text:
    The People of the State of Illinois ex rel. Oscar Nelson, Auditor of Public Accounts of the State of Illinois v. Peoples Bank and Trust Company of Rockford. Solem Machine Company, Appellee, v. Eugene Abegg, Receiver of Peoples Bank and Trust Company, Appellant.
    Gen. No. 8,607.

      Opinion filed May 25, 1933.
    Hall & Dusher, for appellant.

      Hyer & Gill, for appellee.
   Mr. Presiding Justice Wolfe

delivered the opinion of the court.

The Peoples Bank and Trust Company of Rockford, Illinois, closed its doors for business on June 15, 1931. Soon thereafter the auditor of public accounts appointed Eugene Abegg as receiver for said bank. At the October term of the circuit court of Winnebago county, a suit in chancery was begun for the purpose of liquidating the bank’s assets, and a decree was entered in October of that year confirming the appointment of the receiver and providing for the liquidation of the assets of said bank through its receiver.

At the same term of court an action at law in assumpsit was started by the appellee, Solem Machine Co. v. Peoples Bank and Trust Co. The amount claimed to be due the plaintiff at that time was $30,000. An order was entered by the court consolidating the assumpsit action and the receiver’s suit. Sometime afterward an order was entered in the receiver’s suit granting leave to the Solem Machine Co. to file an intervening petition for an allowance of a claim against the receiver. The bill of particulars in the assumpsit suit was allowed to stand as an intervening-petition for the allowance of a claim in the receiver’s suit. To this intervening petition a demurrer was filed and sustained by the court. The Solem Company then filed an amended intervening petition to which the receiver filed an answer. A hearing was had on said petition and on October 1, 1932, a decree was entered allowing the claim of the Solem Company against the receiver of the bank in the sum of $22,242.94 as a general claim. The court refused to allow the claim as a preferred one, and this appeal is from that decree. Both the complainant and the defendants have assigned error to the allowance of this claim as a general one.

The claim of the Solem Machine Company was based upon two separate groups of bank checks, the proceeds of which were wrongfully converted by one Chester A. Gribson, secretary-treasurer of the Solem Mfg. Company during the years 1928 to 1931 inclusive. Gibson had authority to draw, execute and deliver checks upon the account of the Solem Company, and to execute for and on behalf of the company promissory notes, etc. During all of the period in question the Third National Bank of Rockford, Illinois, was the depository for the Solem Machine Company, but at no time had it carried an account, or done any business with the Peoples Bank and Trust Company, of Rockford, where Gibson carried his own personal account. In the latter part of April, 1931, certain shortages were discovered in the accounts of Gibson, and after a complete audit completed in September, 1931, the shortage was ascertained to be in the neighborhood of $35,000. The claim of the Solem Machine Company was based upon these two groups of checks which were wrongfully converted by Gibson. The first group consisted of nine separate checks issued from November 1, 1928 to October 25, 1929, to an aggregate sum of $20,215.75. These checks belonged to the Solem Machine Company being payable to the order of said bank and signed in the name of the Solem Machine Company by said Gibson and drawn on the Third National Bank of Rockford, Illinois. The second group consisted of 13 checks aggregating a sum óf $2,027.19, drawn by different customers of the Solem Company and payable to the order of the Solem Company and indorsed in the name of said company by Gibson as secretary. All of these checks were presented by Gibson to the Peoples Bank and Trust Company, and he was immediately given credit in his individual account with the said bank, and the Peoples Bank and Trust Company collected all of these checks from the Third National Bank in due course. The proceeds of all of these checks were used for the individual use and benefit of Gibson. The aggregate of the amounts collected and deposited to the credit of Gibson was $22,242.94.

From the time that Gibson deposited the first of these checks up to the time of the closing of the Peoples Bank and Trust Company, the bank had cash on hand and due from other banks more than sufficient cash to discharge and pay all thése checks in question.

On May 29, 1931, which was the time that the audit of his accounts was being made, Gibson gave his demand note to the Solem Machine Company in the sum of $25,000, payable to the order of the Solem Machine Company with interest at six per cent and deposited with said note as collateral security a large amount of stocks, bonds and notes. This collateral security included 141 shares of the capital stock of the Solem Machine Company, which has a par value of $10 per share. It did not include a life insurance policy in the Prudential Life Insurance Company on the life of Gibson. This policy had lapsed, but with the consent of Gibson it was reinstated, and the Solem Machine Company was made beneficiary under said policy. Gibson died and in October, 1931, the Solem Machine Company collected the sum of $10,000 upon said policy. The collateral was delivered to the Solem Machine Company on May 12, 1931, and the note was dated May 28, 1931. No charge was ever made on the books of the Solem Machine Company against Gibson for the amount of the shortage.

In addition to the conversion of the funds represented by the checks in this case, Gibson had also drawn about $10,000 from the Third National Bank of Rockford. This item of $10,000 is not involved in this claim.

It appears from the evidence that the $25,000 note was taken as an evidence of indebtedness, but was subject to adjustment on the complete audit of Gibson’s account. The president of the Solem Machine Company testified that the note was given to cover a shortage of money that Gibson had taken unlawfully from the Third National Bank; that at the time the note was given that • shortage was undetermined in amount; that at that time the Solem Machine Company knew nothing about the Peoples Bank and Trust Company transaction, and that the taking of the note in question had nothing to do with that shortage and the Peoples Bank and Trust Company upon which this claim is predicated. It will be observed that the Solem Machine Company had never carried an account with the Peoples Bank and Trust Company and that all of these checks showed on their face that they were the property of the Solem Machine Company. Where a bank upon accepting a check drawn to its order by one who is not indebted to it and with whom it has no account, credits the proceeds thereof to the account of the person presenting it without taking any precaution to determine the authority of the person receiving the same, it will be liable to the maker for failure to hold the proceeds of the instrument subject to the order of the maker, and under such circumstances the bank would not bé holder in due course of law. Milano v. Sheridan Trust & Savings Bank, 242 Ill. App. 362; Paine v. Sheridan Trust & Savings Bank, 342 Ill. 342, aff’g 255 Ill. App. 250.

It is the contention of the appellant that the actions of Gibson were ratified, and that by the taking of the note and security from Gibson the tort of the thing was satisfied or extinguished, and that the Solem Machine Company is now estopped as against the receiver to deny the authority of Gibson to make the deposit. It will be observed that the testimony is undisputed that the note given by Gibson to the appellee was made before the audit was complete and before any knowledge was gained of the checks being cashed by Gibson at the appellant bank. From an examination of the whole record, we think none of these claims can be sustained, and that the court properly found that the bank owed the appellee company this money.

The appellee assigns cross errors in contending that the trial court was in error in refusing to allow its claim as a preferred claim, and this court, on appeal, should enter judgment thereon, or remand the case to the circuit court of Winnebago county with instruction to allow said claim as a preferred one. We find no authority that sustains this contention, and we are of the opinion that the trial court properly found and allowed this to be a general claim.

One of the reasons assigned by the appellant why the decree should be reversed is that the receiver should be given credit for $11,410, which is the amount of the insurance policy collected by the Solem Machine Company and the face value of tbe stock of said company that was put up as collateral security for the payment of the $25,000 note. The evidence shows conclusively that this collateral was given for the payment of an unknown indebtedness, which on investigation was found to be $10,000 from the Third National Bank, and the Solem Machine Company would have the right to apply this amount on that indebtedness. Monson v. Meyer, 190 Ill. 105. However, this leaves a balance of $1,140 worth of property in the Solem Machine Company’s possession that should be applied somewhere, this being the par value of the stock turned over by Gibson, and inasmuch as the Solem Machine Company has $1,140 worth of property or money in equity belonging to Gibson, this amount should be applied against the claim found to be due from the appellant to appellee, leaving the net amount to be allowed of $21,102.94.

It is, therefore, ordered that the allowance of said claim as a general claim "be sustained. But the case is hereby reversed and remanded to the circuit court of Winnebago county to allow the said claim as a general one the sum of $21,102.94, and the costs of this suit be assessed against the appellant.

Reversed and remanded with directions.


source: Caselaw Access Project

author: Mr. Presiding Justice Eldredge

license: Public Domain

text:
    Hazel Luke, Plaintiff in Error, v. Robert Marion, Defendant in Error.
    Gen. No. 8,726.
    Opinion filed April 11, 1933.
    Rehearing denied June 20, 1933.

      Hutton & Clark, for plaintiff in error.
    Mann & Stifler and Oliver D. Mann, for defendant in error.
   Mr. Presiding Justice Eldredge

delivered the opinion of the court.

This was an action in case brought by plaintiff in error against defendant in error to recover for injuries received by plaintiff in error as a guest passenger because of the wanton and wilful conduct of defendant in error in driving an automobile, under' the Act of 1931 amending section 42 of the Motor Vehicle Act, Cahill’s St. ch. 95a, if 43. Trial was had before a jury and a verdict returned of not guilty.

