author: Mr. Presiding Justice Denis E. Sullivan Burke, J.,

text:
    Edward O. Tudor, as Successor Trustee, Appellee, v. Russell Firebaugh, Individually and as Alleged Trustee, et al., Defendants. Bessie Brody, Individually and as Owner and Holder of Bonds Secured by Trust Deed Foreclosed Herein, et al., Appellants.
    Gen. No. 40,643.
    Heard in the third division of this court for the first district at the April term, 1939.
    Opinion filed February 14, 1940.
    Whitty & McGah and Abrams, Sherman & Lewis, all of Chicago, for appellants; Louis A. Sherman and Irving S. Abrams, of counsel. ,
    Arthur Abraham, of Chicago, for appellee.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

The record and facts in this case are similar to the record and facts in the case of Tudor v. Firebaugh, 303 Ill. App. 452, and the views expressed in that case apply with equal force to the instant case. Therefore, the decree of the superior court of Cook county is accordingly reversed and the cause is remanded.

Decree reversed and cause remanded.

Hebel, J., concurs.

Burke, J.,

dissenting: On May 19, 1927, Axel Gr. Johnson and Ella S. Johnson, executed a trust deed to Russell Firebaugh, as trustee, to secure the payment of 206 bonds in the aggregate sum of $93,000, the last bond of the series maturing May 7, 1934. The trust deed conveyed the real estate and improvements commonly known as the Laurelwood Apartments, located at 4832-34 North Lincoln street, Chicago. The trustee filed a bill of complaint on the chancery side of the superior court of Cook county alleging various defaults. On April 23, 1931, the superior court of Cook county entered a decree of sale. The decree found that bonds Nos. .1 to 21, inclusive, had been paid; that there was a balance due on bonds Nos. 22 to 206, inclusive, of $82,500; that a reasonable and customary solicitor’s fee would be $4,000, and that all items, together with interest, totalled $91,696.33. The decree directed that a master in chancery sell the property. On May 15,1931, the premises were offered for sale by the master. Russell Firebaugh, as trustee, bid in the property for the benefit of all the owners and holders of the outstanding bonds. The sale was confirmed by the court and a certificate of sale issued to Russell Firebaugh, as trustee. On August 16, 1932, the master issued to Fire-baugh a master’s deed in the usual form. During the pendency of the foreclosure proceeding and thereafter Firebaugh was in possession of the premises and collected the rents, issues and profits, made disbursements and operated the premises. At the time the sale was confirmed, no plan of reorganization was presented to the court and no plan had been presented to the bondholders. E. Bay Grant became successor trustee and on August 20, 1934, filed an original complaint in the superior court, praying for the approval of his accounts and the declaration and interpretation of the terms of the trust upon which he held title to the premises, and for an accounting against Bussell Firebaugh. While the latter complaint in chancery was pending, and on December 7, 1934, E. Bay Grant resigned as successor trustee, and the Consolidated Bondholders’ Committee, holders of a substantial amount of bonds secured by the trust deed, petitioned the court for the appointment of a successor trustee, alleging that a majority of the bondholders had failed to appoint a successor trustee. The court entered a decree on February 13, 1935, and appointed Edward 0. Tudor as successor trustee. The decree approved the accounting of E. Bay Grant and directed that Bus-sell Firebaugh execute a quitclaim deed to the successor trustee. The last paragraph of the decree provided that “this court retains jurisdiction of the Successor Trustee and of the premises above described and of the parties hereto for the purpose of further instructing said Successor Trustee in the administration of his trust; that the ultimate and net proceeds from the operation, leasing, encumbrance or sale of said premises shall be held for the benefit of the holders of the outstanding bonds and interest coupons described in and secured by that certain Trust Deed from the said Axel G. Johnson and Ella S. Johnson, his wife, to Bussell Firebaugh, as Trustee, dated May 19th, 1927, and recorded in the Becorder’s Office of Cook County, Illinois on May 28th, 1927, as Document No. 9668124; but that the interest of the holders of said bonds and interest coupons shall consist solely of an interest in and to the proceeds from the administration or disposition of said premises, and shall constitute solely personal property and the holders of said bonds and interest coupons shall have and do have no right, title or interest in or to said premises above described or any part thereof. ’ ’ The complaint on which the decree is based, is not in the record. It appears that the complaint was filed as a class or representative action. The decree finds that the proceedings were brought in behalf of all the bondholders, and that there was no conflict of interest. The decree also finds that the owners and holders of the outstanding bonds and interest coupons are numerous and widely scattered, many of them residing outside of the State of Illinois and in distant parts of the United States; that the addresses of some of the owners of the bonds are unknown ; that service upon many of the bondholders would be difficult and impossible to obtain; that Louis Nelson, William" G. Heidemann, Herman Weiss and Oliver J. Wescott, members of a certain Bondholders’ Protective Committee for. bonds purchased from the Maywood State Bank and Melrose Park State Bank, Charles H. Slocum, Anthony K. Warner, Charles Schutt and Ida Wagner, members of a certain committee styling themselves, “The Bond & Mortgage Bondholders’ Committee,” John W. Guskay, Philip T. Waldbillig, William Kessler and Harry L. Randall, as members of a Bondholders’ Protective Committee, and John Herold, William Mohns, Charles L. Schutt, Charles H. Slocum, Dr. I. S. Trostler and Dr. William H. Meyer were holders of a substantial amount of bonds; that the named persons had interests alike in all respects to the interest of all the bondholders and interest coupons, and that they “now represent all of the holders and owners of said bonds and interest coupons.” No appeal was prosecuted from the decree entered on February 13, 1935. Firebaugh delivered a deed conveying the property to the successor trustee in accordance with the directions of the decree.

On April 29, 1936, Edward 0. Tudor, the successor trustee, filed his petition in the superior court of Cook county in the same case in which the decree of February 13, 1935, was entered. The petition recited that in the decree the court reserved jurisdiction of the successor trustee and of the premises for the purpose of further instructing the successor trustee in the administration of his trust; that various questions had arisen in connection with the administration of the trust; that he believed the court should determine some definite plan of reorganization, setting out the rights, powers and duties of the successor trustee in connection with the trust and providing for the issuance of certificates of beneficial interest to the bondholders in lieu of their bonds, and “providing for some inspection and examination of the operations of the trust by representatives of the bondholders”; and prayed that the court instruct him with respect to his rights, powers and duties in the premises; that the court determine a plan for the exchange of bonds for certificates of beneficial interest. The petition also stated that certain taxes remain unpaid against the premises, and that suggestions had been made by various bondholders that money should be borrowed upon a first mortgage on the premises in order to pay the taxes and costs of administration, and asked the instruction of the court on such matters, and prayed that the court determine his fees and expenses and the fees of his attorney. On April 29, 1939, an order was entered on motion of the successor trustee, giving him leave to file the petition and giving leave to John W. Gruskay, William Kessler, John Brown, Charles Schutt, Louis Nelson and Francis McGovern, comprising a certain Consolidated Bondholders’ Committee, to file their answer instanter, and referred the cause to a master in chancery for the purpose of taking proofs and reporting his conclusions of law and fact. The answer of the individuals comprising the Consolidated Bondholders’ Committee, was filed the following day, and admits that the court should instruct the trustee with respect to his rights and duties in the administration of the trust, that the specific powers of the trust be defined, that specific machinery for the conduct and supervision of the trust should be set up, and that the fees and costs of the respondents in connection with the procuring of the bonds, representation of the bondholders and service of the committee in connection therewith, should be fixed and allowed by the court to be paid out of the proceeds of the reorganization mortgage. On October 4, 1938, the trustee presented the master’s report and asked that a decree be entered in accordance with the recommendations therein. The motion was continued until October 14, 1938, and all parties in interest were given leave to file objections or exceptions to the report before October 14, 1938. On October 13, 1938, Bessie Brody, the owner of bonds Nos. 74, 75, 76, 77, 175 and 176, and Louis E. Nelson, William G. Heidemann, Herman Weiss and Oliver J. Wescott, members of a certain Bondholders’ Protective Committee for bonds purchased from the Maywood State Bank and Melrose Park State Bank, and John T. Brown, John W. Grus-kay, Louis E. Nelson, Charles L. Schutt, Francis W. McGovern and William A. Kessler, constituting the Consolidated Bondholders’ Committee, filed exceptions to the master’s report. The master reported that pursuant to the order of reference and to due notice given, he took testimony, and he recommended that the interest of the bondholders shall constitute a beneficial interest in the net income, proceeds and avails which may come into the hands of the trustee through leases, sales assignments or other dispositions, conversions or uses of the trust property, or any part or parts thereof in the proportion which the number of units held by each certificate holder shall bear to the total, number of units outstanding; recommended the approval of the plan of reorganization; that certificates of beneficial interest shall be equivalent to one unit for each $100, principal amount of bonds; that the certificates shall provide that the holder thereof has no claim or interest, legal or equitable, in any of the real estate, but only an interest in the net income, proceeds and avails thereof. The master further recommended that the attorney for the receiver was entitled to the sum of $5,000 as'the reasonable sum for his services which were necessary to be performed in order to successfully conclude the proceedings; that the Consolidated Bondholders’ Protective Committee be paid $2,500 as the reasonable value of services rendered and to 'be rendered in connection with the reorganization plan; that the successor trustee be granted the sum of $1,000 as the reasonable value of the services to be performed by him, and that the court retain jurisdiction of the cause for the purpose of further instructing the successor trustee with respect to his rights, powers and duties. We will discuss the exceptions in connection with the points made by appellants.

