author: Per Curiam.

text:
    George Steiger et al., Complainants, v. Charles B. Wood et al., Defendants. Baldwin State Bank of Delavan et al., Appellants, v. Charles B. Wood et al., Appellees. Charles B. Wood, Cross Complainant, v. George Steiger et al., Cross Defendants.
    Gen. No. 9,104.

      Opinion filed October 14, 1938.
    Rehearing denied January 3, 1939.
    A. M. Fitzgerald, of Springfield, and O. L. Conder, of Pekin, for appellants.
    Egbert M. Culbertson, of Delavan, and C. E. Birkett, of Peoria, for certain appellees.
    Todd, Morgan, Pendarvis & Arber, for certain other appellee and cross appellant.
   Per Curiam.

This is an appeal by Charles H. Albers, receiver of the Baldwin State Bank, of Delavan, Illinois, defendant, cross complainant and cross defendant, from a decree entered in the circuit court of Tazewell County, Illinois, on September 13, 1937, in a cause wherein Budolph L. Steiger, administrator of the estate of George Steiger, deceased, et al., were complainants, and Charles B. Wood et ah, were defendants, by the terms of which a deficiency judgment was entered against Charles H. Albers, receiver of the Baldwin State Bank of Delavan, in favor of the defendant and countercomplainant, Charles B. Wood, to be paid in due course of administration as far as the assets of said bank would ratably reach. Charles B. Wood, defendant and countercomplainant, filed notice of a cross appeal from certain of the findings and judgment of the court.

This bill was filed April 22, 1932, by the complainants against Charles B. Wood and Amy M. Wood. The Baldwin State Bank, of Delavan, and John H. Shade, its then receiver, were also made parties defendant, and upon the resignation of John H. Shade as receiver William L. O’Connell was appointed successor receiver; and upon his death, it being suggested to the court, Charles H. Albers was substituted as successor receiver.

The bill alleged that the Baldwin State Bank, of Delavan, claimed an interest in the real estate described in the trust deed by virtue of a deed executed by Charles B. Wood and wife to the bank, as grantee, by which deed the same was conveyed subject to a trust deed securing- the payment of notes in the sum of $21,000, and which indebtedness the grantee assumed and agreed to pay. Answers were filed by the defendants. The receiver filed a cross-bill, and Charles B. Wood also filed a cross-bill, in which William B. Baldwin, Frank B. Shelton, F. S. Allen, E. B. Bhoades and E. R. Rhoades, trustee, the Baldwin State Bank and John H. Shade, receiver, were made parties defendant. C. Y. Frings was appointed special master to take the proofs, examine questions of law and fact and report the same with his conclusions.

Upon a hearing on the report of the master the same was approved and a decree for foreclosure and sale entered. The decree finds the complainants are the holders of the notes set forth in the complaint; that the premises were conveyed to Wood March 28, 1927, by Garretson and were subject to a mortgage of $21,000, and that William D. Garretson was indebted to the bank upon his personal notes in the sum of $2,000; that Wood held title for the benefit of the bank, as its agent or trustee, for the purpose of enabling the bank to sell the same without foreclosure proceedings and, from the proceeds, to pay the mortgage notes and the personal notes of Garretson due the bank.

That Wood executed the notes at the request of the officers of the bank without consideration, and delivered them to the bank upon the agreement that the bank would pay the same on or before maturity and that he should not become liable for the payment of any sum on account of the execution of the notes. That Wood deeded the premises to the bank, the deed containing an express provision that the grantee assumes and agrees to pay the notes secured by the trust deed, and that the bank accepted the deed and assumed full control and operation of the farm, collected the rents and paid the expenses. That Wood is personally liable on the notes, but,- as between him and the bank and its, receive?, the bank was the principal debtor and Wood was surety; that the receiver should exonerate Wood by paying any deficiency arising after a sale of the premises in so far as the assets of the bank would reach.

The decree approving the master’s report of sale found that Charles B. Wood was indebted to the complainants in the amount of the notes and interest and also found a deficiency of $19,402.16, and that Wood was personally liable to pay complainants such deficiency. Judgment was entered in favor of the various complainants for the amount due each against Charles B. Wood. It was also decreed that Charles H. Albers, receiver of the Baldwin State Bank, exonerate the defendant Wood by paying to him the amount of the deficiency decreed to be paid by him in as far as the assets of the bank would ratably reach in due course of liquidation.

It appears from the record that on March 1, 1920, William R. Baldwin and Frank B. Shelton were co-partners, doing business as the Baldwin Bank, in Dela • van, Illinois, and on that day made a loan to William L. Garretson in the sum of $21,000, secured by a trust deed to Frank B. Shelton, trustee, upon ninety-nine acres of land in Delavan township, Tazewell county, Illinois. The notes evidencing the money loaned were sold to customers of the bank. ■

December 1, 1920, the Baldwin State Bank of Delavan was incorporated, and at a meeting of the directors, held on December 4, 1920, a resolution was adopted buying all the interests of the Baldwin Bank theretofore owned by Baldwin and Shelton, and assuming control from December 1,1920, of all profits, assets and responsibilities of said bank, Baldwin and Shelton guaranteeing all notes and assets.

Garretson, being unable to pay his indebtedness upon maturity of the notes on March 1, 1925, the trustee, Shelton, who was also cashier of the bank, extended the loan one year and again, on March 1, 1926, it was extended another year. Garretson was also indebted to the bank at that time in the sum of $2,000. He agreed to deed the farm to the bank, so that it might be sold and the noteholders and bank paid and the surplus turned over to him. Mr. Shelton told Wood, who was one of the directors of the bank, that Garretson was unable to pay the loan and asked him to take title to the farm and carry it for the noteholders and the bank until a solution could be arrived at. The land was conveyed by Garretson to Wood, and he was given a lease of the farm for a year, which was renewed for another year, and at the expiration of which time he offered to waive all interest in the farm or the proceeds derived from the sale, providing the obligations he owed would be surrendered to him.

In order to carry out this proposition of Garret-son’s, Wood and his wife conveyed the land to E. R. Rhoades, trustee, to secure the payment of sixteen notes executed by Wood, due in five years after date, and aggregating the sum of $21,000' with 5 per cent interest, and also gave the bank his personal note for $2,000 representing the personal debt due the bank from Garretson. Prior to the execution of the trust deed and notes Wood had a conversation with Frank B. Shelton at the bank, in which Garretson’s loan was discussed, wherein Shelton asked Wood to execute the notes and trust deed, at the same time assuring Wood that the bank would hold him harmless in the matter and that the bank did not expect him to pay the notes and he would never lose a cent. When the notes and trust deed were turned over to Shelton at the bank, he assured Wood that it was not his obligation at all, and it was so understood. Subsequently Wood had a conversation with various officers of the bank concerning the Garretson farm, and received a written instrument signed by all of the officers and directors of the bank except Price, a director, which was substantially as follows:

Whereas Charles B. Wood did, at the request of the directors of the Baldwin State Bank, of Delavan, Illinois, take title to one hundred acres of land deeded to him by W.- L. Garretson (describing the same). The land was deeded to Wood, a director of the bank, rather than to have the bank take title, said Wood did on taking title give to the bank a trust deed and notes for $21,000, with interest, and a personal note for $2,000 and interest. It is the wish of the bank that Wood sell said land as soon as the directors of the bank shall state, and deliver to the purchaser a warranty deed, the purchase money or security to be paid to said bank, and that being done the bank shall cancel and deliver to Wood all of the notes, amounting to $23,000, and all interest due, and release Wood from any further obligations to the bank resulting from the above transaction ; Wood to be under no obligation to pay any money for repairs, taxes, or any other purpose, but the bank shall pay all such expenses.