Many errors.have been assigned and argued, most of which are principally directed to the improper conduct and remarks of counsel for defendant in error during the progress of the trial, some of which are well taken, but as this judgment must be reversed for error in the application of the law, it will be unnecessary to discuss the others as they will probably not appear again on another trial. The' provision of the statute above mentioned is as follows“ (b) Provided, hotvever, that no person riding in a motor vehicle as a guest, without payment for such ride, nor his personal representative in the event of the death of such guest, shall have a cause of action for damages against the driver or operator of such motor vehicle or its owner or his employee or agent for injury, death or loss, in case of accident, unless such accident shall have been caused by the wilful and wanton misconduct of the driver or operator of such motor vehicle or its owner or his employee or agent and unless such wilful and wanton misconduct contributed to the injury, death or loss for which the action is brought.”

The first and ninth instructions given on behalf of defendant in error in substance state that the plaintiff in error could not recover unless her injuries were caused by the wilful and wanton conduct of defendant in the operation of his automobile. These instructions are not in accordance with the law as announced by the statute. The evidence shows that the injuries were received by means of a collision between the automobile in which plaintiff in error was riding, and which was being driven by defendant in error, with another automobile, and there was evidence tending to show that both drivers were guilty of wilful and wanton conduct at the time of the accident. These instructions as given limit too narrowly the liability of defendant in error. The wilful and wanton conduct of defendant in error might not have been the sole cause of the injury but if it contributed to the causation of the injuries, he would be liable therefor. Instruction No. 10 given on behalf of defendant in error correctly states the law but will not cure the error in the giving of the other two as the jury would not know which principle of law to apply to the facts in the case, which knowledge was absolutely necessary to enable them to arrive at a correct verdict.

Por the errors indicated, the judgment must be reversed and the cause remanded.

Reversed and remanded.


author: Mr. Justice Shurtleff

text:
    John B. Colegrove and Company State Bank v. Amelia Gaupp. Amelia Gaupp, Appellee, v. John B. Colegrove and Company State Bank, Robert G. Earley, Receiver of John B. Colegrove and Company State Bank (Appellant), and Christine Miller.
    Gen. No. 8,713.
    Opinion filed April 11, 1933.
    Rehearing denied June 20, 1933.
    Oscar J. Putting, for appellant.
    Leslie J. Taylor, for appellee; Graham & Graham, of counsel.
   Mr. Justice Shurtleff

delivered the opinion of the court.

This is an appeal from a decree of the circuit court of Christian county.

The John B. Colegrove and Company State Bank was organized in 1920. Prior to that time it was conducted under the name of the John B. Colegrove and Co. Bank, a partnership. Martin B. Miller was a customer of the old bank, and did business with it until his death. He also had dealings of various kinds with John B. Colegrove personally. Mr. Miller died in 1924, leaving ■ Amelia Gaupp as one of his surviving children.

It is contended by appellee Amelia Gaupp that at the- time in question the John B. Colegrove and Company State Bank received and accepted from Martin B. Miller and Christine Miller, his wife, the sum of $7,000 in trust for the benefit of Martin B. Miller, Christine Miller and Amelia Gaupp, and that the income therefrom should be reserved for them, or the survivor of them; that on February 2, 1928, Amelia Gaupp made a written demand on the bank for said $7,000 and the interest thereon, claiming she was the owner of the entire fund by virtue of a certain contract entered into between Martin B. Miller, Christine Miller and Amelia Gaupp on March 8, 1916, and as afterwards modified by agreement of the parties about March 1, 1920.

Appellant contends that the John B. Colegrove and Company State Bank never received the property in trust or in any other manner, but that the property or a part thereof was received by John B. Colegrove individually, when the old partnership bank of John B. Colegrove and Company was in operation, and before the John B. Colegrove and Company State Bank came into existence.

Shortly before the John B. Colegrove and Company State Bank closed, Amelia Gaupp, by her counsel, appeared at the bank and demanded the property of Amelia Gaupp, and information regarding the alleged trust fund. John B. Colegrove stated that there was some question concerning the trust, and from such discussion, counsel for Amelia Gaupp understood that there was some uncertainty in the mind of John B. Colegrove concerning the trust. Counsel for Mrs. Gaupp then suggested that if there was any question concerning the trust, a bill to construe the trust ought to be filed in order that there could be a judicial determination concerning the proper construction of the trust. Mr. Colegrove assented to this suggestion, and subsequently a bill of complaint was filed in this cause, wherein the John B. Colegrove and Company State Bank was named as the complainant.

The bill alleged that the John B. Colegrove and Company State Bank was trustee. Soon after the original bill of complaint was filed, appellee waived the issuance and service of process and entered her unlimited appearance and filed her answer and cross-bill. About two or three days before the bank closed, a hearing was had and evidence was heard, but the hearing was not completed when the bank closed.

Appellant was appointed receiver, and, upon investigation by him, it appeared that at no time was there ever any of the trust funds in the possession of the bank, as alleged.

After becoming acquainted with the facts, appellant sought to have the original bill of complaint dismissed. But owing to the fact that a cross-bill was on file, the court refused appellant’s motion and called the case for trial. Appellant then asked leave to amend the original, bill and upon obtaining such leave set forth that the John B. Colegrove and Company State Bank had never at any time accepted any 'obligations or responsibility as a trustee in regard to the estate of Martin B. Miller, deceased, or any portion thereof; that it never authorized any of its agents, its president, cashier or anyone else, to make any declaration of trust or acknowledgment of any kind or character whatsoever, which could be construed as any assumption of responsibility or willingness to act as trustee for said estate; and that any acts of any kind or character which could be construed in any way as an indication that the John B. Colegrove and Company State Bank professed, assumed or intended to act as caretaker of any property of the estate of Martin B. Miller, deceased, as manifested by any snch officer or representative of John B. Oolegrove and Company State Bank, was wholly unauthorized by said bank, and was done or committed for the purpose of defrauding said bank and unlawfully seeking to impose liability upon said bank.

The amended bill further charged that said John B. Oolegrove was acting entirely in his individual capacity, and not at any time as an agent or representative of the John B. Oolegrove and Company State Bank; that notwithstanding such fact and circumstances, the said John B. Oolegrove, to the great wrong and detriment of the John B. Oolegrove and Company State Bank, and for his own personal advantage, in order to protect himself against personal liability on account of his individual acts and doings in connection with said premises, did wrongfully and fraudulently cause this suit to be instituted by causing to be filed therein the original bill of complaint, falsely setting forth and misrepresenting to the court the facts and circumstances of the case, and pretending that the John B. Oolegrove and Company State Bank was acting as trustee and accepting the responsibility therein, so as to commit and involve the John B. Oolegrove and Company State Bank for full responsibility to the cestui que trust in place of the personal liability of John B. Oolegrove as an individual.

Appellee demurred to the amended bill of complaint, but said demurrer was abandoned.

Allegations similar to those in the amended bill of complaint above mentioned also appear in the appellant’s answer to appellee’s cross-bill.

Appellee filed an answer to said bill of complaint and a cross-bill alleging in substance that the John B. Colegróve and Company State Bank was organized under the .banking laws of the State of Illinois, and was qualified to act as trustee and in fiduciary capacities; that on or about November 7, 1923, Martin B. Miller executed his last will and testament; that he thereafter died and his will was admitted to probate on January 15, 1924; that Cleveland P. Miller qualified as executor, administered the estate and was discharged about February 3, 1928; that it was provided in said last will and testament the following:

“Second: I give and bequeath to Amelia Gaupp the sum of Seven Thousand ($7,000) Dollars, and being one half of the money out of the proceeds of the sale of seventy acres of land which said fund is now held in trust for her by the John B. Colegrove and Co. State Bank of Taylorville, Illinois, which with Three Thousand Dollars ($3,000) already paid to her and Four Thousand Dollars ($4,000.00) more which was paid to her on March 1,1920,-shall be in total of Fourteen Thousand Dollars ($14,000.00) and shall be in full of her share of my estate, but the income of same to the amount of Two Hundred Fifty Dollars ($250.00) per annum is reserved for my use during my life time and after my death for the use of my-wife, Christine Miller during her life time.”

