr. Justice Dickey in the case of Ogle v. Turpin, 102 Ill. 148, at page 156, wherein it is stated: “When a man buys notes secured by mortgage he becomes thereby the equitable assignee of the mortgage, and acquires an equitable interest in the mortgaged lands. If he wishes to protect that interest against subsequent purchasers, he may do so by taking a written assignment of the mortgage, and placing that assignment upon record. Possibly a record of the assignment of the note would be sufficient. ’ ’

The difficulty with such contention in this case is that there is no provision in the statute which makes the recording of a note or bond notice to anyone, and as the bonds in this case were payable to bearer and did not contain the name of the real owner such a recording would be futile. In addition to this there is no provision for the recording of a trust deed which would give notice to the world who the real beneficiaries are. In this case, the conveyance being a trust deed securing many bonds held by different people, the trustee had no power to make an assignment of the trust deed to any one or to divest himself of his duties thereunder. If the owner of a bond, secured by a trust deed, attempted to place the bond on record in the recorder’s office, such action by him would not cause said bond to appear in the chain of title as there is no legal description set forth in said bond and it merely contains the legend, “secured by real estate situated in Calumet City, Cook County, Illinois,” without giving any legal description of the real estate. Consequently, such a recording would not carry with it any notice or be any protection to subsequent purchasers.

We believe from all the facts and circumstances surrounding this transaction and the law applicable thereto, there was sufficient appearing to put a prospective purchaser on inquiry and cause an ordinarily prudent man to investigóte the situation further than the facts disclosed by the trust and release deeds. Such an inquiry or investigation would have led him at once to the truth, namely, that the said bonds had not been paid, canceled or surrendered and thus would have avoided the present difficulty of the Polish National Alliance. In failing to make this investigation or inquiry as required by the laws of this State, which is tantamount to closing its eyes to what it could have discovered, the Polish National Alliance placed itself in the position of having had the equivalent of actual notice of the rights of the defendant bondholders under the trust deed of January 17, 1928. Consequently, we believe the trial court was correct in finding:

First, that the Polish National Alliance as subrogees of Mary Czaszewicz, was entitled to a first lien on the premises herein involved to the extent of $10,000, and interest thereon as shown by the decree;

Second, that the bondholders were entitled to a second lien as their interests were proven in the aggregate sum of $10,000 distributed among the various owners of said bonds, together with the interest thereon as set forth in the decree; and

Third, that the Polish National Alliance is entitled to a subsequent or third lien to the extent of $7,000, with interest as shown by the decree.

For the reasons herein given the decree of the circuit court is hereby affirmed.

Decree affirmed.

Hebel and Hall, JJ., concur.


text:
    In re Estate of George J. Schmitt, Deceased. The Peoples Trust and Savings Bank of Chicago, Appellee, v. Victor T. Schmitt and Charlotte W. Schmitt, Executors of the Estate of George J. Schmitt, Appellants.
    Gen. No. 38,872.
    Opinion filed January 27, 1937.
    Rehearing denied February 16, 1937.
    James A. Peterson, of Chicago, for appellants.
    Mater, Meter, Austrian & Platt, of Chicago, for appellee; David P. Rosenthal and Prank D. Mater, both of Chicago, of counsel.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

This is an appeal from an order entered in the circuit court, against defendants as executors of the estate of George J. Schmitt deceased, allowing the claim of the Peoples Trust and Savings Bank of Chicago for the sum of $115,325.25.

The facts before us show that a claim was filed by the plaintiff, the Peoples Trust and Savings Bank, in the probate court of Cook county against the estate of George J. Schmitt, deceased, based upon a guaranty signed by the deceased and 10 others' for the payment at maturity of a $100,000 promissory note and interest executed by the Edgewater Presbyterian Church. The claim was allowed by the probate court and an appeal was taken to the circuit court where a judgment was entered allowing the claim against the said estate for the sum of $115,325.25, upon a finding by the court without a jury.

