author: Mr. Justice Wilson

text:
    John Rudin, Appellant, v. The King-Richardson Company et al., Appellees.
    Gen. No. 36,802.
    Opinion filed June 20, 1934.
    Rehearing denied July 9, 1934.
    Judah, Reichmann, Trumbull & Cox and Stevens, Carrier & Griffith,' for appellant.
    Winston, Strawn & Shaw, for appellees; Edward W. Everett and George T. Evans, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

On February 20, 1923, the plaintiff, John Rudin, instituted an action in replevin in the circuit court of Cook county, for the recovery of a carload of books consisting of 3,225 sets, known as “The Bible Story.” The defendants were the King-Bichardson Company, a corporation, William H. Kevins, doing business as Springfield Printing and Binding Company, Kew York Central Bailroad Company, a corporation, and John Doe. The books were taken under the replevin writ of the sheriff of Cook county from the warehouse of the defendant railroad company and turned over to the plaintiff. A trial was had before the court without a jury and the issues were against the plaintiff and the right to possession of the books adjudged to be in William H. Kevins, doing business as the Springfield Printing and Binding Company. A writ of retorno habendo was ordered to issue and the defendants were awarded their costs. From this judgment plaintiff appealed direct to the Supreme Court of Illinois on the ground that the constitutionality of the Illinois statute regulating the business of storing personal property for hire (Cahill’s Ill. Rev. St. 1921, ch. Illa, Tf111 et seq.) was involved. The Supreme Court on appeal reversed the judgment of the circuit court, and remanded the cause. The opinion of the Supreme Court is found in the case reported as Rudin v. King-Richardson Co., 311 Ill. 513. The cause after remandment was again tried in the circuit court, by the court without a jury, resulting in another judgment against the plaintiff and finding the right to possession of the property in the King-Bichardson Company, a corporation. From this latter judgment an appeal has been prayed and allowed to this court, and it comes before us for the first time. In the original proceeding in the Supreme Court of this State no mention was made of the constitutional question involved, but the court proceeded to consider the case upon the facts without first transferring it to this court for consideration.

January 2, 1924, after the judgment of the circuit court and before the opinion of the Supreme Court of this State was rendered, Budin and others filed their bill against the King-Bichardson Company and Kevins in the United States District Court of Massachusetts, seeking certain rights as minority stockholders. The court in that case, Johnson v. King-Richardson Co., 28 F. (2d) 192, found against the complainant Budin and others and dismissed the bill. In its opinion the court found as facts that the bill was brought at the instigation of Budin who had agreed to bear all of the expenses of the litigation; further, that Budin for a number of years had been the exclusive agent for the sale of defendant’s books in the Chicago territory; that he operated under a written contract and that when the King-Bichardson Company proposed to increase the price of these books to Budin, he objected strenuously and threatened Kevins with legal proceedings; that early in 1922, Budin conceived the idea of getting up a set of books along the same lines as the King-Bichardson Company and of putting them upon the market in place of said company’s product; that pursuant to this plan he called for large deliveries of the books from the defendant company in 1922, in an amount more than could be sold, for the purpose of having these on hand to keep the business running until his own books were ready for sale; that Budin then formulated a systematic plan to ruin the King-Bichardson Company in order to prevent it from competing with his new book and employed the authors of the defendant’s book to prepare his competing work.

A number of communications from Budin to others employed by the King-Bichardson Company are set forth in the opinion, from which it appears that while Budin was ostensibly acting as agent for and on behalf of the King-Bichardson Company, -he was in fact attempting to build an organization for himself. The court in its opinion said:

“Rudin in this case is not even acting for a rival company. He is himself the rival, and is using his position as stockholder to further his own personal business at the expense of the King-Richardson Company. Johnson is a mere stool pigeon of Rudin, having lent himself in his character as stockholder to Rudin. ’ ’ The court also in its opinion held that from the letters of Rudin it is apparent that his purpose in bringing the suit was not to protect the interests of the minority stockholders, but to cause the stock of the King-Richardson Company to become valueless and to put that company out of business.

March 7, 1923, the King-Richardson Company filed its bill of complaint in the United States District Court for the Northern District of Illinois, charging that on January 1, 1914, complainant and the defendant entered into a written contract under which Rudin, the defendant in that case, undertook to manage and conduct plaintiff’s business in Chicago, which contract was subsequently modified but otherwise continued in full force and effect. The bill alleges that the terms of the contract have been violated by the defendant and prays for an accounting, injunction and the appointment of a receiver. To this bill the defendant filed his answer and asserted his counterclaim to the effect that there was due him an amount over and above that admitted to be due the complainant because of complainant’s failure to carry out the terms of the agreement. The master found in favor of the King-Richardson Company and against the defendant Rudin on his counterclaim and the report was affirmed by the United States District Court. An appeal, was taken to the United States Court of Appeals for the Northern District of Illinois, opinion found under the title, Rudin v. King-Richardson Co., 37 F. (2d) 637, where the court, after relating the facts, found that the defendant Rudin under the contract of January 1, 1914, was placed in charge of the Chicago business of the King-Richardson Company as its agent and that this fact of agency has at no time been disputed; that books Avere shipped from time to time to the Chicago Branch from the King-Richardson Company and the bank account carried in that name; that all the contracts Avith the employees of the Chicago Branch Avere made in the name of the King-Richardson Company, as was also the lease to the premises; that during the latter part of 1920, a sharp controversy arose between the parties with relation to the prices charged for the books; that Rudin demanded a reduction in price and threatened suit; that the supplemental agreement of December 23, 1920, did not terminate the agency of Rudin, as claimed by him, but was only for the purpose of adjusting existing conditions; that it was the duty of Rudin, as agent of the King-Richardson Company, to exercise good faith in all his dealings with the subject matter of the agency, but that he, Rudin, Adolated his contract in many respe'cts and that the King-Richardson Company was justified in refusing to deliver the books to him under the agreement; that Rudin borrowed money at the bank, executed the notes of the King-Richardson Company therefor, and that this conduct was not warranted; that Rudin’s insistence that he should not be charged Avith the amounts representing the contract price of the sets of books remaining unsold out of the Springfield carload is without force; that he had tried to get possession of them from the King-Richardson Company, but that a delivery to him of the books would only have furthered the conspiracy to ruin the business of the King-Richardson Company; that this company Avas a publisher and disposed of its product only through branch offices and was more than within its rights when it refused to deliver the carload to Rudin and was not obligated under the law to so deliver them; that later when the facts were fully developed from the evidence it appeared that the King-Richardson Company had neither branch offices nor agents and there was no accessible market for the unsold books. The court found that Rudin was the cause of the damage and ordered the books delivered to the King-Richardson Company; that the various tenders made by Rudin were either insufficient in amount or substance or were procured by notes to which Rudin had unlawfully signed the King-Richardson Company’s name and, therefore, the tenders were of no value.

We have cited from these two cases in the United States Court rather fully because of the fact that the holdings in those cases are so diametrically opposed to that of the Supreme Court of this State.

It is the contention of counsel for the defendant, the King-Richardson Company, that these decisions were based upon a number of communications between Rudin and persons other than the defendant, which tended to show that Rudin was not acting in good faith at any time during the negotiations between himself and the King-Richardson Company, but was attempting to destroy the business of the King-Richardson Company for his own purposes, and that this evidence was not before the court upon the original trial of this cause, but that if it had been produced and considered by the Supreme Court on the appeal of the original cause, the judgment would have been favorable to the defendant in the replevin suit'in the courts of this State. This testimony was produced upon the second trial of the cause which is now before us on appeal and it is insisted by the defendant that this evidence renders it impossible for the plaintiff to succeed in his replevin suit.

Counsel for the plaintiff in the proceeding here insists that while the cause was reversed and remanded by the Supreme Court, nevertheless, its opinion with the .findings therein contained is conclusive against the defendant and should be the law in the case and that this court should be governed accordingly and reverse this judgment now here on appeal.

On the other hand it is insisted by counsel for defendant that the decision of the United States Circuit Court of Appeals has created an estoppel by verdict which precludes Rudin from contending that he had not breached the contract and that, therefore, the company was justified in refusing to deliver the books.

The opinion of the Supreme Court of this State contains a detailed statement of the facts, but, for the purpose of this proceeding, we believe it is necessary to briefly restate the facts for the purpose of a better consideration of the entire matter.

The King-Richardson Company was a New Jersey corporation, authorized to do business in the State of Illinois. It was the owner of the copyrights and plates of a publication known as “The Bible Story” for which it was obligated to pay royalties to certain authors by the name of Hall and Wood.

In 1922, and for many years prior thereto, one William H. Kevins, who was in control of the King-Richardson Company, by reason of his stockholdings, was also the sole proprietor of the Springfield Printing and Binding Company. Both of these companies had their principal offices in Springfield, Massachusetts, and the employees of the two companies worked interchangeably for both corporations. The books were published by the Springfield Printing and Binding Company for the King-Richardson Company and the King-Richardson Company had two branch offices, one of which was located at Springfield, Massachusetts, and the other at Chicago.