The cross-bill then recites that on the date of the execution of said will, Martin B. Miller deposited with the bank the sum of $7,000 and the bank executed a declaration of trust in the words and figures following:

“Taylorville, Ill., November 7, 1923. Received of Martin B. Miller and Christine Miller, his wife, the sum of $7,000.00 which is placed in escrow and which is to be held in trust by me for the use of Martin B. Miller,- Christine Miller and Mrs. Amelia Gaupp, and on the death of Martin B. Miller and Christine Miller or the survivor of them said sum to be delivered over to Mrs. Amelia Gaupp (wife of John Gaupp) of Springfield, Illinois. And while said sum is held in trust it is agreed that the taxes and assessments that may be levied against the same shall be paid by Mrs. Amelia Gaupp, and it is also agreed that the use of said money and the income derived therefrom is reserved by Martin B. Miller and Christine Miller or the survivor of them. And it is- also agreed that in case Mrs. Amelia Gaupp should die before the said Martin B. Miller and Christine Miller or the survivor of them, then the whole amount of same shall revert to the said Martin B. Miller to dispose of as he may see fit. And also it is agreed that in case the said Martin B. Miller or his wife Christine Miller should find it necessary to use any part of the principal of said amount at any time, that he or she may draw any part or all of same for their use. Interest to be paid at the rate of 5 per cent per annum.

“John B. Colegrove and Co. State Bank

“By John B. Colegrove, President.”

The answer and cross-bill then recited that no part of the sum of $7,000 was received by Cleveland P. Miller but the bank paid to Christine Miller, surviving widow, $350 per annum interest on the .fund of $7,000 beginning on November 7, 1924, and annually thereafter, including November, 1927, but had not paid the income from said fund to anyone subsequent thereto.

The answer and cross-bill further recited that on February 2, 1928, Amelia Gaupp made a written demand for the trust fund and interest, claiming to be the owner by virtue of a contract entered into between Martin B. Miller, Christine Miller, his wife, Amelia Gaupp and others, bearing date March 8, 1916, as afterwards modified by agreement of parties on or about' March 1, 1920, also by virtue of the foregoing paragraph two of said will. The cross-bill then recited that the bank was desirous of discontinuing its service and duties as such trustee, and that it was ready and willing to pay over the sum of $7,000 and the' interest accrued subsequent to November 7, 1927, to Amelia Gaupp if the court should decide that Amelia Gaupp is the owner, or to transfer the fund to some other person to be designated by the order of the court as trustee.

The original bill made Amelia Gaupp a party defendant, prayed for an accounting and that the court should determine the question of the title to said sum of $7,000 and appoint a suitable person as trustee should the court determine that the funds should be held in trust.

Before the appointment of the receiver, appellee, Amelia Gaupp, had filed her written appearance to the original bill, which she had procured John B. Cole-grove to present in the name and on behalf of the bank, and had filed an answer admitting the allegations with reference to the probate of the will and then proceeding the defendant denied that she had knowledge of the purported trust provision by the deposit of $7,000 with the John B. Colegrove and Company State Bank; that Cleveland P. Miller never obtained the money and disclaimed all interest in the sum of $7,000; alleged that on or about March 8, 1916, a contract was entered into by Martin B. Miller, Christine Miller, his wife, and children' and prospective heirs of Martin B. Miller, which contract made a distribution to the several children; that pursuant to said contract, the appellee entered into possession of 70 acres of land described in the contract, paid all taxes and assessments, collected the rents and paid Martin B. Miller the sum of $225 per annum, as provided in the contract; that on or about March 1, 1920, she obtained a purchaser for the real estate for the sum of $14,000; that her father consented to the sale and made conveyance, and by the agreement between the heirs and the father, the annuity was increased from $225 to $250 per annum, which she continued to pay to her father during- his lifetime, and thereafter to his widow, Christine Miller.

The answer further alleged that she received $7,000 of the purchase price; that her father requested her to permit him to retain the other $7,000 and to enjoy the income so long as he lived; that she consented to the arrangement, and was advised by her father that the $7,000 was invested at the John B. Colegrove and Company State Bank in her name, the income to be used by her father; that after the death of her father and the probate of the will, she relied upon Cleveland P. Miller to restore the said sum of $7,000, .and about -February 2, 1928, at the time fixed by the county court of Christian county for the final settlement of the estate of Martin B. Miller, she was advised by Cleveland P. Miller that he never received the sum of $7,000; that it was no part of the assets of the estate of Martin B. Miller, but that her money was held by the John B. Colegrove and Company State Bank for her; that she then made demand on the bank for the money and accumulated interest and was advised by the bank that it held the money as trustee until after the death of Christine Miller, the stepmother of Amelia Gaupp.

The answer further alleged that she had never known of the alleged trust until February 2, 1928, and denied that Martin B. Miller had any title to the $7,000 and denied that he could create a trust for the benefit of Christine Miller in said fund, as defendant had continued to pay the annuities to Christine Miller, as provided by the terms of the contract.

The answer denied that the court had jurisdiction to appoint any person as trustee; prayed that the same might be held as and for a cross-bill; prayed that the bank be directed to account with her, and that she be adjudged to be the owner of the sum of $7,000 with accrued interest, and entitled to immediate possession ; and that she might receive such other and further relief in the premises as to the court might be deemed equitable.

Attached to the answer was the family contract entered into between Martin B. Miller and Christine Miller, his wife, and four children bearing date March 8, 1916, which recites the payment of certain moneys to Cleveland P. Miller and that in 1914, land ■was conveyed to a daughter, Rosa Bury, and a warranty deed to Amelia Gaupp to about 70 acres of land and a deed to another daughter for 70 acres, the three warranty deeds being placed in the bank of John B. Colegrove and Company State Bank with instructions to the bankers to deliver said deeds to each of the respective grantees immediately after the death of the survivor of Martin B. Miller and wife. The contract further provided for the payment of an annuity by each of the four children; that of Amelia Gaupp to be in the sum of $225, which, in 1920, was increased to $250. The contract then provided for forfeiture in case of default by the respective grantees.

A replication was filed and a hearing had on the foregoing pleadings on October 10, 1929, and the trial court determined that Christine Miller should be made a party. On November 13, 1929, Amelia Gaupp was granted leave and filed an amendment to her cross-bill,the amendment in substance being that Christine Miller claimed some interest in the fund of $7,000, made Christine Miller a party defendant and prayed for relief and for a summons to issue for Christine Miller to the November term of court. Summons was issued, served and returned, and at the November term of court, Christine Miller and the bank defaulted, there being no answers filed to the cross-bill. On February 14, 1931, an additional amendment was filed ■ to the cross-bill setting up the failure of the John B. Cole-grove and Company State Bank; that it was in liquidation, and that Robert G. Earley was appointed and is acting as receiver; that at the time of the closing of the bank on or about October 11, 1929, the bank had on hand cash and cash items approximating $25,000 and that at all times after the creation of the trust had on hand in the form of cash and cash items an amount in excess of the trust fund of $7,000, and made Robert G; Earley, as receiver, a party defendant.

On July 13,1931, Robert G. Earley, as receiver, filed an answer denying the allegations of the cross-bill and denying that the John B. Oolegrove and Company State Bank held any funds as trustee. On the same date, by leave of court, Robert G. Earley amended the original bill of complaint filed by the bank by striking out substantially all of the original bill and setting up the failure of the bank and the appointment of Robert G. Earley as trustee, and then proceeded to allege that the bank had never accepted any obligations • or responsibilities, as a trustee and never authorized any agents, president or other officer to make any declaration of trust and in effect denied any responsibility or liability on the part of the bank as a trustee, as hereinbefore set out, and denied the right of the bank to have instituted the proceedings.

Amelia Gaupp demurred to said amended bill and filed exceptions to part and an answer to part. The case was set for trial without disposing of the demurrer and exceptions but was tried by an agreement of the respective parties and their solicitors, that portion of the decree being as follows:

“The court further finds that the cause was called for trial and technical objections to the pleadings were waived by the respective solicitors and their clients, and a hearing was had upon the cross-bill as amended, as aforesaid, and answer and replications, and the is-, sues were submitted to the court as to whether or not the John B. Oolegrove and Company State Bank became a trustee for Amelia Gaupp in the sum of Seven Thousand ($7,000.00) Dollars ; also upon the question of whether or not Amelia Gaupp was the sole owner of said trust funds, and also as to whether or not such trust funds constituted Amelia Gaupp a preferred creditor of said bank in process of liquidation under the receivership of Robert G. Barley. The technical questions of the sufficiency of the amendment to the original bill and answer of Robert G. Barley, receiver as aforesaid, being waived.”

The foregoing are substantially the issues in the cause, although not set out with the greatest nicety.

There was a decree in behalf of appellee, Amelia Gaupp, establishing the trust and giving it preference in the payment of claims and continuing the cause for the purpose only of determining the full amount of the preferred claims. The receiver has appealed.

