author: Mr. Justice O’Connor Mr. Presiding Justice Hatchett

text:
    Emil Till, Appellant, v. Material Service Corporation, Appellee.
    Gen. No. 38,974.

      Matohbtt, P. J., dissenting.
    Opinion filed January 4, 1937.
    Rehearing denied January 18, 1937.

      Michael J. Sullivan, of Chicago, for appellant; Shepard Andalman, of counsel.
    D ’Ancona, Pelaum & Kohlsaat, of Chicago, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff brought suit against defendant to recover $1,452 claimed to be due because of defendant’s failure to return a special assessment bond of the face value of $1,000, with interest at six per cent per annum, which had been deposited with defendant as collateral security for a loan, and for defendant’s failure to carry out its written agreement to replace the bond or pay the face value thereof. There was a trial before the court without a jury, a finding and judgment in defendant’s favor, and plaintiff appeals.

The record discloses that plaintiff was a contractor engaged in the business of constructing sewers, and bought from defendant material required by him in his work; that about June, 1928, plaintiff borrowed $25,000 from defendant and to secure his note for this amount deposited as collateral special assessment bonds of the Village of Specialville of the face value of $50,000 — 50 bonds of $1,000 each. Thereafter plaintiff, from time to time, made payments to defendant on account of this indebtedness and about October 1, 1931, went to defendant’s office to pay the balance and receive back his 50 bonds. Defendant was unable to tender all the bonds because, it said, one of them had been lost or misplaced. Thereupon defendant’s representative stated that" if plaintiff would pay the balance due in full, it would obtain a duplicate of the bond and return it to plaintiff, or it would pay the amount of the bond. Plaintiff agreed to this, and thereupon defendant prepared, signed and delivered to plaintiff a letter as follows :

“Material Service Corporation Building and Paving Materials Foundry Sands — Fire Brick — Coal 33 North LaSalle St.
Chicago
October 1, 1931.
“Mr. Emil Till,
Chicago, Illinois.
“Dear Sir:
“This is to acknowledge that we have received from you one bond in the amount of One Thousand Dollars ($1,000.00) on the Village of Specialville which was deposited with us as collateral security on your account, which account you are now paying in full.
“We hereby guarantee to either secure a duplicate of said bond which has been lost, or to secure the payment to you of the amount of said bond upon its maturity. This bond, we have been advised, matures on 12/31/32.
“Yours truly,
Material Service Corporation
jg:lm By: Irving Crown”

Plaintiff then paid the balance he owed defendant and received his collateral except the $1,000 bond. Afterward, defendant having failed either to give plaintiff the duplicate bond or to pay the amount of it, plaintiff brought the instant suit.

The bond was dated December 1, 1927, and bore interest at the rate of six per cent per annum, and plaintiff’s claim was for the face of the bond with interest thereon.

Defendant filed an affidavit of merits in which it set up that the bond mentioned in plaintiff’s statement of claim “was stolen on or about May 31, 1929, from the defendant without fault or negligence on its part”; and that because of the theft defendant “at no time became liable to return said bond or to account for the value thereof to the plaintiff”; that the making and delivery of the letter or agreement dated October 1, 1931, set forth in plaintiff’s statement of claim “was without any good or valuable consideration.”

Plaintiff testified that on October 1, 1931, he called at defendant’s place of business in the Foreman Bank building and advised Mr. Madden, credit manager of defendant, that he wanted to pay the balance of his indebtedness and to obtain the return of his bonds; that Mr. Madden produced all the bonds but one; that he said, “It must have been lost while we were moving from the Conway building to the Foreman Bank building; probably mislaid somewhere, but if you make the payment in full we will get a duplicate of that bond or we will pay you the amount of the bond”; that this was agreed to. The evidence further shows that at that time Mr. Madden caused the letter or agreement above quoted to be prepared by defendant’s legal department and it was then presented to Mr. Irving Crown, vice president of defendant, who signed it and it was delivered to plaintiff, who paid the balance due and received 49 of his bonds.

Mr. Madden testified that at the time plaintiff called to pay the balance of his indebtedness he told plaintiff the bond had been stolen; that their offices had been burglarized and one of the bonds was missing; that the substance of what plaintiff then said was, “he would expect us to malee good on the bond or give him another duplicate bond; I said we would fio doubt take care of it”; that he then had the legal department prepare the letter or agreement and had it executed by the vice president and then delivered to plaintiff, who paid the balance of his indebtedness; “I had this letter drafted by the law department'which he [Mr. Crown] was to sign as an officer of the company; he said all right; Till owed the corporation at the time we made a final settlement about $25,000, and at this time he paid up in full.” This witness gave further testimony to the effect that defendant’s offices in the Foreman Bank building had been burglarized about June, 1929, and that shortly thereafter he advised plaintiff of this fact; that all the bonds had been kept by defendant in a vault in the basement of the building, except one which was kept in a vault in defendant’s offices, and that the person who knew about the keeping of the bonds in the vault was John Svoboda, who at the time of the burglary and prior thereto was the auditor of defendant, but at the time of the trial was in California.

Irving Crown, vice president of the defendant company, testified concerning the keeping of the bonds and the fact that their offices had been burglarized.

The trial began on October 26,1935, which was about six years after the burglary. A careful consideration of the testimony of Madden and of Crown discloses the fact that they had very little information about the safe-keeping of the bonds. The testimony of these two witnesses as to what they said concerning the burglarizing of their offices and the loss of the $1,000 bond is most unsatisfactory. When Madden was testifying his evidence was so unsatisfactory that the trial judge said, “I am disgusted with this witness,” and when Crown testified his evidence was likewise so unsatisfactory that the trial judge said, “Maybe you can straighten him out, I can’t.”

It is not at all clear that the bond was stolen; there is some evidence tending to show it might have been lost or misplaced in moving defendant’s offices from the Conway building to the Foreman Bank building. The letter or agreement given plaintiff at the time he paid the balance of his indebtedness specifically states the bond was lost. For is the evidence at all satisfactory that defendant kept the one bond in its offices and the other 49' down in the vault. Crown testified, ‘ ‘ There were 50 bonds, 49 being kept in the vault in the safety deposit vault of the American National Bank building, and the other one was kept in the safe in the office because we generally kept a sample of the bond in the safe so that it would be easily accessible in case of an examination. ’ ’ Just why it was necessary to have a bond in the vault for examination does not appear.

Under the law, as the bonds were pledged to defendant and one not returned, plaintiff made a prima facie case, and it therefore devolved upon- defendant to go forward with evidence that would tend to show that the loss of the bond did not result “from any fault or neglect on the part of the defendant.” This proposition is stated by counsel for defendant and is a correct statement of the law. Clemenson v. Whitney, 238 Ill. App. 308; Miles v. International Hotel Co., 289 Ill. 320.

In the Glemenson case we reviewed the authorities and refused to follow the rule stated in Nichols v. Union Stock Yards & Transit Co., 193 Ill. App. 14, and other authorities there cited. We there said (p. 313): “It is the contention of the bailee defendant in the case at bar, that, although the plaintiff made out a prima facie case of negligence, by her showing that her car was delivered to the defendant, but that he failed to deliver the car back to her upon demand, he fully and successfully rebutted that presumption merely by showing that the car had been stolen, and that thereupon it devolved upon plaintiff, as a part of the burden resting upon her, to establish negligence on his part, and to show that the theft was caused by such negligence.” The court then refers to the Nichols and other cases, and continuing said, “We have gone into this question again, in connection with the case at bar, and have come to the conclusion that the better reasoning and the weight of authority is that where the bailor makes out a prima facie case of negligence against the bailee, by showing that the goods-bailed have not been returned on demand, such prima facie case is not overcome by a showing, on the part of the bailee, to the effect that the goods have been burned or otherwise destroyed or have been stolen, but before the bailor’s prima facie case can be said to be overcome, the bailee must further produce evidence tending to prove that such burning or loss or theft was occasioned without his fault.” The court there also quoted from Miles v. International Hotel Co., 289 Ill. 320, the following: “The weight of modem authority holds the rule to be that where the bailor has shown that the goods were received in good condition by the bailee and were not returned to the bailor on demand, the bailor has made out a case of prima facie negligence ag*ainst the bailee, and the bailee must show that the loss or damage was caused without his fault.” We think the evidence was insufficient to overcome plaintiff’s prima facie case.