On October 18, 1938, after the exceptions had been fully argued, the court entered a decree finding that it was to the best interests of the holders of bonds to reorganize the property and to further define the rights, powers and .duties of the trustee with respect to the administration of the trust; that the trustee has acquired the fee simple title to the real estate; that the interest of the certificate holders shall constitute a beneficial interest in the net income, proceeds and avails which may come into the hands of the trustee through leases, sales, assignments or other dispositions, conversions or uses of the trust property, or any part or parts thereof in the proportion which the number of units held by each certificate holder shall bear to the total number of units outstanding; that the certificate holders shall not be considered as partners; that subject to limitations .set out, the trustee shall have power to sell and convert the property into cash or other personal property, and to distribute the net proceeds to the beneficiaries to manage, operate, improve, protect and maintain the property; to sell, exchange, convey, mortgage, pledge and incumber the property; that the trustee shall not sell any of the trust property, issue trust deeds, mortgages or pledges, or exercise any trust powers other-than in the operation of the premises in the usual course of business without the consent in writing of the majority of the •trust managers, or 51 per cent of the amount of the outstanding certificate holders; that the trustee shall submit accounts of receipts and disbursements monthly to each of the trust managers; that expenditures of over $100 shall be made only upon competitive bidding after notice to the trust managers; that the trust managers shall have access to the books of the operation of the trust, and the beneficiaries shall be furnished with a summary statement at least once every six months; that there shall be issued to the holders of the bonds, certificates of beneficial interest evidencing the interest in the trust in an amount equivalent to one unit for each $100, principal amount of bonds held, upon the surrender and cancellation of the bonds and interest coupons attached; that the certificates shall have a clause whereby the holder agrees that he has no claim or interest, legal or equitable, in any of the property, but only an interest in the net income, proceeds and avails thereof; that the trustee shall maintain a register for the purpose of showing the ownership of the certificates and transfers thereof; that the trustee shall establish reserves from the income and shall make distribution to the certificate holders semimonthly at the written request of a majority of trust managers or the holders of 51 per cent in the amount of the outstanding certificates; that the trustee shall furnish a bond; that the trustee shall keep books; that John W. G-uskay, John T. Brown and William A. Kess-ler shall be the trust managers; that the trustee, trust managers, or any part of them, may be removed for cause by demand in writing of 51 per cent of the outstanding certificate holders; that the trust may be terminated or amended after 20 days ’ notice to the trustee, the trust managers and the certificate holders, by instrument in writing duly executed by the holders of 66% per cent of the outstanding certificates, and if not sooner terminated, by the liquidation of the trust property, shall terminate at the expiration of 15 years from the date hereof, at which time the trust property shall be sold by the trustee at public auction after 90 days’ notice in writing given by registered mail to all of the certificate holders and trust managers; that the trustee shall receive as compensation 5 per cent of the gross rentals realized from the operation of the trust property, and each of the trust managers the sum of $50 annually as his compensation; that the attorney for the trustee be paid $2,500 as the reasonable value of the services rendered by him; that the attorneys for “a certain Bondholders’ Protective Committee for bonds purchased from the Maywood State Bank and Melrose Park State Bank, and John T. Brown, John W. Gus-kay, Louis E. Nelson, Charles L. Schutt, Francis W. McGovern and William A. Kessler, constituting the Consolidated Bondholders’ Committee,” be paid $500 for their services; that John W. Guskay, William A. Kessler, John T. Brown, Charles L. Schutt, Louis E. Nelson and Francis W. McGovern, comprising the Consolidated Bondholders’ Protective Committee, be paid the sum of $1,250 for services rendered in the proceedings; that the successor trustee be paid $500 as the reasonable value of the services he rendered; that the master be paid $116.50 as his fee; that the fees so ordered paid and the general taxes be paid out of the proceeds of the reorganization mortgage, to be placed upon the premises; that the trustee be authorized to negotiate a first mortgage for a sum sufficient to pay the fees, costs and general taxes; that upon the preparation of the reorganization mortgage, the same is to be presented to the court for approval; that Russell Firebaugh, former trustee, account to the court for all moneys received and all disbursements made from the premises described, within 20 days, and that the court retain jurisdiction for the purpose of further instructing the trustee with respect to his rights, powers and duties in the premises. Bessie Brody, individually and as owner and holder of bonds secured by the trust deed foreclosed, Louis Nelson, William Gf. Heidemann, Herman Weiss and Oliver J. Wescott, members of a certain Bondholders’ Protective Committee, and John T. Brown, John W. Guskay, Louis E. Nelson, Charles L. Schutt, William A. Kessler and Francis W. McGovern, constituting the Consolidated Bondholders’ Committee, prosecute this appeal from the decree of-October 18,1938.

Except for Bessie Brody, the parties who are prosecuting this appeal, constitute the same bondholders’ committee which filed an answer to the petition, and which answer admitted that the court should instruct the successor trustee with respect to his rights and duties in the administration of the trust; that specific machinery for the conduct and supervision of the trust should be set up and that the fees and costs of the committee should be fixed and allowed and made a part of the reorganization mortgage. It is worthy of note that John T. Brown appeared before the master and testified in behalf of plaintiff that he was the chairman of the Consolidated Bondholders’ Committee, the holders and owners of a substantial number of bonds ; that he and other members of the committee made a careful investigation as to a plan of reorganization by which the property could be operated for the benefit of the bondholders; that the plan of reorganization presented to the master outlined an adequate and ap-proriate plan for the reorganization of the property and contained a “proper interpretation of the powers and duties of the successor trustee”; that the plan was adequate, workable and reasonable and gave the bondholders full and complete protection; that it was necessary for the court to take jurisdiction in order to define the rights, powers and duties of the successor trustee and to protect the interest of the bondholders ; that there was a forfeiture on account of the general taxes for 1927; that the sum of $1,487.63 remains unpaid on the 1930 taxes; that the taxes for 1931 are unpaid; that there is a balance unpaid on the 1932 taxes of $1,240.47; that there is an unpaid balance of $695.60 on the general taxes for 1933; that there is an unpaid balance of $1,208.47 on the general taxes for 1934; that the general taxes for 1935 were unpaid; that the bills for the 1935 taxes had not then been issued; but that the taxes would amount to $1,400; that in addition to the amounts due on the taxes, the county collector would add 12 per cent per year as a penalty; that the committee could procure a loan; that it was desirable that a liquidating loan be made for the purpose of paying the taxes in order to stop the accumulation of penalties; that since May, 1932, there had been no distribution of any sort to the bondholders, and he also testified as to reasonable fees for services rendered by the Consolidated Bondholders’ Committee. He presented a plan of reorganization, which was received in evidence. He appeared for the committee at the hearing. He stated that the committee had given careful consideration to the plan of reorganization which set out the terms and limitations defining the powers of the successor trustee, and that the plan provided for a liquidating trust which would be fair to all parties. The record does not show that any objections were filed before the master. When the master’s report was presented, leave was granted to the Consolidated Bondholders’ Committee and to Bessie Brody to file exceptions. Bessie Brody and the various committees filed joint exceptions, and in so doing were represented by the same attorney. There was a full hearing before the court. One of the exceptions was that the master failed to give counsel notice of the hearings. We do not know what evidence or statements were introduced before the chancellor as to whether notice had been given. All presumptions are in favor of the validity of the decree and the burden is on anyone who objects to support such objections by reference to the record. No record has been certified as to what was said or introduced before the chancellor. It must be assumed that he acted on proper evidence or stipulations. Another objection is that a bondholder had commenced a suit for partition which was then pending in the superior court of Cook county. According- to the argument presented in the brief, the partition suit was commenced by Bessie Brody. Our attention has not been called to any part of the record which discloses anything about the partition suit, except the mere statement in the exceptions that such a suit was pending. Bessie Brody did not ask leave to file a pleading of any kind. The Consolidated Bondholders ’ Committee did not ask leave to amend the answer. Hence, their exceptions are inconsistent with their own answer. Mr. Brown, chairman of the bondholders’ committee, as a witness before the master, urged the approval of the plan of reorganization, which is now being attacked. No good reason has been vouchsafed to us as to why the members of the Bondholders ’ Protective Committee changed their attitude from one of urging the court to assume jurisdiction and to approve the plan, to one of antagonism to the approval of the plan. The appellants did not produce, or offer to produce, any other plan and did not offer any amendment to the plan proposed. If the objectors had any constructive ideas as to a better way of reorganizing the property, they did not disclose them to the court. It is difficult for us to understand how the members of the bondholders’ committee can now take a position which is entirely at variance with the position they took in the superior court. It also appears that Bessie Brody and the members of the bondholders’ committee were given a full hearing before the chancellor;