Considerable feeling is expressed in this case, growing out of appellee and her counsel procuring the said John B. Colegrove in the beginning, to file the bill in the name of said bank, and by a solicitor selected by appellee and her counsel; however, appellant presents in his brief the following:

“We wish to state in behalf of appellant that we do not want to be understood as at any time questioning the good faith of Mr. Taylor, solicitor for appellee, in regard to the facts and circumstances under which the bill of complaint was prepared and filed. Our contention is that John B. Colegrove, in truth and in fact, was' the trustee; that he used the money and trust property, converted the same to his own use, and subsequently he undertook to fraudulently shift his individual liability to that of the bank. ’ ’

The cause was first heard before the closing of the bank on October 10,1929, when all matters were stipulated between counsel for appellee and counsel for the bank, but the cause was not completed. It was then stipulated, “that John B. Colegrove and Company State Bank has the sum of Seven Thousand ($7,000.00) Dollars and has had it since the 7th day of November, 1923, as evidenced by a copy of the Trust Agreement which is marked Exhibit B.” The basis of proof in appellee’s cause consists of the trust agreement signed by John B. Colegrove, in behalf of said bank, and the will of Martin B. Miller, deceased. Outside of those instruments there is no proof that any sum of money was paid into said bank in trust for appellee, .or for any other person. Objections were made and sustained as to any showing of transactions between Colegrove and Martin B. Miller or between the bank and said Martin B. Miller, on the ground that Miller was dead, and any such transactions could not be gone into by parol proof. The same rulings were made in connection with proofs offered in regard to Cleveland P. Miller, the executor of the last will and testament of Martin B. Miller, deceased. Appellee, Amelia Gaupp, denied the trust and denied the right of her father, Martin B. Miller, in his lifetime to establish such a trust in her behalf. She claimed that the funds belonged to her and that she had merely left them in her father’s hands during his lifetime. She had never heard of the trust until after her father’s death. Each of the parties to this cause was suing and defending in her and its own right, and neither of them in a representative capacity and there were many errors of the court in its rulings upon the admission of evidence adverse to appellant.

, May Royse Sharp, a witness for appellee, testified : “I live in Taylorville. Until the John B. Colegrove and Co. State Bank closed, I was private secretary to the president of the bank, and stenographer for the bank-for about twelve and a half years. During that time John B. Colegrove was president of the bank. . . . The Miller family-was in the bank on many occasions, on banking business. I have made copies of this agreement and copies of the will several times. Cleveland Miller was there at times when I made copies of these papers. I couldn’t say whether John B. Colegrove was there. He has been present when they came in. I don’t know whether John B. Colegrove had the trust money or trust property personally, or whether the bank had it. I remember making a copy of this agreement for Mr. Cleveland Miller at different times. John B. Colegrove was an attorney. He'advised with the Miller family at different times about legal matters. I don’t recall the date when Martin B. Miller died, but I remember the making of the will. Members of the Miller family came into the bank shortly after the death of Martin B. Miller. Cleveland Miller was in the bank many times. I can’t say that he was with the family at the reading of the will. I remember the day the will was read to Mrs. Dollinschiek, after the death of Martin B. Miller. I don’t know what attorney assisted in the probate of the will.”

Homer Brents was a witness in behalf of appellant. He testified:

“I live in Taylorville, Illinois. My business is abstract and titles. I was the first employee of the John B. Colegrove and Co. State Bank. The bank was opened on April 9, 1908. It was a partnership; was located on the west side of the square. I acted as cashier from the day it opened until the first of October, 1919. I came back about the first of November, 1919, and stayed until the spring of 1920. I had no designated title, but they called me . the vice president as far as official signatures were concerned. I was re-employed in 1919, left later, and then went back in the fall of 1920. At that time I had a sort of general supervision of the abstract business and the placing of the stock of the John B. Colegrove & Co. State Bank. I knew something about a trust concerning the property of Martin B. Miller, by observation. ... I knew by hearing conversations, and seeing transactions on the books of the bank, but I saw no written instrument of trust. The first time was at the time of the purchase of the land on which Bicks’ Addition to Humphrey is located, in 1912. The John B. Colegrove & Co. State Bank was not in existence at that time— not until 1920. ... I worked with the Colegrove Bank to the 15th of April, 1925. I learned of the Miller trust fund only through conversations, observation and transactions that came through. Mr. and Mrs. Miller, Martin B. Miller and Christine Miller came to the bank and waited an hour or two on different occasions and had a private conversation with Mr. Cole-grove. While they were in conference Mr. Ricks came over and stopped at the bank window and told me.

“Mr. Taylor: That is objected to.

“Witness: I had conversations with Mr. Ricks, and the clerks in the bank. I didn’t learn anything about the Miller business from Mr. Colegrove.

“Q. Do you know whether Mr. Ricks borrowed any of this trust money?

“Mr. Taylor: That is objected to.

“Mr. Putting: We are trying to identify this fund, as to who borrowed it and as to who it was, borrowed from.

“Mr. Taylor: We object to it.

“Mr. Putting: This witness cannot tell all he knows in one answer.

“Mr. Taylor: The evidence so far, is undisputed

that the president of the' John B. Colegrove & Co. State' Bank executed this trust agreement and any conversation which would tend to refute the intent of the papers would—

“The Court: The objection is overruled, I will hear it subject to the objection.”

Cross complainant excepted.

“Q. Do you know whether Mr. Ricks borrowed any of this trust money?

“Mr. Taylor: That is objected to.

“A. Yes, sir, $7,300.00. I know where that money came from. The note of the Ricks Motor Sales Co., payable to John B. Colegrove, trustee, was brought out of the room in which the conference between Mr. Colegrove and the Millers had taken place, and into which room Mr. Ricks had gone, was brought into the bank and put through the day’s business, and I had previously been told.

“Mr. Taylor: I object to any conversation between the Bank’s clerks and Bank’s officers.

“Witness: This was not, this was with the borrower.

“Mr. Taylor: They don’t claim the conversation to have been had in the presence of Mr. and Mrs. Miller.

“Mr. Putting: We are making the offer.

“The Court: The objection is overruled.”

Cross complainant excepted.

, “Witness: The Ricks Motor Sales Company owed $7,300 and on this occasion Mr. Ricks informed me he was going to take up his $7,300 note, that Mr. Cole-grove had arranged for him to get it from the Millers, and in a few minutes after he went out the new note was brought in by Mr. Colegrove, payable to John B. Colegrove, trustee, and indorsed without recourse.

“I am not through with that conversation. The next day Mr. Ricks came in. . . . There was a conversation the next day about this matter with Ralph Ricks.” Objected to; overruled; cross complainant excepted. “Nothing was done as a result of that conversation. I had access to the books and records of the bank. There was no record anywhere of any trust money or property being held by the John B. Cole-grove and Co. State Bank for Martin B. Miller, or his estate, or Amelia Graupp. T continued my connection with the bank until April 15, 1925.

“Q. During any of that time was there any record or any other evidence in writing, or otherwise, in the Bank there, where John B. Colegrove and Co. State Bank was holding any property in trust for Martin B. Miller, or Ms heirs or Amelia Gaupp, or the Martin B. Miller estate?

“Witness: No, sir, there was not.

“Q. Do you know of John B. Colegrove, himself, having or handling any money or property in trust for Martin B. Miller, or his estate, or Amelia Gaupp or any of his heirs ?

‘‘ Mr. Taylor: At what time ?

“Mr. Putting: During the time that he was there at the bank, in 1924 and 1925.

“Witness: Not from any actual evidence. The

books of the hank disclosed nothing more than that John B. Colegrove, trustee, was named as the payee in the $7,300 note. John B. Colegrove, personally, was named as trustee.

“Mr. Taylor: That is objected to, unless they show that instrument.

“Witness: I don’t know where the instrument is— the note of the Ricks Motor Sales Co. There was nothing on the note to indicate for whom John B. Cole-grove was acting as trustee. That account was kept in a separate file, and it was renewed at various times. I saw the renewals. The last renewal I had any personal knowledge of was the last one I entered in the bills receivable ledger in 1925. The last two or three renewals were made payable to John B. Colegrove, trustee. The bank was not named as payee in any of these notes as trustee. I have recently examined the hooks of the bank to refresh my memory. I found various credits and debits on the liability ledger as a direct liability against the Ricks Motor Sales Co., as a liability on the $7,300, and that was entered during the time I was an employee. I kept the liability ledger. The entries were made by me and were the same today when I examined them as when I made them. ’ ’

Cross-examination.