We are also of opinion that plaintiff is entitled to recover on the letter or written agreement delivered to him by defendant under the circumstances above stated. There was sufficient consideration for the execution of the agreement by defendant. It wanted to receive its money but could not return the bond, and in consideration of plaintiff paying the balance he then owed without receiving his bond, defendant executed the agreement whereby it agreed to obtain a duplicate bond for plaintiff or to pay him the face of the bond. Plaintiff thereupon received the agreement and paid the balance. This is sufficient consideration in any view of the law. Hulse v. Hulse, 155 Ill. App. 343, where the c'ourt, speaking by Mr. Justice Duncan, held that a debt1 barred by the statute of limitations or any moral obligation which was once a legal one, is sufficient consideration to support a contract. The court there said (p. 348): “The consideration was ample to support the contract. The compromise of a doubtful claim, fairly obtained, is a sufficient consideration on which to found a contract, no matter what the ultimate result of a contest might have been. So is a debt barred by the Statute of Limitations, or any moral obligation which was once a legal one. Lawrence v. Coddington, 52 Ill. App. 133; Honeyman v. Jarvis, 79 Ill. 322; Keener v. Crull, 19 Ill. 189; Morse v. Grate, 43 Ill. App. 513; Hobbs v. Greifenhagen, 91 Ill. App. 400. These authorities proceed upon the principle that the law permits a man to pay an honest debt no matter how barred, or to right any wrong or grievance that another may have suffered by his conduct, without litigation; and that ‘when he constitutes himself a judge in his own cause and decides against himself, ’ by making a new contract, ‘he cannot be heard to reverse his own judgment. ’ ”

In Hobbs v. Greifenhagen, 91 Ill. App. 400, cited in the Hulse case, it was said that the rule that a moral obligation would support a subsequent promise and constitute a legal consideration is limited to cases where the moral duty was once a legal one. The court there said (p. 402): “It is clear, however, whatever view may have been previously entertained, that the latest expression of the Supreme Court limits the doctrine that a moral obligation will support a subsequent promise, to cases where the moral duty was once a legal one.” In the Hobbs case the court also quoted (p. 402) from the case of Spear v. Griffith, 86 Ill. 552, the following: “Whether out of this arose a legal obligation upon the father to pay for the deficit, it is not necessary here to inquire. A moral obligation was beyofid all doubt thus created. This moral obligation the vendor recognized in his life, and in consideration thereof promised appellee to make to him compensation out of his personal estate. The promise created a legal obligation, which appellee is entitled to enforce. ’ ’

In Honeyman v. Jarvis, 79 Ill. 322, cited in the Hulse case, where the court was considering the question whether the agreement which arose ont of a compromise of the doubtful right was based on a real consideration, it was held that the real consideration which each party receives under a compromise was not a sacrifice of the right claimed, but the settlement of a dispute and the abandonment of the claimed right, and the fact that it later turned out that the party had in reality no claim was immaterial. The court there said (p. 322): “The compromise of a doubtful right, though it afterwards turns out the right is on the other side, where there is neither actual nor constructive fraud, and the parties act in good faith, with full knowledge of the facts, is a sufficient consideration to support a promise.”

In the case at bar defendant prima facie was under legal duty to return the bond upon payment by plaintiff of the indebtedness. It was unable to do so. Plaintiff waived the rigilt to obtain the bond at the time he paid his debt, in consideration of which defendant promised in writing to procure a duplicate bond for plaintiff or to pay the face of the bond. And the fact that it might be that defendant was not liable for the bond because its place of business had been burglarized through no negligence on its part, would not render the agreement without consideration.

Defendant contends that the letter or ag*reement of October 1, 1931, was inadmissible because the copy attached to plaintiff’s statement of claim as an exhibit showed that the letter was signed by defendant by Henry Crown, while the letter offered in evidence was signed by defendant by Irving Crown. This objection is frivolous. The letter is signed by defendant. More-' over, counsel for plaintiff stated that the signature of the original letter be read as “Henry” in place of “Irving.” There is no merit in this contention.

Defendant also contends that plaintiff’s position that he is entitled to have judgment entered in this court in his favor for the face of the bond pins interest is untenable because plaintiff did not prove any damages; that there was no evidence offered as to the value of the bond. We think this contention cannot be sustained.' The face of the bond was for $1,000 and interest at 6%, and in the written agreement of October 1, 1931, defendant stated, “We hereby guarantee to either secure a duplicate of said bond which has been lost or to secure the payment to you of the amount of said bond upon its maturity. This bond we have been advised matures on 12/31/32.” Defendant having agreed to secure a duplicate of the bond or to pay the amount of the bond, is bound by its agreement. The defense sought to be interposed is unconscionable and wholly without merit.

The judgment of the municipal court of Chicago is reversed and judgment will be entered in this court in favor of the plaintiff and against the defendant for the amount of plaintiff’s claim, $1,452.

Judgment reversed and judgment in this court.

McSurely, J., concurs.

Hatchett, P. J., dissents.

Mr. Presiding Justice Hatchett

dissenting: I dissent from the judgment of the court. However, I agree that the evidence shows the bond was not stolen. The promise of defendant was :

“We hereby guarantee to either secure a duplicate of said bond which has been lost or to secure the payment to you of the amount of said bond upon its maturity. This bond we have been advised matures on 12/31/32.”

Defendant did not find the lost bond and did not secure a duplicate. The face value of the bond was $1,000. It drew interest at six per cent per annum from December 1, 1927. On these facts plaintiff is given judgment for the sum of $1,452, the face amount of the bond with interest. ' There is no proof in the record that the bond was worth anything. There is no proof of how much it would have cost to obtain a duplicate as agreed. Under the statute plaintiff can still sue on the bond. (See Illinois State Bar Stats. 1935, ch. 98, U 15, section 14; Jones Ill. Stats. Ann. 89.015.) The only damage which has actually been sustained is what it will cost to procure an indemnified bond as provided by the statute. Under the circumstances I think the amount of the judgment is unconscionable. The agreement (assuming a valid consideration) was one in the nature of the payment of a penalty, and only actual damages should in my opinion have been allowed.


source: Caselaw Access Project

author: Mr. Justice O’Connor

license: Public Domain

text:
    Michael Horan and Mid-City Trust and Savings Bank v. Frieda Goldman et al. Harold A. Rosenstein et al., Appellants.
    Gen. No. 38,981.

      Opinion filed January 4, 1937.
    Harold A. Rosenstein, pro se.

    Gustav E. Beerly, of Chicago, for appellees; John F. Difeenderffer, Jr., and Harold L. Eisenstein, both of Chicago, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

By this appeal Harold A. Rosenstein, Sarah Rosenstein and Eli Rosenstein seek to reverse an order entered by the circuit court of Cook county awarding a writ of assistance to Michael Horan so that he might obtain possession of an apartment in a building to which he had obtained a master’s deed as the result of a foreclosure suit.

So far as is necessary to state the facts here, the record discloses that on November 13, 1933, Michael Horan, who will hereinafter be referred to as plaintiff, filed his bill to foreclose a trust deed securing an indebtedness of which there was a balance of $5,000 due. The notes and trust deed were executed by Frieda Goldman and Samuel Gfoldman, her husband. The property was afterward conveyed by the mortgagors to Sarah and Eli Eosenstein and later to their son, the defendant Harold A. Eosenstein. Sarah and Eli Eosenstein, the parents, defendant Harold, their son, and his wife occupied an apartment in the premises at the time the foreclosure suit was brought. The son and his wife were made parties but his parents were not made parties. Harold A. Eosenstein and his wife filed their joint and several answer in which they “neither admit nor deny the allegations contained in the bill of complaint . . . but demand strict proof. ’ ’ Afterward the case was referred to a master in chancery who took the proofs, made up his report and recommended a decree in accordance with the prayer of the bill. Harold A. Eosenstein and his wife filed objections to the master’s report, some of which were sustained, some withdrawn and some overruled, and a decree of foreclosure was entered November 20, 1934. It is in the usual form and it was decreed that in case the premises were sold and not redeemed a deed issue to the purchaser and he be let into possession, and in case anyone refused to surrender possession that a writ of assistance might issue. There was tío objection or exception to this decree.

The property was sold to plaintiff, Michael Horan, and a deficiency decree was entered. Afterward a receiver was appointed and upon his petition an order was entered January 19, 1935, that Sarah Eosenstein pay $10 a month to the receiver for her occupancy of one of the apartments in the building, and that in the event the rent was not paid, a writ of assistance issue. Defendant Harold Eosenstein objected to the order on the ground that his mother, Sarah Eosenstein, who he alleged was the owner of the equity at 'the time of the foreclosure suit, was not a party to the suit. Afterward $10 a month was paid in accordance with the order and defendant Harold Eosenstein claims that he paid the rent under protest.

After the expiration of the period of redemption the master issued his deed to plaintiff Michael Horan, and he petitioned the court that a writ of assistance be issued against defendant Harold Eosenstein and his parents Sarah and Eli Eosenstein. An order was accordingly entered on April 16, 1936, and, as stated, it is from this order that the Eosensteins appeal.

In the foreclosure suit Harold Eosenstein was called by plaintiff and testified that he and his wife lived in an apartment in the premises. Afterward, when he was putting in his defense, he gave testimony to the effect that shortly before the bill was filed he was informed that the title to the property was in him; that his parents, Sarah and Eli Eosenstein, held title to the property as joint tenants; that the property was transferred so that the title was in his mother, and afterward the evidence shows the mother and father conveyed the property by quitclaim deed on January 7,1932, to their son, defendant Harold Eosenstein. He further gave testimony to the effect that he did not own the property but that it belonged to his parents. This testimony, on motion of plaintiff, was stricken by the master on the ground that such defense was not set up in defendant Harold Eosenstein’s answer. The ruling in this respect was sustained by the chancellor and it is contended that this ruling was erroneous and prejudicial. - We think there is no merit in this contention. In Linder v. Barnett, 318 Ill. 259, the court said (p. 265): “It is a rule of chancery pleading that a defendant by his answer is bound to apprise a complainant of the nature of the defense he intends to set up, and he cannot avail himself of any matter in defense not stated in the answer even though it should appear in the evidence. ’ ’ Moreover, no objection or exception was taken by defendant to the decree of foreclosure, and he cannot now be heard to complain. Nor are his parents in any better position because the title was conveyed by them to their son Harold. In these circumstances neither of them will be heard to say that their son did not own the premises. The foreclosure decree, to which no objection or exception was made, provided that a writ of assistance might issue against anyone to put in possession of the property the person who obtained title through the foreclosure suit. The title to the premises at the time of foreclosure being in defendant Harold Bosenstein, it was not necessary, under the circumstances, to make his parents parties defendant. Thulin v. Anderson, 154 Ill. App. 41.