At the time Wood executed the trust deed and notes, he and his wife executed a warranty deed conveying the premises to the Baldwin State Bank of Delavan, the deed containing a provision that it was made subject to the trust deed securing the sum of $21,000, which the grantee assumed and agreed to pay, thereby releasing the grantors of all liability on the $21,000 and interest thereon. This deed was given to Frank B. Shelton at the bank, and retained- by it. In December, 1931, Wood had a conversation with Mr. Rhoades, then cashier of the bank, and Mr. Nicholson, chief bank examiner. Mr. Rhoades mentioned to Nicholson the circumstances of the Garretson farm, and informed him the farm was considered as the bank’s farm and carried in the name of Mr. Wood.

When the farm was deeded to Wood the bank took over the management and control of the same. As the rents fell due, in 1927, they weye placed in the bank and credited to the Garretson Farm Account, and this account was carried until the bank closed. • From this account all taxes, insurance,- and other expenses of every kind in connection with the farm, were paid. The payments included the interest on the $21,000 notes that Wood signed. The rents were not always sufficient to pay the interest and taxes and other expenses. When there was a shortage they loaned the money on a note to Mr. Wood. These notes were signed, more or less, for the purpose of bookkeeping, and were given to keep the account from being overdrawn.

Mr. Wood never paid the notes, they were ultimately charged off by the bank, and charged to “Expense” or “Profit and Loss,” at the end of an interest period. This account was kept along with the other accounts in the bank.

John H. Shade was appointed receiver of the bank on January 25, 1932, but he resigned as such receiver and William L. O’Connell was duly appointed as successor; and on the death of William L. O’Connell in October, 1936, Charles H. Albers, receiver, was substituted as a party.

On behalf of appellant it is contended that the transaction, entered into between the bank and Gfarretson, and taking the title to the premises by Wood and his subsequent making of the trust deed and the notes secured by the same, and the deeding of the same by Mr. Wood to the bank, subject to the trust deed securing $21,000 in notes, and the provision in the deed by which the bank assumed and agreed to pay the indebtedness secured by the trust deed and relieving Wood of all liability on account thereof, is not binding upon the bank to the detriment of its depositors and creditors, and that he, as receiver, has authority to disclaim any liability on account thereof, advancing several reasons for so contending, one of which is the transaction, was not entered into by the proper corporate action.

It is insisted that it was the duty of the bank under the law to keep a minute record of the proceedings of its board of directors, and that the records of the bank are not only the best but the only evidence admissible to prove or disprove any of the issues made in the case. It is further insisted that there is no competent evidence in the record showing that the board of directors of the bank passed the resolution, signed by them, in which was stated the purpose and terms upon which Mr. Wood took title to the land in question, and subsequently issued the notes and trust deed securing the same; that the report of the officers to the auditor of public accounts does not show the bank to have owned any real estate except the bank building, nor do they show that the Garretson or Wood notes were owned as an asset or liability of the bank. It is contended that the evidence shows conclusively that if there was any agreement had with Wood it was secret and undisclosed, and that the officers of the bank did conceal the true state of the bank from the auditor and the depositors ; that the reports show that this account was designated on the books of the bank as the Garretson Farm Account with C. B. Wood as/nanager.

It is not the law that a bank can be held liable for only those contracts that are made by the board of directors acting in a meeting and of which a record is kept. In the case of Nelson v. Colegrove, 265 Ill. App. 488, a case cited by appellant as sustaining his contention, it is said: “The bank can only be held liable upon contracts for action taken by its board of directors, of which record must be kept, or by the action of its officers acting within their authority.” A bank will be bound by the acts of its president, cashier, or any other officer who has authority to act for it, as well as by the formal resolutions of its board of directors. Libby v. Union Nat. Bank, 99 Ill. 622.

Frank B. Shelton was cashier of the bank and had complete control of the farm loan business, and when Garretson could not pay his mortgage indebtedness when it became due in 1925 he consulted Shelton, trustee in the deed of trust, and cashier of the bank, to whom he always went in connection with the business of his loan, and he extended the loan for one year. When Garretson could not meet his indebtedness he agreed to deed the farm to the bank so that it might be sold and the mortgage indebtedness and the $2,000, that Garretson owed to the bank on his personal notes, be paid and any surplus paid over to him. Mr. Shelton informed Mr. Wood, who was one of the directors of the bank, that Garretson was unable to pay his loan and asked him to take title and carry it for the benefit of the noteholders and the bank until a solution could be arrived at. After acquiring title Wood leased the farm to Garretson for one year. The farm was then offered for sale at public auction by Garretson, and a bona fide bid of $239 per acre was received. Garret-son, however refused to permit the bid to be accepted as he believed the farm was worth $250 per acre. A sale at the price offered would have realized enough money to have paid the noteholders, the personal indebtedness of Garretson to the bank and a surplus to Garretson. After this Garretson offered to give up possession of the farm and waive all interest he had in the same, or in the proceeds derived from its sale, npon condition that his mortgage notes and trust deed and his personal notes due to the bank be surrendered to him.

It was at this time that Wood executed the new mortgage notes and trust deed and his personal note for $2,000, representing the personal liability of Garretson on his notes to the bank, and delivered the same to the bank in order that it might obtain full control over the farm by exchanging the notes, executed by Wood, for the Garretson notes and in this way be in a position to effect a sale of the farm without the consent of Garret-son, and without foreclosure proceedings.

Wood executed the notes and trust deed involved in this proceeding without any consideration, and had no personal interest in the matter and did not benefit in any way by the transaction, and simply acted as trustee for the bank and entirely in its interest upon the written contract of the officers of the bank, that the debt would be paid by the bank, and upon the verbal assurance of Frank B. Shelton, cashier of the bank at the time he requested Wood to execute the trust deed and notes, that the bank would hold him harmless in the matter and that he would never lose a cent. In addition to the assurance received by Wood he deeded the premises to the bank subject to the trust deed indebtedness, which the bank assumed and agreed to pay.

The contract signed by the officers of the bank and the verbal assurance given Wood by Frank B. Shelton, cashier, is the contract and assurance of the bank and shows plainly why Wood executed the notes and trust deed. He was merely acting for the bank, and would not have signed the notes and trust deed if the assurance of the cashier and the contract of the officers of the bank, holding him free from loss, had not been given him. Under the laws of Illinois a bank can purchase real estate to secure the satisfaction of a debt due it, even though it be incumbered and costs a considerable sum over and above the debt, and the title to the land is acquired from another than the debtor. Libby v. Union Nat. Bank, supra; Mapes v. Scott, 88 Ill. 352. Property which a bank is not ordinarily authorized to purchase may be acquired as security for a loan or in payment of a past due debt. In obtaining additional security to perfect its loan, it may assume payment of liens existing against the security obtained. 9 C. J. S., Banks & Banking, Sec. 168; 7 Am. Jur., Banks, Sec. 163. And when it is within the powers of the bank to acquire certain real estate, it may, as a part of the transaction, assume and agree to pay the mortgage thereon. 7 Am. Jur., Banks, Sec. 168.

Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument, for the purpose of giving effect thereto. As between immediate parties, and as regards a remote party other than a holder in due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making, drawing, accepting, or indorsing, as the case may be; and in such case the delivery may be shown to have been conditional or for special purpose only, and not for the purpose of transferring the property in the instrument. Ch. 98, sec. 36, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 89.036].