The plaintiff, Rudin, had been employed for some time prior to 1914 by the King-Richardson Company at its Chicago branch and on January 1st of that year he entered into an agreement with the King-Richardson Company under which he became manager of the Chicago.branch, his income to depend upon the profits of that particular branch of the King-Richardson Company. Books were billed to him at a discount of 75 per cent from the retail price and he was to receive the entire profits from the business after paying for the books, all supplies to be furnished by the company at cost and all expenses including salaries, wages, commissions, freight and rent on the premises. Rudin agreed to devote his entire time and attention to the exclusive business of the company and to do business in the name of the company, whose agent he was, and to pay all expenses of the Chicago branch and to satisfy any and all obligations incurred by him in connection with the business. He was to keep the bank account in the name of “King-Richardson Company, Chicago Branch. ”

Certain controversies arose between Kevins and Rudin, resulting in a supplemental agreement dated January 12, 1916, which settled certain controversies between the parties and provided that the balance due to the King-Richardson Company from Rudin should be paid on or before September 1, 1916. It further provided that all balances due for each year thereafter should be paid in full on or before September 1st of each succeeding year. Further controversies arose between Kevins and Rudin, as a result of Rudin’s contention that Kevins was not shipping books promptly and a further supplemental agreement was entered into September 8,1917, as a result of which Rudin was given exclusive rights to "sell the company’s publication in further described térritory and compromising a dispute over the price of certain, books ordered prior to January 1, 1917. -

: The original agreement expired by' its terms on December 31, 1918, and on October 19, 1918, a further supplemental agreement was entered into renewing all previous agreements for a three-year period from January 1, 1919. This supplemental agreement also provided that Budin could collect accounts in the name of the company and convert the proceeds to his own benefit, but that the records should be kept in the name of the company and at the termination of the agreement all property should be delivered to the company upon demand.

On January 3, 1920, another supplemental agreement was entered into increasing the price of “The Bible Story” and changing the method of billing the books by the company to Budin from a discount basis to a straight price per set.

During 1920 and thereafter numerous controversies arose between the parties and again a supplemental agreement, which was known as the fifth agreement, was entered into between the parties on the 23rd day of December, 1920. This agreement was between Nevins, personally, the King-Bichardson Company, by Nevins, and by Budin. Under this supplemental agreement the Springfield and Chicago branches agreed to take 20,000 sets of “The Bible Story” each year for two years and fixed the price to be paid, the price depending upon the number of books purchased. At this time Budin was manager of the Chicago branch and Sawhill and Ferris were managers of the Springfield branch of the company.

On March 25,1922, Budin placed his order for 14,000 sets and Sawhill and Ferris placed their order for 6,000 sets for the Springfield branch. At this time Nevins was president and the sole managing director of the King-Bichardson Company and was also doing business as and controlled the business of the Springfield Printing and Binding Company. During the previous year, 1921, the parties had ordered 20,000 sets in the same manner and at the end of that year, 1921, Budin was owing the company $114,000 on his 1921 account. A controversy between the parties arose because of the failure of Rudin to pay and Nevins took the position that he would ship books to Rudin only as needed. As a 'result of this controversy on May 4, 1922, a sixth supplemental agreement was entered into between the parties. Under this agreement the company was to continue shipping books and Rudin was to make certain payments on the back account.

In December 1922, 3,225 sets of “The Bible Story,” which were a part of the 14,000 sets which Rudin had ordered, were shipped to Chicago and arrived December 29, 1922, and placed on the New York Central 23rd street team track. On January 22nd they were placed in the Taylor street warehouse to be stored for hire. These books were printed by the Springfield Printing and Binding Company, and the Springfield Printing and Binding Company was named as the consignor and they were consigned to Springfield Printing and Binding Company, 2300 Prairie avenue, Chicago, Illinois. On the bill of lading were the words, “see letter attached.” At this time the King-Richardson Company’s Chicago branch was located at 2301 Prairie avenue. The goods were shipped to 2300 Prairie avenue, which was not the address of the Chicago branch. The letter containing the bill of lading read as follows:

“We are shipping to ourselves today, 2300 Prairie Avenue, Chicago, Illinois, one car of books, . . . which is not to be delivered to any except to our order. When car arrives in Chicago notify consignor at Blackstone Hotel.”

This letter was on the stationery of the Springfield Printing and Binding Company and signed by William H. Nevins, proprietor. At this time Rudin was indebted to the King-Richardson Company in the amount of $61,910.03. This was as of December 31,1922. This was the situation at the time Rudin demanded that the books in the possession of the New York Central lines be turned over to him under his contract with the King-Richardson Company. The King-Richardson Company objected to turning them over on account of the outstanding indebtedness and insisted upon a substantial payment. January 11, 1923, Rudin by a letter tendered his check in the sum of $85,709.88, covering his indebtedness and certain other items which included the books in transit. This is the tender mentioned in the opinion of the Supreme Court, which will be-discussed later, and which is also the tender which the United States Circuit Court of Appeals found from additional evidence to have been based entirely upon the credit of the King-Richardson Company and not upon that of Rudin. This was the situation at the time Rudin instituted this replevin suit to recover possession of the books known as “The Bible Story.”

The Supreme Court of this State in its opinion held that it was a question of intention as to whether or not title to the books under the shipment passed to Rudin as the purchaser. As we have already shown in the statement of facts, the books were shipped by the Springfield Printing and Binding Company to the Springfield Printing and Binding Company at Chicago, 2300 Prairie avenue. This was not the address of Rudin or the King-Richardson Company.- On the boxes containing the books were stenciled the words: “Books — Keep - Dry — The King-Richardson Co., Chicago, Ill. ’ ’ The Supreme • Court also says in its opinion, “It is clear that Hevins did not intend to deliver this carload of books until appellant had met his demands, but : it is just as clear that he did intend to deliver the books if and when appellant paid the amount demanded by the King-Richardson Company. After giving full consideration to all the evidence in the record and to the exhaustive arguments of counsel, we are convinced that these books were appropriated to the contract and that the title to them passed to appellant. Delivery of possession was not necessary to pass the title. (Rhea v. Riner, 21 Ill. 526.) It follows that if appellant met his obligations under the contract and was entitled to delivery of possession, and the company refused to turn the books over to him by indorsing the bill of lading or otherwise, then he had the right to maintain an action for the goods themselves. Williston on Sales, sec. 284. ”

The Supreme Court then in its opinion considers the right to possession and held that the tender on the part of Rudin met the demands of the company and he was entitled to possession. The Supreme Court also held in its opinion as follows:

“From the time Nevins reached Chicago until this action was begun the company’s demands were excessive and it refused at all times to accept the amount actually due from appellant. This conduct of the company relieved appellant from making a tender of the amount due.”

Upon the retrial of this cause in the circuit court, all the evidence, records, communications and exhibits introduced in the proceeding in the United States Circuit Court of Appeals and before the District Court of Massachusetts were introduced in evidence under a stipulation of the parties. This evidence is so voluminous that it would be impossible to comment in detail-upon the testimony-of the various witnesses and the written documents and communications introduced in evidence. But, from a consideration of this testimony and the documentary evidence, we aré of the opinion that the views of the Supreme Court of this State might have been different if this evidence had been before that court upon review of the original proceeding in replevin. From this evidence it appears that Rudin in collaboration with Sawhill who was in charge of the Springfield branch of the King-Richardson Company undertook to destroy the value of the stock of the King-Richardson Company by refusing to make payments for books from time to time and creating controversies which were detrimental to the business; that Rudin had a well defined plan to take over the business of this company in his own name after the expiration of his contract and for that purpose was negotiating with the.agents of the company wherever they were located in order to build up for himself a sales organization; that the purpose of acquiring a large number of “The Bible Story” books from Nevins was to permit the running of the company until such time as Rudin could supply a new volume for the market; that in order to bring about this plan, Rudin had communicated with the authors of “The Bible Story” for the purpose of having them prepare for him a book of similar character as that known as “The Bible Story” which he might be able to use and market for his own particular use. We cannot help but feel that Nevins sensed this situation and that in view of the fact of the large amount of money due him from Rudin he was particularly careful in his efforts to keep the property within his own name by consigning it to the Springfield Printing and Binding Company at Chicago and to an address different from that of Rudin. It should be borne in mind that the contract between the King-Richardson Company and Rudin expired December 31, 1922, and a demand for possession of the books and records of the company, together with office equipment, was made January 10, 1923. The replevin suit was not instituted until after this demand for possession by Nevins.

Evidence which was not before the Supreme Court, but introduced upon the trials in the federal court, consisted of communications and the testimony of witnesses to the effect that there was a conspiracy existing between Budin, Sawhill and others to effectuate the purpose already stated.

In September, 1922, Budin and Sawhill were already discussing the exchange of territory records. September 14, 1922, Budin wrote Sawhill asking him whether he desired a record of sales of “The Bible Story” from the Chicago office. Sawhill replied in a communication stating that he would be glad to supply Budin with the records kept at Springfield, Massachusetts. There is a considerable number of communications along this line, indicating the purpose of acquiring for some reason the territory records of the King-Bichardson Company to be used interchangeably.

October 24,1922, one Orwig, who was connected with the Chicago branch wrote to Sawhill stating that these records were being prepared and that it would be advisable to keep them until everything was settled. During this time Budin was making an effort to acquire Kevins’ stock in the company and in a letter to Sawhill, Budin said, “Kevins is going to watch our moves, and will doubtless occasionally in the most unexpected ways and times sound you out.”

On June 27, 1922, Hall wrote Budin advising him that he had heard of possible changes in the KingBichardson Company, and if Budin had the capital to invest in a new book it would be preferable to an attempt to imitate an old book. Hall was the author of “The Bible Story.” On July 8, 1922, Budin wrote to Hall telling him that he would be interested in the new book and asking for a conference and later on July 28th he wrote again stating that he would be interested in any work that Hall and Wood were getting out and wished to arrange a conference for August 9th or 10th.