Appellants urge that the provisions of the trust deed constitute the charter of the trustee’s powers and duties; that only when there is some reasonable doubt as to the powers or duties or rights of parties interested, is the trustee entitled to the court’s direction, and that equity cannot create a trust over the objections of the cestui que trust. The parties admit that the trustee had the power to bid in the property at the foreclosure sale for the benefit of all the bondholders. It has been held that where the "trustee has power under the terms of the trust deed to bid in the property for the benefit of all the bondholders, he holds upon an active trust. It is well settled that a court of chancery in the exercise of its general equity powers may pass upon the fairness of a plan of reorganization. As a general rule, such a plan is passed upon before the sale is confirmed. No explanation has been given as to why a plan of reorganization was not submitted to the bondholders before the real estate was sold. In First Nat. Bank of Chicago v. Bryn Mawr Beach Bldg. Corp., 365 Ill. 409 (opinion filed February 12, 1937), the Supreme Court, at page 416, said:

“Until about twenty years ago the courts of this country were uniform in the view that they had no concern with the business of a re-organization of bond or debt-encumbered properties of a corporation, but it was thought that the sole function of equity courts was, through receiverships and injunctions, to supervise the assets pending sale or liquidation, as the creditors might determine, and to sell the property at foreclosure sale for what it might bring. During the last twenty years, however, Federal courts have been of the view that equity jurisdiction does extend to the examination and approval or disapproval of proposed plans of re-organization. It is true that in most of the cases, such as Kansas City Terminal Railroad Co. v. Central Union Trust Co. 271 U. S. 445, 70 L. ed. 1028, Louisville Trust Co. v. Louisville, N. & A. R. R. Co. 174 U. S. 674, 43 L. ed. 1130, and Guaranty Trust Co. v. Missouri Pacific Railway Co. 238 Fed. 812, jurisdiction has been taken on the ground that the defaulting mortgagor was a railroad or other public utility, and that the public interest was sufficient to justify a court of equity in taking jurisdiction of a plan to keep such utility in operation. The equitable jurisdiction of Federal courts has not, however, been limited solely to cases where utilities were involved, as is shown by Bethlehem Steel Co. v. International Combustion Engineering Corp. 66 Fed. (2d) 409, Graselli Chemical Co. v. Aetna Explosives Co. 252 Fed. 456, and like cases, where a court of equity has taken jurisdiction to consider the means by which re-organization of private corporations was sought to be effected and to approve or disapprove the same and the foreclosure sale had in connection therewith. In these cases it has been recognized that where large properties, as to which rights and relations are complicated, are sold at foreclosure sale, such sale, disconnected with a plan of re-organization, is likely to prove disastrous, as it rarely obtains for the property any approach to a fair price and often enables a financially strong group to gain by combined action an unfair advantage over those who do not have the means to protect the sale. And so these courts of equity have withheld the sale of the mortgaged property under the protection of possession by a trustee or receiver appointed by the court or acting under the terms of the trust deed, until such time as a sale might be had as a step in the re-organization of the concern. For this purpose the court takes jurisdiction to consider the fairness of the plan proposed. This, as we understand it, has been the underlying purpose of the exercise of equitable jurisdiction in cases of this character. First Nat. Bank v. Flershem, 290 U. S. 504, 78 L. ed. 465; National Surety Co. v. Coriell, 289 U. S. 426, 77 L. ed. 1300; Habirshaw Electric Co. v. Habirshaw Electric Cable Co. Inc. 296 Fed. 875.

“It is not pointed out wherein equity jurisdiction and powers of State courts are to be considered more limited or restricted than those of the Federal courts.” The real estate in the instant case was sold by the master and the approval of the chancellor asked thereon. The court in entering the decree appealed from, was facing a situation and not a theory. The successor trustee had title to the property. It is well known that there has been little if any market for the sale of such properties in the past 10 years. None of the objectors has stated that anyone is offering to purchase the property. Without the decree of court, the duties of the trustee are not defined, nor is there any provision as to when the trust terminates. The Supreme Court has held that it is proper for the court to pass on a plan of reorganization prior to the confirmation of the sale. Where the sale has been conducted and the deed issued to a trustee, we do not know of any good reason why a court of equity does not have equal power at that time to approve a plan of reorganization and instruct the trustee as to his duties. Rules of equity jurisdiction have developed and are developing. All who are conversant with the history of equity jurisprudence know that as a distinct system it has been of constant growth and development from its inception. In Dodge v. Cole, 97 Ill. 338, the Supreme Court said: “The jurisdiction of a court of equity does not depend upon the mere accident whether the court has, in some previous case or at some distant period of time, granted relief under similar circumstances, but rather upon the necessities of mankind, and the great principles of natural justice, which are recognized by the courts as a part of the law of the land, and which are applicable alike to all conditions of society, all ages, and all people.” We conclude that under the factual situation confronting the chancellor he had the right to approve a plan of reorganization and to enter a decree defining the rights and duties of the successor trustee and bondholders.

Another point insisted upon by appellants is that by virtue of the partition suit filed by Bessie Brody in the superior court on September 16, 1937, that court acquired jurisdiction of the subject matter involved in the instant cause, and that hence the chancellor had no power to enter the instant decree. No pleading was filed, setting up the pendency of a prior action. All that the record discloses as to the other case is set out in exception No. 8, stating that “these objectors had commenced a suit for partition now pending in the Superior Court of Cook County, Illinois, as case No. 37S 11513, in which she alleged to be part owner of said premises.” No citation of authority is required for the proposition that matter in abatement must be pleaded in the trial court. Appellants brief states that the partition suit was filed on September 16, 1937. The petition in the instant case was filed on April 29, 1938, prior to the filing of the partition proceeding. It is not contended that any decree has been entered in the partition suit. The pendency of a prior suit, if it constitutes a defense, must be pleaded in abatement. We must remember that the decree of February 13,1935, finds that the interests of the bondholders constitute personal property, subject to an express trust. No appeal was prosecuted from that decree. The decree in the instant case also provides that the interest of the certificate holders shall constitute personal property and not an interest in real estate. In the case of Aronson v. Olsen, 348 Ill. 26, the court said, p. 28:

“By the deed of trust the entire legal and equitable title to the property was expressly vested in the trustee, and the interest of each and every beneficiary, and of all persons claiming under them, was declared to be personal property. Under this agreement it was expressly stipulated that no beneficiary should have any right, title or interest in or to any portion of the real estate. The defendants in error had, therefore, no such interest in the land, either legal or equitable, as would authorize them, as beneficiaries under the trust, to a partition of the premises. Whitaker v. Shearer, 313 Ill. 473; Duncanson v. Lill, 322 id. 528; Ward v. Williams, 282 id. 632; Williams v. Wiggand, 53 id. 233.” In Harris v. Ingleside Bldg. Corp., 370 Ill. 617, 623, the court said:

“An equitable title, however, does not necessarily mean that it may be partitioned, because there are many situations where it is refused from equitable considerations. For example, a title held subject to an active trust, (Burbach v. Burbach, 217 Ill. 547,) or legal or equitable titles held upon an agreement not to partition.” I am of the opinion that the court had the right to declare the interest of the certificate holders to be an interest in personal property and not in real estate.

If a bondholder or a group of bondholders sought to partition the property, we know that the property would then have to be sold at a judicial sale. Yet, the title now vested in the trustee was acquired through a judicial sale. Presumably, the property would be bid in for the benefit of the depositing bondholders. The nondepositing bondholders would then receive their share of the amount for which the property was sold, which, in all probability, would be only a few cents on the dollar. Without the provision that the certificate holders do not have an interest in real estate, many difficult problems would arise, such as petitions to partition, following the devolutions of title to a fractional undivided part to a multitude of heirs, and other like problems. By the necessity of the situation, the action of the court in declaring that the interest of a certificate holder is an interest in personal property only, was in accordance with equitable principles. The case of Ashton v. Macqueen, 361 Ill. 132, relied on by appellants, is not applicable to the facts in the case at bar. The decree entered on February 13, 1935, from which no appeal was prosecuted, was a representative suit and was binding on all of the bondholders.