The court did not err in permitting Wood to show the purpose of his taking title to the land and the purpose for which the notes and trust deed were executed and delivered to the bank, showing that the same was without any consideration for so doing, so far as he was 'concerned. The evidence admitted was all part of the one transaction, and therefore admissible.

We are of the opinion that the bank was bound by the contract of its officers, and by its acceptance of the deed to the premises, and that the court was not in error when, by the decree, it ordered the receiver to exonerate Wood by paying him the amount of the deficiency to be paid by him.

The contention of appellant that the bank had Wood take title to the farm secretly and with the intent to deceive the auditor and depositors of the bank is without foundation. There is nothing in the record that would show that there was any fraudulent intent on the part of the officers of the bank or Mr. Wood in placing the title in his name. In the first place Garret-son consented to deed the farm to Mr. Wood to hold the title in trust for the bank, the same to be sold and the money used to pay the mortgage indebtedness and money due the bank, the surplus to be turned over to him. When the farm was put up for sale at public auction by Garretson and a bid sufficient to pay the indebtedness and leave a surplus was obtained, he refused to let the farm be sold.

It was after this that Mr. Shelton, on behalf of the bank, induced Mr. Wood, by agreeing to hold him free from loss, to execute and deliver to the bank the mortgage notes to take the place of the Garretson notes. This was done on the express condition that Garretson would deliver up possession of the farm and waive all interest therein and from the proceeds thereof so that the farm could be sold and the money due the bank from Garretson together with the mortgage indebtedness paid. It had just been demonstrated' that the premises would sell for enough to pay all of the indebtedness. The record shows that the bank' examiner for the auditor of public accounts knew about the transaction and informed the officers of the bank that; in carrying the account as the Garretson Farm account, they met with the approval of the auditor. The bank fulfilled its obligation entered into with Mr. Wood during the time it was doing business, and objection to the transaction was made by the receiver in January, 1932.

Appellant further insists that the purpose of Mr. Wood, in taking title to the land, was to protect the noteholders or customers rather than to collect an indebtedness due the bank, and that the action of the officers in their attempt to render the bank liable in the transaction was ultra vires and void, and not binding on the receiver. That the powers of a bank are only such as may be granted by the statute; that the bank had no interest in the Garretson farm. That it has always been against the policy of the State to permit corporations to own real estate beyond that which is necessary for their corporate business. Had Wood only taken title to secure the bank the payment of the $1,986.21, owing to it by Garretson, yet to take title and then assume the payment of the $21,000, was certainly beyond its power as a bank, and, particularly so, since Garretson’s paper was amply secured. Garretson’s note was signed by a brother of his, who was the owner of real estate, but the record fails to show him financially responsible.

Under the provisions of ch. 16%, sec. 9, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 10.09], a bank may carry as an asset real estate necessary to do its business and such other real estate to which it may obtain title in the collection of its debts. In the case of Wolff v. Schwill & Co., 351 Ill. 28,183 N. E. 567, it is held that when the charter of a corporation expressly authorizes it to hold land for certain purposes, whether it is holding the land within the scope of its chartered power or in abuse thereof, is a question which the State alone can raise. Citing Bartee Tie Co. v. Jackson, 281 Ill. 452, 117 N. E. 1007; Hayden v. Hayden, 241 Ill. 183, 89 N. E. 347; Springer v. Chicago Real Estate Loan & Trust Co., 202 Ill. 17, 66 N. E. 850.

The Baldwin State Bank having authority under the provisions of the statute above cited to carry as assets real estate necessary to do its business and such other real estate to which it might obtain title in the collection of its debts, appellant cannot question the right of the bank to take title to the real estate in question. As to whether in so doing it abused its authority can only be inquired of by the State.

Appellant asserts that there appears to have been no agreement on the part of the bank whereby it was to answer or become liable for the debt or undertaking made by Mr. Wood; that the statute of frauds and perjuries provides that no action shall be brought whereby it will charge a defendant with any special promise to answer for the debt or default of other persons unless the promise is in writing. This in effect is the contention, that the bank was not authorized to take title to the real estate and assume and agree to pay the mortgage incumbrance in order to collect the money due it from Gfarretson on his personal notes.

The bank did not undertake to answer for the debt of another, as we have heretofore shown. Wood was trustee for the bank in the transaction and acted for it and at its request in the execution of the notes and trust deed and the debt was in reality that of the bank.

Cross appellant Wood insists that the court was in error when it found that the bank negotiated the notes to the several plaintiffs for a good and valuable consideration and that the plaintiffs are the holders thereof in due course and Wood became liable upon said notes upon their execution and made default in the payment thereof.

It is also claimed that Wood could not become personally liable immediately upon the execution and delivery of the notes to the bank as his want of consideration would be a defense in the hands of any one not a holder in due course. That Wood’s notes were exchanged for Glarretson’s notes which were worthless as personal obligations, and the persons who acquired Wood’s notes could not have become purchasers for value. That regardless of how a mortgage noteholder acquired title thereto, his note is subject to the same defenses in a foreclosure proceeding as it was in the hands of the original holder or payee. The Wood notes are therefore subject to his defense of want of consideration. It was manifestly erroneous for the trial court to allow deficiency judgments in favor of plaintiffs against Wood.

It is claimed that the trial court should have allowed direct claims in favor of the noteholders against the receiver of the bank; that the decree of the trial court should be reversed insofar only as it found that the bank negotiated the notes for a good and valuable consideration in due course, and that Wood became and is personally liable thereon and has made default in payment.

The record is quite voluminous, and while many questions are raised and arg-ued they all center around the contention that the bank was not bound by the action of its officers and directors.

We have given due consideration to the questions raised and argued on behalf of appellant and cross appellant and are of opinion that the decree of the circuit court of Tazewell county should be affirmed and the same is accordingly affirmed.

Decree affirmed.


source: Caselaw Access Project

author: Mr. Presiding Justice McSurely O’Connor, J.,

license: Public Domain

text:
    Ross W. Swing et al., Appellants, v. American Federation of Labor et al., Appellees and Cross Appellants.
    Gen. No. 40,195.

      O’Connor,, J., concurring in part and dissenting in part.
    Opinion filed December 21, 1938.
    Rehearing denied January 9, 1939.
    Samuel A. Rinella and Myer N. Rosengard, both of Chicago, for appellants; Joseph Barbera, Seymour Rady and Arthur Frankel, all of Chicago, of counsel.
    Stanton & Stanton, of Chicago, for appellees; Bailey Stanton, S. J. Stanton and Wm, McK. Glee-son, of Chicago, of counsel.
    Daniel D. Carmell, of Chicago, for certain appellees.
    Ben Meyers and Hart E. Baker, for certain other appellees.
    Frank J. Delany, Jr., Leon M. Despees, Arthur J. Goldberg, Henry IIeineman and George L. Quilici, all of Chicago, and Charles O. Gregory and Malcolm P. Sharp, both of New York State, amici curiae.

   Mr. Presiding Justice McSurely

delivered the opinion of the court.

By this appeal' plaintiffs seek the reversal of an order dissolving a preliminary injunction, assessing damages and dismissing their complaint.

Pursuant to the prayer of the complaint a temporary injunction was issued restraining the defendants from picketing in front of Swing’s placó of business; subsequently answers were filed by defendants and a motion made to dissolve the temporary injunction and to dismiss plaintiffs ’ complaint, which motions were allowed. Defendants’ brief seems to assume that the court considered both'the complaint and the answers filed in passing upon the motions, but the orders show definitely that the complaint was dismissed for want of equity-on its face, so that in considering the question before us we have only to consider whether the complaint sets up a cause of action.