July 22, 1922, Budin wrote to Sawhill stating, “We are going to figure on buying enough Bible Story to run us through 1923 the way things look now.”

July 28, 1922, Rudin wrote to Hall suggesting that he attend a conference between himself, Hall and Wood at Springfield. It appears from the record that Rudin paid the expenses of Dr. Hall on July 29, 1922.

Sometime in August, Rudin and Pottenger entered into a contract with Hall and Wood for the preparation of a new book. Later Hall wrote Rudin asking him to put the contracts in his safe and not to refer to them in any way to Nevins. In August, Hall spent several days in Chicago with Rudin discussing the question of getting out the new work. On August 28th, Rudin wrote to Sawhill telling him that he had broken his promise not to tell Hall that Sawhill and Ferris would not be in the new combination.

A number of communications of similar import passed between the parties, showing that prior to the beginning of the replevin suit and before the expiration of Rudin’s contract, he had been negotiating with Hall, Wood and Sawhill in order to procure a new story that would take the place of the one produced by the King-Richardson Company. During this time, moreover, Rudin was in communication with his brother, a lawyer, who was helping to formulate the plan to secure the business of the King-Richardson Company for Rudin.

In October, 1922, Rudin wrote Hall a letter, as follows:

‘I am enclosing herewith an opinion by my brother on your and Professor Wood’s contract which, in substance, holds that the contract which you made with Mr. King originally, to which, of course, the King-Richardson Company succeeded by assignment from him, is purely a printing and selling right; that you and Professor Wood retain your rights as authors, and that you can by notice to the King-Richardson Company terminate as to their right to further print and sell The Bible Story at any time.

“ ‘I also enclose a copy of yonr original contract as it was delivered to me some years ago, by either Mr. Nevins or Mr. Johnson. I wish you would submit this to your attorney, together with my brother’s opinion, and if he agrees with you, of course, you can absolutely block Mr. Nevins’ sale of his interests with the King-Richardson Company, because, as you know, the only value is in the right of The Bible Story. Further, if that is the situation, we can be saved a tremendous lot of work in the building of our new set. We have a right to use any portion of it, and to prevent the further sale of Bible Story, thus eliminating it as a competitor, and eliminating the King-Richardson Company as well, because it will have nothing to exist for, as no one will buy out the stock without the right to sell, and publish and to own, The Bible Story. At least it will give you control of the situation and enable you to say to whom Bible Story shall be sold, or to say that it shall not be sold at all after the new work is out.

“ ‘Kindly let me hear from you on this.’ ”

On October 28, 1922, again Rudin wrote to Hall asking him whether or not his lawyer’s opinion agreed with that of Rudin’s brother and whether he could not by notice terminate the rights of the King-Richardson Company to further print or sell “The Bible Story”; that if he could he could then use any part of “The Bible Story” in the new work and could absolutely block any sale of Nevins of his stock and get it nearly at his own figure. In this communication he adds,

“ ‘I know the effect that would have upon Mr. Nevins’ stock, and upon the value of K-R Company; practically reducing that to zero! I would be affected along with other K-R stockholders, but I would willingly sacrifice whatever I have to go on with the new work and to leave our future unhampered and unharassed! I don’t want you to take any action, of course, that will mean any loss to you and Professor Wood on the old set. I simply ask that you do not put into Mr. Nevins’ hands, or to any successor to him, the power to hamper us. ’ ”

It must he borne in mind, considering this communication, that Eudin was the agent of the KingBichardson Company in charge of the Chicago branch and by law obligated to a faithful performance as such and to work for the best interests of his employer. The correspondence introduced in evidence in our opinion shows a total disregard of this obligation and instead shows a determined purpose on the part of Eudin to destroy the value of the King-Bichardson Company stock and to succeed to its business. Eudin did not own the Chicago branch, but was simply a stockholder. He does not deny this, but by his conduct in the Massachusetts court as such, openly recognized' his position as a minority stockholder in charge of the business in Chicago, as its agent. His intention of taking the books under the consignment to Chicago is illustrated by his communications of September 21, 1922, September 23, 1922, and September 27, 1922, in which communications to Sawhill it appears that although he had placed an order for 14,000 sets for the year, he did not feel that he was obligated to take them and that if he did no.t want them he was sure he could not be compelled to do so; that he might have to disappoint Nevins as it looked as if he might be able to get along with 2,000 or 3,000 sets. In this communication of September 23, 1922, he stated: “Think it’s well for us to go on record on it, because if he tries to act nasty in the final settlement of our account we can come back against him for defective workmanship. ’ ’

It also appears from the evidence, as shown by the books of the King-Bichardson Company, that Eudin, for his own benefit, had been making new contracts with the agents of that company before their old contracts with the King-Richardson Company had expired. The King-Richardson Company contract having been terminated with Rudin, he should not have made any contracts with agents of that company after that date. A number of contracts were, however, so made. After termination of the contract the business in the Chicago branch was conducted without interruption and new contracts were made in the name of that company by Rudin and his associates. The advertisements in the papers for agents in the company’s name and letters were signed by Rudin stating that he was formerly of the King-Richardson Company of Chicago. A number of agents were secured for the sale of the “Book of Life. ’’ This was the publication which Rudin intended to substitute for “The Bible Story” and which was a result of the plan devised by Rudin, Saw-hill and Hall.

The lease to the premises of the King-Richardson Company was, of course, in the name of that corporation and it was the understanding between the parties that it was so to remain as shown by the corre-t spondence. November 27, 1920, however, Rudin procured a lease to the premises in his own name as lessee. This lease provided that — meaning Rudin— “you are to have the space that is now occupied by the King-Richardson Company.” This lease was accepted by John Rudin. This lease ran beyond the termination of his employment with the King-Richardson Company.

The evidence sdt out in this opinion, together with a great number of documents and writings, was not before the Supreme Court at the time of its decision and, therefore, that court was not advised as to the actual situation between the parties. From this new evidence introduced upon the second hearing it is apparent that Rudin had already breached the contract by taking the lease to the premises in his own name, soliciting the agents of the company for his own, purposes for future employment after the termination of his contract and by his conduct in attempting to destroy the business of the King-Richardson Company. When the Supreme Court in its opinion held that the books were appropriated to the contract, it did not have before it this evidence. As we have already stated, Kevins must have sensed something of this situation when he attempted to keep control of the books by having them assigned to the Springfield. Printing and Binding Company of Chicago at an address different than that of Rudin. In our opinion the new facts in evidence justified him in his position in refusing to deliver and have a direct bearing upon the intention of the parties.

The Supreme Court in its opinion referred to the fact that Rudin had made a sufficient offer to perform and a sufficient tender to entitle him to possession of the books. Prom the new evidence adduced upon the trial of the other proceeding since that opinion, it developed that $45,000, which went to make up part of • the certificate of deposit, the certified check used in making the tender to the defendant, was made up of a note for $45,000, payable to the order of the bank, signed the King-Richardson Company, by John Rudin, manager. It is evident from this that the purported tender was based largely upon the credit of the King-Richardson Company, of which Kevins was the principal stockholder, and which would have sustained the principal loss in case of its nonpayment if the tender had been accepted. This evidence was not before the Supreme Court and it had no means of ascertaining the fact from the record as it was then before it. It amounted to a tender to the defendant of his own money. 1

In the case of Rudin v. King-Richardson Co., 37 F. (2d) 637, the Circuit Court of Appeals for the Northern District of Illinois, in referring to this particular transaction, found that the tenders were insufficient and in its opinion it says: 1 ‘ They were either insufficient in amount or substance, or the principal amounts of such tenders were procured by notes to which appellant had unlawfully signed appellee’s name.”

Rudin, as agent, did not have the power to borrow money in the corporate name and particularly for his own' purposes. There was nothing before the Supreme Court of this State indicating that Rudin had included in his tender a large amount which went to make up the total which was, in fact, based upon the credit of the corporation.

From a consideration of all the newly produced evidence in regard to the relationship existing between the parties and the new evidence as to the purported tender, we are of the opinion that the judgment of the circuit court is correct. The decision of the Supreme Court was not based upon the law of the case, but upon the facts. Under such circumstances when the cause was remanded, it naturally follows that the cause must be retried. If it should develop on the new trial that additional evidence was heard which would materially alter the rights of the parties in the opinion of the trial court, it becomes the duty of such trial court to consider this new evidence together with all the other evidence in the case.

We agree with counsel for plaintiff that the trial court is bound by the law of the case as found by a court of review upon appeal, but this rule is not applicable to cases depending entirely upon the question of fact. As already stated, this cause was not heard by us on the facts on appeal from the previous judgment and, as only a question of fact is involved, we are constrained to impose our finding on such facts as they appear. We are of the opinion that these facts have thrown an additional light upon the entire subject matter and that the judgment of the trial court should be affirmed, and, for that reason, it is affirmed.

Judgment affirmed.

Hall, P. J., and Hebel, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Alma Grace Van Winkle, Appellee, v. George Weston, Appellant.
    Gen. No. 37,078.