The chancellor had the power to pass on the plan of reorganization. He considered that the plan was fair. Appellants in their statement of facts say that under the decree of October 18, 1938, the interest of the bondholders is in the income only. An examination of the decree discloses that the bondholders were entitled to all the net income, proceeds and avails from sales and other dispositions of the property. It is clear, therefore, that the certificate holders will be entitled to the net income and to their proportionate share of the proceeds and avails from a sale or other disposition of the property. The tax situation is deplorable. No attack, however, is made on the integrity of the successor trustee. In the decree the court directed the original trustee to make an accounting within 20 days. From a careful consideration of the record and of the points presented, we cannot hold that the chancellor abused his discretion in approving the plan. Criticism is also leveled at the fees that were allowed. No complaint is made as to the amount of the fees, providing any fees are allowed. It is well settled that fees may be allowed to a trustee or his attorney where it is necessary to file a complaint for the purpose of construing the trust. The trust deed covering the mortgage on the property in question expressly provided that the trustee should be allowed compensation for himself and his attorney and also for all proper outlays. There was testimony before the master as to the reasonable value of the services rendered by the trustee, the attorneys and the committees, and we are unable to say that the court was wrong in accepting such testimony and entering a decree in accordance therewith.

We observe that the plan of reorganization contemplates that the trustee may be removed on the vote of 51 per cent in amount of the certificate holders. The court would nevertheless have the power of removing the trustee for cause regardless of whether a majority of the certificate holders demanded such removal. A court of equity has the inherent right to remove a trustee where he is dishonest or incompetent. Under the decree appealed from, the court retained jurisdiction to further instruct the trustee with respect to his rights, powers and duties in the premises. Should any certificate holder have good ground to believe that the property was not being honestly and capably managed, he would have the undoubted right to file a petition in the same cause, asking to be heard with respect to his grievances. Should any certificate holder wish to call to the attention of the court the fact that any person or corporation was ready to make an offer to purchase the property, the chancellor would have the power to bring before him the trustee and certificate holders and all other necessary parties for the purpose of determining whether it would be for the best interests of the certificate holders to sell the property. It follows that the chancellor would also have the right to decide that the property should not be sold if he deemed the terms unfavorable to the certificate holders.

Finally, it is argued that the provisions of the decree directing the issuance of certificates of beneficial interest are in violation of section 770,15 USCA sec. 3, of the Federal Securities Act of 1933. I am of the opinion that under the circumstances disclosed by the record, the issuance of the certificates does not constitute a violation of the Federal Securities Act of 1933.

       See Callaghan’s Illinois Digest, same topic and section number.


source: Caselaw Access Project

author: Mr. Presiding Justice Denis E. Sullivan

license: Public Domain

text:
    Northern Trust Company, et al., as Trustees Under the Last Will and Testament of Simon Reid, Deceased, Appellees, v. Clementine C. Archbold, Administratrix of the Estate of Ambrose B. Chadwick, Deceased, et al., Appellants. Appeal of Clementine C. Archbold, Individually and as Administratrix of Estate of Ambrose B. Chadwick, Deceased, Appellant.
    Gen. No. 40,756.

      Heard in the third division of this court for the first district at the June term, 1939.
    Opinion filed February 14, 1940.
    Gr. Edwin Mitchell, of Chicago, for appellant.
    Goodspeed, Bates & Carter, of Chicago, for appellees ; J. Wesley Amundson, of Chicago, of counsel.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

On January 23, 1939, the circuit court of Cook county entered a decree from which this appeal is brought by Clementine C. Archbold, individually and as administratrix of the estate of Ambrose B. Chadwick, deceased. The decree appealed from required the defendant, Clementine C. Archbold, individually, to account to herself as administratrix of the estate of Ambrose B. Chadwick, deceased, which estate was at the time pending in the probate court, for the sum of $3,400, the proceeds of the sale of certain property, so that the same would be inventoried among the assets of the said estate, and be subjected to paying claims against said estate, including a sixth-class claim in the sum of $1,279. The appeal is also taken from the order entered November 12,1936, denying defendants’ motion to strike the complaint, and also from the order entered November 29, 1937, referring said cause to a master in chancery instead of dismissing said cause upon the complaint and answer thereto.

The complaint was filed on July 2, 1936 and was called a complaint to set aside fraudulent conveyance, and claimed that Ambrose B. Chadwick was indebted to plaintiffs in the sum of $1,279 for unpaid rent for premises rented to him by plaintiffs for a plumbing office and shop; that he died intestate, December 5, 1935, leaving Clementine C. Archbold, as his sole heir at law and next of kin; that she was duly appointed and qualified as administratrix of his estate in the probate court of Cook county, Illinois; that plaintiffs filed their claim on February 3,1936, which was allowed in said probate court as a sixth-class claim on April 13, 1936; that on November 1, 1934, said Chadwick conveyed by warranty deed to his said daughter certain described real estate without consideration for the purpose of defrauding plaintiffs and other creditors; that demand has been made upon said Clementine C. Arehbold to inventory said real estate as an asset of said estate.

The prayer of the plaintiff is: (1) that said Clementine C. Arehbold inventory all assets of said estate and answer certain interrogatories relating to said real estate; (2) that an accounting be taken; (3) that claims be paid; (4) that a receiver be appointed; (5) that an injunction issue to restrain said Clementine C. Arehbold and Cliff R. Arehbold, from receiving any assets of said estate or from conveying or incumbering said real estate; and (6) other relief.

On August 4,1936, defendants filed an answer which by its terms answered each paragraph of the complaint; said answer stated that the real estate which they questioned, did not belong to the estate, but that it belonged to the administratrix and it had been sold to a third party some time before.

The answer further stated that the present property and effects of said Ambrose B. Chadwick, the deceased, which came into the control of the defendant Clementine C. Arehbold, or any one for her, have been set forth, inventoried and approved in the probate court in the case of Ambrose B. Chadwick, deceased.

Said answer further stated that the inventory has been filed and an accounting rendered of all property which has come into the hands of Clementine C. Arch-bold, administratrix of said estate; that the same is res adjudícala, and that all of said estate having been accounted for, there is nothing further to account.

On motion of the plaintiffs this answer was stricken in its entirety.

At the time of the striking of the first answer, leave was given to file another answer which second answer was filed on November 23,1936, and in substance is the same as the first one, and it sets up as a defense that the said Clementine C. Archbold did not inventory the real estate in said estate, as she claimed it as her own; that plaintiffs attempted by citation proceedings in said probate court to force the said Clementine C. Archbold, as administratrix, to inventory said real estate in said estate, which proceedings were decided in said probate court against said plaintiffs, and that said finding was not appealed, and is now res adjudicata.

Said answer further denied that the plaintiffs are entitled to have defendant set forth and discover the nature, amount and value of all the property, etc., of said Ambrose B. Chadwick, deceased, as said Clementine C. Archbold as administratrix, has filed her inventory, which said inventory has been approved by the said probate court, and plaintiffs’ petition to discover assets in said probate court has been heard by that court and a finding made against plaintiffs therein, which finding is res adjudicata; that she has accounted to the probate court for all of said estate and that there is nothing further to account.

Said answer further states that inasmuch as the balance of $82.05 due the undertaker as a first-class claim has been paid by said administratrix from her own funds, no accounting should be required for plaintiffs or anyone else; that plaintiffs are not entitled to a receiver ; that there being no property belonging to said estate in the hands of any defendant, and the further fact that the probate court has not relinquished jurisdiction of the subject matter of said estate, no injunction should be allowed.

On November 29, 1937, an order was entered referring said cause for a hearing of testimony and report of conclusions to a master in chancery. On January 23, 1939, the master filed a report finding in favor of the plaintiffs and recommending the granting of the relief prayed.

The theories of the contending parties are as follows :

Plaintiffs contend that a conveyance from a father to a daughter is a badge of fraud and that the said daughter as the administratrix of her father’s estate should be required to inventory as an asset of said estate the real estate conveyed by warranty deed to her 13 months and 4 days prior to her father’s death.

Defendants contend that such a conveyance is not a badge of fraud, and the burden of proof is upon the plaintiffs; that the plaintiffs having filed their citation in the pending estate in the probate court and having an adverse ruling there, have a remedy of appeal to the circuit court; that the circuit court does not have original jurisdiction in this case, and that said ruling of the probate court is res adjudicata; that the plaintiffs having called the defendant, Mrs. Archbold, as their witness and not producing any evidence of any kind to contradict her, are bound by her testimony and the same must be taken as true.

The circuit court by its decree concludes as follows:

“The Court orders, adjudges and decrees that said Clementine C. Archbold, individually account in the Probate Court of Cook County, Illinois, to herself, as administratrix of said estate, still pending in the said Probate Court, for the'said sum of $3,400 and pay the same over to herself as administratrix so that the same may be inventoried among the assets of said estate and be subjected to the payment of claims allowed against said estate, including plaintiffs’ claim allowed in said Probate Court. Orders defendant, Cliff R Archbold, be dismissed without costs.
“The Court reserves jurisdiction to effectuate and carry out this decree and such further orders as may be necessary.”