The complaint is a joint pleading filed by the employer, Swing, and all of his employees; in it Swing asserts that he is engaged in the beauty parlor business in Chicago and his co-plaintiffs are all his employees ; none of the members of the defendant unions are employees, or former or expectant employees of Swing; the Cosmetologists Union, defendant, is a union Local recently organized for the purpose of taking into the union employees of Chicago beauty shop operators. Plaintiff Swing asserts he has spent a large sum of. money in equipment and furnishings in his place of business and in advertising, and has built up a large clientele.

April 30,1937, four persons purporting to be officials and business agents of Local No. 548-D of the Hairdressers and Cosmetologists Union, called upon Swing and demanded that he order his employees to join their union; the complaint alleges he told them he had no objection to his employees joining the union if they wished to do so, and had no objection to these agents discussing the matter with his employees; that he permitted them at various times to speak to his employees and never at any time, by any means, attempted to influence his employees in the matter; that he was perfectly willing that the employees should decide for themselves.

That the employees, of their own free will and without any suggestions on his part, have refused to join this union for the reason that several of them had previously on several occasions joined other unions, which unions had lasted for but a short time and were never heard of thereafter, and they believed that this experience would be repeated if they joined this particular new union; that the employees saw no advantage in joining and believed it was merely a front for its organizers for the purpose of permitting them to collect large sums of money, not to be used for the benefit of the members but for the personal use of the organizers. Employer Swing asserts that he has had no disputes or controversies with his employees; that they are satisfied with the wages he is paying them and with their working hours and conditions; that there has never been any lockout on his part or any strike by his employees.

That notwithstanding these conditions defendants caused his place of business to be picketed by several persons; none of the pickets were employees and all of them were strangers to him and never employed by him; that beginning April 30, 1937, there were one and very often two male and female pickets walking up and down and close to the entrance to his place of business, carrying large signs with the words in large letters, “This beauty Shop is Unfair to Organized Labor, Hairdressers and Cosmetologists Union Local 548-D, American Federation of Labor and Chicago Federation of Labor”; that the picketing continued during the entire day and part of the evening when the place was open for business. The complaint charges that the wording and' lettering on the signs are untrue and designedly false and malicious; that the pickets interfered with the customers entering and coming from the place of business; that on the evening of May 15, 1937, one of his women customers, who had had some beauty work done in his shop and was just leaving, was accosted by one of the pickets then walking in front of the shop, who grabbed her by the arm and in a threatening manner said to her, “You better not go in there again; it’s a scab shop”; that on the same day another customer, as she was leaving the premises, was accosted by two men who had been loitering about the premises for some time, and who in a threatening and menacing voice said to her, “You ought to be shot for going into that scab shop.”

That the untruthful statements on the signs misled the public and patrons into believing there was a strike in the shop; that this is untrue and unfair to the employees, resulting in loss of patronage; that successful attempts were made by the defendants to shut off the hot water and laundry supply of plaintiffs by reason of some connection with the engineer of the building and the drivers of laundry trucks.

The complaint charges that the pickets were all strangers to the plaintiff employer and that defendants were conspiring to ruin plaintiff’s business, and that the entire campaign was a malevolent one, and if permitted to continue would bring about the destruction of plaintiff’s business.

The question presented for determination is whether a labor union, in which none of its members are present, past or expectant employees of an employer, has a right to picket his place of business for the purpose of compelling the employees, who do not wish to join a union, to do so.

In the past the Illinois courts were committed to the proposition that peaceful picketing and peaceful persuasion were unlawful. Philip Henrici Co. v. Alexander, 198 Ill. App. 568; O’Brien v. People, 216 Ill. 354; Franklin Union v. People, 220 Ill. 355; Barnes & Co. v. Chicago Typographical Union, 232 Ill. 424; Wilson v. Hey, 232 Ill. 389; Kemp v. Division No. 241, 255 Ill. 213; Anderson & Lind Mfg. Co. v. Carpenters’ Dist. Council, 308 Ill. 488.

October 15, 1914, the Federal Congress passed the Clayton Act as an amendment to the Sherman AntiTrust Law, and section 20 of the Clayton Act prohibited the granting of injunctions against peaceful picketing and persuasion. July 1, 1925 (laws of 1925, page 378) our legislature passed an act substantially the same as section 20 of the Clayton Act [Jones Ill. Stats. Ann. 106.21], This provides in substance that no restraining order or injunction shall be granted by any court of this State — “in any case involving or growing out of a dispute concerning terms or conditions of employment, enjoining or restraining any person or pgrsons, either singly or in concert, from terminating any relation of employment or from ceasing to perform any work or labor, or from peaceably and without threats or intimidation recommending, advising, or persuading others so to do; or from peaceably and without threats or intimidation being upon any public street, or thoroughfare or highway for the purpose of obtaining or communicating information, or to peaceably and without threat's or intimidation persuade any person or persons to work or to abstain from working, or to employ or to peaceably and without threats or intimidation cease to employ any party to a labor dispute, or to recommend, advise, or persuade others so to do.”

In Ossey v. Retail Clerks’ Union, 326 Ill. 405, and Fenske Bros. v. Upholsterers’ International Union, 358 Ill. 239, the Supreme Court of this State has said that our Anti-Injunction Act is substantially the same as the Clayton Act, and our courts in interpreting our own Anti-Injunction Act have followed the decisions of the United States Supreme Court in its interpretation of the Clayton Act. That court has interpreted section 20 of the Clayton Act to refer to disputes between employers and employees. Duplex Printing Press Co. v. Deering, 254 U. S. 443, 469; American Steel Foundries v. Tri-City Central Trades Council, 257 U. S. 184, 202; Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229.

The State of Wisconsin passed an act similar in all respects to section 20 of the Clayton Act and to our own Anti-Injunction Act, and the Wisconsin Supreme Court, in American Furniture Co. v. I. B. of T. C. and H. of A., 222 Wis. 338, 268 N. W. 250, 256, 258, definitely held that the act referred only to employer and employee relationships.

March 23, 1932, the Federal Congress passed what is called the Norris-LaGuardia Act, which undertook to define a labor dispute as an instance where employees of a particular business may not be members of a labor union, but a labor union of the same craft or trade was given the right, peacefully and by persuasion, to picket for the purpose of compelling employees and employers working in the same craft or trade to become members and abide by the union’s by-laws. New Negro Alliance v. Sanitary Grocery Co., 303 U. S. 552.

Shortly thereafter the State of Wisconsin amended its labor code so as to comply with the purposes and rights of the Norris-LaGuardia Act. The constitutionality of this amendment was upheld in Senn v. Tile Layers Protective Union, 301 U. S. 468, and Lauf v. E. G. Shinner & Co., 303 U. S. 323.

In Goldfinger v. Feintuch, 276 N. Y. 281, the right to picket by strangers was sustained by virtue of a recently enacted statute defining a “labor dispute.” Apparently assuming that without such defining statute such picketing would be unlawful. No such amendatory act has been passed by the legislature of this State.