Plaintiff’s exhibit 1 shows the signatures of the president, treasurer and secretary of the church organization and the indorsement of the Peoples Trust and Savings Bank of Chicago, trustee, certifying that it is the principal note described in a trust deed to the Peoples Trust and Savings Bank of Chicago, trustee, dated August 15, 1925, Register No. R 1075 and is signed by the secretary of the bank. On the back of the note appears the indorsement of the Edgewater Presbyterian Church, signed by its president, treas- ■ urer and secretary. The guaranty was signed by some 11 persons, one of them being the now deceased George J. Schmitt. There also appears on said document indorsement by Peoples Trust and Savings Bank, making the said note payable to Oscar Nelson, auditor of public accounts, Springfield, Illinois, or his successor in office, and also an indorsement by Oscar Nelson, auditor of public accounts, to pay to the order of the plaintiff, the Peoples Trust and Savings Bank without recourse.

There is no question raised as to the validity, the signatures, or the amount of the indebtedness due on said note. The defendant contends, however, that at the time the claim was filed in the probate court the note was in the possession of Oscar Nelson, auditor of public accounts; that the plaintiff did not have a legal title to the note as the title to the same was in the auditor of public accounts. Defendant further contends that there was no proof of the indorsement from the auditor of public accounts back to the plaintiff; that even if that indorsement be taken as proved, it is ineffective because the note was not delivered into the possession of the plaintiff after that indorsement was made on the note so as to pass title; that at the time the claim was filed, and until the time of the trial in the circuit court, the note was in the possession of the auditor of public accounts and therefore the legal title remained in him; that plaintiff not having legal title, it was not entitled to sue.

Plaintiff contends that it owned the note; that although the note was in the possession of the State auditor of public accounts at the time the claim was filed and thereafter pledged as security as provided by the statute to secure the bank’s trust department, the plaintiff had such title as would enable it to maintain an action on the note; that the note was indorsed by the State auditor to the plaintiff which transferred title to plaintiff, thus enabling plaintiff to sue on the note.

It appears from the evidence that the note in reality belonged to the Peoples Trust and Savings Bank, the plaintiff herein, and that in order to place security with the State auditor to secure the beneficiaries of the trusts in their trust department, as the statute provides, they used the note and trust deed as an asset and deposited the same with the State auditor who, at that time, was Oscar Nelson.

Under the statute did the plaintiff by pledging the note with the auditor of public accounts deprive itself of the right to have the same proven in the probate court against the estate of George J. Schmitt, one of the guarantors? In what way are the defendants concerned as to the rights of the plaintiff as against others and in the beneficial interest in said note unless their defense is set-off, payment, etc. ?

In the case of Henderson v. Davisson, 157 Ill. 379, 381, cited by counsel for defendant, Mr. Justice Phillips speaking* for the court said:

“The note having matured and suit been instituted thereon, if a judgment is rendered no subsequent holder can thereafter maintain a recovery on the same. (Middleton v. Griffith, 31 Atl. Rep. N. J. 405.) It is a matter with which the defendant has no concern as to rights between the plaintiff and another in the beneficial interest in the judgment, unless his defense is set off, payment, etc. Parks v. Brown, 16 Ill. 454.

“Possession of the note is prima facie evidence of ownership, and a payee or endorsee in possession may recover, notwithstanding* an endorsement of his name on the back thereof. (Gillham v. State Bank, 2 Scam. 245; Laflin v. Sherman, 28 Ill. 391; Palmer v. Gardiner, 77 id. 143; Best v. Nokomis Nat. Bank, 76 id. 608.) Notwithstanding the endorsement, the plaintiff, when the note again comes to his possession, may disregard the endorsement or strike it out. Its existence does not defeat a recovery. Parks v. Brown, 16 Ill. 454; Richards v. Darst, 51 id. 140; Humphreyville v. Culver, Page, Hoyne & Co., 73 id. 485. . . . ”

When the note herein was pledged with the auditor of public accounts, it seems to us that the only interest that the auditor of public accounts could have in the note was as pledgee to secure the creditors of the trust department of the Peoples Trust and Savings Bank. It was not intended under the law that he should obtain any interest therein, other than for the purpose indicated. The statute providing for such deposits, being Ill. State Bar Stats. 1935, chapter 32, f[ 350; Jones Ill. Stats. Ann. 135.25, provides among other things, as follows:

“. . . The securities so deposited may be exchanged from time to time for other securities receivable as aforesaid and mortgages so deposited may be exchanged from time to time for bonds of the Home Owners Loan Corporation. . . . ”

We think under the facts in this case, we are justified in assuming* that when the State auditor forwarded the note in this case to the plaintiff, he was either permitting the plaintiff to withdraw the securities in exchange for others, or that he was actually releasing all interest in the note. Whatever the State auditor did or did not do in forwarding this note to the plaintiff, we do not think it was of any concern to the defendant. Whether the State auditor did or did not do his duty, it would not be a proper defense to be interposed by the defendant. The note in question was originally payable to bearer and although indorsed specially was still negotiable by delivery and the fact that it is in the possession of the plaintiff raises the presumption that the title was vested in it.

Chapter 98, ft 60, section 40, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 89.060, provides as follows :

“Where an instrument originally payable to or indorsed specifically to bearer is subsequently indorsed specially it may nevertheless be further negotiated by delivery; but the person indorsing specially is liable as indorser to only such holders as make title through his indorsement. ’

For the purposes of this suit indorsement thereon would not necessarily be controlling as the plaintiff would have the right to strike out and eliminate any indorsement which is not necessary to his title.

Chapter 98, if 68, section 48, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 89.068, provides as follows :

‘ ‘ The owner may at any time strike out any indorsement which is not necessary to his title. The indorser whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument.”

There being no affidavit denying the execution of the indorsement, defendant could not be heard to deny the same at time of trial and we think the testimony of plaintiff’s witnesses and the admission of counsel was sufficient prima facie proof of such indorsement. Chapter 110, If 163, section 35, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 104.035; DeClerque v. Campbell, 231 Ill. 442.

Whatever may be the rule at law regarding the recovery on negotiable instruments, the suit in this case was brought in the probate court and was in the nature of a statutory claim against the estate. In these circumstances the rule is different because the probate court in the matter of estates exercises equitable jurisdiction and has the power to adjudicate the rights of all the parties and in the exercise of equitable jurisdiction can enter such orders as will fully protect every one.

In the case of Dixon v. Buell, 21 Ill. 203, a claim was filed in the probate court by one Jeptha Dixon, who was the assignee of John Dixon, against the estate of the deceased tenant of John Dixon. At that time, under the common law, an assignee had no right to sue in his own name. The court on motion of defendant nonsuited the plaintiff and in reversing the judgment the Supreme Court held at page 204: “Now, even if this endorsement did not pass the legal interest in the rent to plaintiff in error, there can be no doubt that it passed the equitable right to him, to receive the money when it became due, according to the terms of the contract.

“Then if the Probate Court has equitable jurisdiction in the allowance of claims against the estates of deceased persons, there was no error in instituting this proceeding in the name of plaintiff. This court held, in the case of Moore v. Rogers, 19 Ill. R. 349, that, ‘the statute providing for the settlement of estates of deceased persons, empowers the County Court to adjudicate upon all “claims” presented for allowance, and provides the mode and time of exhibiting them for allowance; and although the words claims, demands, and debts, are used in the statute in apparently the same connection, we are satisfied that mere equitable money demands are within their meaning, and therefore, within the jurisdiction of the County Court. ’ The demand in the case under consideration was only a money demand, and it therefore follows that the County Court had jurisdiction of this case, if it were only an equitable assignment. And if it had such jurisdiction, no objection is perceived to that court adopting the forms of equitable proceedings, in so far at least, as to permit the claimant to proceed in his own name to obtain the allowance. Then, whether it was a legal or equitable assignment, it can make no difference, as in either case the plaintiff had a right to proceed in his own name in that court, . . . ”

Regardless of whether or not Oscar Nelson, the former auditor of public accounts, indorsed the note to plaintiff, since the trial in the probate court and the hearing on appeal in the circuit court, the successor auditor of public accounts, Edward J. Barrett, placed a further indorsement on the note and thereby disclaimed and released any and all interest therein.