It seems to us that the first two questions to decide are:

First. As to the jurisdiction of the circuit court over a case,- which at the same time is pending in the probate court;

Secondly. Where the probate court has decided a question adversely to the plaintiffs, instead of appeal therefrom can they file an original suit in the circuit court to litigate the same question?

One of the first points made by the appellee in support of the jurisdiction of the circuit court is: “ The Circuit Court, not the Probate Court, has jurisdiction to set aside a fraudulent conveyance made by decedent before his death.”

Such question was heretofore decided in the case of Johnson v. Nelson, 341 Ill. 119, at p. 121, wherein the late Mr. Justice DeYoung discusses the question of jurisdiction in part as follows :

“The question of jurisdiction, although not raised by either party, presents itself at the threshold of our inquiry and necessarily demands our consideration. Prior to July 1, 1925, sections 81 and 82 of the act in regard to the administration of estates (Cahill’s Ill. Stat. 1923, p. 86; Smith’s Stat. 1923, p. 17), read as follows:
‘ ‘ Sec. 81. If any executor or administrator, or other person interested in any estate, shall state upon oath, to any county court, that he believes that any person has in possession, or has concealed or embezzled, any goods, chattels, moneys or effects, books of account, papers or any evidences of debt whatever, or titles to lands belonging to any deceased person; or that he believes that any person has any knowledge or information of or concerning any indebtedness, or evidences of indebtedness, or property titles or effects, belonging to any deceased person, which knowledge or information is necessary to the recovery of the same, by suit or otherwise, by the executor or administrator, of which the executor or administrator is ignorant, and that such person refuses to give to the executor or administrator such knowledge or information, the court shall require such person to appear before it by citation, and may examine him on oath, and hear the testimony of such executor or administrator, and other evidence offered by either party, and make such order in the premises as the case may require.
“ ‘Sec. 82. If such person refuses to answer such proper interrogatories as may be propounded to him, or refuses to deliver up such property or effects, or in case the same has been converted, the proceeds or value thereof, upon a requisition being made for that purpose by an order of the said court, such court may commit such person to jail until he shall comply with the order of the court therein.’ ”

Continuing the court said :

“These sections provided a summary method for the recovery of property of the character defined in section 81, which belonged to a decedent at the time of his death, but had come into the possession of a third party prior thereto, and which that party either retained in his possession or had concealed or embezzled. (Dinsmoor v. Bressler, 164 Ill. 211). In a case where the decedent’s ownership of the property in his lifetime was not disputed, the court might order the respondent, by the authority of sections 81 and 82, to deliver the property, or if he had converted it, the proceeds or value of the property, to the executor or administrator. If, however, the respondent claimed to be the owner of the property sought to be recovered, these sections could not be invoked against him, because he had the constitutional right to a jury trial for the determination of the question of the title to the property, and these sections made no provision for such a trial. Nor were these sections designed to afford the means of collecting a debt owing to the decedent at the time of his death. The title to the goods sold or the money lent, in such a case, had passed to the debtor or borrower, and sections 81 and 82 were not available to obtain satisfaction of the debt or claim. To accomplish that end, the personal representative was compelled to institute in a court of competent jurisdiction, a plenary action wherein the defendant had the right to a trial by jury. Martin v. Martin, 170 Ill. 18; Sullivan v. Arcola State Bank, 314 id. 40.
‘‘ Sections 81 and 82 of the act in regard to administration of estates were amended by an act approved June 30,1925, and effective July 1,1925. (Laws of 1925, pp. 1, 2; Cahill’s Ill. Stat. 1929, p. 62; Smith’s Stat. 1929, p. 92). The amendatory act made additions to both sections. The additions to section 81 by interpolation are: (1) The statement upon oath by which the proceeding is instituted may be made to the probate court as well as the county court; (2) the respondent’s possession or control as distinguished from his possession merely, and his conversion as well as concealment or embezzlement-of the property sought may be the subject of inquiry, and (3) the property for the recovery of which the proceeding may be brought and the knowledge or information desired may concern property belonging not only to ‘any deceased person’ but also ‘to the executor or administrator or the estate of any deceased person. ’ The following provisions, which conclude section 81, were added by the amendatory act: ‘The court shall have power to hear, settle and adjudge all controverted questions of title and claims of adverse title and to determine the right of property. Such questions' of title and of rights of property, and such claims of adverse title shall be determined, upon the demand of either party, by a trial by jury.’
“No change was made in section 82, except that the amendatory act added the following provisions: ‘and if such order is for the delivery of such property or effects the court may enforce such order by execution against the real and personal property of the person thus ordered. With respect to property and effects concerning which there is raised a question of title, or of the right of property, or claim of adverse.title, the court shall (upon trial by jury as provided in the preceding section, if such trial is demanded) enter a judgment according to the right of the matter and enforce the same by execution against the real and personal property of the person against whom such judgment is rendered, or the court may enforce its judgment and order in the premises by proceedings in contempt against any of the parties to said proceedings. ’ ”

The complaint in the instant case was filed to set aside an alleged fraudulent conveyance of real estate. When the answer was filed it set up several affirmative defenses: First, that the real estate had been sold by the defendant Clementine C. Archbold to a third party and that title was not now vested in her; Secondly, that the plaintiffs had theretofore filed a petition in the probate court alleging in substance the same facts as set forth in the complaint; that a hearing was had and the court decided adversely to plaintiffs and such decision is res adjudicate/, in the present case. No reply was made to this answer as is' provided by ch. 110, par. 156, sec. 32, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 104.032], wherein it is said: “. . . When new matter by way of defense or counterclaim is pleaded in the answer, a reply shall be filed by the plaintiff. ...”

Chapter 110, par. 164, sec. 40, subparagraph 2, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 104.040], provides:

“ (2) Every allegation, except allegations of damages, not explicitly denied shall be deemed to be admitted, unless the party shall state in his pleading that he has no knowledge thereof sufficient to form a belief, and shall attach an affidavit of the truth of such statement of want of knowledge, or unless the party has had no opportunity to deny.”

Instead of replying to the facts set up by way of defense, which shows that a third party held title, and requiring the new parties to the suit to be included if the original purpose of the bill was to be carried out, and taking no notice of the action of the probate court and its decision, the plaintiffs moved the court to strike said answer. This the court erroneously did, but gave to the defendants an opportunity to file a new answer, which they did, setting up practically the same defense as was contained in the first answer, when again the plaintiffs made no issue but admitted to be true the acts constituting the defenses heretofore mentioned. So, the question presented for our consideration is whether the judgment of the probate court entered upon a petition of the plaintiffs therein, being the same parties and the same subject matter as here involved, shall be considered as an estoppel by verdict and res adjudícala in the present proceeding.

According to the answer filed to the complaint, which plaintiffs by failing to answer admit to be true, there is nothing in the hands of the administratrix other than the proceeds of the sale of the real estate which the testimony shows to be $3,400.

In the case of Healea v. Verne, 343 Ill. 325, the court at p. 334, said:

“In Potter v. Clapp, supra, a freehold was involved, the complainant claiming dower and homestead, freehold estates, and it was held that the judgment of the probate court allowing the complainant a widow’s award was conclusive upon the heirs who had appeared and contested her application that she was legally married to the decedent and was his widow. This case was decided in 1903, and its effect was to hold that the adjudication of the status and the relations of the persons interested in the estates of deceased persons by the probate court, in the exercise of its jurisdiction, where the parties have appeared and contested the rights, was conclusive in any subsequent litigation between the same parties. This was on the general principle of the conclusive character of an adjudication by any court, of any question material to the issue in a case within its jurisdiction, upon all parties or their privies in any subsequent litigation between the same parties where the same question may be material. This principle is not affected by the act of 1909, which provided a special statutory proceeding for a specific purpose and provided that the judgment in that proceeding should be prima facie evidence, only. That act had nothing to do with a contest over the appointment of an administrator and did not affect the conclusiveness which had always characterized such judgments to the same extent as the judgments of all other courts acting within their jurisdiction.”

Chapter 37, pars. 303, 309 and 309a, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 110.157, 110.163, 110.164], provide in part as follows:

“303 Jurisdiction.] § 5. Probate courts shall have original jurisdiction in all matters of probate, the settlement of estates of deceased persons . . ., and in cases of the sales of real estate of deceased persons for the payment of debts.”
“309 Appeals.] §11. Appeals may be taken from the final orders, judgments and decrees of the probate courts to the circuit courts of their respective counties in all matters except in proceedings on the application of executors, administrators, guardians and conservators for the sale of real estate, ...”
“309a Appeals.] §12. Appeals may be taken and prosecuted from the final orders and decrees of the probate court to the supreme court in proceedings on the application of executors, administrators, guardians and conservators for the sale of real estate. . . ”

In Coffey v. Coffey, 179 Ill. 283, which was a case somewhat similar to the instant case, the decedent had previous to his death given to the person he named in his will as executor, certain stock certificates signed in blank, which certificates the said executor refused to inventory as assets of the said estate. Certain heirs then filed their petition in the probate court to compel the said executor to inventory the said certificates, and upon a finding adverse to said heirs, they appealed to the circuit court. The circuit court affirmed the finding and the case was appealed to the Appellate Court. The opinion of the Appellate Court was later adopted and concurred in by the Supreme Court at which time it was held:

“In a proceeding by heirs to compel an executor to inventory shares of stock claimed by him as his own, the fact that he held the stock assigned in blank before the death of the owner raises a presumption of ownership in him which must be overcome before his prima facie title will be divested, even though he were held incompetent to testify when and how he got possession.”