In the instant case the trial court apparently was moved to its conclusion by the opinion of the Second Division of this court in Schuster v. International Ass’n of Machinists, 293 Ill. App. 177. That opinion is a comprehensive statement of the history and decisions relating to the rights of labor unions to picket. It was there properly held that it was the province of each State to formulate its own public policy as to what may constitute a labor dispute and as to what may lawfully be done by the parties participating therein in their endeavor to achieve their respective aims. We are fully in accord with this statement, and possibly we might be in accord with the conclusion following this statement, that “no sound reason is advanced why the public policy of this State . . . should not be in accord with the public policy of the Federal government. . . . ”

Is it a judicial or an exclusively legislative function to declare the public policy of this State? This is the question presented. In the Fenske case, above cited (at page 250), the well-known principle is stated that the legislative power shall be separate from the judicial. ‘ ‘ To declare what the law is or has been is a judicial power; to declare what the law shall be is a legislative power. ’ ’ After noting-that the legislature may, in the exercise of the police power of the State, enact those matters which have a tendency to promote the public comfort, health, safety, morals and welfare, and that this power is elastic and capable of expansion in order to keep pace with human progress, the Fenske opinion holds it was not the province of the court to discuss the merits of labor disputes; ‘ ‘ nor are we permitted to speculate upon whether or not an act of the legislature is a wise or the best remedy for dealing with such problems. That is a matter committed by the constitution to the legislative branch of government, ’ ’ and article 3 of the Constitution, after stating the' three distinct departments of the government, says: “no person or collection of persons, being one of these departments, shall exercise any power properly belonging to either of the others.”

The opinion in the Schuster case may present persuasive reasons why the legislature should adopt an act similar to that enacted in Wisconsin and in the Federal Congress (the Norris-LaGuardia Act) but to hold that because this should be the law it therefore is the law in this State, is encroaching upon the province of the legislature. Recalling that for years the courts of this State restrained peaceful picketing, that by the passage of the Anti-Injunction Act such restraints were removed, and that this act was interpreted to refer only to the relationship of employers and employees, the conclusion seems to follow that, until the legislature enlarges the scope of the Anti-Injunction statute, peaceful picketing by strangers (persons not employed or previous or expectant employees) is prohibited by law.

Although in the interest of harmony we might concur in the conclusion reached in the Schuster case, there are present in the instant case facts not in that case which compel a contrary conclusion.

The complaint alleges certain specific acts of violence, and in no case has the right to physical violence by a labor union been upheld. The complaint alleges that the legend on the banners carried by the pickets was untrue and maliciously made. This allegation must be taken as true. On two occasions customers leaving plaintiff’s place of business were accosted in a menacing manner with threats. A secondary boycott is charged in the complaint by the allegations that the hot water supply was cut off because of some connection or relationship between the defendants and the janitor or engineer. As we have said, all courts have condemned such practices, and it has been held that such conduct forms a part of a general campaign, and if any part of the campaign is unlawful then the whole campaign is unlawful and can be enjoined. American Steel Foundries v. Tri-City Central Trades Council, 257 U. S. 184, and Ossey v. Retail Clerks’ Union, 326 Ill. 405. In the latter case (page 417) the opinion quoted with approval from the American Steel Foundries case: “When one or more assaults or disturbances ensued they characterized the whole campaign, which became effective because of its intimidating character. . . .”

Defendants have filed a cross appeal asking that this court increase the amount allowed by the trial court as attorneys’ fees, but our conclusion carries with it the disallowance of any amount in the nature of damages.

We are of the opinion that the preliminary injunction entered by the circuit court was proper and that the court erred in dissolving this and dismissing the complaint.

The orders of the trial court are reversed.

Reversed.

Hatchett, J., concurs.

O’Connor, J.,

concurring in part and dissenting in part :

In my opinion that part of the injunctional order was proper which enjoined defendants from:

“(e) Menacing, intimidating, threatening or harrassing persons employed by or persons going to and from plaintiff’s place of business; from calling plaintiff and members of plaintiff’s family and plaintiff’s employees vile names and shouting offensive epithets;

“ (f) Threatening, coercing, intimidating or assaulting the employees of the plaintiff' or harrassing the employees of the plaintiff, while on their way to and from their homes to the place of business ;

“ (g) Threatening, coercing, intimidating1 or assaulting prospective employees, or persons seeking employment from the plaintiff, and from preventing by threats, coercion or intimidation, such prospective employees and persons seeking employment, from entering plaintiff’s place of business”; Fenske Bros. v. Upholsterers’ International Union, 358 Ill. 239. The balance of the injunctional order was unwarranted. Exchange Bakery & Restaurant v. Rifkin, 245 N. Y. 260; American Steel Foundries v. Tri-City Central Trades Council, 257 U. S. 184.

Our Anti-Injunction Act of 1925, in my opinion, is not limited to disputes between employer and employees as was provided in section 20 of the Clayton Act.


author: Mr. Justice O’Connor

text:
    Harry A. Bigelow, Trustee in Bankruptcy of Insull Utility Investments, Inc., Appellant, v. Frank H. Bicek, Appellee.
    Gen. No. 40,219.
    Opinion filed December 21, 1938.
    Rehearing denied January 16, 1939.
    Rosenthal, Hamill, Eldridge & King, of Chicago, for appellant; Willard L. King and Newell A. Clapp, of Chicago, of counsel.
    Edward Gr. Bicek, of Chicago, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

May 29, Í937, plaintiff brought an action against defendant to recover $770 with interest thereon at the rate of 5 per cent per annum from June 15, 1931. Defendant’s motion to strike the complaint was sustained, plaintiff elected to stand by his complaint, the suit was dismissed at his costs, and he appeals.

The complaint alleged that the Insull Utility Investments, Inc., was adjudged a bankrupt in the District Court of the United States for the Northern District of Illinois, Eastern Division, on September 22, 1932, and that plaintiff was appointed and is now acting as trustee of the estate; that among the assets of the bankrupt estate were certain “written contracts, known as subscription warrants” signed by defendant, whereby he subscribed for 22 shares of the common stock of the Investment company; that this stock was being issued pursuant to a resolution of the Board of Directors and subscription warrants which, as exhibits, were made a part of the complaint; that defendant agreed to pay $1,100 for the 22 shares in 10 instalments of $110, beginning September, 1930, and ending with June, 1931; that defendant paid three instalments— September 12, October 8 and November 25, 1930, — ■ leaving a balance due of $770, with interest at 5 per cent from June 15, 1933., which defendant refuses to pay. It was further alleged that if the assets of the estate of the bankrupt were collected in full, including all unpaid subscriptions for the stock, they would be insufficient to pay all valid claims filed against the estate, and that the “Insull Utility Investments, Inc., has performed all the conditions of said contracts, on its part to be performed.”

The resolution of the Board of Directors of the Investments company passed July 28, 1930, provided that each holder of common stock, as shown of record on the company’s books at noon on Saturday, August 30,1930, should “be entitled to subscribe for new- or additional Common Stock” to 20 per cent of their respective holdings at $50 per share, payable at the election of the stockholder in one payment on or before September 15, 1930, or in 10 instalments of $5 each on or before the 15th of September, 1930, and each month thereafter, ending with the month of June, 1931; that a “subscription warrant” be mailed to each stockholder. The resolution further provided that upon making the payment of the whole or one or more instalments, the subscriber would be entitled to receive “a Stock Subscription Receipt” upon which payments of the instalments were to be indorsed as made. “On the date of final payment of the subscription price within the time hereinabove prescribed the recorded subscriber shall be entitled to have issued to him” a certificate or certificates of stock for the number of shares. That the certificate should not be delivered except upon surrender of the receipt, and “ownership of a Stock Subscription Receipt shall not constitute the owner a stockholder in the company, nor give him any voting or dividend rights. The rights of any recorded subscriber or of the holder of any Stock Subscription Receipt may be forfeited in accordance with the Company’s by-laws for default in payment of any instalment when due”; that when the recorded subscriber receives his certificates “he shall receive also interest at the rate of four per centum (4%) per annum upon each instalment paid calculated from the date of payment to the Common Stock dividend record date last preceding the date upon which he becomes entitled to such certificate . . . ; provided, however, that forfeiture of a subscription . . . for default in payment of any instalment when due shall terminate all right to any interest. ’ ’

The “Subscription Warrant” attached to the complaint certifies that the stockholder upon surrender of the warrant, is entitled to subscribe for shares of the common stock of the Investments company at $50 a share, in accordance with the resolution of the Board of Directors of July 28, 1930, paying for such stock in 1 or 10 instalments of $5 each, beginning September 15, 1930, and ending June, 1931. The warrants bore an indorsement dated September 12, 1930, addressed to the Investments company, entitled “Subscription.” These were signed by defendant, Bicek, and stated that he had elected to pay his ‘ subscription on the 10 payment plan.”