We do not think it is of importance when the indorsements were placed on the note so long as it is evident that it was the intention to convey to the plaintiff all the interest which the State auditor may have had. This is especially true in a proceeding in the probate court when exercising equitable jurisdiction. As was said in the case of Kelly v. Galbraith, 186 Ill. 593, at page 610: “Undoubtedly, the rule in actions at law is, that the right to judgment depends upon the facts as they exist at the commencement of the action, (Bacon v. Schepflin, 185 Ill. 122,) but such is not the rule in equity. The relief administered in equity is such as the nature of the case, and the facts as they exist at the close of the litigation, demand.” In the case of McCall v. Lee, 120 Ill. 261, a claim was filed in the county court by Thomas McKee, as administrator of the Estate of Kate H. Lee, against the estate of Catherine Dwire, deceased. In another action the Supreme Court intimated that the real party in interest was Henry R. Lee and not the administrator. Accordingly, leave was asked to amend the claim, substituting the name of appellee in place of said administrator. On page 269, the Supreme Court said: “The county court, in considering claims against estates, is not limited to the technical legal rights of parties, but may act upon their equities.”

In Thomson v. Black, 200 Ill. 465, a claim was filed against the estate of a deceased executor on his bond. The original claimant was Joseph M. Barker, administrator de bonis non, with the will annexed of the estate of James Reid, deceased. During the appeal to the Appellate Court from the circuit court Barker died and Black, the appellee, was appointed his successor and substituted for him. There was no defense on the merits to the claim on the bond, but it was insisted that the claim could not be filed in the name of the actual claimant but should have been filed and prosecuted in the name of the People of the State of Illinois for the use of the person injured. The Supreme Court held at pages 467-8: “The right of action at law is vested solely in the person having the legal interest. A beneficial plaintiff or usee, whenever necessary for the assertion of his rights, may bring an action at law for his use and benefit, but he must bring it in the name of the one having the legal title and right to sue. The question here is whether that rule applies to a claim filed against an estate.

“The common law remedies against a party cease at his death, and the statutory remedies against his estate provided by the Administration act must then be pursued, so far as the probate court is concerned. The statute provides that every administrator or executor shall fix upon a term for the purpose of having claims adjusted. All demands of every nature are. to be exhibited to the probate court for adjustment and to be classified and settled. The claimant is required to produce his claim in writing at the term fixed by the administrator or executor, or to file a copy of it with the clerk of the court afterward, within the time fixed by statute, but no regular pleadings are required. (Thorp v. Goewey, 85 Ill. 611.) The pleas filed in this case were not necessary or proper, and as the issues were not to be made up in that manner the circuit court was right in disregarding them. Claims not due may be allowed, and the proceeding bears no analogy to proceedings conducted according to the course of the common law. It was not intended by the legislature that claims should only be presented in technical legal forms, or that only those learned in the law and skilled in its practice should be able to present claims for settlement. The proceeding in the presentation and allowance of claims is not according to the common law practice, and there is no mode of preserving the evidence or exceptions or of making them a part of the record as in a suit at law. (Blair v. Sennott, 134 Ill. 78.) It is not governed by technical rules which apply to a formal suit at law. (Scheel v. Eid man, 68 Ill. 193.) In allowance of claims against estates the probate court disregards mere matters of form and looks to the substance. (Wolf v. Beaird, 123 Ill. 585.) In a matter where equitable relief is required the court will adopt forms of equitable procedure, and in other cases will secure to parties the rights allowed to them by law, for the purpose of arriving at an adjustment of the claim.”

The defense to the note in this case appears to be highly technical. Nothing appears from the record which denies the fact that this money is owing and that the said decedent during his life guaranteed the payment of the note and failed to carry out that guarantee and that, therefore, his estate is now liable for this debt. Nothing is suggested in the way of a legal defense which is of merit and certainly nothing appears which would appeal to the equitable consideration of a court as to why the order of the circuit court should not stand. The evidence abundantly shows that the debt is due and owing- by decedents’ estate and the trial court could equitably have entered no other order than it did.