The order of the circuit court of Cook county appealed from is affirmed.

Order affirmed.

Matchett, P. J., and McSurely, J., concur.


text:
    John Kurzawski et al., Appellees, v. Henry Kurzawski et al., Defendants. Frank Piontowski, Appellant.
    Gen. No. 38,995.

      Opinion filed January 4, 1937.
    Loesch, Scofield, Loesch & Burke, of Chicago, for appellant.
    Ewart Harris, of Chicago, for appellees; Paul V. Pallasch, of Chicago, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiffs, who are six of the seven legatees under the last will and testament of John Kurzawski, deceased, filed their complaint in chancery in the superior court of Cook county against the executor of the last will and testament of John Kurzawski, deceased, and others, including the other legatee, to compel the sale of real estate belonging to the estate of the deceased to pay legacies.

Frank Piontowski, who will be hereinafter referred to as the defendant, filed his answer admitting substantially all of the allegations of the complaint, but contended that the superior court was without jurisdiction, the exclusive jurisdiction being- in the probate court of Cook county. The matter was referred to a master in chancery who took the evidence, made up his report, and recommended that a decree be entered in accordance with the prayer of the complaint. A decree was accordingly entered and defendant appeals.

Counsel for defendant in their brief say, “The sole question presented to this court is the question of the jurisdiction of the Superior Court to order a sale of real estate to pay legacies.” And they contend that the exclusive jurisdiction was in the probate court of Cook county. In support of the contention, counsel cite section 20, article 6, Ill. Constitution of 1870; pars. 331 and 335, ch. 37; par. 139, ch. 3, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 110.151, 110.157, 110.139; (Smith-Hurd Ill. Stats. 1935, pars. 229 and 303, ch. 37; par. 139, ch. 3); People v. Marshall, 262 Ill. App. 128; People v. Abbott, 274 Ill. 380; People v. Elgin P. Ass’n, 359 Ill. 379; Estate of Hannah Schwartz, 275 Ill. App. 374.

Sec. 20, article 6, of the Constitution of 1870 authorized the general assembly to create probate courts in certain counties and that such courts “when established, shall have original jurisdiction of all probate matters, the settlement of estates of deceased persons, the appointment of guardians and conservators, and settlement of their accounts; and all matters relating to apprentices, and in cases of the sales of real estate of deceased persons for the payment of debts.”

By par. 331, ch. 37, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 110.151, the Legislature established a probate court in each county of the State having a certain population, and by par. 335, of ch. 37, of the same statute it was provided that “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.”

By par. 139 of ch, 3, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 110.139, it is provided that “Where it appears that a legacy provided by the will of a decedent is a charge express or implied upon the real estate of decedent, and there is not sufficient personal estate of said decedent out of which such legacy can properly be satisfied, or such legacy is not otherwise paid, satisfied or lapsed, then the county or probate court of the county where letters testamentary or of administration with the will annexed were issued, may upon the filing of a petition therefor by the executor or administrator, order the sale of real estate upon which such legacy is a charge, or so much of said real estate as may be necessary to satisfy such legacy, together with the costs and expenses of such proceeding. The mode of commencing such proceedings shall be by the filing of a petition by the executor or administrator ... in the county or probate court. . . . The practice and procedure in such cases shall be the same, as near as may be, as the practice and procedure in proceedings for the sale of real estate by executors and administrators to pay the debts of decedents. The proceeds of the sale of the real estate, after the payment of legacies which are a charge and lien thereon, and the costs and expenses of such proceedings, shall be paid over to the devisees, heirs at law, or other persons thereunto entitled as their interest therein may appear.”

It seems to be conceded that the legacies in the instant case are a charge upon the real estate. Counsel for defendant contend that par. 139, above quoted, provides that “The mode of commencing such proceedings shall be by the filing of a petition” and that the word “shall” should be construed to be mandatory and not permissive. We think this contention cannot be sustained. The paragraph provides that when it is sought to sell real estate in the probate court to pay legacies which are a charg’e on real estate, the executor or administrator, with the will annexed, shall file a petition for this purpose. Obviously this fact does in no way throw any light on the question whether a court of chancery, which is a court of unlimited jurisdiction in all cases of law and equity, has jurisdiction. That provision merely provides the method to be followed in the probate court.

In Estate of Schwarts, above cited (275 Ill. App. 374), a petition was filed in the probate court of Cook county, requesting that court to order the executrix to file a petition to sell real estate belonging* to the estate to pay debts and legacies. The probate court entered an order in accordance with the prayer of the petition but this order was reversed on appeal by the circuit court of Cook county. A further appeal was prosecuted to this court, where the decree of the circuit court was reversed and the only question in controversy was whether the legacies were a charge upon the real estate involved. The question now under consideration was in no way involved or considered.

Sec. 12 of article 6 of the Constitution of 1870 provides: “The circuit courts shall have original jurisdiction of all causes in law and equity.” Sec. 23 of the same article provides: “The county of Cook shall be one judicial circuit. The circuit court of Cook county shall consist of five judges, . . . The superior court of Chicago shall be continued, and called the superior court of Cook county.” Section 24 of the same article provides: “Any judge of either of said courts (circuit or superior court of Cook county) shall have all the powers of a circuit judge. ’ ’ The circuit and superior courts of Cook county are identical except in name. Cobe v. Guyer, 237 Ill. 516. The superior court of Cook county has the same jurisdiction as the circuit court of Cook county and its constitutional jurisdiction cannot be taken away by statute but at most ‘‘ only gives to the court named in the statute concurrent jurisdiction.” Spencer v. Means, 231 Ill. App. 359. And in Stephens v. Chicago, B. & Q. R. Co., 303 Ill. 49, the court said (p. 51): “The constitution confers upon the circuit court jurisdiction of all causes in equity, and the legislature is without power to deprive it of any part of this jurisdiction.” In Frachelton v. Masters, 249 Ill. 30, a petition was filed in the circuit court of Menard county for the appointment of a trustee to sell real estate in accordance with the provisions of the will of the deceased. The court there said (p. 34): “It is finally contended that the circuit court, sitting as a court of chancery, was without jurisdiction to appoint a trustee to make sale of said real estate, as the exclusive jurisdiction was vested in the county court of Menard county to appoint such trustee, where the estate of Squire D. Masters was in the course of administration. The circuit courts of this State are given original jurisdiction ‘of all causes in law and equity, ’ and those courts have heretofore in many cases appointed trustees to sell real estate. . . . That the circuit courts of this State have jurisdiction, in proper cases, to make such appointment there can be no question.” The court then referred to an act of the legislature, passed in 1909, which confers upon county courts power to supervise and control all testamentary trusts created by original wills, and continuing said, “Appellants contend that the foregoing act of the legislature is a constitutional and valid act, and that, properly construed, it confers exclusive jurisdiction on the county and probate courts of the State to administer testamentary trusts, and that by reason of said act the circuit court of Menard county was without jurisdiction to appoint a trustee and order a sale of the trust estate in accordance with the provisions of the will. Section 12 of article 6 of the Constitution of 1870 provides that circuit courts shall have original jurisdiction of all causes in law and equity. . . . Even if the act in question be valid, it could not be held to deprive the circuit courts of their original jurisdiction under the constitution.” And continuing the court said (p. 36): “In Meyers v. People, 67 Ill. 503, this court held that under said clause of the constitution the legislature had the power to confer upon county courts concurrent jurisdiction with circuit courts in all matters, but it has never been held that extending the jurisdiction of the county courts under said section deprives the circuit court of its original constitutional jurisdiction. The Act of 1909, if valid, would only have the effect of extending the jurisdiction in relation to testamentary trusts to county and probate courts concurrently with the circuit courts. In no event can appellants’ contention be sustained on the theory that the jurisdiction of the county and probate courts is exclusive. ’ ’

In the instant case, the constitution gives original jurisdiction to the circuit courts and to the superior court of Cook county “of all causes of law and equity. ’ ’ And this power cannot be limited by the legislature. The superior court of Cook county had jurisdiction, and the decree is affirmed.

Decree affirmed.

Matchett, P. J., and McSurely, J., concur.


author: Mr. Justice O’Connor Matohett, P. J.,

text:
    Eli Metcoff, Successor Trustee, Appellant, v. Charles A. Phelps et al. Charles A. Phelps and Sara G. Phelps, Appellees.
    Gen. No. 39,124.
    Hatchett, P. J., dissenting.
    Opinion filed January 4, 1937.
    Rehearing denied January 18, 1937.
    Shulman, Shulman & Abrams, of Chicago, for appellant ; Meyer Abrams, of counsel.
    George. E. Fitzgerald, of Chicago, for appellees ; Charles A. Phelps, of Chicago, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Eli Metcoff, as successor trustee in a trust deed, filed a complaint in equity against Charles A. Phelps, Sara G-. Phelps, his wife, and others, to foreclose the indebtedness secured by the trust deed on certain premises in Chicago. Charles A. Phelps and Sara Gf. Phelps, who will be referred to as defendants, filed their verified answer in' which they set up certain facts which challenged plaintiff’s right to bring the suit on the ground that a decree entered by the circuit court of Cook county, purporting to appoint Metcoff successor trustee, was void as to them. After the filing of the answer defendants moved that the complaint be dismissed, basing their motion on the facts set up in their verified answer,. The court sustained the motion, dismissed the suit, and plaintiff appeals.