      Opinion filed June 20, 1934.
    Rehearing denied and opinion modified July 9, 1934.
    Frank A. O’Donnell, for appellant.
    Nash & Ahern, for appellee; Martin J. McNally, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

May 26, 1933, Alma Grace Van Winkle, plaintiff, filed her action in forcible detainer against the defendant, George Weston, in which she claimed that she was entitled to the possession of certain premises known as 638 Groveland Park, Chicago, and which were unlawfully withheld by the defendant. The action was heard by the court without a jury resulting in a finding in favor of the plaintiff and judgment on the finding. Motions for a new trial and in arrest of judgment were overruled, exceptions taken, and this appeal . prayed and allowed.

From the evidence it appears that one Grace Reed Weston was the owner of the premises consisting of a three-flat building; that Grace Reed Weston on April 27, 1932, was married to the defendant, George Weston; that she lived on the premises known as 638 Grove-land Park until on or about January 15, 1933, ‘when she became a patient in a private sanitarium at 14347 Longwood Drive, Chicago, where she died June 14th of that year. The defendant Weston and his wife Grace Reed Weston entered upon the premises known as 638 Groveland Park on April 27, 1932, the day of their marriage where the defendant continued to reside in one of the apartments, the other two apartments being vacant. April 8, 1933, Grace Reed Weston executed and delivered to the plaintiff a quitclaim deed to the property described in the forcible detainer action for a consideration .of $10 and other good and valuable consideration; the husband was not present at the time and did not sign the deed. The plaintiff was the niece of the grantor Grace Reed Weston.

It is the plaintiff’s contention that she is entitled to possession because she is the grantee named in a deed of conveyance executed and delivered by the grantor in possession. It is the position of the defendant that he had a homestead estate in the premises at the time the deed was executed and delivered and that he had not waived this estate by joining.in the deed of conveyance and that consequently forcible entry and detainer will not lie. Plaintiff, replies by asserting that the defendant failed to file proper pleadings setting forth his alleged homestead, and that he is barred from asserting his rights because his wife offered to provide another home suitable for their condition in life and that even though forcible entry would not lie to obtain possession of all. the property, nevertheless plaintiff was entitled to that portion of the premises not occupied by the defendant as a homestead.

The Forcible Entry and Detainer Act, chapter 57, par. 2, section 6, Cahill’s Illinois Revised Statutes, provides that a person, shall be entitled to maintain an action in forcible entry and. detainer “When lands or tenements have been conveyed by any grantor in possession. . . .” We agree with plaintiff’s position that she would have a right of action under the provision of the statute referred to, if the question of the right of homestead was not involved. The action of forcible entry and detainer is a civil remedy for the restitution of premises of which one is unjustly deprived and the right of possession is all that is involved or can be determined. Chicago Ry. Equipment Co. v. Wilson, 250 Ill. App. 231. If the defendant had a homestead right in the premises then he could not be ousted under forcible entry and detainer so long as that homestead right existed.

Chapter 52, par. 1, sec. 1, Cahill’s Illinois Revised Statutes, 1933, — Exemptions—provides:

“1. Homestead Estate.] Section 1. Be it enacted by the People of the State of Illinois; represented in the General Assembly, That every householder having a family, shall be entitled to an estate of homestead, to the extent in value of $1,000, in the farm or lot of land and buildings thereon, owned or rightly possessed, by lease or otherwise, and occupied by' him or her as a residence; and such homestead, and all "right and title therein, shall be exempt from attachment, judgment, levy or execution, sale for the payment of his debts, or other purposes, and from the laws of conveyance, descent and devise, except as hereinafter provided.”

Section 2 of the act provides that such exemption shall continue after the death of such householder, for the benefit of the husband or wife surviving, so long as he or she continues to occupy such homestéad, etc.

Chapter 68, Cahill’s Illinois Revised Statutes — Husband and Wife — par. 16, sec. 16, provides that neither the husband nor wife can remove the other or their children from their homestead without the consent of the other, unless the owner of the property shall in good faith, provide another homestead suitable to the condition in life of the family.

The evidence in the case at bar shows that the wife left the home for the purpose of going to a sanitarium where she remained until her death and it is evident that this was not a suitable place for, nor could it be considered as, a homestead suitable to the condition in life of the family. The statutory provisions have been construed to secure the right of homestead to both husband and wife and neither can be dispossessed except by their voluntary action or by an action pointed out by statute. McMahill v. McMahill, 105 Ill. 596. This right of homestead continues after the death of the householder for the benefit of the surviving husband or wife so long as he or she continues to keep such homestead. Olp v. Meyer, 277 Ill. 202.

Under the facts as we see them in this case the defendant was still entitled to his homestead rights which were not released upon the execution of the deed. Jones v. Jones, 281 Ill. 595.

We see no force in the position of the plaintiff that the defendant had failed to properly set up a defense of homestead rights in the action, particularly in view of the fact that in actions for forcible entry and detainer under the Municipal Court Act, Cahill’s St. ch. 37, 1Í 389 et seq., and the rules of that court, written pleadings are not required. Moreover, the case proceeded entirely upon the theory of the plaintiff that she was entitled to possession under her deed and that the defendant was not entitled to a homestead in the premises.

The sole question remaining for consideration is whether or not an action of forcible entry and detainer under the statute may be maintained to recover possession of premises occupied as a homestead. No cases have been cited in support of this position. This action is a statutory action and should be strictly followed. There is no doubt but that in a proper action relief could be obtained, but in such an action it would be necessary to establish the value of the homestead right in order to ascertain how far this right extended and this we believe cannot be done in such a proceeding as the one before us.

In Diets v. Hagler, 309 Ill. 381, the court in its opinion said: “The law is well settled that the purchaser on execution of land worth more than $1,000, in which the judgment debtor has an estate of homestead, without setting off the homestead, as required by the statute, gets no title which is available in a proceeding at law for the possession of the premises, because the court of law cannot determine how far the homestead right will extend. (Hartwell v. McDonald, 69 Ill. 293; Nichols, Shepard & Co. v. Spremont, 111 id. 631; Palmer v. Riddle, 197 id. 45; Klosowski v. Klosowski, 266 id. 360.) It is equally well settled that such a purchaser does get an equitable title to the excess in value of $1,000, which he may go into a court of equity and enforce by having a homestead of that amount set off to the judgment debtor, or, if that is impracticable, by paying him $1,000. (Loomis v. Gerson, 62 Ill. 11; Leupold v. Krause, 95 id. 440; Krupp v. Brand, 200 id. 403; Mayne v. Drury, 295 id. 533.) ”

The right of homestead is conferred by statute and can be divested only in the manner provided. Hubbell v. Canady, 58 Ill. 425.

The grantor in the deed in the case at bar did not deprive the defendant of his homestead right and this right can be set up in any action brought to eject him from the premises. Pardee v. Lindley, 31 Ill. 174.

The Supreme Court in the case of Voss v. Rezgis, 343 Ill. 451, which was a proceeding at law for the partition of real estate in which the interest of the husband was sold on execution, says:

“ ‘The purchaser, on execution, of land worth more than $1,000, in which the judgment debtor has an estate of homestead, without setting off the homestead, as required by the statute, gets no title which is available in a proceeding at law for the possession of the premises, because the court of law cannot determine how far the homestead right will extend. ’ (Diets v. Hagler, supra.) The rule has usually been applied in suits in ejectment. (Hartwell v. McDonald, 69 Ill. 293; Nichols, Shepard & Co. v. Spremont, 111 id. 631; Palmer v. Riddle, 197 id. 45.) The ground upon which the decisions in actions at law rest is, that the title acquired at a sale on execution, where the homestead is not set apart, is not available in ejectment or forcible detainer because a court of law cannot determine how far the homestead right will extend. Krupp v. Brand, 200 Ill. 403.”

The Supreme Court in the case of Gray v. Schofield, 175 Ill. 36, which was a bill for partition where a homestead was involved, in its opinion lays down the following rule: “The deed from John Schofield did not affect his title in fee to the extent and value of $1,000, but as to that estate was a nullity and the title remained in him. (Barrows v. Barrows, 138 Ill. 649.) A deed embracing the homestead, which is inoperative to convey that estate, leaves it in the grantor unaffected by the deed, and the estate is to be treated precisely as though the deed had never been executed.”

Under the authorities cited we are of the opinion that the action of forcible entry and detainér will not lie to secure the possession of premises occupied as a homestead. Plaintiff contends, however, that in view of the fact that the premises consisted of a three-apartment building with the land underneath, the judgment should be sustained as to the two vacant apartments on the theory that these were not occupied as a homestead and we are referred to the- case of Potter v. Clapp, 203 Ill. 592. In support of this contention plaintiff offered testimony showing that the value of the property was $8,000 at the time of the commencement of the action. The case referred to by plaintiff, however, was an action in equity asking for the assignment of dower and homestead in the real estate involved in that proceeding. It was intimated in that opinion that a person occupying a separate apartment might be in the position of one keeping a home on a separate lot..

It is true that a homestead might not extend to the whole building where only one apartment was occupied as a homestead, particularly in the present age and generation where the apartment buildings are so huge and occupied by so many tenants. Such a situation, however, can be easily taken care of in a proper proceeding where evidence can be shown for the purpose of arriving at the value of the homestead and proper steps taken to protect the homestead rights, but we are still of the opinion that forcible entry and detainer is not a proper action to dispossess one claiming under such a title. If this were permitted cases of this character might resolve themselves into questions of value and surrounding conditions which would require the introduction of evidence which is not contemplated under the action here.

For the reasons stated in this opinion the judgment of the municipal court is reversed.

Judgment reversed.