Defendant’s written motion to strike specified as reasons, (1) there was no allegation in the complaint of a tender or a readiness to tender the stock; (2) that since the Investments company was a bankrupt, neither it nor plaintiff was able to perform the agreement set out in the complaint and exhibits; and (3) there was no allegation that the Investments company had complied with the provisions of the Illinois Securities law.

Plaintiff contends that “the contracts sued on are contracts of subscription for shares of stock in a corporation” and that “it is not necessary to deliver or tender the stock subscribed for, or allege or prove the readiness or ability to da so.” In support of these contentions counsel cite Smith v. General Motors Corp., 289 Fed. 205; Wemple v. St. Louis, Jerseyville & Springfield Ry. Co., 120 Ill. 196; In re Hannevig, 10 F. (2d) 941; Martin v. Clarke, 95 F. (2d) 26; Shiffer v. Akenbrook, 75 Ind. App. 149, and other authorities.

In the Smith case (289 Fed. 205) the General Motors Corporation increased its common stock and offered to its existing common stockholders proportionately the right to subscribe to new stock at $20 a share. Smith subscribed for several thousand shares and made a down payment of $2 a share. Before the balance became due he died and his administrators refused to pay. Suit was brought against them, there was a directed verdict for plaintiff and the case was taken to the court of appeals where the judgment was affirmed. In its opinion the court said, “Was it a subscription or purchase contract, rather than an option to subscribe í ’ ’ It was held to be a subscription contract, and continuing the court said that on the day when the $18 per share was due the stock had a market value of more than $18 per share, and that if the contract was to be treated as one of purchase and sale the vendor was under the usual duty to mitigate damages by selling at the market price, in which case there would be no damage.

In that case the General Motors was a going concern, was able and willing to deliver the stock and had tendered certificates for the shares to the administrators of the estate of the purchaser which upon refusal were deposited with the clerk of the court. Obviously that case is not in point with the case before us, where the Investments company is in bankruptcy and utterly disabled from delivering the certificates for the shares of stock.

In the Wemple case (120 Ill. 196) the defendants gave a conditional note for $500 to a railroad company for which they were to receive five shares of stock when the railroad was constructed along a certain route, etc. The jury found the railroad was so constructed. The court in construing the note held that the certificate should be issued “after payment is made.” In that case there was no inability on the part of the railroad company to deliver the certificate for the shares.

In In re Hannevig, 10 F. (2d) 941, it appeared that a claim was allowed against the bankrupt estate of Hannevig. The claim was ‘ ‘ alleged to be due from the bankrupt on unpaid subscriptions on account of the purchase of shares of stock” in a foreign bank, which at the time the claim was filed was in process of liquidation. But one witness testified that, “The claim is based on calls and assessments on stock” of the bank; that 20,000 shares had been alloted to Hannevig. By the original subscription agreement, Hannevig requested the bank to allot to him a certain number of shares or any less number that might be alloted to him, “and I authorize you to register me as a holder of the shares.” The court held that they would not take judicial notice of the laws of a foreign country, and that, “In the United States a subscription for stock implies a promise to pay for it, even though the subscription was before incorporation. . . . the record shows to our satisfaction that an allotment of this stock to the bankrupt was actually made”; but that whether the allotment had been made was not of importance ; that the law in this country was well settled and that it was no defense to an action on a subscription to say that a corporation had not delivered or tendered the certificate of stock. And said that the bankrupt, when a call was made upon him for payment of one pound per share, acknowledged his liability. In-concluding the opinion the court said (p. 947): “In view of the whole record and of the fact that at the present time the name of the bankrupt appears on the official records of the bank as the owner of the 20,000 shares of stock [the number of shares he subscribed for] and that fact is known to him, and he has done nothing to have his name removed from the list, we are unable to say, upon the record as it is presented, that the bankrupt has rebutted and overcome the prima facie case made by the filing of the proof of claim.”

In the Martin case (95 F. (2d) 26) the claim of the trustee of a bankrupt company was allowed against Clarke and on appeal the judgment was affirmed. The basis of the claim was the failure of the defendant to pay the balance due for stock in the bankrupt company subscribed by him. The decision was based on the statute of Delaware. Prior to the bankruptcy proceeding Clarke had paid more than 2/z of the purchase price of the stock. He had subscribed for 940 shares each of the preferred and common stock. Under the subscription agreement one-half of the subscription was to be paid in cash and the balance from time to time as called for by the board of directors. 1 ‘ Certificates for said shares shall be issued as the same are paid for hereunder.” The court said the trustee had secured the entry of an assessment upon showing the insolvency of the corporation. The court there considered the question of jurisdiction and based its decision on the laws of Delaware and said (p. 28): “But it is said that defendant did not receive all the certificates and that the same have not been tendered him. ... the liability of the subscriber, though based upon contract, is a statutory one for the benefit of the creditors, and where insolvency or bankruptcy intervenes the futility of issuance of the proper certificates avoids any necessity of delivery or tender thereof. ’ ’

In the Shiffer case (75 Ind. App. 149) a trustee of an Indiana bankrupt corporation brought an action against the subscribers to its capital stock to recover unpaid balances on their several subscriptions. A demurrer was sustained to certain parts of the complaint, plaintiff refused to plead further, judgment was rendered against him and he appealed. The court then analyzes the complaint and says that it charged the subscriptions were taken before the incorporation; that after the incorporation the directors of the company accepted the subscription contracts; that thereafter the defendants accepted the rights and privileges of stockholders and promised to pay their subscription and did pay the first call on the subscription made by the directors, “so that they became entitled to all the rights and privileges of stockholders of the corporation and assumed all the liabilities of subscribers . . . participated in the affairs of the corporation, attended meeting of its stockholders and voted thereat for the election of directors and the adoption of by-laws and by their acts . . . proclaimed to the public and to persons dealing with the corporation and selling it goods and extending it credits, that they were stockholders . . . that they held out to the public and to persons dealing with such corporation and giving it and extending credit to it, that their subscriptions were bona fide subscriptions” until the company went into bankruptcy; and it was held that defendants were liable on their subscription contracts although no certificate of stock had been issued or tendered.

In the instant case counsel for defendant contends that the contract entered into by defendant for the 22 shares of stock, construed most favorably to plaintiff, “are not subscriptions for stock but merely executory contracts for the sale and purchase of stock,” citing Stern v. Mayer, 166 Minn. 346, 207 N. W. 737; Guaranty Mortgage Co. v. Wilcox, 62 Utah 184, 218 Pac. 133; Crichfield-Loeffler, Inc. v. Taverna, 4 N. J. Misc. 310, 132 Atl. 494; Boroseptic Chemical Co. v. Nelson, 53 S. D. 546, 221 N. W. 264; Barnard v. Tidrick, 35 S. D. 403, 152 N. W. 690; Gill Printing Co. v. Goodman, 224 Ala. 97.