Defendants in their answer admitted the execution of the trust deed; that it was given to secure an indebtedness of $47,500 and that the Reliance Bank and Trust Company was named trustee, that the bank was afterward closed and a receiver appointed to liquidate its affairs; that on May 11, 1934, the receiver of the bank resigned as trustee, but did not notify defendants of this fact until June 7, 1934; that four days thereafter Della Barker, who owned one of the bonds involved in the instant case, and three others who owned ■bonds secured by three other trust deeds covering three separate pieces of property in which the Reliance Bank was trustee, filed their complaint in the circuit court of Cook county to appoint successor trustees in lieu of the Reliance Bank and Trust Company, which resigned, mailing as defendants Charles A. Phelps, defendant in the instant case, Patrick J. Newton, Mary Newton, his wife, Mary Sogat, and William L. O’Connell as receiver of another State bank, and caused summons to be issued by.the clerk of the circuit court against such defendants. The summons showed the sheriff served Newton, his wife, and O’Connell, the receiver, and returned the summons “not found” as to the other defendants, which included Charles A. Phelps.

The-answer further set up, by way of an exhibit, that on June 18, 1934, the circuit court entered an order in the Della Barker case, in which it is stated that on motion of plaintiffs in that case for the entry of an order fixing the time, manner and form of notice to be served, and on whom such notice was to be served in connection with the appointment of the successor trustees, and ordered that a notice, which is made a part of the order, be given “to all parties who were made defendants to the complaint by publishing-” in a daily newspaper, and the parties were given 20 days from the date of the publication to file their appearance or answer. The order further provided that after such publication and the passage of 20 days, the matter might be taken up by the circuit court upon notice served on all parties “by mail” at least 24 hours before “it was to be presented to the court”; and that the appointment of the successor trustees, after the publication of the notice, be made “upon notice duly served on all parties who will then have filed their appearance.” It further appears from the answer and exhibits made a part of it that the notice provided by the order of the circuit court was afterward published in “The Chicago Recorder” on one day, and the answer also shows that counsel for the bondholders’ committee was served with notice by counsel for plaintiff in the circuit court that they would call the matter up before that court for entry of a decree. On July 25, 1934, a decree was entered appointing plaintiff, Eli Metcoff, as successor trustee as to the trust deed here sought to be foreclosed, but whether he was appointed so far as the other three trust deeds were involved in that ease, does not appear.

The complaint, summons, and the sheriff’s return thereon, the order and the decree of the proceedings in the circuit court of Cook county are attached to and made a part of defendants ’ answer. The answer further set up that plaintiff, Meteoff, was the agent of Della Barker, plaintiff in the circuit court suit, and had, before bringing that suit, collected from Charles A. Phelps, defendant in the instant case, interest on her bond; that Meteoff had requested Phelps in case he, Meteoff, should secure the resignation of the Reliance Bank and Trust Company as trustee, to appoint Metcoff as successor trustee, which request Phelps refused.

It further appears from the record that defendant Charles A. Phelps was for about 35 years a practicing lawyer in Chicago with an office located in the Loop, and that he could easily have been served by the sheriff with the summons in the circuit court proceeding had the sheriff been requested to do so. It further appears that Phelps had no notice or knowledge of the circuit court case until after the decree was entered by that court and until after the instant foreclosure suit was broug'ht. No reason is given, nor is any suggested by plaintiff, as to why Phelps was not served by the sheriff in the circuit court case, nor as to why the notice of publication was not mailed to him, as the order of the circuit court required.

But counsel for plaintiff say in their brief that the proceeding in the circuit court, whereby plaintiff was appointed successor trustee, was authorized by the terms of the trust deed and was regular in every way ; that the trust deed provided that in case of a vacancy in the trusteeship, “then the holder or holders of any of said bonds may apply to the Circuit court of Cook county for the appointment of a new Trustee or Trustees upon such notice as such court shall prescribe to be given in such manner or upon or to such party or parties, person or persons as such court shall direct.”

We think, as counsel for plaintiff contend, that the grantor in his trust deed may authorize the court to appoint a successor trustee upon such terms and notice as he sees fit. Morrison v. Kelly, 22 Ill. 610. We are also of opinion that the contention of defendants that such a provision is contrary to law and void, and that plaintiff in the circuit court suit was required to follow the provisions of the Civil Practice Act, is without merit.

But we-are further of opinion that where a provision in a trust deed authorizes the appointment of a successor trustee in case of a vacancy by a proceeding in court, such a proceeding must not merely be one of form, but one of substance; that notice of such a proceeding should be of such a character as would, at least, probably bring to the attention of those most interested, what was sought. In the instant case it is obvious that one of the persons most vitally interested, viz., Charles A. Phelps, was not notified of the circuit court proceeding, although a summons was issued against him, and although he was practicing his profession in an office located in the Loop,, while other defendants in that case, who apparently were not so much interested, were served by the sheriff. Moreover, the order of the circuit court required the notice that was to be published in that case be sent “by mail” to the defendants, and there is no suggestion that the notice was mailed, but on the contrary defendant Charles A. Phelps swears in his answer that he had no knowledge or notice of that proceeding until some time after the decree was entered.

In their brief counsel for plaintiff refer to a case cited in defendants’ brief, saying that in that case the trust was an active one, while in the instant case the trust was a naked trust.

The powers given, and the duties imposed on the trustee or his successor in the trust deed here soug’ht to be foreclosed, did not involve a naked trust because the trustee had many active duties to perform. In case of default, on his request all leases were to be delivered to him; bis consent was required in case of any improvements sought to be made; he was required to approve the insurance companies insuring the property, and in case of_loss the money was to be paid to him; in case of default the trustee had the rigid to enter and take possession of the premises, collect rents, manage the property, etc., and perform under certain conditions many other active duties. In these circumstances it is obvious that Phelps would be vitally interested in the character of the person appointed successor trustee; no service having been had on him, it is elemental that as to Phelps the decree of the circuit court is void and of no force and effect.

The decree of the superior court of Cook county is affirmed.

Decree affirmed.

MoSurely, J., concurs.

Matohett, P. J.,

dissenting: The decree of .the circuit court was not void although possibly voidable. The proper practice would have been for defendants to appear in the circuit court and move to set the decree aside. A collateral attack should not have been permitted.


author: Mr. Presiding Justice Huffman

text:
    The First Trust Joint Stock Land Bank of Chicago, Appellant, v. Horace A. Hickok et al., Appellees.
    Gen. No. 9,099.

      Opinion filed November 30, 1936.
    Rehearing denied and opinion modified January 19, 1937.
    Hibbs & Pool, of Ottawa, for appellant.
    Butters & Butters and John A. Berry, of Ottawa, for appellees.
   Mr. Presiding Justice Huffman

delivered the opinion of the court.

Horace Hickok was the owner of an 80-acre tract. He was indebted to his mother, Martha Hickok, in the sum of $6,000. This note was secured by a trust deed on the said 80-acre tract. This trust deed was dated February 29, 1928, and recorded March 2, 1928. One J. W. Weldon, cashier of the Troy G-rove State Bank, was named as trustee in the trust deed. Weldon was in the active management of this bank. The Hickok family lived in the vicinity of the village of Troy G-rove and transacted their banking business with the above bank. Weldon became instrumental in securing a loan of $8,000 from appellant for the said Horace Hickok. Hickok had purchased a 40-acre tract owned by the Zorn heirs. A mortgage was executed by him to appellant under date of August 18, 1928, which was acknowledged on September 1, 1928, and recorded on Sept. 25, 1928. This mortgage was given to secure an $8,000 indebtedness to appellant. It conveyed both the 80- and the 40-acre tracts. No money was advanced by appellant under this mortgage until March 2, 1929. On March 4, 1929, the trustee released the above $6,000 trust deed on the 80-acre tract, and at the same time took from Hickok another trust deed on both the 80- and 40-acre tracts, securing the same $6,000 indebtedness. This second trust deed was recorded on March 4, 1929. On April 8, 1929, the mortgage given to appellant was refiled for record and again recorded. On May 23,1929, the trustee Weldon executed a subordination agreement in favor of appellant, which recited that the mortgage executed by Hiekok to appellant should be a first lien upon the 80- and 40-acre tracts, and superior to the trust deed held by said trustee on the $6,000 indebtedness, in favor of Martha Hiekok.

Appellant brought its suit to the June term, 1933, of the circuit court of LaSalle county for foreclosure under its aforesaid mortgage of August 18, 1928, against the lands therein described, which were comprised of the 80- and 40-acre tracts. Appellant alleged in its complaint that its mortgage was a first lien upon both tracts, treating the $6,000 indebtedness that was due Martha Hiekok and secured by a trust deed on the 80-acre tract under date of February 29, 1928, as extinguished by the release thereof by the trustee on March 4, 1929, and treating the renewal trust deed taken on that date to secure the same $6,000 indebtedness, as a new mortgage which created no equitable rights in Martha Hiekok except such as arose with the inception of the renewal trust deed executed on March 4, 1929.