In Kepple v. Crabb, 152 Ill. App. 149, a petition was filed in the county court of McDonough county for a citation on the administrator, a hearing was had and a decree entered in said county court against the administrator ; that he then appealed to the circuit court and later appealed to the Appellate Court. The Appellate Court set forth the proper procedure at p. 153, wherein it is stated: “The method of procedure in issuing a citation upon a proper showing by petition, as was done in this case, has been sanctioned by the courts in numerous eases, and it is the proper method of procedure. In the case of Martin v. Martin, 170 Ill. 18, the same question was raised and the same procedure was had by citation. . . . The court obtains jurisdiction to act on the filing of the petition, as was done in this case. The pleadings are summary in character, and the court for the purpose of determining the rights of the parties, had full chancery powers and jurisdiction, and the proceeding is had under the rules of chancery practice. ”

The rule followed in the majority of jurisdictions is that a court sitting in probate has original jurisdiction to determine the title to property which a personal representative claims as his own. 90 A. L. R. 134, and cases cited; Martin v. Martin, 170 Ill. 18; Healea v. Verne, 343 Ill. 325.

Plaintiffs relied solely upon the nncontradicted testimony of Clementine C. Archbold, defendant, who was called as their witness. In Luthy & Co. v. Paradis, 299 Ill. 380, at p. 383, the court said:

“The appellee claims that it is not bound by the testimony of the appellants though it called them as its witnesses but that the truth may be shown by any competent testimony, even in direct contradiction of what the appellants, as witnesses for the appellee, may have testified to. There is no doubt that this is the law. The trouble about its application to this case is that there is no other competent testimony contradicting the testimony of the appellants. The fact that they may have been impeached by inconsistencies in their testimony or contradictory statements will not supply the lack of proof of the essential elements of the complainant’s case. A party who calls his adversary as a witness cannot call in question the latter’s credibility. That part of his testimony which makes in favor of the witness must be considered as well as that against him, and if there is no countervailing testimony it must be taken as true. Sawyer v. Moyer, 109 Ill. 461; Bowman v. Ash, 143 id. 649; American Hoist and Derrick Co. v. Hall, 208 id. 597.”

In Chance v. Kinsella, 310 Ill. 515, the court at p. 523, said: “The appellee called the appellant as her own witness. She was not for that reason bound by his testimony but might show the truth by any competent evidence, even in direct contradiction of what the appellant testified, but she could not call in question the appellant’s credibility. The part of his testimony which is in his favor must be considered, and if there is no countervailing testimony it must be taken as true. (Luthy & Co. v. Paradis, 299 Ill. 380.) There is no evidence contradicting the testimony of the appellant. . . . There is no presumption from the mere fact of relationship that a conveyance from a parent to a child is the product of fraud or undue influence. Hudson v. Hudson, 237 Ill. 9; Smith v. Kopitzki, 254 id. 498. •’

From the record in this case we have arrived at the conclusion that the plaintiffs are estopped by the verdict of the probate court when, upon their motion, the probate court entered a judgment against them which should have prevented the circuit court from taking original jurisdiction and without plaintiffs availing themselves of the statutory provisions of appeal. The trial court should have sustained the answer of the defendants, setting forth those facts, instead of striking it on the motion of the plaintiffs.

We further believe that the evidence is not sufficient to justify a setting aside of the transfer from the father to his daughter, as there is no evidence excepting that of the defendants, which is not contradicted by any countervailing testimony upon which to base a finding that defendants ’ evidence was not true.

The trial court was in error in entering a decree in favor of the plaintiffs and against the defendants.

For the reasons herein given the decree of the circuit court is reversed and the cause is remanded with directions to dismiss said complaint for want of equity.

Reversed and remanded with directions.

Hebel and Burke, JJ., concur.


text:
    Mary Graziani and Enrico Gattone, Appellees, v. City of Chicago, Appellant.
    Gen. No. 40,843.

      Heard in the third division of this court for the first district at the October term, 1939.
    Opinion filed February 14, 1940.
    Rehearing denied March 12, 1940.
    Barnet Hodes, Corporation Counsel, for appellant; Joseph F. Grossman, First Assistant Corporation Counsel, and J. Herzl Segal, Assistant Corporation Counsel, of counsel.
    Irving Breakstone, of Chicago, for appellees; Howard F. Bishop, George A. Mason,. Daniel S. Went-worth, Aaron Soble and Robert F. Dewey, all of Chicago, of counsel.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

From the brief and argument for appellant as to the statement of the case, which appellee says is correct and adequate, we gather the following:

An action at law was filed in the superior court of Cook county on October 9,1936, by Mary Graziani and Enrico Gattone against the City of Chicago, seeking to recover interest upon a judgment in the sum of $17,500 entered July 13,1928, in proceedings under the Local Improvements Act, the principal of which judgment had been paid in full.

The cause was heard by the court without a jury and upon a motion for a summary judgment and affidavits in support thereof and in opposition thereto. The trial court sustained the motion and entered summary judgment in favor of the plaintiffs.

We think the court did right in entering the judgment and we also think that enough has been written in connection with the question as to whether or not interest is allowable on judgments in condemnation proceedings. We are of the further opinion that no advantage will accrue to anyone from a more or less learned pursuit of this subject and discussion regarding the same.

We think the Supreme Court settled the questions presented here in the case of Northwestern Yeast Co. v. City of Chicago, which was before the Appellate Court and is reported in 301 Ill. App. 303, when the said Supreme Court denied a petition for leave to appeal, making the decision of the Appellate Court final.

In the opinion of the Appellate Court, at p. 308, this court said:

“ ‘The right to interest under the statute on a condemnation judgment is well settled. . . . The claim is for interest which is solely of statutory origin. ’ ” Citing Blaine v. City of Chicago, 366 Ill. 341; Feldman v. City of Chicago, 276 Ill. App. 142; Turk v. City of Chicago, 352 Ill. 171; Girard Trust Co. v. United States, 270 U. S. 163, 70 L. Ed. 524, 46 Sup. Ct. 229.

As to the motion of the plaintiffs for a summary judgment, this was justified as defendant by its affidavit of defense made no issue which was necessary to meet. As to the motion that was made to transfer this cause to the Supreme Court on the grounds that section 16 of the Local Improvements Act is unconstitutional and void, said motion is denied.

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

Judgment affirmed.

Hebel and Burke, JJ., concur.


author: Mr. Presiding Justice Denis EL Sullivan

text:
    Alice M. Carter, Appellee, v. Southern Limited, Inc., et al. Appeal of Southern Limited, Inc., Appellant.
    Gen. No. 40,867.
    Heard in the third division of this court for the first district at the October term, 1939.
    Opinion filed February 14, 1940.
    Burt A. Crowe and Carl H. Preihs, both of Chicago, for appellant.

      Prescott, Burroughs & Taylor, of Chicago, for appellee; Andrew J. O’Donnell, Patrick B. Prescott, Jr. and A. M. Burroughs, all of Chicago, of counsel.
   Mr. Presiding Justice Denis EL Sullivan

delivered the opinion of the court.

This is an appeal from a judgment entered in the superior court on the verdict of a jury for $2,300 against the defendant Southern Limited, Inc., for damages alleged to have been suffered by plaintiff Alice M. Carter, as the result of malicious prosecution and false imprisonment, caused by the defendant through its agents, said plaintiff having been accused of having received stolen property, to wit, Southern Limited, Incorporated bus tickets of the value of $104.

It appears from the evidence that the defendant Southern Limited, Incorporated, is the owner and possessor of a certain bus line; that it had in its employ a man by the name of Allen who was its agent and sold tickets at the 47th street station; that plaintiff purchased some tickets from- Allen; that at the time plaintiff was employed at the Union Bus Depot at 316% East 47th street; that the said Allen failed to turn in the money to his employer and subsequently pleaded guilty to keeping the money which he had received from plaintiff for the tickets which amounted to $104; that the defendant also demanded that plaintiff pay the $104 for the tickets for which she had already paid.

It further appears from the evidence that Arnold, a representative of that defendant company, obtained the assistance of the police department and upon plaintiff’s refusal to pay the money, Arnold said: “Throw her in jail”; that Keena, another employee said, “I am the Southern Limited. Throw her in jail.” And the evidence further shows that plaintiff was put in jail.