‘1 Mr. Martin Miller, when I knew him, was the owner of quite a large body of land. I don’t recall of him having a personal account in the John B. Colegrove and Co. State Bank, in the way of a checking account or certificate of deposit. I knew of him selling 40 acres of land. I have no recollection of a transaction by which Martin P. Miller, a brother of Mrs. Gaupp, purchased 40 acres for $40,000. I would say that Mr. Colegrove acted as the advisor of Mr. Miller. They didn’t let anyone wait on them but Mr. Colegrove. The sum of money I have in mind is $7,300. That was the Ricks Motor Sales proposition. That note became an asset of the bank, but renewed each time to John B. Colegrove, trustee and endorsed. I don’t believe I ever saw cross-complainant’s exhibit 9 until since the bank closed. There might have been papers in the vault that I didn’t see. I didn’t see "the papers that were sealed up. If this paper had been Mr. Miller’s or Mr. Colegrove’s I would not have seen it. I did not learn the details of a great many of Mr. Cole-grove’s transactions. I can’t fix the date on which I had that conversation with Mr. Ricks when Martin B. Miller and Christine Miller were in conference with Mr. Colegrove. I cannot recall any other transactions with Martin B. Miller on the same date. There would not be anything on the books about cross-complainant’s exhibit 8. I never saw a copy of that in the bank’s vault. I don’t know whether I was an employee at the time the will was made, as I don’t know the date of it. I have no knowledge of a $7,000 fund. I have no knowledge whatever of the Gaupp trust agreement and the Martin B. Miller will. This note for $7,300 appears on the liability ledger as an existing note at the close of the bank, and that is the only evidence I have of it. That is the Ricks Motor Sales Co. note. The concern later went into bankruptcy. I don’t believe the first or second renewal of the note carried the notation of trustee following the name of the payee, but from 1923 it appears with the name of the payee written in the liability ledger, with J. B. C. as trustee, but the note was in existence before that. I had no official title in the bank. The other officers of the bank had occasion to examine these notes any time they went to the note case. I wasn’t at any of the directors’ meetings. Ralph Ricks was second vice-president of the bank part of the time. April 15, 1925, was the last date I was actively in the bank. I can’t recall whether I ever saw Mrs. Gaupp in the bank in connection with this business.”

Leon Traylor testified for appellant:

“l am assistant cashier at First Trust and Savings Bank and assistant to the receiver of the John B. Cole-grove and Co. State Bank. I was- assistant cashier for the John B. Colegrove and Co. State Bank from the time of its organization in 192(J until October 10, 1929, the last day that the bank operated. I had access to the books, papers and records of the bank.

“Q. I will ask you whether, during any of that time, from 1920 up to the time the bank closed, the John B. Colegrove and Co. State Bank had any record where it was acting as trustee for Martin B. Miller, or any of his heirs, or for Amelia Gaupp ?

“A. None that I know of. I do not know of any tl’ust that was conducted or handled for Amelia Gaupp or the heirs of Martin B. Miller by anyone connected with the John B. Colegrove and Co. State Bank. I did not know of John B. Colegrove handling any such trust. I know of the Ricks Motor Sales Company owing money wherein John B. Colegrove, as trustee, ivas named as payee. That was a note of $7,300. .1 would say the date of it was somewhere around 1920. The note was renewed from time to time. No payments were made on it.”

John B. Colegrove was a witness in behalf of appellant and testified:

“I reside in Taylorville, and was president of the John B. Colegrove and Co. State Bank. Before the John B. Colegrove and Co. State Bank was organized we run the partnership bank of John B. Colegrove and Co. I knew Martin B. Miller in his lifetime, and I know Amelia Gaupp and Cleveland Miller.

“Q. Directing your attention to about the 7th of November, 1923, did you act personally as trustee over a trust fund of over $7,000?

“Mr. Taylor: That is objected to as leading.

“Q. Did you act as trustee over any money or property for the use of Martin B. Miller, Christine Miller and Mrs. Amelia Gaupp?

“A. Yes, sir.

“I was trustee, or agent, or something, for Martin B. Miller. I had some money. $4,000 was the balance due on a forty acre tract that we bought from him, and that $4,000 was to go to Martin P. Miller. . . . It went on two or three years and he had a chance to sell some of the land to Martin P. Miller, his son, and he made the arrangements with Mrs. Gaupp and Mrs. Trost. I received $7,000 and $7,300 from Martin B. Miller, about ten to fifteen years ago — about 1919. I received, the $7,300 mentioned in cross-complainant’s exhibit 1. . . . The $7,000 which I received about December 7,1923, came from the sale of about 80 acres of land. I received the money from Martin P. Miller in two payments, about six months apart. . . . Martin P. Miller made the check to his father, Martin B. Miller, and Martin B. Miller turned the check for $3,000 over to me as a personal loan. When they closed up the deal Martin B. Miller got $4,000 more and turned it over to me to hold in escrow for him and collect the interest for him as long as he lived. I gave him my personal note for the first $3,000 he turned over to me. When I received the. $4,000 to be held in escrow I made him a trust certificate. ... I got the $4,000 on the 1st of March after he sold the land, making $7,000, and then I made him a certificate of the old bank for it. It run on for several years and then I made them a certificate with the new bank, about 1923, and it stands that way yet.

“Q. Well, now then, who got this money, you or the old bank or the new bank?

“A. Part of it was put in the bank in my name. $4,000 was never in the bank, it was always a note, and the $7,300, the bank never did have that. . . . That is the $7,000 that I got and put in the bank in my name, and then paid to the bank for money I owed the bank personally.

“Q. I will ask you whether or not the John B. Cole-grove and Co. State Bank, itself, ever did anything with regard to this $7,000 other than what you have mentioned?

“Mr. Taylor: That is objected to for the same reason. I don’t think that the officer of the bank can come in and repudiate the written undertaking of the bank.

‘1 The Court: Overruled, I will hear it. ’ ’ Exception.

“A. The bank had nothing to do with it except what I did, either as an officer or an individual. I am a licensed lawyer, and gave some legal advice.”

This is all of the proofs in the record tending in any manner to establish a trust. The funds, as a trust, never reached the bank. They were used by Colegrove to pay his indebtedness at the bank. The bank, as an entity, never had any knowledge of such a trust. The burden of proof in this case is upon appellee to establish a trust. Appellee never had any dealings with the bank in regard to these funds and denies the trust. Appellee’s father, by the proofs, never made a special deposit in the bank, but did trust Colegrove. None of the funds in controversy were ever placed in the bank, in trust, and the only foundation of a claim of trust is the false and fictitious trust agreement, executed by Colegrove under date of November 7, 1923. It is not claimed that this agreement was ever executed or delivered to any person at the request or with the knowledge of either the appellee or her father, Martin B. Miller. It did not constitute a trust, where no funds were placed in the bank in pursuance of the instrument. People v. Farmers State Bank, 338 Ill. 134.

It was held in Sturges v. Keith, 57 Ill. 454:

“The difficulty with the proposition is, that if a sole party should, as a banker, receive stock or coin upon special deposit, and it should be embezzled by his own clerk or cashier, then, although that would be a wrongful conversion of the property, still it would not be the act of the banker, nor would he be liable.for such conversion unless he participated in it, or was guilty of gross negligence. Story on Bailments, sec. 88. If a sole party would not be liable under the circumstances supposed by the instruction, then, of course, several would not.” But even this authority does not apply in the case at bar, because none of the funds of appellee were ever paid into the bank so that they could be even embezzled.

It follows, that the decree of the circuit court of Christian county should be and is reversed.

Reversed.


text:
    Robert C. Daugherty, Appellant, v. Alliance Casualty Company, Appellee.
    Gen. No. 8,733.

      Opinion filed April 11, 1933.
    Rehearing denied June 20, 1933.
    Rearioic & Rearick and Meeks & Lowenstein, for appellant.
    Acton, Acton & Baldwin, for appellee; W. M. Acton, of counsel.
   Mr. Justice Shurtleff

delivered the opinion of the court.

This is an action in assumpsit, brought by Robert C. Daugherty, appellant, against the Alliance Casualty Company, a corporation, appellee. The purport of the policy is that it contracts to pay to the assured certain losses suffered by appellant in the operation of his taxicab business, by accident, collisions, etc., and for any losses suffered by appellant on account of injuries to his passengers.

The declaration then alleges that on November 6, 1930, at 9:30 a. m., while the policy was in force, one M. P. Burton, a passenger for hire in one of the plaintiff’s taxis covered by the policy, sustained by accident bodily injuries by the overturning of the vehicle.

The plaintiff gave immediate notice; defendant denied liability; suit was brought; defendant after notice refused to defend; plaintiff defended; there was a judgment for $3,500 which plaintiff later compromised for $1,750; the court costs were $33.92 and attorneys’ fees were $200, all of which the plaintiff paid.

The cause of action is averred to be a breach of defendant’s promise to pay these items, and plaintiff avers full performance on his part, and negatives the matters forbidden.

The declaration then sets forth that there was an attempted cancellation of the policy at 10 o ’clock a. m. of the same day, after the accident in question had occurred, and that this occurred by a mutual mistake on the part of both parties to the contract, and without any notice of the accident or injury, which purported cancellation is averred to be null and void.

To this declaration appellee filed a special plea, as follows: “1. That the plaintiff ought not to have his aforesaid action against it, the defendant, because it says, that on, to-wit: November 6, 1930, at about 9 o’clock a. m., that defendant, Alliance Casualty Company- through its agent A. G. Gouthiere, notified the plaintiff that the defendant desired to cancel its said policy with him, and the said A. Gr. Gouthiere then and there notified the plaintiff that he thought he could get another company to take the risk and asked the plaintiff if it was satisfactory to do so, and the plaintiff then and there consented that the said A. G. Gouthiere see if he could get another company to take the risk.