Prior to the bringing of the suit by appellant, Martha Hiekok died, and B. J. Dean was serving as administrator of her estate. The defendants answered, denying that appellant’s mortgage was a first lien upon the 80-acre tract, claiming that the same was a junior lien to the trust deed executed by Hiekok to his mother, Martha, under date of February 29,1928, and recorded on March 2, 1928. The defendants alleged that the release of this trust deed by the trustee Weldon on March 4, 1929, was fraudulent and done without the knowledge, consent or approval of Martha Hiekok, and Ethel Hiekok (her daughter), who claims an interest in the $6,000 indebtedness to the extent of $1,000. They further allege that the subordination agreement as made by the said Weldon, was fraudulent and without the knowledge, consent or approval of the defendants. The defendants filed their cross-bill setting up their claim to be the owners of a first lien upon the 80-acre tract by virtue of the trust deed executed under date of February 29, 1928. They again alleged the release thereof by the trustee on March 4, 1929, to be fraudulent and without their knowledge, consent or approval. They allege that the mortgage of appellant, although refiled for record and again recorded on April 8, 1929, did not become thereby a first lien upon the premises therein described; that the subordination agreement executed by the said Weldon to appellant was a fraud and void; and that the trust deed upon the 80-acre tract (described as the W% of the SW% of Sec. 36, T35N, Range 1, E. of the 3rd P. M. in said county) executed on February 29,1928, was a first lien on such land.

There is no controversy in this appeal with respect to the decree of the court in regard to the 40-acre tract. In respect to this land, the court found that appellant was entitled to a first lien thereon. Appellant brings this appeal from the decree of the court with respect to the 80-acre tract.

The court held that Ethel Hiekok had a prior lien upon the 80-acre tract to the extent of $1,000, represented by an interest to that extent which she claimed to own in the $6,000 note given to her mother by her brother Horace Hiekok on February 29, 1928, and that to this extent the trust deed of February 29, 1928, was a first lien on the 80-acre tract. The court then found that appellant was entitled to a second lien upon said 80-acre tract by virtue of its mortgage (which second lien was subject only to the above $1,000 interest of Ethel Hiekok). The court next found that the administrator held a third lien upon the 80-acre tract, same being subject to the first lien of Ethel for $1,000 and the second lien of appellant. Appellant appeals from that portion of the decree granting Ethel Hiekok a first lien under the $6,000 mortgage, to the extent of $1,000. Defendants have prosecuted their cross appeal claiming that the $6,000 mortgage is a prior lien on the 80-acre tract to that held by appellant. There is no contention between the administrator and Ethel Hiekok over the $1,000 interest claimed by her.

We have endeavored to confine our reference to the facts herein to such as considered necessary to disclose the contention and legal position of the parties. To attempt a further discussion would extend this opinion beyond proper lengths.

There is some contention on the part of appellant that Horace Hiekok borrowed the $8,000 in order to purchase the 40-acre tract. It appears from the evidence that $2,144.80 of the sum advanced by appellant by virtue of its loan to Hiekok was retained by the trustee Weldon and applied upon an indebtedness due his bank by the said Hiekok.

The $6,000 note secured by trust deed on the 80-acre tract, under date of February 29, 1928, was due March 1, 1933. It is the contention of the cross complainants that the release of the mortgage of February 29, 1928, by the trustee on March 4, 1929, was fraudulent and void. It is next urged that in any event, the lien of a senior mortgage is not lost by a release thereof and the taking of a new mortgage contemporaneously, when the facts disclose that the new transaction is a mere continuation of the first and the indebtedness remains the same, and that no part of the debt is extinguished thereby. Appellant urges the release of the $6,000 mortgage by the trustee was legal and therefore that its mortgage attached to the 80-acre tract as a prior lien to the second $6,000 mortgage.

It is a general rule that the cancellation of a mortgage on the record is not conclusive as to its discharge, or as to the payment of the indebtedness secured thereby, and where the holder of a senior mortgage discharges it of record, and contemporaneously therewith takes a new mortgage, he will not, in the absence of paramount equities, be held to have subordinated his security to an intervening lien unless such intention upon his part is indicated by the circumstances of the transaction, or shown by extrinsic evidence. Roberts v. Doan, 180 Ill. 187; Campbell v. Trotter, 100 Ill. 281; Christie v. Hale, 46 Ill. 117; Shaver v. Williams, 87 Ill. 469; 33 A. L. R. 149; 98 A. L. R. 843 (with annotations covering more than 20 States). A court is not at liberty to infer facts not proven, yet it is at liberty to draw all the inferences which logically and naturally flow from the facts proven. It is not an act of reasonable prudence and caution such as men commonly use in the conduct of business affairs, for one having a first mortgage upon property, without any apparent motive, to release it, and take a new mortgage subject to a prior lien of a considerably greater amount. On March 4, 1929, the defendants below held a first mortgage on the 80-acre tract. Appellant held a first mortgage on the 40-acre tract and a second mortgage on the 80-acre tract. The evidence establishes the fact that while this situation existed, appellant advanced its money upon, the indebtedness secured by its mortgage. Therefore, the appellant was in no way led to act or to refrain from acting to its prejudice, by the release of the $6,000 trust deed by the trustee on March 4, 1929, and at such time taking a renewal trust deed for the same indebtedness.

A review of the series of transactions involving appellant’s mortgage would indicate that appellant was aware all did not augur well for it. Its mortgage was first recorded on Sept. 25, 1928. No money was advanced thereon until March 2, 1929, when the loan was advanced. This was just two days before the trustee undertook to release the $6,000 trust deed and take a second one in its place. The trustee, Weldon, then either not being satisfied in his own mind, or not having satisfied appellant of a sufficiently improved legal status, undertook on May 23, 1929, to execute a subordination agreement as trustee under the $6,000 trust deed, the agreement being executed in favor of appellant, and to the effect that appellant’s lien created by its mortgage, should be a prior lien to that created by the $6,000 trust deed. In this agreement the trustee mentions only the $6,000 trust deed of March 4, 1929. Such an agreement was wholly unnecessary if this renewal trust deed was to be treated as an original and new transaction, which appellant now urges, because it was subsequent to the recording of appellant’s mortgage. After the above transactions, appellant’s mortgage was refiled for record. The trustee did not testify on the hearing of this case. Where the evidence to prove a fact is chiefly with one party litigant, his failure to produce same cannot be said to resolve itself in his favor. Belding v. Belding, 358 Ill. 216, 220.

Appellant is not in the position of an innocent lien-holder, or purchaser, with respect to the 80-acre tract, such as in the case of Lennartz v. Quilty, 191 Ill. 174. When it took its mortgage, the 80 acres were under mortgage by virtue of the $6,000 trust deed, which had long been a matter of public record. Appellant then knew that it held a second lien on the 80 acres and a first lien on the 40 acres. It advanced the money under its mortgage while the above situation existed. Shortly thereafter, the trustee released the $6,000 mortgage and at the same time took and filed for record a renewal thereof. In this manner appellant claims to have secured a prior lien on the 80-acre tract.

Appellant urges that the change in security is sufficient to defeat the defendants’ rights with respect to the 80-acre tract. The renewal trust deed included both the 80-acre and the 40-acre tracts, while the first trust deed conveyed only the 80-acrje tract. It is the debt that controls. Here the debt remained unchanged. A change in the security does not necessarily discharge a senior mortgage. It depends upon the equities of the case. Priority between mortgagees under such circumstances is to be determined by equitable considerations. In this case, the inclusion of the 40-acre tract in no way worked to the injury of appellant. It had at the time, a first mortgage on the 40 acres and a second mortgage on the 80 acres, and continues to enjoy such rights. The defendants were vested with a first mortgage on the 80 acres. We do not consider that the renewal served to divest them of this right and vest the same in appellant.

It does not appear that appellant did anything it would not have done, or failed to do anything it otherwise would have done, in reliance on the release of the $6,000 trust deed. Appellant has not pointed out wherein its rights were in any way prejudiced or wherein it suffered any damage or injury by such renewal. We are not of the opinion that such renewal created any equitable rights in appellant superior to those previously enjoyed by it under its mortgage, which, at the time of the renewal, vested appellant with a first lien on the 40-acre tract and a second lien on the 80 acres.

The following cases present a persuasive analogy to the principles involved in the case now under consideration: Campbell v. Carter, 14 Ill. 286, 289; Jarvis v. Frink, 14 Ill. 396, 398; Richardson v. Hockenhull, 85 Ill. 124; Stevens v. Allman, 68 Ill. 245; Henschel v. Mamero, 120 Ill. 660, 665 (at which page the court states: <£Equity will keep an encumbrance alive, or consider it extinguished, as will best serve the ends of justice and the actual, just intent of the parties.”) Moffet v. Farwell, 222 Ill. 543.

The appellant having in no way acted in reliance on the renewal, thereby experienced neither any change in its status, nor suffered any prejudice thereto, with reference to the land covered by its mortgage, as the same existed at the time of such renewal. In other words, the renewal of the trust deed in no way served to diminish the rights of appellant as they were then fixed by its mortgage. Under such circumstances, the defendants are entitled to have their rights protected in a court of equity. Such court has the power to adjust the equities between the parties, as the circumstances may seem to require. The release of the $6,000 trust deed and the attempt to subordinate defendants’ prior lien by the subordination agreement are unavailing to effect the results urged by appellant.