Hall, P. J., and Hebel, J., concur.


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    Frank Wadelski and Frank Wadelski as Conservator of the Estate of Frances Wadelski, Insane, Appellees, v. Sixteenth Ward Building and Loan Association of Chicago, Illinois, Appellant.
    Gen. No. 37,150.
    Opinion filed June 20, 1934.
    Rehearing denied July 9, 1934.

      Christian C. H. Zillman, for appellant.
    Irving S. Abrams and Harry M. Ehrlich, for appellees.
   Mr. Justice Wilson

delivered the opinion of the court.

This is an appeal from a judgment of the circuit court in favor of the plaintiffs, Frank Wadelski and Frank Wadelski as conservator of the estate of Frances Wadelski, insane, against the Sixteenth Ward Building & Loan Association, a corporation, for the sum of $2,240. The suit was indebitatus assumpsit for money had and received by the defendant for use of the plaintiffs. The cause was tried by the court without a jury and there appears to be no dispute as to the facts.

From a stipulation of facts entered into between the parties, it appears that in February, 1921, certain real estate located in the City of Chicago was owned by Martin Bartalski and his wife. This property was located on Ashland avenue.

February 1st of that year the City of Chicago started condemnation proceedings for the purpose of widening that particular street. While these proceedings were pending the property in question was conveyed by Bartalski and his wife to Frank Wadelski and Frances Wadelski, his wife, by warranty deed dated November 5, 1923, and subsequently recorded with the recorder of deeds of Cook county. Wadelski and his wife entered upon the premises and took possession and remained in possession until July 16, 1931.

July 26, 1927, a judgment was entered in the condemnation proceedings awarding the sum of $2,673 in full for a certain piece of the property taken and assessing the sum of $433 against the premises not taken as benefits accrued to that portion of the property by reason of the improvement.

June 22, 1928, Wadelski and Ms wife borrowed from the defendant, Sixteenth Ward Building and Loan Association of Chicago, Illinois, the sum of $5,000 and executed their note and mortgage for that amount secured by the premises in question.

May 18, 1929, the said WadelsM and his wife having defaulted in the payment of dues and interest on said mortgage, defendant herein, the Building and Loan Association, filed its bill for foreclosure in the circuit court of Cook county and obtained a decree under- which said premises were sold on November 19, 1929, to the defendant, and at the same time and by virtue of the same decree a deficiency was found for the sum of $435.57 in favor of the defendant here and complainant in the foreclosure suit.

February 20, 1931, a master’s deed to the property herein was executed and delivered to the defendant.

April 21, 1931, the City of CMcago, in accordance with the award in the condemnation proceedings, deposited with the county treasurer its check in the sum of $2,240. This amount was arrived at by deducting the sum of $433, benefits to the property not taken, from the sum of $2,673, the amount awarded for that portion of the premises taken.

In addition to the stipulation of facts certain evidence was introduced by the plaintiffs for the purpose of showing that the city entered upon the premises in question and took possession sometime in October, 1930. This, however, was after the sale under foreclosure but before the issuance of the master’s deed.

April 30, 1931, the Building and Loan Association filed its petition in the condemnation proceedings praying that the amount of $2,240 deposited with the county treasurer by the City of Chicago be paid to it as the owner of the premises taken, and" it was so ordered.

Plaintiffs’ action is in indebitatus assumpsit to recover the sum of $2,240, paid the defendant on the theory that the sale under the decree of foreclosure extinguished the mortgage and satisfied the debt but did not convey the title, which remained in the mort-, gagor until the expiration of the period of redemption and the delivery of the master’s deed. Plaintiffs also insist that the City of Chicago having taken possession of the premises in question in October, 1930, and prior to the issuance of the master’s deed, the plaintiffs as owners of the premises acquired a vested right in the compensation which was superior to that of the defendant. The plaintiffs were parties to the condemnation suit in which the order to pay the money to the Building and Loan Association was entered. No appeal was taken from that order so it still stands. No point is raised here however that this proceeding in effect is an attempt to review the judgment order of that proceeding and that question is, therefore, not before us.

May 18,1929, prior to any action by the city indicating its intention to take possession of the property in question, the Building and Loan Association elected to declare a default in the note and mortgage for nonpayment of interest and started its foreclosure proceedings. The fact that the Building and Loan Association subsequently prosecuted this proceeding to a successful conclusion in the circuit court indicates that there was such a default and condition broken.

In order to arrive at a correct conclusion it is necessary to first give consideration to the question as to where the title to the property was during the various steps both in the condemnation and the foreclosure proceedings for the purpose of determining where the title to the condemnation award was at the time it was paid by the city to the county treasurer, and what the purchaser secured by reason of the sale. In this connection it must be borne in mind that at the time this money was paid by the city there had been a sale of the property under the foreclosure proceedings but the master’s deed had not as yet been delivered.

Originally, in the course of the development of real estate mortgages in England, under the common law, a mortgage was a pledge of land requiring a judgment to complete the transfer of title to and vest it in the mortgagee.

Later as was stated in Lightcap v. Bradley, 186 Ill. 510, a form of mortgage came into existence known as a trust deed which attempted to convey the legal title to the mortgagee upon condition broken. As a result of various decisions we now find the rule to be that as between the mortgagor and the mortgagee upon condition broken, the title vests in the mortgagee and upon foreclosure and sale the rights of the mortgagee have become fixed by the decree of sale and the title again vests in the mortgagor, subject to divesting on the completion of the sale by the issuance of the master’s deed. A purchaser, if a third person, acquires no title but only a right to such until the issuance of the master’s deed, so that during the period of 15 months between the decree of sale and the issuance of the deed, the title is in the mortgagor and he is still the owner of the land with the right to convey his title and interest.

It has been held that the fee title held by the mortgagee is in the nature of a base or determinable fee and the term of its existence is measured by that of the mortgage debt. Lightcap v. Bradley, 186 Ill. 510; Wolkenstein v. Slonim, 270 Ill. App. 473.

In the case of Rohrer v. Deatherage, 336 Ill. 450, however, the court announced the rule that the mortgagor was the legal owner of the premises against all persons except the mortgagee and his assigns, but that after condition broken, the mortgagee is as between himself and the mortgagor the owner of the fee. In this connection it might be interesting to note that there might be a very serious question of fact as to whether there was a condition broken, in which event the question as to where the title to the property was becomes not one of law but one of fact. The latest announcement of the rule appears to be found in the case of Wolkenstein v. Slonim, 355 Ill. 306, where the court in its opinion said: “A mortgage conveys title as between the mortgagor and the mortgagee, but it is only a qualified title as security for the creditor during the existence of the debt. The mortgagor is regarded as the owner of the land for all beneficial purposes, subject only to the rights of the mortgagee. After condition broken, the mortgagee is, as between himself and the mortgagor, the owner of the fee, and he may maintain ejectment against the mortgagor or the owner of the equity of redemption. Upon default he has the right to possession against the mortgagor, his grantee, or anyone claiming under him by any right. (Rohrer v. Deatherage, supra; Ware v. Schintz, 190 Ill. 189; Bradley v. Lightcap, supra; Taylor v. Adams, 115 Ill. 570.)” Under the rule as announced in this decision we find that the mortgagor was the owner of the premises with the title thereto and that the mortgagee had a qualified title as security for the debt and during its existence, but that upon condition broken, as in this case, the mortgagee became the owner in fee as between himself and his mortgagor.

We now come to a consideration of the question as to the relative rights after the entry of the foreclosure decree in the suit brought by the Building and Loan Association against the Wadelskis.

It was in this interim between the decree of sale and the issuance of the master’s deed that the money was paid into the hands of the county treasurer. Plaintiffs’ claim is that by the decree of foreclosure the mortgagee’s estate in the land was extinguished and reinvested in plaintiffs and therefore plaintiffs became entitled to this fund. The case of Ware v. Schintz, 190 Ill. 189, however, expresses the rule as follows: “The fee title held by the mortgagee is in the nature of a base or determinable fee. The term of its existence is measured by that of the mortgage debt. When the latter is paid or becomes barred by the Statute of Limitations the mortgagee’s title is extinguished by operation of law. (Pollock v. Maison, 41 Ill. 516; Harris v. Mills, 28 id. 44; Gibson v. Rees, 50 id. 383; Barrett v. Hinckley, 124 id. 32; Lightcap v. Bradley, 186 id. 510.) Until it is extinguished the legal title is in the mortgagee for the purpose of obtaining satisfaction of his debt.” Under this rule it would appear that the title remained in the mortgagee until a complete satisfaction of the debt. This case evidently holds that the title of the mortgagee in the nature of a base of determinable fee exists until extinguished by a satisfaction of the mortgage debt. We later find the rule announced in Chicago Joint Stock Land Bank v. McCambridge, 343 Ill. 456, as follows:

“A sale under a decree of foreclosure of a mortgage extinguishes the mortgage and satisfies the debt secured by it to the extent of the purchase price received. It does not, however, convey the title, which remains in the mortgagor or his grantee until the expiration of the fifteen months’ period of redemption and until a conveyance by the master’s deed. (Bradley v. Lightcap, 202 Ill. 154; Schroeder v. Bozarth, 224 id. 310.) Both before and after a sale under a foreclosure decree the owner of the equity of redemption has the same estate in the land. ■ (Williams v. Williston, 315 Ill. 178; Aetna Life Ins. Co. v. Beckman, 210 id. 394.) The only qualification of his estate is that the amount and time of the redemption have become absolutely fixed by the- decree and sale, and his estate will be absolutely divested if he fails to redeem within the allotted time. (Stephens v. Illinois Mutual Ins. Co., 43 Ill. 327.)” The effect of the holding in Chicago Joint Stock Land Bank v. McCambridge is that the decree of foreclosure extinguishes the mortgage debt and the title is in the mortgagor until the period of redemption expires.