In the Stern case defendant Mayer signed a written document, “Application for Stock. I hereby subscribe for 5 shares of the Common Capital Stock of the U. S. I. Realty Company of Minneapolis, Minnesota, and agree to take the same when issued and to pay for the same $800.” The payments were $72 annually and the document further provided, 1 ‘ The company accepts the subscription and agrees to issue and deliver the stock when the amount paid with interest thereon at 6% per annum . . . shall equal the subscription price of the stock.” Afterward the Realty company was adjudged a bankrupt and the plaintiff was appointed trustee. A demurrer was sustained to the complaint, the trustee appealed; the judgment was affirmed. The court said (p. 348): “The important question is whether this writing is to be construed as a subscription to capital stock or a contract for the sale and purchase of shares of such stock. . . . (p. 349.) If the instrument is a mere subscription for stock like that involved in Marson v. Deither, 49 Minn., 423, 52 N. W. 38, the subscriber has the status of a stockholder. In an action upon a stock subscription, which does not by its terms require the execution and delivery of the certificate before or concurrently with payment, an allegation of non-delivery of stock is no defense. In such cases it is not necessary to allege tender thereof in the complaint. . . .

“The general rule is that the execution and delivery of the certificate are not conditions precedent to the liability of a subscriber . . . unless the contract of subscription expressly requires a tender of certificate as a condition precedent to liability thereon. In this case the corporation has agreed to issue and deliver the stock when its purchase price is paid. It may, notwithstanding this reservation, be a subscription. The presence of such reservation is a circumstance indicative of a sale rather than a subscription. Whichever it may be, the complainant must plead that it is able and willing to perform. In other words, where the contract in a stock subscription provides for delivery of stock when paid for, the acts must be regarded as contemporaneous. In such case the corporation’s inability to perform should disable it from enforcement against the subscriber, although he may, by virtue of the terms of his contract, be a stockholder. Hence in an action for the whole amount subscribed or to enforce payment of the final instalment, plaintiff must allege his willingness and ability to perform. . . . (p. 350.) The distinction between the sale of corporate stock and subscription thereto is that a subscriber has certain attributes in the way of rights, privileges and liabilities, ordinarily including title, that do not attach to a purchaser. Plaintiff asks to have this instrument construed as a subscription with the attributes mentioned withheld from the defendant or suspended until he makes payment. The absence of such rights and liabilities is the very thing that prevents holding the instrument to be a subscription. If these attributes are to attach only on complete performance by defendant, the transaction is ordinarily a sale. The subscriber, by the terms of his contract, becomes the owner of the stock before the certificate is issued or delivered. ’ ’

The court held that the agreement was not a subscription but an executory contract for the sale and purchase of stock, and said that plaintiff had alleged he was ready and willing to deliver the certificate but the complaint disclosed that the corporation was bankrupt and that (p. 352) “Ordinarily bankruptcy is a complete disablement of the bankrupt from performance of his contracts and the equivalent of a repudiation, subject only to the right of the trustee in some cases to rehabilitate the contract by performance.” But held that the corporation for all purposes was lifeless and consequently there could be no performance.

We agree with the reasoning in the Stern case, and we think it applicable to the facts in the case before us. In the instant case defendant was to pay for the stock in 10 instalments and upon the final payment he was entitled to have “issued to him a certificate or certificates” for the number of shares of stock. Documents signed by defendant for the 22 shares provided the issuance to him of the “Stock Subscription Receipt shall not constitute the owner a stockholder of the company.” We hold, as did the Minnesota court, that the agreement or document signed by defendant “was not a subscription but an executory' contract for the sale and purchase of stock.” While there may be cases where a recovery can be had by the trustee in bankruptcy against one who has subscribed for shares where the stock of the corporation has been increased without the delivery of the stock certificate or ability to do so, such as where it appears that persons have extended credit to the corporation on the strength of such subscriptions, as in the Shiffer case (75 Ind. App. 149), there are no such allegations in the complaint before us.

We think there is no merit in defendant’s contention that the contract for the purchase or sale of the stock involved was in violation of the Illinois Securities Law and therefore void. This was an affirmative defense. Obviously the presumption is that the Insull Utility Investments Company complied with the law, and the contrary has not been made to appear.

For the reasons stated the decree of the circuit court of Cook county is affirmed.

Decree affirmed.

McSurely, P. J., and Hatchett, J., concur.


author: Mr. Presiding Justice Burke

text:
    Houston H. Hall, Appellee, v. Metropolitan Life Insurance Company, Appellant.
    Gen. No. 39,885.

      Opinion filed December 30, 1938.
    Hoyne, O’Connor & Rubinkam, of Chicago, for appellant; Nathaniel Rubinkam, William S. Allen, and James O. Brooks, all of Chicago, of counsel.
    Zedrick T. Braden and George S. Barnes, both of Chicago, for appellee.
   Mr. Presiding Justice Burke

delivered the opinion of the court.

Plaintiff, a practicing attorney at the Chicago bar, sued in the municipal court of Chicago to enforce an attorney’s lien and on a trial before the court without a jury judgment was rendered in favor of plaintiff for $100, to reverse which defendant prosecutes this appeal.

Grace Smith and Grundy Lewis had claims pending against defendant corporation. On February 8, 1937, Grace Smith, one of the claimants, retained plaintiff and signed a contract reading:

“This is to certify that I have this day employed Houston H. Hall as attorney to represent me in my claim against the Metropolitan Life Insurance Company, for certain claims due me on policies Be: my mother and sister. My attorney is to have and receive one-third of the amount collected as and for attorney’s fees for service rendered in this case.” Plaintiff testified that on the same day he went to defendant’s branch office and delivered a letter to “a woman in charge of the second floor office at 45 East 47th Street. I don’t know the lady’s name. I talked to the lady”; that the lady was at the window and was accepting premiums and marking premium receipt books; that lie gave her a copy of the letter and retained the original. The letter, also designated as a notice, despite objection of defendant, was received in evidence. It reads:

“February 8, 1937«
.“Metropolitan Life Insurance Co.,
1 Madison Square,
New York City.
‘ ‘ Gentlemen:
“This will notify you that Mrs. Grace Smith of 5339 Wentworth Avenue, 2nd Apt., has employed me to represent her in a certain claim against you for benefits due under and by virtue of the terms of Insurance policies insuring the life of one Alice Dubroca, her mother, and Anna Lewis, her sister, both parties have since died.
“She states that she has made several demands on you to pay same, but as yet the benefits have not' been paid to her.
“This will further notify you that this case is being handled on a contingent fee basis and that I have in my possession a contract signed by the above mentioned party by the terms of which I am to receive as Attorney’s fees a sum of money equal to one-third (Y) of any and all sum or sums of money which may become due and payable to her in settlement of the above claim and I claim an Attorney’s lien in accordance with the said contract above mentioned.
“Respectfully yours, “Houston H. Hall”

Over the objection of defendant the following letter was also received in evidence:

“Metropolitan Life Insurance Company
“Frederick H. Ecker, Chairman of the Board Leroy A. Lincoln, President New York City
“Ind. Claim February 15, 1937
“In re: DC 5511593 28901829 Alice Dubroca;
12429236 22495721 Anna Dubrocz
“Houston H. Hall ’ 219
Attorney at Law 290
3458 South State Street -
Chicago, Illinois 409
“Dear Sir
“Replying to your letter of February 8, permit us to inform you that we have already instructed our local office at 6 East Garfield Boulevard, Second Floor, in charge of Alexander Both to proceed in the settlement of this claim. However, we informed him that any settlement made had to include your client, Grace Smith. We, of course, are not going to pay your client individually. Claim was filed by Grundy Lewis and he is also to be included in the settlement. If your client and Grundy Lewis cannot reach an agreement, we will await the appointment of a legal representative of the estate.
“Yours truly
“John B. Northrop [signed]”

The claims were being settled through the branch office at 6 East Garfield boulevard, Chicago. Defendant, through its manager at the Garfield boulevard office, made out and delivered two checks, dated February 12, 1937, payable to Grundy Lewis and Grace Smith, one in the sum of $219.74 and the other in the sum of $290.83, which checks were delivered and paid. It is conceded that Grace Smith received $300 in full satisfaction of her claim, and the trial court felt that plaintiff under his contract was entitled to $100. It will be observed that the notice was actually received by defendant corporation. Grace Smith, called as a witness by defendant, testified (inter alia) that she could read, and that plaintiff told her he would charge her one-third of whatever might be recovered. It was stipulated that if Grundy Lewis testified he would say that there was no dispute about payment of the claim, and likewise stipulated that if a Mr. Perlmutter appeared he would testify that he, as agent for defendant, delivered the check and at such time had no knowledge that plaintiff claimed an attorney’s lien.

The first criticism leveled at the judgment is that the contract for a fee of one-third of the amount collected is unreasonable and unconscionable, and in support of its position defendant cites Berkos v. Aetna Life Ins. Co., 279 Ill. App. 243. There Berkos, an attorney, filed a petition for an attorney’s lien in a case that arose out of two certificates issued to Candelario de la Rosa under a group life insurance policy, who became ill and died while his claim was pending, and his father was granted permission to intervene and filed an answer contesting the claim of Attorney Berkos. That case is not in point. The father of insured had a clear right to raise his voice in objection to the reasonableness of the fee sought. In the case before us the dispute is between the attorney and the corporation against which he asserts a lien. The client, Grace Smith, appeared only as a witness and did not challenge the claim of plaintiff for the enforcement of a lien against defendant. Defendant is not in a position to contend that the fee contracted for was unreasonable and unconscionable.

The chief point on which defendant relies to overturn the judgment is that “service of notice on a corporation of an attorney’s claim for lien must be personal and in accordance with the statute for the service of process on corporations. Service was not properly made by leaving a copy of the notice with an employee and there can be no recovery under an attorney’s claim for lien unless the Act has been strictly complied with. ” Sec. 14, ch. 13, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 9.13], provides that an attorney claiming a lien shall serve notice in writing, which service may be made by registered mail, upon the party against whom the client may have a suit, claim or cause of action, and that such lien shall attach from and after the time of service of such notice. It is plain, therefore, that the lien is effective from the moment of service. The original Attorney’s Lien Act adopted in 1909 did not contain the clause permitting service by registered mail, and the Supreme Court, in Haj v. American Bottle Co., 261 Ill. 362, held that service by registered mail was ineffective. Subsequently, and apparently because of the ruling’ of the Supreme Court in the Haj case, the act was amended so as to permit service by registered mail. The Haj case approves the statement in Chicago & Alton R. Co. v. Smith, 78 Ill. 96, 99, that “when a notice is required, and the mode of service is not specified, the law requires that it shall be personal.” Hence, in the instant case it was incumbent on plaintiff to establish personal service of the notice of lien. In support of its contention that there was no personal service, defendant calls attention to sec. 157.111, ch. 32, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 32.114], that “service of process in any suit, action, or proceeding, or service of any notice or demand required or permitted by law to be served on a foreign corporation may be made on such corporation by service thereof on the registered agent of such corporation.” (Italics ours.) Said section further provides that whenever a foreign corporation authorized to transact business in this State fails to appoint or maintain a registered agent upon whom service of process or notice may be had, then the Secretary of State is authorized to accept service for the corporation of any process or notice, and also contains the following significant language: “Nothing herein contained shall limit or affect the right to serve any process, notice, or demand required or permitted by law to be served upon a foreign corporation in any other manner now or hereafter permitted by law.” Section 157.111, ch. 32, just quoted, should be read in conjunction with sec. 141, ch. 110. The latter section authorizes service of process on a corporation by leaving a copy thereof with any officer or agent of the corporation found in the county. When the two sections are considered together it is obvious that the act, in providing for service on a foreign corporation through a designated agent or the Secretary of State, is permissive and not restrictive. A mere reading of the section demonstrates that such was the clear intention of the legislature. Therefore, a foreign corporation may be served in the same manner as a domestic corporation, and may also be served as provided in sec. 157.111, ch. 32. Defendant stresses the opinion of this court in Mayer v. Yellow Cab Co., 247 Ill. App. 42. The opinion was filed in 1927, and the court, in considering whether there was valid service of an attorney’s lien notice, was speaking at a time when the Practice Act of 1907 was in effect. Section 8 of the Practice Act of 1907 (Appendix to ch. 110, Smith-Hurd Ill. Anno. Stats., p. 816 [Jones Ill. Stats. Ann. 104.017 note]) stated that a corporation “may be served with process by leaving a copy thereof with its president, if he can be found in the county in which the suit is brought or in any county to which process is directed under the provisions of section 6 of this Act. If he shall not be found in the county or in the county to which process is directed then by leaving a copy of the process with any clerk, secretary, superintendent, general agent, cashier, principal, director, engineer, conductor, station agent, or any agent of said company found in the county in which such suit is brought or in any county to which process is directed . . .” We obtained and read the abstract and briefs in the Mayer case, supra. There was conflict in the testimony as to whether or not the notice was received. On March 19, 1925, the petitioners, being the attorneys asserting a claim for lien, prepared a notice, and Emil Schlan made oath that he served the notice “upon the Yellow Cab Co., a corporation, by leaving a copy of same with Beulah Schulman, a person over the age of 12 years, agent, then being on and in charge of the office of the said corporation on March 19, 1925, at 1:00 o’clock P. M.” The court said (p. 47): “However, aside from all other questions, the attempted service of the lien notice did not constitute service as required by the statute. The service must be personal and in accord with the statute providing for service of process upon corporations and, without which, however meritorious the lawyer’s claim for fees may be, there can be no recovery.” (Italics ours.) This court, in the Mayer opinion, was, of course, discussing the statute in effect at that time, which required that service of process on a corporation be made by leaving a copy of the process with the president, if he could be found in the county, and that if he could not be found then by leaving a copy with any clerk, secretary, superintendent, general agent, cashier, principal, director, engineer, conductor, station agent, or any agent of the company found in the county. In that case there was no attempt made to establish that the president of the Yellow Cab Company could not be found in the county, and this court rightly decided that there was no personal service of the notice in the manner provided for the service of process on corporations. The Civil Practice Act went into effect on January 1, 1934, and superseded the Practice Act of 1907. The new act permits service of process by leaving a copy thereof with any officer or agent of defendant found in the county, and does not require that an effort be first made to serve the president.

From the above discussion it is patent that the notice was properly served. The lien attached from the time of service, and when defendant paid the claim to plaintiff’s client it did so at its peril.

Hence, the judgment of the municipal court of Chicago should be and it is affirmed.

Judgment affirmed.

John J. Sullivan and Friend, JJ., concur.