The decree of the circuit court is therefore reversed and this cause remanded with directions that it modify the same to hold that the defendants have a first and prior lien on the 80-acre tract, to the amount due on the $6,000 note, and that the appellant shall have a second lien thereon.

Reversed and remanded with directions.


text:
    Hartliep Transit Company for use of Barton Snow and Cornelia Snow, Appellee, v. Central Mutual Insurance Company of Chicago, Appellant.
    Gen. No. 9,111.

      Opinion filed November 30, 1936.
    Rehearing denied and supplemental opinion filed January 19, 1937.
    Hadley, Weaver & Woodward, of Wheaton, and William Levine, of Chicago, for appellant.
    Arne B. Hummeland, of Chicago, for appellee; Clyde L. Todd, of Chicago, of counsel.
   Mr. Presiding Justice Huffman

delivered the opinion of the court.

Appellant issued its policy of insurance to the Hartliep Transit Company, a corporation of the State of Iowa, with its principle place of business located in Sioux City, covering some 17 or more' trucks which the transit company used in the conduct of its business. The policy was countersigned by the authorized agent of appellant, at Sioux City on January 10, 1935., and delivered to the assured.

One of the transit company’s trucks had a collision with a car in which Barton Snow and Cornelia, his wife, were riding, on February 12, 1935, in DuPage county, Illinois. These parties brought suit against the transit company, which resulted in judgments in their favor, totaling $25,000. Appellant herein defended that case under a reservation of rights wherein it claimed that at the time of the accident, -the transit company was operating the truck in territory not covered by the policy.

This present suit was brought by Snow and wife by way of a garnishment action as judgment creditors, for their use and in the name of the insured, to enforce the terms of the policy against appellant and compel payment of the aforesaid judgments. The policy had a maximum liability of $40,000.

This cause was heard before the court and a judgment entered in favor of the transit company for the use and benefit of Snow and wife. Appellant urges that the policy of insurance was obtained by fraud and misrepresentation on the part of the assured. Other . points are assigned which we do not deem it necessary to consider in the disposition of this case.

Appellant claims that the transit company in making application for the policy of insurance herein represented that the truck involved in this accident was a truck devoted to transportation of freight through rural sections of Iowa, and that it was not represented as one of the number of trucks used for transportation purposes to Chicago. It charges that the premium on such policy was determined by the hazard involved, and that the hazard involved was determined by the territory in which the trucks were to be operated. Fraud is thus charged in the procurement of the policy, based upon the alleged misrepresentation with refer- . ence to the operation of the truck in question. Appellant claims that it was caused to issue the policy because of such fraudulent misrepresentation, and that otherwise the contract would not have been entered into. The trial court in its remarks on this question stated that assuming this to be a proper defense, he did not consider it sufficiently proven to void the policy.

No application made by the transit company with reference to the issuance of the policy in question is attached thereto. The terms of the policy in nowise limit the operation of the various trucks therein listed, other than within the limits of the United States and Canada. Appellee takes the position that the policy of insurance was an Iowa contract, and under "the statutes of that State (1935 Code, secs. 8974 and 8975, ch. 404), if true copy of any application or representation of the insured is not attached to the policy, the insurance company shall he precluded from pleading, alleging or proving* the falsity of any such application or representation, as a defense to any action under such policy. These sections of the Iowa statute have been applied in the cases of Hemmings v. Home Mut. Ins. Ass’n of Iowa, 199 Iowa 1311, 203 N. W. 818; Bukowski v. Security Benefit Ass’n of Kansas, — Iowa —, 261 N. W. 723; and Kirkpatrick v. London Guarantee & Accident Co., 139 Iowa 370, 115 N. W. 1107. Where a statute of another State has received a construction by the highest court of that State, such construction will ordinarily be adopted in the courts of this State. Bell v. Farwell, 176 Ill. 489, 494.

The general rule is that a contract of insurance is deemed to be executed at the place where the last act is done which is necessary to make the same binding* upon the parties, and if the policy does not become binding until countersigned by the authorized agent at the place of delivery, or not-binding until delivery to the assured, the place of delivery is considered the place of the contract. McElroy v. Metropolitan Life Ins. Co., 23 L. R. A. (N. S.) 968; Bacon, Life and Accident Ins. (4th ed.) p. 332; Orient Ins. Co. v. Rudolph, 69 N. J. Eq. 570, 61 Atl. 26; Hardiman v. Fire Ass’n of Philadelphia, 212 Pa. 383, 61 Atl. 990; Northwestern Mut. Life Ins. Co. v. McCue, 223 U. S. 234, 56 L. Ed. 419. Another general rule in the construction of contracts in matters affecting* their validity and the rights of the parties is that they are governed by the law of the place where the contract is made, at the time of the making thereof, and that such law is as much a part of the contract as if incorporated therein. This rule prevails in the absence of any agreement of the parties to the contrary. Gaston, Williams & Wigmore of Canada v. Warner, 260 U. S. 201, 67 L. Ed. 211.

The transit company was an Iowa corporation operating a fleet of trucks out of Sioux City. Appellant had notice that some of the trucks from time to time were routed to or through Chicago. Foreign insurance companies, as well as other foreign corporations, cannot enter a State and establish authorized agencies for the solicitation and transaction of business, as a matter of legal right, but by comity, and such corporations are held subject to the same statutory restrictions, duties and measures as exist in such State for the conduct of similar domestic corporate enterprises. Foreign corporations are not permitted to thus come into a State and assert rights in contravention of the laws thereof. It is a matter of general knowledge that the various States have enacted laws relative to the licensing of foreign insurance companies to transact business therein, and as a matter of public policy such companies under such circumstances, having1 authorized agents to solicit business, must be held to transact such business under the laws of the State where the policy is sold. Any other rule would not only lead to confusion and uncertainty, but would permit a foreign insurance company to enter a State, establish agencies, and transact business in violation of the laws of such State.

It appears that the final act which took place to make the contract binding upon the parties in this case, occurred in Sioux City, Iowa, where the premium was paid, the policy countersigned by appellant’s authorized ag'ent, and delivered to the assured. The policy provides that the same shall be signed by the president and secretary and countersigned by a duly authorized agent of the company. Another portion of the policy is to the effect that all provisions therein which are in conflict with the statutes of the State wherein the policy is issued, are understood and declared and acknowledged by the company to be amended to conform to such statutes. This is a recog*nition by appellant that its contracts of insurance are subject to the laws of the State wherein they are sold.

From an examination of the record and policy, we are of the opinion it is an Iowa contract, and as a matter of comity, the laws of that State must control. It is conceded that under such circumstances the appellant cannot defend on the ground of fraud in the procurement of the policy, because of the fact that no true copy of any application or representation of the insured upon which the policy issued, was attached to and made a part of the contract, and that by force and effect of the statute of Iowa, the appellant is precluded from interposing such defense in any action thereon.

The judgment of the trial court is therefore affirmed.

Jtidgment affirmed.

Supplemental Opinion Upon Petition for Rehearing.

The appellant has filed its petition for rehearing, insisting that this court misapprehended the statute of Iowa in holding the same constituted substantive rights between the parties, and urging the statute of that State precluding an insurance company from pleading, alleging, or proving the falsity of an application, when the same is not attached to the policy, relates only to matters.of procedure and remedy, and that the courts of Iowa have so construed such statutes. Neither time nor propriety permits this court to unduly extend its opinions in a detailed discussion of all the various legal questions involved in a ease, yet a clear and concise statement of facts and the rules or principles of laiv applied thereto, is always desired. The insistence of appellant that the law of Iowa relates only to form and procedure and creates no substantive rights has prompted a further statement and discussion of the rule as applied by this court in the disposition of this case.

The distinction between the right of an insurer to set up a defense upon a provision contained in the policy itself, and the right to set up a defense based upon an alleged fraudulent representation claimed to have been made in the application, when such is not attached to the policy, must not be confused. The former rule is clearly expressed in the case of Washington Fidelity Nat. Ins. Co. v. Burton, 287 U. S. 97, 77 L. Ed. 196, 87 A. L. R. 191 (with annotations, p. 194); and the latter, in the case of John Hancock Mut. Life Ins. Co. v. Yates (U. S. Supreme Court, L. Ed., Adv. Op. Vol. 81, No. 3, p. 110). These two cases clearly distinguish between defenses based upon a condition contained in the policy, and one sought to be interposed, based upon a fraudulent representation claimed to have been made in an application therefor, when such application was not attached to the policy, and the statutes of the State where the policy was sold prohibit the interposing of such defense.