There is another question of law, however, which in our opinion is decisive of the question here involved and that is as to what the purchaser under the foreclosure sale acquired by reason of his purchase and in this connection it becomes necessary to consider the nature of the condemnation proceeding and the character of the judgment entered in such a case. We may safely say that such a judgment as is involved here is, in its nature, a conditional judgment. After a hearing upon the petition filed, whether the proceeding is under the Local Improvements Act, Cahill’s St. ch. 24, If 120 et seq., or the Eminent Domain Act, Cahill’s St. ch. 47, the value of the property taken is fixed and the award made which is to be paid upon the taking of the property. If the property is not taken in accordance with the terms of the award, no judgment attaches and the proceeding dies a natural death. When the award is paid into court and the judgment becomes effective, the owner of the property becomes vested with the right to the fund deposited except in the event of intervening rights of others. If there had been no foreclosure and sale of the property in question, the plaintiffs in this proceeding would have been entitled to the fund, subject to the rights of the mortgagee. The character of the judgments in these condemnation proceedings, as hereinbefore expressed, has been enunciated in the case of Chicago & N. W. Ry. Co. v. City of Chicago, 148 Ill. 141, and in Rice v. City of Chicago, 57 Ill. App. 558.

We believe it is also a well established rule that where property incumbered by a mortgage or deed of trust is condemned and the money awarded for the land taken is paid into the county treasury, the lien of the mortgage will attach to the fund so paid. Union Mut. Life Ins. Co. v. Chicago & W. I. R. Co., 146 Ill. 320; City of Chicago v. Gage, 268 Ill. 232. Under these decisions the mortgage having been made to cover the entire estate, it would attach to the fund substituted for the property taken.

Coming to a consideration of the question as to what a purchaser would receive under the master’s sale and before the issuance of the deed, it appearing that the fund had not yet been paid into the hands of the county treasurer, it is, we believe, apparent that the purchaser would be entitled to take all the right, title and interest of the mortgagor under the foreclosure sale as of the date thereof which would vest, however, only upon the issuance and delivery of the master’s deed. At the time of making a bid, the purchaser would have a right to assume that he was buying the premises in its entirety. The award under the proceedings to condemn being a conditional judgment and not yet in effect, a purchaser would have the right to rely upon the fact that he was purchasing the property. He would naturally make his bid accordingly. Upon the payment of the money in the hands of the county treasurer it became substituted for the property taken and, in our opinion, belonged to the purchaser in the event of his finally completing the purchase and receiving his master’s deed. The mortgagor upon the issuance of the deed immediately would be divested of his interest to the fund which was substituted for the land. The fact that the purchase was made by the mortgagee in our opinion would not alter the rule. His bid also would be presumptively based upon the fact that he was purchasing the property in satisfaction of his debt. If he was cognizant of the fact that the money would be paid into court before the completion of his purchase under his mortgage and he was to be deprived of the property taken and not receive the award, his bid, necessarily, would be less and the deficiency decree greater.

We see no reason for differentiating between the purchase by a third person and the mortgagee. The mortgagor had at all times the right to redeem after the sale and before the issuance of the master’s deed and if he had done so he would have become entitled to the award in place of the purchaser. In accordance with the reasoning herein expressed the Building and Loan Association acquired rights under the sale no different from those of a stranger purchasing the property. We have been referred by plaintiffs to the case of City of Chicago v. Thomasson, 259 Ill. 322, in support of their position that the city having taken possession of the land, as shown by the evidence, the award immediately became due and payable and when paid into the hands of the county treasurer, the rights of the plaintiffs immediately attached thereto. As we have pointed out, however, this possession was taken, if at all, by the city after the foreclosure sale, and the purchaser upon receiving its master’s deed, acquired all the rights of the mortgagor. Moreover, in the case cited the action was between the owners of the property and the city and the rights of third persons had not intervened as in the case at bar. Thomasson was suing the city to recover a judgment for the award which had not been paid, although the city had entered into possession. We do not consider that case in point as the circumstances in the case at bar are quite different.

We are, therefore, of the opinion that the circuit court erred in entering judgment in favor of plaintiffs and against the defendant. There is no dispute as to the facts. These were stipulated to, and the fact that the city took possession is not controverted; therefore, only a question of law is involved and for that reason the judgment of the circuit court is reversed and judgment is entered here in favor of the defendant.

Judgment reversed and judgment here.

Hall, P. J., and Hebel, J., concur.


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    Philip A. Wernick, Appellee, v. National Bond and Investment Company, Appellant.
    Gen. No. 37,173.
    Opinion filed June 20, 1934.
    Rehearing denied July 9, 1934.
    John W. Creekmur, Nolan H. Tepper and Milton Silberg, for appellant.
    Maurice H. Herman, for appellee; Newell Mecartnet, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

Plaintiff, National Bond and Investment Company, a corporation, brought its action in the municipal court in replevin to recover possession of a Chevrolet coach. The court found the right of property in the defendant Wernick and entered judgment, from which judgment this appeal was taken.

The facts disclose that on January 4, 1931, Wernick bought a car from the Garfield-Chevrolet Sales Company, under a conditional sales contract and executed his note for the purchase price. This note was sold by the Garfield-Chevrolet Sales Company to the plaintiff in this suit, National Bond ánd Investment Company, and on October 12, 1932, there was still due and owing on the contract to purchase the automobile the sum of $150 and there was a default in the payment of one of the instalments amounting to $40.20. On that date Wernick acknowledged in writing the amount still due and the default in one of the payments and asked for an extension of time. The unpaid balance was $150 and the defendant agreed to repurchase the car for the sum of $180, which amount included additional cost to the plaintiff such as insurance on the car and certain other expenses, and executed a new note for that amount. It was further agreed that the defendant was to pay the $180 in instalments of $15 each, without interest. A new conditional sales contract was entered into as of that date and signed by the parties to this suit.

The defendant on the hearing contended that the transaction itself came under the provisions of the Small Loans Act, Cahill’s St. ch. 74, H 27 et seq., and that there was usury in the transaction. It is also contended that the transaction was ultra vires and that the facts concerning the extra charges and expenses were entirely within the knowledge of the plaintiff. The contention that the transaction came under the Small Loans Act is untenable. The Small Loans Act contemplates the loan of money and not the sale of a commodity.

By the transaction between the parties here, upon default in the payments under the original sales contract, the plaintiff had the right to enter into a new agreement for the sale of the car, which was done. The plaintiff also had a right to fix a sales price on the car. It was a new transaction between the parties and the purchaser could take it or not as he saw fit. The fact that the price was higher than the balance remaining due under the original purchase did not change the rights of the parties. Plaintiff upon default on the original contract was entitled to possession and could make his new contract at an increased purchase price. Sales do not come under the Small Loans Act unless they are intended as a subterfuge to cover up a loan, which was certainly not the case here. So far as we can see the transaction was equitable. Manufacturers Finance Trust v. Stone, 251 Ill. App. 414. Neither was there any usury in the transaction. The seller had the right to make his price.

On the trial of the case testimony was introduced on behalf of the plaintiff showing that the extra charge was for expenses incurred as shown by the records of the company. A charge was made for each item, and included a charge for overhead expenses in conducting the transaction and a charge for insurance on the car under the new agreement. These cost items are not disputed. Neither was the transaction ultra vires. The charter of the company recorded with the recorder of deeds of Cook county was introduced in evidence by the defendant and from this it appears that the company was authorized to deal in bonds, securities, notes, evidences of indebtedness, etc. The purchase of the original note from the G-arfield-Chevrolet Sales Company, together with the conditional sales contract, was within the terms of its charter.

In our opinion the municipal court erred in finding the property in the defendant and the judgment will be and it hereby is reversed and the cause remanded with directions to enter judgment in favor of the plaintiff and to do such other things as are necessary in conformity with the views expressed in this opinion.

Judgment reversed and cause remanded with directions.

Hall, P. J., and Hebel, J., concur.


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    The Chicago Daily News, Inc., Defendant in Error, v. Mary Everett Kohler, Administratrix, Plaintiff in Error.
    Gen. No. 37,224.

      Opinion filed June 20, 1934.
    Winston, Strawn & Shaw, for plaintiff in error; Edward W. Everett and Charles J. Calderini, of counsel.
    Fisher, Boyden, Bell, Boyd & Marshall, for defendant in error; Thomas L. Marshall and David A. Watts, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

This is an action on appeal to this court to reverse a judgment entered on the verdict of a jury awarding damages in favor of the plaintiff, The Chicago Daily News, and against the defendant, Mary Everett Kohler, administratrix of the estate of Gr. A. E. Kohler, deceased, for breach of contract. The pleadings consisted of a declaration, plea of the -general issue and a plea of set-off.