It further appears from the evidence that after plaintiff had been in jail for two days or more, Van-dermeer, the representative of the defendant, filed a sworn complaint in the municipal court of Chicago; that thereafter he went to the State’s Attorney’s office in response to an order from Fitzgerald who authorized him to sign the complaint against plaintiff, which he signed; that Fitzgerald was vice president of the defendant company.

It further appears from the evidence that on December 12, 1936, the complaint against plaintiff was dismissed by the State’s Attorney and thereafter the defendant, by its agents, took the matter before the grand jury and had plaintiff indicted for conspiracy, on which charge plaintiff was discharged on motion of the State’s Attorney.

It further appears from the evidence that both before and after her arrest plaintiff was at times employed by defendant at its 47th street bus station; that she succeeded Allen and was intrusted with the sale of tickets and defendant’s money.

In the statement of facts it is uncontroverted that prior to December 10, 1936, tickets used for transportation upon the Southern Limited lines were in the usual course of its business being returned to that company of which they had no record of the sale and for which they did not receive the price of the transportation. It does not appear in the record just how or by what means the vehicle department of the police department of this city learned of these circumstances. However, they did know of it, and acting'upon the orders of Police Lieutenant Killackey, Officers Callahan and Filetti, were assigned to investigate this leakage and failure of the payment to the company for tickets sold, and upon learning that the tickets were sold by the plaintiff Alice Carter, the police officers called at the office run by Mr. and Mrs. Carter and requested Mr. Carter to go to the vehicle department at 11th and State streets for questioning and a determination of the facts surrounding the failure of payment for tickets sold. Plaintiff volunteered to go in place of Mr. Carter, stating that she had made the sale. The ticket had been sold to a Mr. Townsend, who, prior to that time, had been taken from defendant’s bus on the south side of Chicago by police officers Callahan and Filetti.

After the police officers had taken Mrs. Carter to the 11th street police station, they apparently tried to get her to tell a story other than she had previously told. It is quite evident that the police department was being used for collecting a private debt and these police officers seemed to be willing tools to accomplish that result. They had no warrants and they had no right to obtain them. No crime had been committed to their knowledge and as apparent exponents of the third-degree method, they deprived this woman of her liberty at the instigation of defendant in disregard of the rights of the plaintiff.

Again referring to defendant’s statement of facts, we find that Lieutenant Killackey ordered that Mrs. Carter be kept in jail and then sought the advice of the State’s Attorney of Cook county. One attempt was made to see the latter, without success," and the following day after a trip to the criminal court building, Mrs. Carter was taken to the State’s Attorney’s office in the criminal court building on the west side of Chicago for further examination. The Assistant State’s Attorney, Irwin Clorfene, testified that he was acting in the capacity of Assistant State’s Attorney on December 12,1936, the date Mrs. Carter was brought into his office. He, as Assistant State’s Attorney, had been requested to make inquiry as to the alleged claim of some fault on the part of Alice Carter in connection with receiving stolen property. He was assigned by his superior officer to take a statement from Mrs. Carter and to make an investigation. He testified that it was.part of his job to recommend or otherwise prosecute any complaints in matters of that nature. The case involved bus tickets and, all matters of that nature, were referred to Mr. Clorfene. During this time plaintiff was kept in jail without a warrant. Vander-meer was sent for by the police department and at the request of the officers then went to the criminal court building. There, at that time and place, the circumstances and facts surrounding the loss of money in connection with bus tickets sold and unaccounted for were related to Mr. Clorfene by Officers Filetti and Callahan, and Vandermeer and Townsend. The following statement is copied 'verbatim from defendant’s brief: “The plaintiff, Mrs. Carter, was there, told of her constitutional rights and instead of cooperating with the State’s Attorney and making a full disclosure of the facts and circumstances, she refused to talk. She was told by the State’s Attorney that it would be wise for her to give him the entire story and if she had a defense to the story she should disclose it. She evaded the State’s Attorney and thereby quite naturally aroused suspicion in the mind of Mr. Clor-fene.” This is the first defense of third-degree methods being substituted for the “Bill of Bights” that has come to our notice. Article II, section 10 of our Constitution, entitled, Bill of Bights, reads as follows: “No person shall be compelled in any criminal case to give evidence against himself, or be twice put in jeopardy for the same offense.”

We wonder if some public officials really believe that they have the right, in violation of the Constitution and law, to subject citizens to the treatment received by plaintiff herein. Do they not know that they have no right to arrest a person without a warrant unless they either see a crime committed or know that a crime has been committed and have reason to believe the accused is the guilty party"? Do they not know that their duty is to take the person so arrested before a magistrate; that they have no right to make a defendant “talk”; that the so-called “investigation” cannot be held pursuant to the law in making the defendant a witness against himself or herself; that the presumption of innocence is still one of the cherished rights of citizenship; that the condition or state of any official’s mind, whether suspicious or otherwise, would not justify acts which would unlawfully deprive such citizen of his or her liberty or to compel such person to “talk” against his or her will?

The defense in this case seems to be based upon the theory that this procedure was taken on the advice of counsel, and that Mr. Clorfene, an Assistant State’s Attorney was the counsel. In order that the defense — on advice of counsel — may be interposed, it must be shown that the defendant made a full and fair statement of all the facts and then it should state just what facts he communicated. It is not permissible that he testify that he disclosed all the facts and circumstances without stating what they were. 38 Corpus Juris 489. It further appears, however, that it was the police officers and not defendant who stated the so-called facts to the Assistant State’s Attorney. In addition to this, however, it appears that the defense of “advice of counsel” was not interposed in the trial court and neither the pleadings nor the evidence contain any reference to said defense, and for that reason it cannot now be interposed here for the first time.

The evidence shows that when plaintiff purchased the tickets from defendant’s agent, she paid for them and was under no obligation or duty to account to anyone.

Complaint is made by defendant to the answers of the jury to two interrogatories of defendant requiring answers from the jury. These interrogatories were improperly given, they were confusing and contradictory, leaving the jury to determine questions of law and not of fact, but no harm was done by the jury in answering them as they did.

There are many assignments of error presented for our consideration, the principal ones being that the verdict is against the weight of the evidence. The other assignments are mainly modifications and reiterations of the same.

We think the jury should have returned a verdict against the defendant as the preponderance of the evidence is in favor of plaintiff. Citizens, corporations and those who are charged with the enforcement of the law should know there are certain limitations placed upon their powers and that they must proceed according to the law; that the rights and liberties of individuals cannot be unlawfully taken from them, and the defendant should have known that charging an innocent person with a crime which she did not commit, causing such person to be arrested and tried and then later causing such person to be indicted and not prosecuted, as was done in the instant case, with all the consequent embarrassment and expense, and all this without probable cause or any evidence to sustain such action, creates a liability. The law makes provision as to what the redress shall be and we think the evidence and the proof amply sustain the case of the plaintiff against the defendant. We think the trial court did right in entering a judgment in favor of plaintiff and against the defendant.

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

Judgment affirmed.

Hebel and Burke, JJ., concur.


text:
    Adelyne Guild, Appellee, v. Metropolitan Life Insurance Company, Appellant.
    Gen. No. 40,916.
    Heard in the third division of this court for the first district at the October term, 1939.
    Opinion filed February 14, 1940.
    Rehearing denied March 12, 1940.
    Hoyne, O’Connor & Rubinkam, of Chicago, for appellant; Nathaniel Rubinkam, Ira W. Hurley and Albert E. Hallett, Jr., all of Chicago, of counsel.
    Arthur C. Rothblatt and Sidney Rothblatt, both of Chicago, for appellee.
   Mr. Presiding Justice Denis E. Sullivan

delivered the opinion of the court.

Defendant, Metropolitan Life Insurance Company, brings this appeal from a summary judgment entered against it in the superior court on the motion of the plaintiff for the sum of $910, said amount representing the amount claimed to be due on two life insurance policies issued by defendant on the life of one Daisy Guild for $455 each.

Plaintiff, Adelyne Guild, mother-in-law of the deceased Daisy Guild, in her amended complaint alleges that she is the beneficiary in two life insurance policies issued by the defendant company on the life of the said Daisy Guild.

Plaintiff further alleges that she has paid the premiums on the policies in question from the dates of their issuance; that the last time plaintiff heard from Daisy Guild was December 28, 1929; that plaintiff’s claim is founded on the presumption that the insured is dead and that her death occurred at the expiration of the seventh year from December 28, 1929; that plaintiff notified the defendant company on July 21, 1936, and complied with the terms of the policy; that at all times after the expiration of the seven-year period plaintiff has requested defendant to pay the same; that plaintiff has paid $60 in premiums for the period after December 28, 1936, which plaintiff now asks to be returned to her with interest and that she have judgment for the sum of $910, being the amount of the policies, together with interest.

Plaintiff’s theory of the case is as set forth in her amended complaint and alleges that her claim is based upon the presumption that the insured is dead and that her death occurred at the expiration of the seventh year from December 28, 1929, the last time she was seen by plaintiff.