An omission to attach the application to the policy contract, “while not invalidating the policy shall serve to preclude the insurance company from pleading, alleging, or proving such application or representations or the falsity thereof.” Rauen v. Prudential Ins. Co. (1906), 129 Iowa 725, 729. The court further states on p. 731, that when the application is not attached, “the policy should be treated, construed, and enforced as if no written application had been made.” Ag’ain on p. 735, it is said: “The denial of the rig’ht to plead or prove such extrinsic matter, is not in any proper sense a ‘penalty’ for failing to comply with the statute, for the company has a perfect right to waive or forego any advantage it could derive from an embodiment of the application in the policy. It issues its policy with the statute in view, and, failing to do that which by the terms of the statute is necessary to allow the application to have any ‘bearing’ on the rights of the parties, the contract stands as if the omitted writing’s never existed. ’ ’

It is further held in Dixon v. Northwestern Nat. Life Ins Co. (1920), 189 Iowa 1268, 179 N. W. 885, that in soliciting insurance in Iowa, from a resident of said State, and in delivering the policy to the insured in Iowa, the company was doing business in said State within the meaning of the statute, and that its failure to attach a copy of the application to the policy exposed it to the same restrictions in pleading and proving its defenses as would be applicable were the insurer an Iowa corporation. The court holding in that case that no foreign insurance company could lawfully do business in Iowa except with the consent of that State, and when doing such business, such company was bound by the same rule and limitations which the statute of the State prescribed for home companies engaged in like or similar business. At p. 888 (179 N. W.), the court used the following language: “The appellant seeks by its answer and so called counter-claim to avoid every restriction found in this statute, and proposes, notwithstanding the law forbidding it, to allege, plead, and prove, not only the existence of such application, but to allege, plead, and prove its falsity, and because thereof to escape performance of its contract. We are not concerned at this point with the wisdom or abstract justice of the provision. Its validity is unquestionable. As has been said by this court on other occasions: ‘Foreign insurance companies are not compelled to do business in this state. If they voluntarily choose to do so, however, they must submit to such conditions and restrictions as the legislature may see fit to impose.’ (Nelson v. Insurance Company, 110 Iowa 604, 81 N. W. 808.) The requirement that their policies shall have copies of the applications therefor attached or endorsed thereon, is not a burdensome one, and, if they fail to observe such simple regulation, they cannot justly complain of the consequences which the statute attaches to such neg- • lect. ’ ’

It is stated in our opinion that the application was not attached to the policy, and that under such circumstances the statute of Iowa prohibited the interposing of any defense based upon alleged false representations made therein. It was held that the appellant was thereby precluded from making such defense. It was further pointed out that so far as the body of the policy itself is concerned, it restricts the assured in the operation of his trucks, only to the limits of the United States and Canada.

An exhaustive review of some thirty or more Iowa cases upon the question here involved will be found in 93 A. L. E. at pp. 383 and 384. An examination of those cases clearly discloses that under the Iowa statute, appellant was required to attach to or indorse upon the policy, a true copy of the application therefor as made by the assured, and that its failure so to do forever precluded it from pleading, alleging, or proving the falsity of such application or any representation made therein, as a defense to any action under the policy, and that this has been the consistent holding of the courts of that State.

The petition for rehearing is therefore denied.

Petition for rehearing denied.


text:
    Wilbur R. Williams, Appellee, v. Leila J. Anderson et al., Appellants.
    Gen. No. 9,117.

      Opinion filed November 30, 1936.
    Rehearing denied January 19, 1937.
    Runyard & Behanna, of Waukegan, for appellants; Eugene M. Runyard, of counsel.
    Hall & Hulse, of Waukegan, for appellee; Aubert L. Hall and Marshall Meyer, of Waukegan, of counsel.
   Mr. Presiding Justice Huffman

delivered the opinion of the court.

Appellee filed his suit in the circuit court of Lake county to the December term, 1932, to establish a parol trust in personal property. The cause was referred to a master, whose findings were against appellee. Objections to the master’s report were overruled and permitted to stand as exceptions before the trial court. The trial court sustained the exceptions with respect to the master’s findings that no such trust was proven, and entered a decree in favor of the complainant below, finding that the alleged trust was valid and enforceable; declaring appellant, Leila J. Anderson and her husband, C. K. Anderson, to be the trustees thereof; and taxing* the costs of the case against them individually. The defendants below have prosecuted this appeal from the above decree.

In the year 1870, Edgar B. Williams married Matilda 0. Williams. They lived together as husband and wife from that time until their deaths. Mr. • Williams died May 15,'1931, and Mrs. Williams died on July 29, of the same year. Mrs. Williams, at the time of her marriage to Mr. Williams, had a son by a former marriage, who is the appellee herein, Wilbur R. Williams. There was born to Mr. and Mrs. Williams a daughter, Leila Williams, now Leila Anderson, appellant herein. Mr. Williams died at the age of 85 and Mrs. Williams at the age of 82. They both died intestate. They were residents of the county of Lake, in this State, and administration was had in each of their estates. Boyer Nelson was the duly appointed administrator of the estate of Mr. Williams, and Lyman Grice, the appointed administrator of Mrs. Williams’ estate. The administrator of Mr. Williams’ estate inventoried the personal property involved herein as the absolute property of the estate of said Edgar B. Williams, and the same came into his custody and possession by virtue of his office.

The complaint charges that Mr. Williams, some time before his death, entered into an oral arrangement and agreement with his wife, Matilda, whereby all of the personal property owned by him at his demise* should pass to and vest in his wife, and that she was to enjoy the income therefrom during her lifetime, and that upon her death, the same should pass to their daughter Leila (appellant), and to appellee (the son of Mrs. Williams by a former marriage), to be divided equally between these two persons. It is then charged that the personal property in question was delivered to C. K. Anderson (appellant’s husband), as the agent of Matilda Williams, and as trustee thereof, and that he as such agent took possession of the property and retained the same in the capacity of trustee. Mr. Williams had experienced financial success. He lived in a small place, yet from the record it fairly appears that he was the possessor of an estate of half a million dollars. He and Mrs. Williams, during the later years of their life, made distribution of the greater portion of their property. At the time of Mr. Williams ’ death, he was retaining but a small portion of his estate, consisting of certain securities which are the subject matter of this litigation.

It appears that Mr. Anderson (husband of Leila Williams), was a man of property and business affairs. He was a resident of Chicago. He is president of the First National Bank at Antioch, which was the home of Mr. Williams. Mr. Anderson looked after the business affairs of Mr. Williams, with respect to the safekeeping of his securities and in the deposits of money or credit to his account. Mr. Williams had a safety deposit box in the bank at Antioch, to which Mr. Anderson had a key part of the time. He also had safety deposit boxes at the Continental National Bank of Chicago, and at the First National Bank of Chicago, to which Mr. Anderson had access. It appears that the contents of these boxes consisted of stocks and bonds, and that real estate papers and such securities as were not listed, were in the box at Antioch. It was the habit and custom of Mr. Anderson’s secretary to look after the securities deposited for safekeeping in Chicago, to keep records of the same, clip and cash coupons, which together with dividends were deposited to the account of Mr. Williams. Mr. Anderson looked after the buying and selling of securities for Mr. Williams. Mr. Williams spent his winters in Florida, and depended upon his son-in-law to look after his investments and the payment of all taxes.

The extent of the record in this case prevents a discussion of the evidence. The master found that Mr. Williams did not establish a valid trust of personal property as alleged by appellee complainant; that he did not designate or name either Mr. or Mrs. Anderson as trustee under any such trust; that he did not designate any definite fund or subject matter out of which such trust of personal property was to be created, and did not deliver to either Mr. or Mrs. Anderson as trustees, or as agents for Mrs. Williams, the personal property involved herein, or any personal property including that as set forth and described in the inventory filed in the estate of Mr. Williams, by the administrator. The master further found that neither Mr. nor Mrs. Anderson had in their possession at the time of the filing of the bill of complaint herein, any personal property or funds of any kind of the estate of Mr. Williams, which they held as trustee under any declaration of trust, verbal or written. Certain written instruments were in evidence for the purpose of tending to establish the alleged trust. The master found that such instruments were not executed in pursuance of any trust agreement made by Mr. Williams; that they were not executed as a will of Mrs. Williams ; that the purpose of the documents does not appear therein, and that the purpose had not been explained or established by other competent evidence. The master found that if the instrument in question was an attempted independent agreement between the parties, it' cannot be enforced in this proceeding, as no trust was involved, and the parties would thereby have an adequate remedy at law against the administrator of the estate of Mr. Williams, for recovery of the property. The administration of the estate of Mr. Williams is still pending.

The paramount and controlling question to be decided in this case is whether a parol trust was created in the personal property of Mr. Williams, in his lifetime, as claimed by appellee. Trusts in respect to personal property may be created in the same manner in which the title thereto may be transferred, that is, by parol, inasmuch as the statute of frauds has no application. Otherwise the same general rules in creating a trust in land apply to creating a trust in chattels — there must be sufficiently definite language used to raise a trust, and the subject and object must also be sufficiently certain. The expression of a mere motive or promise or intent to make a gift, when the same are prospective in character, are ineffectual when standing alone. Upon the acceptance of a trust, it becomes the duty of the trustee to reduce to possession the personalty involved in the subject matter of the trust, and to retain it in his custody and control. The evidence required to establish a trust in personal property must be clear and convincing, both as to its existence and as to its terms and conditions.