The plaintiff, The Chicago Daily News, is a corporation engaged in the editing and publishing of a daily newspaper in the City of Chicago. Gr. A. E. Kohler, deceased, was at the time of the making of the contract hereinafter referred to, doing business as Kohler Brothers and made and manufactured an article known as the Kohler Magazine Reels under a patent issued by the United States Government. This patent originated in the plant of The Chicago Daily News which, by reason thereof, was entitled to shop rights as shown by an agreement dated July 15, 1907. By this agreement the defendant hereinafter referred to as Kohler, for one dollar and other valuable consideration granted the right to The Chicago Daily News to use these reels in connection with its plant in the City of Chicago.

July 27, 1927, Kohler submitted to The Chicago Daily News a typewritten proposal which, among other things, contained the following:

‘ ‘ Gentlemen:

“We propose to furnish 72 Kohler Magazine Reels per specifications attached and made a part of this contract, for use in the plant of Chicago Daily News at Chicago, Illinois, subject to the following terms and conditions:

“Price for each reel, Four Thousand Dollars ($4,000.00) f.o.b. cars factory.

“Total Amount of Contract Two Hundred Eighty-eight Thousand ($288,000.00) Dollars.

“Terms of Payment: Twenty per cent (20%) in cash upon acceptance of contract by purchaser;

“Twenty per cent (20%) thirty (30) days thereafter ;

“Twenty per cent (20%) sixty (60) days thereafter ;

“Twenty per cent (20%) upon shipment;

“Twenty per cent (20%) ninety (90) days after shipment.

“Proportionate payments shall be made for partial shipments.

“Payment in full shall not relieve Kohler Brothers of the guarantees covered by this contract.

“Shipment Shall Be Made on or about as specified . . . 19 . . .

“It is important that the installation of Presses is not delayed because of delay in shipment of the Reels, and the above shipping date is set accordingly. Purchaser, therefore, agrees to accept shipment on the specified date.

“The apparatus covered by this proposal is built to meet the special requirements of the purchaser, is applicable for this installation only, and this contract is therefore not subject to cancellation for any cause whatsoever.

“Foundations for reels, means for supporting belt shaft bearings on press structure, and drivers for connecting the belt shaft to the press shall be furnished by purchaser in accordance with drawings approved by Kohler Brothers.

“Purchaser shall furnish, or direct other interested parties to furnish, without expense to Kohler Brothers, all drawings, written data and dimensions which are in Kohler Brothers’ opinion necessary for the installation and operation of the reels; and Kohler Brothers will furnish, without expense, the necessary drawings and data co-ordinating with the data so furnished."

“Any delay in securing this data will constitute a proportionate extension of the specified shipping date.”

This proposal was accompanied by a letter, which was made a part of the agreement, as follows:

“July 27, 1927.

“The Chicago Daily News, Inc.,

15 North Wells Street,

Chicago.

‘ ‘ Gentlemen:

“As a part of our proposal of this date for seventy-two (72) Kohler Magazine Reels, we agree to allow you a credit of Ninety Thousand ($90,000.00) Dollars, making the total contract price One Hundred Ninety-eight Thousand ($198,000.00) Dollars, equivalent to Two Thousand Seven Hundred Fifty ($2,750.00) Dollars each.

“We further agree to allow you the sum of Eighteen Thousand ($18,000.00) additional for which we are to receive the fifteen Kohler Magazine Reels now being used in your old pressroom, making the net amount of this contract One Hundred Eighty Thousand ($180,000.00) Dollars.

“This allowance is made because of the privilege extended to you in the agreement dated July 15, 1907, conceding your right to use these reels in the plant of The Chicago Daily News.

Respectfully submitted,

Kohler Brothers

By G. A. E. Kohler (Signed)

G-. A. E. Kohler.

“Accepted, August 4, 1927,

The Chicago Daily News, Inc.

By (Signed) Walter A. Strong

President.”

November 22, 1927, the contract was modified by agreement between the parties as to the terms of payment and as the question of payment is of importance in the construction of the cause, we set this agreement up in full:

“November 22, 1927.

“The Chicago Daily News, Inc.

15 North Wells Street,

Chicago, Illinois.

“Gentlemen:

“In accordance with the request of Mr. Walter A. Strong, we hereby agree to modify the terms of payment enumerated in our contract for seventy-two (72) Kohler Magazine Reels accepted August 4, 1927, to read as follows:

“20% of the contract price in cash upon acceptance of contract by purchaser.

“20% November 25, 1927

“10% February 1, 1928

“10% April 1,1928

“10% June 1,1928

“10% August 1, 1928

“10% October 1,1928

“10% November 1, 1928

“Shipment of eight (8) of these reels will be made on or about December 1,1927.

“Shipment of the sixty-four (64) remaining reels to be made on September 1, 1928.

Very truly yours,

Kohler Brothers '

By G-. A. E. Kohler (Signed) ”

November 30, 1927, two additional reels were ordered to be used in the experimental building on the west side by The Chicago Daily News at the same price as that specified in the contract. This order for two additional reels was accepted by the defendant to be billed separately when delivered and at the price stated in the contract. Under the agreement deliveries of reels were made as follows:

“It was then stipulated that Kohler delivered eight reels December, 1927, being four reels shipped December 1,1927; four reels shipped December 12,1927; four reels shipped September 1, 1928; four reels shipped September 29, 1928; four reels shipped October 6, 1928; four reels shipped October 19, 1928; five reels shipped December 1,1928; five reels shipped December 3, 1928, making a total of thirty-eight reels.” Four reels were shipped September 9, 1928 which by error was omitted in the above stipulation.

Under the same agreement payments were made by the plaintiff to the defendant, as follows:

“Check dated September 7, 1927 for $36,000, Plaintiff’s Exhibit 1; check for $36,000, dated December 1, 1927, Plaintiff’s Exhibit 2; check dated February 2, 1928 for $18,000, Plaintiff’s Exhibit 3; check dated April 6, 1928, for $18,000, Plaintiff’s Exhibit 4; check dated June 19, 1928 for $18,000, Plaintiff’s Exhibit 5; check dated August 1, 1928 for $18,000, Plaintiff’s Exhibit 6.”

The total payments made up to' and including August 1, 1928, were $144,000. The total number of reels delivered at any time was ‘38. In the letter of July 27, 1927, accompanying the typewritten contract, after allowing credits and deductions, the net amount of that agreement was fixed at $180,000. This would make the cost of each reel $2,500, and from an examination of the number of reels delivered, as shown by the figures already stated and the amounts paid by the plaintiff, it is apparent that at this price per reel the defendant was paid a considerable amount over that required, at the time of the alleged breach of the contract for failure to deliver.

May 16, 1928, the plaintiff sent to the defendant the following communication:

“Referring to the contract between your company and this company dated July 27, 1927, covering seventy-two (72) Kohler magazine reels, later increased to seventy-four (74) reels, ten of which have been delivered. This company has made a change in design in its new presses which makes impossible the use of magazine reels. Consequently we hereby inform you that we will accept no more reels under said contract and we instruct you to deliver no more reels thereunder and to do no more work in the fabrication or preparation of said reels; and we hereby notify you that said contract is hereby finally cancelled and terminated by us.

“We shall be glad to discuss with you at your con- . venience the matter of fair reimbursement of such outlay, if any, already made in connection with this contract.”

From this communication it appears that at the time about 10 of the 74 reels had been delivered. In answer to this communication the defendant replied stating that the contract could not be canceled simply by sending notice thereof and adding,

“Belying on your contract, we have ordered all these reels and the principal parts of all of them have now been manufactured and we are in position to deliver them in accordance with the contract.”

July 17, 1927, plaintiff wired defendant that it was willing to sell back the 64 reels then held by the defendant and not delivered. In answer to this telegram Kohler wired that under Clause Three of Specifications in the contract, defendant would, if possible, furnish any special apparatus requested and to send press drawings so that he could meet conditions and added in the telegram the following words:

“We are prepared to furnish the new device in your test plant to determine the necessary requirements and after tests are made to arrange for additional cost.”

During the interim from the signing of the original agreement of July 27, 1927, until the letter of May 16, 1928, in which the plaintiff sought to terminate the contract for nondelivery, the plaintiff had installed new presses in its plant for the purpose of economizing space. It was found advisable under the circumstances to use a two-arm reel instead of the three-arm reel as was contemplated in the original agreement between the parties. Plans and drawings were prepared by the plaintiff and submitted to the defendant and evidently an attempt was made to prepare and manufacture a two-arm reel to take the place of the three-arm reel originally intended for the use in the plaintiff’s plant. This two-arm reel was a fundamentally different piece of machinery from the original three-arm reel contracted for. Considerable testimony was taken and written communications introduced in. evidence pertaining to this innovation and the record is, consequently, in a somewhat confused state on this question. An analysis, however, of the evidence and testimony seems to bear out the position of plaintiff, namely, that the original agreement was not departed from even though it became apparent that the defendant would not be able to supply the new device.

The defendant in its plea of set-off insists that it refused to abide by the communication of May 16, 1928, in which the plaintiff attempted to rescind the agreement and charges that on July 30,1928, the plaintiff formally notified the defendant that it would continue to perform its obligation under the contract dated July 27, 1927, and did thereafter make substantial payments to the defendant for reels received under that agreement. It is specifically charged by the defendant in its plea that “defendant and plaintiff, although negotiating in regard to the terms of an agreement, under which defendant would undertake to design and construct such new and different device, no agreement was ever made therefor between defendant and plaintiff, and the original contract, with said modifications, remained in force and effect.”