“2. That said A. G. Gouthiere interviewed the agent of the United States Fidelity & Guaranty Company, and the two agents and the plaintiff thereupon had a conversation, and that it was thereupon mutually agreed that the defendant’s policy should be cancelled as of 12:01 a. m. of that day, and that the United States Fidelity & Guaranty Company would issue its policy of the same hour, and that the said United States Fidelity & Guaranty Company would issue its policy in substitution of and in lieu of the policy then held by the plaintiff of this defendant, and that the said policy of the said United States Fidelity & Guaranty Company should be effective as of the same date as the cancellation of the policy of the defendant, that is to say: 12:01 a. m. of November 6, 1930, and that in consideration of the cancellation of the policy of this defendant as of the hour and date aforesaid,, and of the putting into effect of the policy of the United States Fidelity & Guaranty Company, as of the same hour and date, that this defendant would refund to the plaintiff the prepaid premium on said policy from the hour and day of said cancellation, and that the said plaintiff would pay to the United States Fidelity & Guaranty Company, the premium for its policy from the said hour and date, that is, to-wit: 12:01 A. M. of November 6, 1930.

“3. And the defendant further avers that in pursuance of said mutual agreement by and between the parties as aforesaid, and for the considerations aforesaid, the said United States Fidelity & Guaranty Company did receive the usual premium from the plaintiff, and issued to him its policy of insurance covering the same risk as the policy of this defendant that was can-celled, effective as of date 12:01 A. M. on November 6, 1930, and said policy was delivered to and accepted by the plaintiff in lieu of the policy of this defendant, and the plaintiff paid said premium to the said United States Fidelity & Guaranty Company, and thereupon and concurrently therewith this defendant did pay to and refund to the plaintiff the prepaid premium on the policy of insurance set forth in the declaration as of date of cancellation, to-wit: 12:01 A. M. on November 6,1930.

“4. Thereupon the plaintiff claimed to this defendant that he had lost or misplaced the policy of insurance sued on in this case, and thereupon plaintiff executed and delivered in writing to this defendant, a statement and release in words and figures, as follows:

“ ‘Lost Policy Or Renewal Certificate
“ ‘Alliance Casualty Company
“ ‘Policy CA-3006

“ ‘Insured R. C. Daugherty d/b/a Yellow & Checker Cab Co.

Effective date of policy December 17,1929.

Effective date of cancellation November 6, 1930, at 12:01 A. M.

I hereby certify that the above described automobile policy has been lost and in consideration of the refund or remission of the return premium thereon, which "is hereby acknowledged, I hereby release the Company from all liability under the provisions of said policy which is hereby cancelled.

Date November 6, 1930.

“ ‘R. C. Daugherty,
“ ‘Yellow & Checker Cab Co.’

“5. And the defendant further avers that all of said" negotiations and said substitution of said policy as 'aforesaid, between said parties as aforesaid took place in good faith and without any knowledge said accident, set forth in the declaration, had happened, if in fact it did happen, prior to the substitution of said policy as aforesaid.

“6. And the defendant further avers that upon the plaintiff learning of said accident mentioned in said declaration, that the plaintiff gave notice to the United States Fidelity & Guaranty Company under its said policy aforesaid, that said accident happened, and notified it to defend said suit, and that the said United States Fidelity & Guaranty Company did employ Rearick & Meeks, as attorneys to defend said suit, and pay said attorneys for their said services, and said attorneys filed a plea in said suit and defended the same as attorneys for the United States Fidelity & Guaranty Company, and after said judgment mentioned in the declaration was rendered, said United States Fidelity & Guaranty Company did compromise said judgment and paid in compromise thereof the said sum of Seventeen Hundred Fifty Dollars ($1750.00) and Thirty-three and 92/100 Dollars ($33.92) costs mentioned in the declaration to the said Milton P. Burton, or his attorneys, and the said Robert C. Daugherty did not pay said attorneys for their services in said matter, and did not pay said amount in compromise of said judgment, but that payment of same was made by the check or voucher of the said United States Fidelity & Guaranty Company.

“7. The defendant further avers that the said substituted policy of the United States Fidelity & Guaranty Company, at all times and in all respects covered the same liability and indemnified the plaintiff against, etc., loss for which he was covered by the policy of this defendant, that was released and surrendered at the time of said substitution of said policy.

“Wherefore, the. defendant avers that it is fully released from all liability in the premises, and that the plaintiff is barred from recovering from the defendant, for or by reason of any of the matters and things in the declaration alleged, and this the defendant is ready to verify. ’ ’

Appellee was given leave to file several replications to this special plea and the following are the replica-, tions:

First replication is a traverse of the allegation that there was agreement that the Alliance policy should be canceled back to 12:01 a. m. of that day, and avers that the agreement was this was to be done as of 10:00 o ’clock a. m. and that neither party to the arrangement was aware that the accident had already occurred.

Second replication avers that the time of making the alleged agreement was 10:00 o’clock a. m. and that the time of the accident was 8:30 a. m.; that at the time of making the agreement all parties were ignorant of the accident, and that there was no agreement that any liability already accrued should be released.

Third replication avers that the time of the accident was 8:30 a. m., that the time of the agreement was 10:00 a. m., that the fact of the accident was unknown, and that there was no consideration for any agreement to release any liability already accrued.

Fourth replication sets forth that none of the matters alleged in the plea occurred prior to the happening of the accident mentioned in the plea, and were made in ignorance of the fact that it had happened, and without notice that any liability had accrued under the defendant’s policy.

Appellee’s demurrer to these replications was both general and special, and the grounds assigned are that the replications do not put in issue all the material allegations of the plea and that they attempt to join on an immaterial issue.

When the demurrer was argued, appellant asked to have it carried back to the plea, which the court denied, and also sustained the demurrer to the replications.

Appellant elected to stand by his pleadings. Appellee moved for judgment on its special plea, which the court allowed, and judgment went against appellant for costs and in bar of the action.

An appeal was prayed and perfected in accordance with the court’s order and the cause is now here for review.

The first question in this case is whether the court erred in refusing to, let appellant carry the demurrer back to appellee’s plea. Was the plea a good plea, in that the bond of the United States Fidelity and Guaranty Company had a retroactive effect and covered a loss that had already occurred?

It was held in John v. Worthen, 188 Ill. App. 406, 411: “Another rule to be observed in the construction of instruments of this character is that the bond will not be retroactive in effect, and does not cover past delinquencies, unless it in terms says that it is to have such effect, so that before an obligation of this character shall be construed as being retroactive it is not sufficient that the language implies a liability but the language must be such as to expressly include such liability in its terms. It is said in the case of Bartlett v. Wheeler, 195 Ill. 451: ‘As a general rule, “sureties are only liable for the defaults of their principal during the term, for which their bond was given, and after it was given, unless it is retrospective in terms.” (2 Sutherland on Damages, — 2d Ed. — sec. 480, and cases referred to in note 1.) It is said in Brandt on Surety-ship and Guaranty (2d Ed., vol. 2, sec. 526): “as a general rule, the bond of a public officer has no retroactive effect, and does not cover past delinquencies, unless it in terms says that it is to have such effect.” ’ See, also, Drake v. Sherman, 179 Ill. 362.”

The same rule was laid down in Maryland Casualty Co. v. First Nat. Bank, 246 Fed. 892 (certiorari denied, 246 U. S. 670, 62 L. Ed. 931).

In Shakman v. United States Credit System Co., 92 Wis. 366, 32 L. R. A. 383, it was held:

“Another question now arises upon the construction to be given to the Langsdorf indorsement. It will be noticed that the policy, though dated October 23, 1889, in terms covers the period of one year commencing on the 1st of July, 1889, and that it insures against losses accruing for merchandise sold and delivered during that period. Thus, the contract covers several months’ business transactions previous to its date. It appears in evidence that a considerable number of the losses for which the plaintiff has recovered judgment were suffered between July 1, 1889, and the delivery of the contract, and that these losses arose from credits given to parties who had no credit rating in Dun’s reports, but did have such rating in Bradstreet’s reports. It is now contended that the Langsdorf indorsement is purely prospective in its operation, and only insures losses occurring after November 8; so that, for the losses occurring before that date, covered by Bradstreet.’s reports only, there can be no recovery. The indorsement reads: ‘ Should any party to whom above-named firm may sell goods not be rated, within the system of this company, at Dun’s Mercantile Agency,’ etc. The argument cannot prevail. This indorsement is part of the whole contract. It must be read in connection with all the other provisions of the contract, aDd as though it were incorporated in the contract at the proper place. So read, there can be no doubt that the contract refers to all goods sold and credits given between July, 1889, and July, 1890, and that the right to use the Bradstreet ratings in the proper cases was intended to be as broad in its terms as to time as the right to use the Dun ratings.” (Commonwealth v. Fidelity Co., 224 Pa. 95, 73 Atl. 327; 25 C. J. sec. 6, p. 1095; and 31 C. J. sec. 25, p. 431.)