If a gift of personal property by way of trust is not to take effect until the death of the donor, it will be one of a testamentary nature, requiring the same proof as a will and cannot be given effect as a donatio causa mortis which differs from a gift inter vivos in that it is revoked by the recovery of the donor. Both classes of gifts which are not of a testamentary kind, must be completed and executed in the lifetime of the donor beyond his power of recall, by a transfer of the possession and legal title to the trustee, or donee. Papers introduced for the purpose of establishing such a trust, but which do not in fact establish same, are unavailing, as courts of equity cannot complete an imperfect or .defective gift. Barnum v. Reed, 136 Ill. 388; Telford v. Patton, 144 Ill. 611; McCartney v. Ridgway, 160 Ill. 129; Taylor v. Harmison, 179 Ill. 137; Weaver v. Weaver, 182 Ill. 287; Mahan v. Schroeder, 236 Ill. 392. The trust in its terms must be clearly established. Trubey v. Pease, 240 Ill. 513; Banning v. Patterson, 363 Ill. 464; Williams v. Chamberlain, 165 Ill. 210. The agent must be the agent of the donee and not of the donor, else the gift will be revocable and imperfect.

Appellee relies most strongly upon the case of Coddington v. Bevan, 315 Ill. 92, in support of his contention that a parol trust has been established herein. The facts in this case do not fit the facts in the case urged. There is no uncertainty as to the rules of law applicable to the establishment of a parol trust. Cases of this nature necessarily depend upon the facts therein. It is seldom, if ever, the facts in any two such cases are the same. An examination of the Goddington case will disclose that the father and son, following the death of the mother, made a division of the trust fund, which demonstrated a recognition of the same on their part, when taken with the other facts and circumstances existing in the case. In the case now before us, no such thing ever occurred. Upon the death of Mr. Williams, administration was begun upon bis estate in the probate court, an administrator was appointed and qualified, and Anderson turned over to the administrator all the property of Mr. Williams which is in controversy herein, as assets of Mr. Williams’ estate, which property was inventoried by the administrator as assets of the deceased’s estate. Appellee stood by and made no complaint.

Evidence was introduced by the complainant below which tended to prove that Mr. Williams, following the distribution of the greater portion of his estate, had made expressions of his intent and desire as to the disposition of his remaining property, consisting of the securities here involved. These expressions however, were based upon a plan of distribution of such property, which he had arrived at with Mrs. Williams, to the effect that should he die first, she would use the property during her lifetime and that thereafter it was to be distributed equally between appellee and Leila Anderson. These statements were based upon plans between himself and his wife, to be carried out in the future, providing’ she survived him. While it may well be said that the expressions on the part of Mr. Williams showed an intention and desire, yet we believe they fall short in the creation or establishment of the alleged trust. A man’s wish or desire that his property may be distributed a certain way, upon his death, is not sufficient. Subsequent voluntary acts by a deceased’s heirs with respect to his property, are but acts of such parties. They can in no way make a will or establish a trust for a deceased person. Mrs. Williams, who survived her husband some two or three months, could not bring about .a trust as claimed herein. Such a trust could only have been created by Mr. Williams. We do not consider the evidence sufficient to establish a trust as claimed by appellee. The other points discussed by counsel in their argument, we do not consider necessary to comment upon, as the views already expressed are deemed sufficient to dispose of this case.

The judgment of the circuit court is therefore reversed and this cause remanded with directions to dismiss the bill of complaint for want of equity.

Reversed and remanded with directions.


text:
    Harry R. Jones, Appellee, v. County of Winnebago, Appellant. George E. Bates, Appellee, v. County of Winnebago, Appellant.
    Gen. No. 9,143.

      Opinion filed January 18, 1937.
    Robert E. Nash, State’s Attorney, and Max A. Weston, Assistant State’s Attorney, for appellant.
    Karl 0. Williams, of Rockford, for appellees; J. Phillip Dunn, of counsel.
   Mr. Presiding Justice Huffman

delivered the opinion of the court.

A.ppellees Jones and Bates were deputy sheriffs of appellant county. When they first began working as such officers, their salaries were $150 per month. This rate of pay continued until some time during the summer of 1932, when it was reduced to $135 per month. Appellees were serving as jailors at the county jail. The board of supervisors at its September meeting, 1932, reduced the appropriation for jailor’s salaries from $5,400 (which it had been the previous year), to the sum of $4,830, and appellees’ monthly salaries were subsequently reduced from $135 per month to $105.

Appellees continued to serve as jailors and to receive each month the sum of $105 therefor, until the expiration of the sheriff’s term of office in December, 1934. In April, 1935, appellees each filed a claim with the county for the sum of $720 for salary as deputy sheriff, acting as jailor, from December 1,1932, to December 1, 1934. This amount claimed is represented by the $30 difference between $135 per month and $105 per month, for a period of 24 months. Their claims were denied by the county board, and appeals taken by appellees to the circuit court of said county, pursuant to statute. (Ill. State Bar Stats. 1935, ch. 34, if 38; Jones Ill. Stats. Ann. 33.036; Smith-Hurd, sec. 35 et seq.) The causes were consolidated for hearing before the court and judgment rendered for each appellee in the sum of $720. The county prosecutes this appeal from said judgments.

It is the contention of appellees that the first reduction in their salaries from $150 per month to $135 per month, was voluntarily accepted by them, but that they protested as to the second reduction from $135 to $105 per month. However, this protest was but a verbal expression by appellees of their dissatisfaction and objection to the action taken by the county board. Their salaries during* the period of time claimed for were paid directly from an appropriation made by the county board for that purpose, and not by the sheriff’s office from fees derived therefrom.

Appellees filed their claim with the county for wages as jailors in the sum of $105 during each of the 24 months in question. These claims were duly audited by the county board and allowed to appellees each month, in the amount and for the purpose claimed. Warrants were drawn therefor, which appellees accepted and cashed. Claims presented against a body politic may be audited by the proper authorities and allowed in full, or allowed in part, or disallowed. A claimant who files his claim, which is duly audited, approved and allowed, and he accepts payment of the same, must be held thereby to be estopped from mailing any further claim for the same services upon which his claim was based. The filing* by appellees of a claim each month in the sum of $105 for services as jailors, and the approval and payment thereof by the county constitutes a waiver of any further claim by appellees against the county for the same services. Appellees’ action in so doing amounted to an executed agreement to receive the reduced salary of $105, about which they now complain, and they are now precluded by their own conduct from asserting any rights to additional salary during such period of time. McHaney v. County of Marion, 77 Ill. 488; Board of Education v. Board of Education, 273 Ill. App. 567.

The respective judgments of the circuit court in favor of appellees are each reversed.

Judgments reversed.


text:
    Ida Garnhart, Administratrix of the Estate of William F. Garnhart, Deceased, Appellee, v. H. T. Reeves, Appellant.
    Gen. No. 9,151.
    Opinion filed January 18, 1937.
    0. H. Linscott, of Rockford, for appellant.

      J. E. Goembel and B. J. Knight, both of Rockford, for appellee; Perley T. Lupton, of Decatur, of counsel.
   Mr. Presiding Justice Huffman

delivered the opinion of the court.

This was an action instituted by appellee as administratrix of the estate of her deceased husband, for his alleged wrongful death. Appellee was riding with her husband in an automobile, traveling west upon a public highway which intersects with Kishwaukee Street Road, at a place commonly known as Camp Grant bridge road intersection. Appellant was traveling north upon Kishwaukee street, toward the point of intersection of the two roads. The accident occurred October 10,1935-, at about 3:30 o’clock in the afternoon. The jury returned a verdict in favor of appellee for the sum of $10,000. Appellant prosecutes this appeal from the judgment entered thereon.

Appellant urges two grounds for reversal, namely, that the evidence shows both the appellee and her husband were guilty of contributory negligence; and that the instructions given on behalf of appellee were erroneous.

Three instructions were given on behalf of appellee. An instruction, in this class of cases, which directs a verdict, must limit the jury to the negligence or to the wrongful conduct charged against the defendant, in the complaint. O’Day v. Crabb, 269 Ill. 123, 133; Illinois Iron & Metal Co. v. Weber, 196 Ill. 526, 531; Molloy v. Chicago Rapid Transit Co., 335 Ill. 164, 171; Herring v. Chicago & Alton R. Co., 299 Ill. 214 ; Ratner v. Chicago City Ry. Co., 233 Ill. 169. Instructions 1 and 2 were of the above character, and defective in the above respect. They directed a verdict and authorized a recovery for negligence generally, without limiting the same to that charged in the complaint. An instruction of this character permits a jury to go outside proper limits. Appellee urges that instructions 1 and 2 are proper, under the rule as announced in Mt. Olive & Staunton Coal Co. v. Rademacher, 190 Ill. 538, 542. That case recognizes the rule as above set out, and therefore does not support appellee’s contention.

The third instruction is the only one which made any reference to due care. In this respect the due care was limited to plaintiff’s intestate and in no way applied to appellee administratrix, who was riding with her husband in the car at the time of the accident. Actions such as this, brought under the Injuries Act, for wrongful death, are statutory and being a single cause of action, there is no separation of the damages to be assessed by the jury. Verdict and judgment in such actions are for a single gross amount, irrespective of the number of the next of kin. It has been held that the “contributory negligence of one beneficiary who may be entitled to share in the amount recovered is a defense to the action.” Hazel v. Hoopeston-Danville Bus Co., 310 Ill. 38, 49. Under the above authority, instruction No. 3 being the only one dealing with the question of due care, should have been made to include appellee administratrix. (Dee v. City of Peru, 343 Ill. 36, 42.)

For the foregoing reasons the judgment herein is reversed and the cause remanded.

Reversed and remanded.