Defendant’s theory of the case is that there has been no compliance with the terms of the policies sued upon; that no proof has been furnished of the death of the insured; that the insured is, in fact, not dead; that she was seen in the year 1934 in New York city, and that no proper showing has been made in the absence of the evidence, to raise the presumption that death occurred as a-matter of law after seven year’s disappearance.

The briefs refer to the disappearance of the insured as of December 28, 1929, in some instances and in other instances as of May 8, 1929. We have set forth the dates as they appear in the briefs and abstract.

No question is raised as to the issuance of the policies or the payment of the premiums.

The evidence shows that the insured disappeared on May 8, 1929; that her absence has been continuous and unexplained since that time; that her friends, relatives or those with whom she would have been likely to have communicated with concerning her whereabouts, received no information relative thereto.

The evidence further shows that the premiums were paid on said policies from their date of issuance, namely, May 26, 1924, until December 10, 1938, and that the amount stated in the two policies was for $910, or $455 on each policy, which is the face amount for which the policies were issued, together with interest at 5 per cent, as provided by statute.

Defendant’s answer denies generally that there is any liability on the part of the defendant; denies that the insured died on May 8, 1936, or at any other time, and avers that said Daisy Guild is still alive; denies that the said Daisy Guild is presumed to have died on May 8, 1936, or at any other time; avers that any premiums paid by the plaintiff or anybody else after May 8, 1936, were paid for the purpose of keeping the two policies sued upon in force; that the payments were voluntarily made without protest, and therefore, the defendant is not indebted to anyone for the return of the premiums so paid after May 8,1936; denies that the plaintiff has complied with all the conditions precedent in accordance with the terms of the policies.

Thereafter, on motion of the plaintiff, defendant filed an admission of facts in accordance with the' statute, wherein defendant admits that it made its policies of insurance on the life of Daisy Guild and delivered the same to the said Daisy Guild or to the plaintiff Adelyne Guild; admits that Adelyne Guild was designated as beneficiary in said policies and that the two policies were for $455 each.

Thereafter interrogatories were filed and the defendant, pursuant to an order entered on January 23, 1939, filed an answer thereto on February 2, 1939, which, among other things, stated:

“9. Defendant does not have the name or address of any reputable person who has seen Daisy Guild alive since May 8, 1936.”

On February 7, 1939, plaintiff made a motion for a summary judgment, supported by an affidavit, and on February 23, 1939, defendant made a motion to strike the affidavit in support of plaintiff’s motion for a summary judgment. Defendant’s reasons therefor are as follows:

“1. The policies sued upon provide that payment will be made by the defendant to the executor or administrator of the insured’s estate and that the designation of Adelyne Guild as beneficiary is subject to the provisions of the policy authorizing payment to the executor or administrator of the estate of the insured or at the option of the Company to pay to other persons, and that the Company did not exercise its option to pay to Adelyne Guild or any other persons and therefore under the law the only person entitled to bring this action is the executor or administrator of the estate of the insured.
“2. The affidavit ... in support of the motion for summary judgment fails to state any facts upon which a presumption of death can be based.
“3. The affidavit of . . . attorney for the plaintiff, attached to the complaint, is not based upon the personal knowledge of said [attorney] and therefore under the Statute is insufficient to support a summary judgment.
“4. The question of whether or not the insured is presumed to be dead is one of fact and whether or not the insured is presumed to be dead can be determined only by a jury or by a court passing upon the facts.”

Thereafter, on February 25, 1939, plaintiff filed an amended complaint.

Having considered these various pleadings, it is evident that plaintiff’s claim is based upon the presumption that the insured is dead and that her death occurred at the expiration of the seventh year from December 28, 1929, at which time she disappeared and has not been heard from since, nor has her absence been explained since that time, nor have the friends or relatives of the insured, or those with whom she would have been likely to communicate concerning her whereabouts, received any information in that regard.

The defense is that such a presumption does not arise from such disappearance.

In plaintiff’s affidavit for a summary judgment it is alleged that Daisy Guild lived with Conrad Guild at 4749 Indiana avenue, Chicago, Illinois, up to and including September 27, 1928; that no children were born to the said Daisy Guild and Conrad Guild; that the last time affiant heard of or from the said Daisy Guild was in the latter part of December, 1929; that at the time Daisy Guild disappeared she weighed about 135 pounds, was 5 feet 10 inches in height and had black hair and dark eyes; that her features were clear and she had a light complexion; that she bore no scars, nor had any defects; that inquiry was made throughout the colored communities in the city of Chicago in the State of Illinois and that diligent effort was made to locate her; that all inquiries failed to reveal any person who had seen or heard from said Daisy Guild or had any tidings of her from the latter part of December, 1929 up to the present time.

Affiant further stated that the Metropolitan Life Insurance Company through its local agents and servants were notified that Daisy Guild had disappeared and affiant was informed by said agents and servants that she could not make claim on said policies of said insurance until a period of seven years had elapsed; that the law required the affiant to wait for a period of seven years from the date of disappearance so that a presumption of death could arise before the claims upon the policies of insurance could be paid; that the affiant continue to pay premiums on said policies of insurance; that in June, 1936, affiant again notified the Metropolitan Life Insurance Company of the continuous unexplained absence and disappearance of Daisy Guild from her residence in Chicago in the latter part of December, 1929, and thereupon the said Insurance Company sent out their investigators and inspectors for the purpose of propounding questions relative to the unexplained absence and disappearance of Daisy Guild.

Affiant further stated that on June 21, 1936, at the request of the Metropolitan Life Insurance Company, affiant completed form No. 2173 with the claim division of the Metropolitan Life Insurance Company, which form is known as declaration of disappearance and in which affiant stated under- oath that she had not seen nor heard from Daisy Guild since the latter part of December, 1929.

On March 24, 1939, an order was entered to strike the affidavit of Anne Bachar, which was filed in support of plaintiff’s motion for a summary judgment. Defendant’s motion to strike said affidavit was overruled. It was further ordered that plaintiff’s motion to strike the answer to the amended complaint at law be overruled.

No affidavit was filed by the defendant in resistance to a motion for a summary judgment, and on April 18, 1939, defendant filed an amended answer. Said answer is repetitious as to some of the allegations of the former answer in. which it was denied that the insured had disappeared; that her absence had been unexplained and that she had disappeared from her usual place of abode.

Said answer further states that on March 13, 1924, the insured was married to the son of plaintiff herein; that thereafter the married life of the insured and her husband was not very harmonious and the insured and her husband did not live together at all times during the course of their married life and were frequently separated and that the said insured did not live with the plaintiff or with her husband in the year 1929; that on February 21, 1929, the insured’s husband filed a divorce action in Cook county asking that a decree of divorce be granted him from the insured on the ground of adultery, and that said divorce was granted on May 28, 1929, on proof of adultery by the insured.

The amended answer sets forth many other matters which would be no defense in an insurance policy case, nor do we think the amended answer of the defendant would in any way prevent the entering of the summary judgment.

As was said in Campbell v. Northwestern Mut. Life Ins. Co., 281 Ill. App. 158, at p. 165: “The law in disappearance cases is well settled in this State. If a person is absent from his home and no word has been received from him within seven years, such disappearance creates a rebuttable presumption that such absent one is dead. Keystone Steel & Wire Co. v. Industrial Commission, 289 Ill. 587; Apitz v. Supreme Lodge Knights & Ladies of Honor, 274 Ill. 196, aff’g 196 Ill. App. 278; Reedy v. Millizen, 155 Ill. 636. This presumption arises at the end of the seven-year period and his death is to be regarded as having taken place seven years from the date of his disappearance. Donovan v. Major, 253 Ill. 179; Whiting v. Nicholl, 46 Ill. 230.”

And again in Davis v. Metropolitan Life Ins. Co., 285 Ill. App. 398, at p. 402, the court said:

“After the expiration of seven years from the time the insured was last heard of, the presumption that he was alive ceased and the presumption of his death took its place. Whiting v. Nicholl, 46 Ill. 230. The law of this State is that when the presumption of death arises at the expiration of the seven-year period, the time of his death is presumed to have been at the end of the seven-year period. Donovan v. Major, 253 Ill. 179.”

In speaking of the rebuttable presumption of death caused by a disappearance, the Supreme Court in the case of Brown v. Brown, 329 his death is presumed to have been at the end of the seven-year period. Donovan v. Major, 253 Ill. 179.”. 198, at p. 202, said: “Presumptions are not evidence but arise as a rule of law. Their effect is to create the necessity for evidence to meet a prima facie case created under such presumption, and which, if no proof to the contrary is offered, will prevail. ’ ’

Other questions are raised here, but they are not sufficiently important to discuss at length.

From the record before us we think the superior court was justified in entering a summary judgment and, for the reasons herein given, the judgment of the superior court is hereby affirmed.

Judgment affirmed.

Hebel and Burke, JJ., concur.