For the reasons herein given the order of the circuit court allowing- this claim against the estate of the said deceased George J. Schmitt is hereby affirmed.

Order affirmed.

Hebel and Hall, JJ„ concur.


text:
    Jack E. Borker, Appellee, v. Vincent Bendix, Appellant.
    Gen. No. 38,885.
    Opinion filed January 27, 1937.
    Rehearing denied February 16, 1937.
    Cassels, Potter & Bentley, of Chicago, for appellant; William H. King, Jr., George C. Bunge and John D. DeFeo, all of Chicago, of counsel.
    Julius L. Kabaker, of Chicago, for appellee.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

This is an appeal from a judgment entered in the municipal court for the sum of $602 and costs in favor of the plaintiff Jack E. Borker and against the defendant Vincent Bendix.

This suit was a contract action in the municipal court brought by the holder of a single $500 bond, out of an issue aggregating approximately $1,400,000, upon a special guaranty executed by the defendant, Vincent Bendix. On motion of the plaintiff, defendant’s second amended affidavit of merits was stricken from the files and, defendant electing to stand upon his said affidavit of merits, judgment was thereupon entered in favor of the plaintiff as aforesaid.

Plaintiff’s statement of claim alleges that on or about December 28, 1928, the Chicago Title and Trust Company, as trustee, made and delivered their six per cent (6%) First Mortgage Gold Bond, in the sum of $500, No. D-192, to the plaintiff through their agent, Central Trust Company of Illinois, of the city of Chicago, which said bond became payable to the bearer on January 1, 1932; that on said January 1, 1932, an extension agreement was executed, extending the maturity of the bond to January 1,1937, conditioned upon the payment of the interest coupons attached to said bond on their respective dates; that said interest coupon Number Three became due July 1, 1933, coupon Number Four became due January 1, 1934, coupon Number Five became due July 1, 1934 and that coupon Number Six became due January 1, 1935, for $15 each, none of which have been paid, although presented to the Central Trust Company of Illinois, or its successor in trust, Central Republic Bank and Trust Company; that said bond carried interest at the rate of six per cent per annum until maturity and seven per cent after maturity and that the said interest coupons carried interest at the rate of seven per cent per annum after maturity on each of said coupons; that the said coupons were not paid on presentment and that the said plaintiff has declared the entire indebtedness due under said bond in accordance with its terms.

Plaintiff’s claim further alleges that neither the said interest coupon notes nor the said bond has been paid to the plaintiff, nor has any part thereof been paid, and the said plaintiff hereby again declares the said bond to be due and payable at once, together with interest at the rate of seven per cent per annum, which said bond and coupons total $560.

Plaintiff further alleges that the said coupon notes and bond were presented for payment to the Central Republic Bank and Trust Company on or about February 16,1935, which payment the maker of said bond has failed and refused to make.

Plaintiff further alleges that in consideration of the execution and purchase of said bond by the plaintiff and in further consideration of the extension of the maturity of said bond that became due January 1, 1932, being bond No. D-192, and owned by the plaintiff, the said defendant executed a written guaranty; that the said guaranty is in words and figures as follows:

“Whereas, the undersigned as the owner and holder of thirty-three and one-third per cent (33}i%) of the beneficial interest in and to the property described in the first mortgage deed of trust dated as of January 1, 1929, from Michigan-Delaware-Chestnut Realty Trust to Central Trust Company of Illinois, as Trustee, heretofore executed and delivered to said Trustee his agreement to pay when due thirty-three and one-third per cent (33^3%) of the principal of, interest on and carrying charges with respect to all bonds from time to time outstanding under said first mortgage deed of trust; and

“Whereas, the undersigned has since the execution and delivery of said agreement acquired substantially larger beneficial interest in and to said property; and

“Whereas, said bonds now outstanding in the principal sum of one million four hundred two thousand five hundred dollars ($1,402,500) matured January 1, 1932 have not been paid, but at the request of the undersigned have been extended to January 1,1937;

“Now, Therefore, in consideration of said extension and other good and valuable considerations, receipt of which is hereby acknowledged, the undersigned hereby guarantees the payment of and agrees to pay the principal of, interest on, and all taxes and assessments and other carrying charges as defined in said first mortgage deed of trust as and when any of said payments shall become due and payable. All payments of principal and/or interest which shall become due from the undersigned under the terms of this instrument shall be made to Central Republic Bank and Trust Company, as Trustee of expressed trust or to its successors in said trust, for the use and benefit of the holders from time to time of said bonds.