July 30,1928, the plaintiff mailed a check for $18,000, being 10 per cent due August 1, 1928, under contract dated July 27, 1927, together with a letter in which the plaintiff stated that the offer of May 16, 1928, to cancel the contract having been rejected by the defendant, it, the plaintiff, was ready to proceed with the original agreement. Among other things the letter contained the following, which in our opinion amounted to a recognition of the original agreement and a demand for delivery:

“We assume from your letter of May 16, 1928, answering our aforesaid letter of the same date, that these reels have now been manufactured in accord"anee with the contraet and that they will be ready for prompt delivery September 1,1928. Please be advised that we expect and shall insist upon delivery of the 64 remaining reels promptly on September 1, 1928, as provided in the aforesaid letter of November 22, 1927, upon your stationery, signed by each of the parties to the contract.”

August 6, 1928, Kohler wrote the Daily News in which he stated that he expected to deliver. the 64 reels in accordance with the agreement and was using every effort to comply with the request. In this letter appears the following:

“In view of your letter, however, insisting upon delivery September 1st, we have ordered, the shipment of these reels and they will be delivered to you at the earliest possible moment beginning on or about September 1, 1928.”

From this time on the defendant in his communications to the plaintiff refers to the contract price as that of $4,000, for each reel. From a review of the evidence we are unable to ascertain upon what theory defendant bases this price. The plaintiff was still insisting upon shipment under the original agreement. Up' to and including December 3, 1928, 38 reels had been delivered. Under the modification of the agreement of November 22,1927, the entire shipment should have been completed by September 1, 1928. At this time the defendant had been paid in full for the reels shipped and had received an overpayment of $49,000. Upon the trial plaintiff credited the defendant with the sum of $300 derived from the sale of some of the old material as junk, leaving a balance due of $48,700 and this was the amount of the verdict.

After waiting for some time and not receiving deliveries under the original agreement, the Daily News wrote Kohler on January 26, 1929, as follows:

“We beg to advise you that in view of your continued failure to deliver the remaining reels, as provided by our contract, we do not intend to accept any further reels, and we shall bring suit against you for the damages caused by your failure to deliver, and for other damages caused by you in connection with this contract, and we have so instructed our attorneys.”

There appears to be one point on which both parties to this litigation agree and that is that the construction of the written contract of July 27, 1927, was one of law for the court. Cases are cited in support of this proposition and the defendant in its given instruction No. 14 told the jury that it was the duty of the court to construe the contract of purchase and the duty of the jury to accept that construction. The court accordingly instructed the jury in the language of the contract, together with the modification of November 22, 1927, and fixed the purchase price at $180,000, the net amount agreed upon in the undertaking. The instruction also directed the jury that under the agreement the 15 old reels were to become the property of Kohler and that the contract price agreed upon could not be affected by any disposition which The Chicago Daily News might see fit to make of reels delivered under the contract. We are of the opinion that this construction was substantially correct as given.

Great stress is laid upon the clause in the agreement to the effect that the reels were to be used in the plant of The Chicago Daily News. The exact wording, however, of the letter of July 27, 1927, which constituted part of the contract after fixing the net price, is as follows:

“This allowance is made because of the privilege extended to you in the agreement dated July 15, 1907, conceding your right to use these reels in the plant of The Chicago Daily News. ” It is stressed in the articles that the reels were patented articles and that the defendant had the right to limit their use. It is unquestionably the rule that the patentee has the right to enforce a limitation where the property is leased and the title remains in the vendor. Where, however, the patented article is sold the vendee obtains full control over the article and may sell or dispose of it as he sees fit and the vendor releases all right in the article in so far as its resale is concerned.

The Supreme Court announced the rule in the case of United States v. General Electric Co., 272 U. S. 476, wherein it said: “Conveying less than title to the patent or part of it, the patentee may grant a license to make, use and vend articles under the specifications of his patent for any royalty or upon any condition the performance of which is reasonably within the reward which the patentee by the grant of the patent is entitled to secure. It is well settled, as already said, that where á patentee makes the patented article and sells it, he can exercise no future control over what the purchaser may wish to do with the article after his purchase. It has passed beyond the scope of the patentee’s rights. Adams v. Burke, 17 Wall. 453; Bloomer v. McQuewan, 14 How. 539; Mitchell v. Hawley, 16 Wall. 544; Hobbie v. Jennison, 149 U. S. 355; Keeler v. Standard Folding Bed Co., 157 U. S. 659.” To the same effect see Boston Store v. American Graphophone Co., 246 U. S. 8, wherein the Supreme Court in its opinion says:

“The case therefore directly involved the general question ?of the power of the patentee to sell, and yet, under the guise of license or otherwise, to put restrictions which in substance were repugnant to the rights which necessarily arbse from the sale which was made. In other words, it required once again, a consideration of the doctrine which had been previously announced in Henry v. Dick Co. and of the significance of the monopoly of the right to use conferred by the patent law which had been reserved in Bauer v. O’Donnell. Comprehensively reviewing the subject, it was decided that the rulings in Bauer v. O’Donnell and Straus v. Victor Talking Machine Co. conflicted with the doctrine announced and the rights sustained in Henry v. Dick Co., and that case was. consequently overruled. Reiterating the ruling in the two last cases, it was again decided that as, by virtue of the patent law, one who had sold a patented machine and received the price, and had thus placed the machine so sold ■beyond the confines of the patent law, could not, by qualifying restrictions as to use, keep under the patent monopoly a subject to which the monopoly no longer applied.

“Applying the cases thus reviewed, there can be no doubt that the alleged price-fixing contract disclosed in the certificate was contrary to the general law and void. There can be equally no doubt that the power to make it in derogation of the general law was not within the monopoly conferred by the patent law, and that the attempt- to enforce its apparent obligations under the guise of a patent infringement was not embraced within the remedies given for the protection of the rights which the patent law conferred.”

The reference to use in the plant of The Chicago Daily News in our opinion was a matter of description and not of restriction. The plant of the defendant was located at Mishawaka, Indiana, and the designation for use in the plant of The Chicago Daily News may have been for shipping purposes, or it may have been for the purpose of showing the right which The Chicago Daily News had under its contract with the defendant of July 15,1907. The operative part of the contract agreement between the parties was clear and unambiguous. The reference .“for use in.the plant of The Chicago Daily News” was a statement not necessary to a solution of the agreement between the parties. It was in the nature of a statement in a preamble. The contract in question was one of bargain and sale and the terms of the agreement were governed by that part of the contract with reference thereto. Martin v. Rothwell, 81 W. Va. 681; Hansbarger v. Hansbarger, 206 Mich. 281; Williams v. Barkley, 165 N. Y. 48; Irwin’s Bank v. Fletcher Savings & Trust Co., 195 Ind. 669.

Upon the breach of the contract the plaintiff had the right to dispose of the property which it had purchased under the best circumstances that it could for the purpose of reducing its loss. Neither is it clear that the plaintiff used the machines in question in places other than the plant of The Chicago Daily News, or at least not until after repeated requests had been made for delivery. ‘While there are numerous communications from the defendant regarding the contemplated new reels to be manufactured, it is apparent from a reading of this record that the plaintiff, after having attempted to alter the contract in order to meet conditions arising from the installation of the new presses, decided to continue it in force and demanded delivery and that the defendant even after May 16th promised to make deliveries in accordance with the agreement of July 27, 1927.

Some space is devoted by the defendant to error on the part of counsel for plaintiff in referring to the fact that Franklin Kohler, an heir, was not placed upon the stand by the defendant. This alleged error is based upon the fact that he was a party in interest and Kohler being dead he was not competent under the statute. We can see no force in this argument inasmuch as the defendant' had the right to tender him as a witness and, moreover, such transactions as he might testify to might not have been matters concerning conversations in which the deceased participated. The contention is without merit.

Error is predicated upon the fact that counsel for the plaintiff in his address to the jury requested one of their number, who happened to be a draftsman, to use his technical knowledge in examining certain drawings which were in evidence. No objection was taken to the remark at the time nor exception recorded. We see no reversible error in this contention.

It is also insisted that it was error to direct the attention of the jury to the fact that Kohler made a profit by not delivering the reels under the written agreement with the plaintiff. The fact is that the defendant filed a set-off and any testimony bearing on the question as to what he received for the sale of the reels was competent as bearing upon the question of his damages, if any.

Holden, a witness called by the defendant, on cross-examination testified that the amount received from the 34 reels not delivered to the Daily News was $135,110, and again stated that if he changed the price from $4,000 per reel to $2,500 the price set forth in the contract with The Chicago Daily News, the difference would be $111,000, so that instead of The Daily News owing Kohler $42,000, Kohler would owe The Daily News $68,955.12.

This evidence discussed by counsel for plaintiff in his argument was in the record and had a direct bearing on the question of defendant’s set-off and also on the question as to whether or not Kohler had breached his contract with the plaintiff in good faith or whether he was tempted because of the additional profit derived from the sale of the reels to others.

We have considered the arguments of both counsel before the jury and find that there was constant interjections on both sides. The cause required a number of days in the trial. We find no such conduct on the part of counsel for the plaintiff as in our opinion should necessitate a retrial.

The question as to whether or not there was a breach in the contract by the defendant was one of fact; the jury was fully instructed and the theory of defendant presented in full to the jury for its consideration. The verdict was sustained by the trial judge who heard the testimony and under the circumstances we find no reason for disturbing it.

For the reasons stated in this opinion the judgment of the circuit court is affirmed.

Judgment affirmed.

Hall, P. J., and Hebel, J., concur.