It has been held that where an insurance agent, upon receiving instructions to cancel, substitutes a policy in place of the one ordered canceled, and such act is ratified by insured by accepting the new policy, he is thereby precluded from recovering on the old policy, even though it had not, at the time of the loss, been formally canceled. (6 Couch Cyc. of Ins. Law, sec. 1433; Finley v. New Brunswick Fire Ins. Co., 193 Fed. 195; Finley v. Western Ins. Co., 69 Wash. 673, 125 Pac. 1012; White v. Insurance Co., 93 Fed. 161, 103 Fed. 260; Larsen v. Thuringia American Ins. Co., 208 Ill. 166.)

We are constrained to hold, in view of these authorities, that the plea was good and that the court did not err in not allowing appellant to carry the demurrer back to appellee’s plea. The vice of appellant’s replications is that neither of them traverses the allegations of the plea, charging that the United States Fidelity and Guaranty Company received notice from appellant to appear and defend said suit, and that said company did appear and defend said suit on behalf of appellant and that appellant suffered no losses or injuries by reason of the premises of any kind whatever.

In this case the contract is one of indemnity against loss and not indemnity against liability, and in such cases there can be no recovery without proof of an actual loss. (31 C. J., sec. 35, p. 439; 5 Couch Cyc. of Insurance Law, sec. 1165, p. 4085; Kinnan v. Hurst Co., 317 Ill. 251, and Little Cahaba Coal Co. v. Aetna Ins. Co., 192 Ala. 42, 68 So. 317.)

It was held in Kinnan v. Hurst Co., supra, at page 255:

“The agreement in paragraph I of the policy, ‘to indemnify the assured against loss from the liability imposed by law upon the assured for damages on account of bodily injuries, ’ etc., together with the condition contained in subdivision I of paragraph IV of the policy, that ‘no action for the indemnity against loss provided for in insuring agreement I of this policy shall lie against the company, except for reimbursement of the amount of loss actually sustained and paid in money by the assured in full satisfaction of a judgment duly recovered against the assured after trial of the issue,’ etc., clearly provides only for the reimbursement of money actually paid in satisfaction of a judgment recovered against the assured after the trial of the issue in an action for bodily injuries alleged to have been accidentally suffered within the terms of the policy,” citing numerous authorities.

The replications did not traverse or answer the entire plea. In order for a replication to be good it must answer the whole of the plea. No replication is sufficient that does not put in issue everything that is material in the plea to which it applies and if it is bad in part it must be rejected. (18 Encyc. of Pleading & Practice, 654; 1 Chitty on Pleading, 643; 49 C. J. sec. 409, p. 334; Schultz v. Miller-Hamilton, 189 Ill. App. 396; Cummings v. Smith, 114 Ill. App. 35.)

A plaintiff by failing to demur and by filing a replication to a special plea, admits the plea to be good in law and raises an issue on the facts alleged, and thereby admits that the facts set forth in the plea make a defense at law. Bell v. McDonald, 219 Ill. App. 593.

The court did not err in sustaining appellee’s demurrer to the replications of appellant, and the judgment of the circuit court of Vermilion county is affirmed.

Affirmed.


text:
    Joe Bevilauqua, Plaintiff in Error, v. City of Taylorville, Defendant in Error.
    Gen. No. 8,626.
    Opinion filed May 8, 1933.
    Carl H. Preihs, for plaintiff in error; Harry B. Hershey and C. J. Vogelsang, of counsel.
    Leal W. Reese and David W. Johnston, for defendant in error.
   Mr. Justice Shurtleff

delivered the opinion of the court.'

This is a writ of error directed to the county court of Christian county, for the purpose of reviewing the trial and judgment of the county court upon an appeal to that court from a justice of the peace, the case being originally started in the justice of the peace court and appealed by the City of Taylorville to the county court, growing out of an alleged violation of an ordinance designed for the purpose of preventing gaming houses from being operated in that city.

Numerous errors are alleged, but the error which is specially urged in this court is that the court was without jurisdiction to hear the case for the reason that the appeal was not perfected, and the transcript from the justice of the peace was not filed with the clerk of the county court 10 days prior to the convening of the October Term, A. D. 1931, of said county court.

The record shows that the transcript from the justice of the peace was filed in the county court October 8,1931. The opening of the October Term, A. D. 1931, of the county court of Christian county occurred on October 12,1931, only four days aftér the filing of said transcript.

On October 19, 1931, in said court, the defendant in error moved for trial of said cause and plaintiff in error objected and moved for a continuance of the cause, which motion the court overruled, to which ruling plaintiff in error took an exception. The cause was tried, resulting in a verdict and judgment against plaintiff in error, and he has brought the record to this court by writ of error for review.

In the opinion of this court it was error in not granting plaintiff in error’s motion for a continuance, inasmuch as the transcript had not been filed in said court 10 days or more before the first day of the term to which it was called for trial, and the court had no jurisdiction of said cause at that term, under the statute.

It was provided that the law terms of the county court of Christian county shall commence on the second Monday of the months of April, June, October and December.

Originally, section 68 of chapter 79 of the Revised Statutes (Cahill’s St. ch. 79, (1178), provided as follows :

“In case the appeal from the justice'of the peace is perfected by filing the papers and transcript of judgment ten days before the commencement of the term of court to which the appeal is taken, the appearance of the appellee may be entered in writing and filed among the papers in the case; and if so entered ten days before the first day of the term of court, the case shall stand for trial at that term.”

.Unless an appeal is perfected by filing transcript ten days before the term of court begins, the cause must- be continued to the next term.

It is argued that this language was omitted from the amendments of 1895 and 1919, and that it is no longer the law as to appeals from justices of the peace. This subject was argued fully in McGillen v. Wolff, 83 Ill. App. 227, and it was held that said section 68 was not repealed. The court said (page 230):

“Now add to and read with what has just been quoted, section 68 before quoted, and it is perfectly plain that there is no repugnance between the two. On the other hand the two together are perfectly consistent, and establish a complete and harmonious rule of practice.

“The justice’s transcript performs the office of the declaration in original suits in courts of record (Reed v. Driscoll, supra), and the requirement that it shall be filed ten days before the first day of the term of court at which the case shall stan.d for trial, is in strict analogy with the practice in courts of record, which requires declarations to be filed ten days before the first day of the term at which judgment may be applied for.

“The act of 1895 containing no repealing clause, either particular or general, we have no hesitation in holding that section 68 of the act of 1872 remains in full force and is to be read and considered in connection with Sec. 1, Art. X, of the act of 1895. ’ ’

To the same effect, substantially, the rule is laid down in Reed v. Driscoll, 84 Ill. 96; Black Amusement Co. v. Case, 139 Ill. App. 73; Gebke v. Wilson, 168 Ill. App. 341; McPike v. Luer, 230 Ill. App. 271, and is in conformity with the various sections of the Practice Act.

Other errors are pointed out. It was error, under the proofs submitted, for the court to instruct the jury to find a verdict against the plaintiff in error. Under the terms of the ordinance and the proofs, the jury could only have found plaintiff in error guilty of “keeping tables or other apparatus for the purpose of playing at any game or sport for money or any other valuable thing,” which facts could only be found by -the jury from the evidence, facts and circumstances proven in the case.

A motion is submitted by defendant in error to strike certain affidavits from the bill of exceptions, which was taken with the case, and this motion should be sustained.

For the reason's stated, the judgment of the county court of Christian county is reversed and the cause remanded for another trial.

Reversed and remanded.


author: Mr. Justice Shurtlefe

text:
    Danville Brick Company, Plaintiff in Error, v. O. K. Yeager, Defendant in Error.
    Gen. No. 8,643.
    Opinion filed May 8, 1933.
    Charles Tr<dup, for plaintiff in error.
    R. R. Book Walter and Gunn, Pen well & Bindley, for. defendant in error.
   Mr. Justice Shurtlefe

delivered the opinion of the court.

This cause is brought to this court .on a writ of error to reverse a judgment of the Vermilion county circuit court, entered upon a general demurrer to plaintiff in error’s declaration.

Plaintiff in error sought to recover a balance claimed to be due upon a contract for brick, as follows:

“June 21, 1926.

“The Danville Brick Company,

“Big 4 and Prospect Ave.,

“Danville, Illinois.

“Re: Wolford Hotel, Danville, 111.