“The undersigned unconditionally waives all notice of non-payment or default, demand, presentment, protest or notice thereof, and the acceptance of this guaranty; accepts all of the provisions of said bond and said first mortgage deed of trust dated as of January 1, 1929; agrees to any extension or extensions of the time of any of said payments without notice to him, and agrees to make such payments when due under the terms of any such extension or extensions; agrees that in case of non-payment by him when due of said payments or any part thereof, that suit therefor may be brought by Central Republic Bank and Trust Company in its own name and as Trustee of an express trust, as aforesaid, or by any successor Trustee for the use and benefit of the holders of said bonds against him at the election of said Trustee, whether or not foreclosure proceedings or any other actions in law or in equity have been commenced against the Mortgagor, or against any other guarantor, or guarantors of the payment of said bonds or any part thereof, and that in any such suit neither the Mortgagor nor any of such guarantors need be joined at the option of said Trustee, and further agrees, in the event of any such suit, proceedings or actions, to pay the costs and reasonable attorneys fees incurred by said Trustee herein.

“The obligations of the undersigned to make the payments herein referred to shall be and become unconditional from and after the time when such payment or payments become due, irrespective of any period of grace referred to in said mortgage deed of trust. If the undersigned shall default in the making of any such payments promptly when due, then and in every such case, without any notice whatsoever Central Republic Bank and Trust Company, Trustee, or its successor in said trust, may, without any action on the part of any bondholder, with or without declaring said bonds due prior to their specified maturity, and upon the written request of the holders of not less than twenty-five per cent (25%) of the principal amount of said bonds then outstanding, shall institute such suit or suits in equity or at law in any court of competent jurisdiction to enforce the payments herein agreed to be made by the undersigned as it may deem proper. The Trustee shall not be bound, however, to institute any suit hereon without first being indemnified to its satisfaction.

“It is expressly understood that this guaranty of payment is given as additional security for the payment of the principal of, interest on and carrying charges with respect to said bonds, and is not to be a substitution for any of the obligations of any other person or persons under any existing guarantees or agreements.

“In Witness Whereof, the undersigned has hereunto affixed his hand and seal this 15th day of November, A. D. 1932.
11 Vincent Bendix (Seal).”

The statement of claim concludes by alleging that plaintiff is a bona fide holder for value of the bond heretofore described and plaintiff prays that a judgment be entered in the sum of $560, together with interest at the rate of seven per cent per annum from January 1,1935, plus reasonable attorneys’ fees.

Defendant’s second amended affidavit of merits denies that plaintiff was induced to or did in fact purchase the bond in question in reliance upon the guaranty referred to in the plaintiff’s statement of claim and alleges that the guaranty in question is a special one and as such may be enforced only by Central Trust Company of Illinois, Trustee, or by its successor in trust; alleges the terms of the contract of guaranty upon which plaintiff is predicating his lawsuit have not been complied with; and further alleges the suit is premature, and denies that the defendant is indebted to the plaintiff in any amount whatsoever.

Attached to defendant’s second amended affidavit of merits was a photostatic copy of bond No. D-192, and, by leave of court, became a part of plaintiff’s statement of claim.

It, therefore, appears that this bond in the principal amount of $500, falling due on January 1, 1932, is one of an issue of the aggregate principal amount of approximately $1,400,000 all equally and ratably secured by a first mortgage and deed of trust of the mortgagor, dated as of January 1, 1929, hereinafter called the mortgage, conveying to Central Trust Company of Illinois as trustee all of the property of the mortgagor described in the mortgage, to which mortgage reference is hereby made for a more particular description of the property mortgaged, the nature and the extent of the security, the rights thereunder of the holders of bonds secured thereby and the rights, duties and immunities of the trustee.

The bond provides among other things, as follows:

On default in payment of the interest on or principal of any of the bonds secured by the mortgage or in the performance of any of the covenants of the mortgagor contained in the mortgage, the principal of this bond may, before the date of the maturity hereof as herein specified, become and be due and payable, together with the accrued interest hereon, in accordance with the provisions of the mortgage.

Indorsed on the margin of the bond appeared the following:

“The maturity of this bond has been extended to January 1, 1937, in accordance with the terms of an extension agreement dated as of January 1,1932; additional coupons are attached hereto; ... It is understood that the holder of the within bond for himself and each successive holder thereof, has consented and by the acceptance thereof with this legend affixed, does hereby consent to the terms and provisions of this legend and of said extension agreement. . . . ”

Bight semiannual interest coupons are attached to said bond numbered 3 to 10 inclusive, and falling due July 1, 1933 to January 1, 1937, inclusive, in the amount of $15 each. By each of said interest coupons Chicago Title and Trust Company, as trustee, under Trust No. 22114, promised to “pay out of the mortg’aged property referred to in the bond hereinafter referred to, to bearer hereof, at the office of Central Republic Bank and Trust Company $15, being six (6) months interest on its First Mortgage 6% Bold Bond dated as of January 1,1929, the maturity of which has been extended.”

The theory of the plaintiff in this case is, that under the aforesaid guaranty agreement, the defendant is now personally liable to pay the amount of the aforesaid bond and interest coupons directly to the plaintiff; that plaintiff could and did accelerate the maturity of said bond; that plaintiff is entitled to receive from defendant the full principal amount of said bond, namely, $500, and of interest coupons Nos. 3 to 6, inclusive, for $15 each, falling due up to January 1, 1935, together with interest at the rate of seven per cent on the aggregate amount of $560 from January 1, 1935, to February 14, 1936, the date judgment was entered. The amount of the judgment as entered by the trial court is computed upon this theory, to wit, $602 and costs.

Defendant’s theory of the case is that the guaranty agreement expressly provides that all payments thereunder are to be made to Central Republic Bank and Trust Company, as trustee, for the use and benefit of the holders of the entire bond issue, and that suit to recover any sums due thereunder can be brought only by such trustee; that plaintiff, as the holder of a single bond, has no right to sue this defendant upon said agreement and that nothing is or can be due under it from defendant directly to the plaintiff; that no default by the defendant in the performance of the said guaranty agreement is alleged in the statement'of claim; that the maturity of the bond held by the plaintiff, namely, Bond No. D-192, due by extension on January 1, 1937, was not legally accelerated, and that the principal of said bond is not yet due and payable, and that plaintiff, in any case, is not entitled to seven per cent interest.

The first error assigned by the defendant is that the trial court erred in striking his second amended affidavit of merits from the files.

The second amended affidavit of merits did not allege any facts upon which an issue could be made on evidence introduced but consisted of denials and conclusions of law. The substance of the affidavit was not, therefore, in compliance with the rules of the municipal court.

Rule 60, paragraph 1, of the municipal court of Chicago provides:

“Every pleading shall contain and contain only a statement in a summary form of the material facts on which the party pleading relies for his claim or defense, as the case may be, but not the evidence by which they are to be proved, and shall, when necessary, be divided into paragraphs numbered consecutively. . . .”

Buie 62 of the municipal court provides:

“A further and better statement of the nature of the claim or defense, or further and better particulars of any matter stated in any pleading, notice or written proceeding requiring particulars, may in all cases be ordered, upon such terms as may be just. . . . ”

It is contended by defendant that under the terms of the guaranty he is not liable except to the Central Bepublic Bank and Trust Company. From a reading of the guaranty we do not think the position of the defendant in that regard is sound. The clauses of the guaranty which control in this regard, are as follows: “Now, Therefore, in consideration of said extension and other good and valuable considerations, receipt of which is hereby acknowledged, the undersigned hereby guarantees the payment of and agrees to pay the principal of, interest on, and all taxes and assessments and other carrying charges as defined in said first mortgage deed of trust as and when any of said payments shall become due and payable. All payments of principal and/or interest which shall become due from the undersigned under the terms of this instrument shall be made to Central Bepublic Bank and Trust Company, as Trustee of expressed trust or to its successors in said trust, for the use and benefit of the holders from time to time of said bonds.

“The undersigned unconditionally waives all notice of non-payment or default, demand, presentment, protest or notice thereof, and the acceptance of this guaranty; accepts all of the provisions of said bonds and said first mortgage deed of trust dated as of January 1,1929; agrees to any extension or extensions of the time of any of said payments without notice to him, and agrees to make such payments when due under the terms of any such extension or extensions; agrees that in case of nonpayment by him when due of said payments or any part thereof, that suit therefor may be brought by Central Republic Bank and Trust Company in its own name and as Trustee of an express trust, as aforesaid, or by any successor Trustee for the use and benefit of the holders of said bonds against him at the election of said Trustee, . . .

“The obligations of the undersigned to make the payments herein referred to shall be and become unconditional from and after the time when such payment or payments become due, irrespective of any period of grace referred to in said mortgage deed of trust. If the undersigned shall default in the making of any such payments promptly when due, then and in every such case, without any notice whatsoever Central Republic Bank and Trust Company, Trustee, or its successor in said trust, may, without any action on the part of any bondholder, with or without declaring said bonds due prior to their specified maturity, and upon the written request of the holders of not less than twenty-five percent (25%) of the principal amount of said bonds then outstanding, shall institute such suit or suits in equity or at law in any court of competent jurisdiction to enforce the payments herein agreed to be made by the undersigned as it may deem proper. The Trustee shall not be bound, however, to institute any suit hereon without first being indemnified to its satisfaction.

“It is expressly understood that this guaranty of payment is given as additional security for the payment of the principal of, interest on and carrying charges with respect to said bonds, and is not to be a substitution for any of the obligations of. any other person or persons under any existing guarantees or agreements.”

From a reading of this guaranty it is apparent that this was an unconditional guaranty to pay this amount of money due as indicated by the bond, and it was so provided according to its terms for the benefit of all the holders of the said bonds. The reference that the payments be made through the Central Republic Bank and Trust Company simply means that the guarantor constituted the Central Republic Bank and Trust Company as its agent to receive the money from him and disburse it and is not a controlling factor of the guaranty.

The facts as disclosed by the evidence that defendant has not complied with the terms of his agreement and has paid neither the principal nor the interest on this note, according to its terms, would be evidence of his liability. The fact that the clause in the guaranty provided that the Central Republic Bank and Trust Company, as Trustee, may commence suit, should not be construed to mean that no one else could commence suit.

As was said by the Supreme Court in the case of Webster v. Fleming, 178 Ill. 140, 145, in quoting from the case of Dean v. Walker, 107 Ill. 540: “ ‘It has ever been held by this court, that such a promise inures to the benefit of the person for whose benefit it is made, and the right to sue is vested in him by force of the agreement itself.’ ” Continuing in the Webster case, the court said:

“It is well settled that, where one person enters into a simple contract with another for the benefit of a third person, such third person may maintain an action for the breach, and such a contract is not within the Statute of Frauds. In line with this principle we have held that, ‘where a person becomes the purchaser of real estate by deed, which, at the time, is encumbered by mortgage, and in the deed conveying the property it is stipulated and agreed that the purchaser assumes and agrees to pay the mortgage as a part of the consideration, the contract creates a personal liability on the purchaser in favor of the holder of the mortgage, which may be enforced in an appropriate action.’ ” See also Schatzkis v. Bosenwald & Weil, 267 Ill. App. 169; Balchunas v. Novicki, 257 Ill. App. 157; Chicago Title S Trust Co. v. Cohen, 284 Ill. App. 181.

We are of the opinion that the judgment of the municipal court was correct and should he and hereby is affirmed.

Judgment affirmed.

Hebel and Hall, JJ., concur.