‘1 Gentlemen:

“Chas. Benson, Inc. has advised us of the selection of your Patrician face brick for use on the Wolford Hotel, and of light commons for back up brick.

“We herewith place order for the approximate following quantities; 330 M. Patricians and 11 M light commons, on the following terms: Patrician face brick, $16.00 per M delivered at the building as needed, of a blend of approximately the following percentages of shades: 30% No. 212, 15% No. 215; 10% No. 260, 25% No. 275, and 20% No. 280. For the Patrician brick used on the two street elevations and the returns (approximately 220 M) the payment is to be $8.00 per M. brick in cash and $8.00 per M. in common stock of the Danville Hotel Company. For the Patrician brick used in the courts (approximately 110 M), the payment is to be $5.50 per M. in cash and $10.50 per M. in common stock of the Danville Hotel Company.

“Common brick for back up will be $10.00 per M delivered at the building as needed, for which payment of $5.00 per M is to be made in cash, and $5.00 per M in common stock of the Danville Hotel Company.

“Very truly yours,
“Yeager & Sons,

“oky*s

“by O. K. Yeager.”

The plaintiff in error adopted two theories in the two counts filed. The first count adopted the theory that inasmuch as an invoice accompanied each delivery of brick specifying that the price was due in 30 days, that this invoice became a part of the contract and therefore required the money and stock payable within 30 days after delivery. This count, however, failed to allege that defendant in error, Yeager, accepted this variation of the contract.

The theory adopted by plaintiff in error in the second count was that the cash and stock became due a reasonable time after delivery of the brick.

However, in both counts, the theory of the plaintiff in error was that because the defendant in error failed to deliver or tender the stock an obligation arose to pay the amount of money represented by the face or the par value of the stock. The demurrer to the declaration therefore squarely raised one proposition, namely: If the plaintiff in error sold the defendant in error $3,773 worth of brick and agreed to accept stock in the Danville Hotel Company of the par value of $3,773, would defendant, in case of the failure to deliver the stock, become liable for $3,773, or would he be liable only for the value of the sto.ck at the time he should have delivered it?

The circuit court decided that the declaration must be predicated upon and contain allegations based upon the proposition that the plaintiff was entitled to recover only the value of the stock at the time it should have been delivered and from that determination this writ of error is prosecuted.

Apparently, all cash payments agreed to have been made have been paid. The agreement is “to make payment in the common stock” of The Danville Hotel Company. No value to said stock is alleged. It is to be noted that this payment is not optional to be paid in either stock or money, but is payable in stock only.

In Smith v. Dunlap, 12 Ill. 184, the contract was a note “for the payment to the bank of Illinois for the sum of $131,480.52, in State of Illinois indebtedness,” which matured and became due on the 20th day of April, 1843. The court held: “Is it a note for the payment of $131,480.52, which the maker may discharge on the day it matures, by an equal amount of the obligations of the state of Illinois ? Or, is it a contract, by which he only assumes to pay that number of dollars of state indebtedness? If the former, it is the privilege of the debtor to make payment on the day named, in the indebtedness of the state, but, if he fails thus to discharge the obligation, he is bound to pay the sum specified in specie; if the latter, he is, in any event, only liable for the actual value of the indebtedness agreed to be paid. There is a wide difference between the two classes of contracts. Where the promisor undertakes to pay a certain number of dollars in specific articles, such as grain, cattle, or other commodities, he -must deliver the property on the day named in the contract, or he becomes absolutely bound to pay-the sum stated in money. The sum expressed in the obligation indicates the true amount of the debt; and the other provision is inserted for the benefit of the debtor, and relates exclusively to the mode of payment. If he does not avail himself of the privilege of discharging the debt in property, the obligation becomes a naked promise to pay the amount in money. But where the promisor agrees to pay a certain sum in bank notes, or other evidences of indebtedness, which purport on their face to represent dollars, and can be counted as such, the sum is expressed to indicate the number of dollars of the notes or evidences to be paid, and not the amount of the debt or consideration. The obligation is in fact but a promise to deliver so many dollars, numerically, of the securities described. If the debtor fails to deliver them according to the terms of the contract, he is responsible only for their real, not their nominal value. Their cash value is the true amount of the debt to be discharged. And beyond the damages directly resulting from the breach of the contract, the creditor is not entitled to recover. ”

From this rule our courts have never swerved. The same rule is laid down in McCumber v. Gilman, 13 Ill. 542, and in Pennsylvania Tire Co. v. Goldberg, 305 Ill. 54, the court adhered to the rule and said:

“Smith v. Dunlap, 12 Ill. 184, was an action on a note of Dunlap for $131,480.52, payable on a date specified in ‘ State of Illinois indebtedness. ’ It was not paid when it became due and suit was brought' to recover. The court said the question raised was whether the instrument sued on was a note for the payment of the amount of money specified, which the maker might discharge on the day of its maturity by delivering to the payee an equal amount of the obligations of the State of Illinois, or whether it was a contract by which the maker assumed to pay that number of dollars of State indebtedness. The court construed it to be a contract to pay a given number of dollars of indebtedness of the State of Illinois; that the amount in dollars is expressed on the face of the instrument or evidence of indebtedness and can be ascertained at once by inspection; that where a promisor agrees to pay a certain number of dollars in bank notes or other evidences of indebtedness which purport to be and can be counted as dollars, the obligation is to pay the number of dollars named of the securities described, and in default of payment the liability of the promisor is only for their real value, but where the undertaking is to pay a certain number of dollars in specific articles, the promisor must deliver the articles on the day named or he will be bound to pay the sum stated in money. The court held the instrument sued on being an agreement to pay a given number of dollars in obligations of the State, the measure of damages was the market value of said obligations on the day the instrument should have been paid.”

In Warnock v. Fleming, 200 Ill. App. 22, 24, the court, speaking by Mr. Justice McSurely, held:

“It is established by many decisions that when suit is brought upon a check or other obligation payable in a foreign or depreciated currency, the measure of damages is the value of such foreign or depreciated currency at the time such check or other obligation should have been paid, with interest to the time of judgment. Among the many cases so holding are the earlier cases in this State of Smith v. Dunlap, 12 Ill. 184; McCumber v. Gilman, 13 Ill. 543; and County of Madison v. Bartlett, 1 Ill. 67, which have never been overruled. Other decisions are Grunwald v. Freese, 34 Pac. 73 (Cal.); Butler v. Merchant (Tex. Civ. App.), 27 S. W. 193; Stewart v. Salaman, 94 U. S. 434; and Matthews v. Rucher, 41 Tex. 636. See also, long list of cases to the same effect in 30 Cyc., p. 1217 and 8 Cyc., p. 328. We are not persuaded by the argument of counsel for defendant to depart from the rule announced in these eases. ’ ’

It would be a waste of time to consider the contract in question in a variety of language, which it does not express, or to interject optional clauses which are found in other cases but which are not found in this contract.

The judgment of the circuit court of Vermilion county is affirmed.

Affirmed.


author: Mr. Justice Shurtleef

text:
    Kathryn Culver, Appellee, v. Lincoln Savings and Building Association, Appellant.
    Gen. No. 8,652.

      Opinion filed May 8, 1933.
    Catron & Hoffmann, for appellant; Hoopes & Pefferle, of counsel.
    Egbert Matheny and Barber & Barber, for appellee.
   Mr. Justice Shurtleef

delivered the opinion of the court.

This is an appeal by a junior decree creditor (who had not been made a party to a suit to foreclose appellee’s first lien mortgage), from a decree entered December 23, 1931, requiring appellant to redeem by May 27, 1932, either by paying (a) the amount of the first lien mortgage debt, or (b) the amount bid by appellee mortgagee at the foreclosure sale; and in default thereof, foreclosing all rights of appellant in the premises.

Appellee’s bill alleged the execution, delivery (May 16,1927), and recording (May 25,1927), of a mortgage to her for $15,000 and interest; the subsequent conveyance by the mortgagor of the mortgaged real estate to Henry E. McOlintick; the default in payment November 16, 1929, and the filing on July 31, 1930, of a suit to foreclose the mortgage against the mortgagor, McOlintick, and all junior mortgagees, tenants and judgment creditors (excepting appellant); the entry of a decree for foreclosure and sale February 4, 1931, finding the mortgage debt and interest (without costs or solicitor’s fees) to be $16,552.87; the sale of the mortgaged property by the master in chancery to appellee on February 27, 1931, for $14,839.22; that appellant was not made a party to the foreclosure suit, although it had, on May 12, 1930, recovered in the circuit court of Menard county, Illinois, a deficiency decree against said McOlintick for $5,906.48 and had filed a transcript thereof in Sangamon county, Illinois, on July 7, 1930, 24 days before the filing of the foreclosure suit; and the bill asked an adjudication of the validity of the mortgage and that the foreclosure proceeding thereon was regular in all respects except the omission of appellant as a party defendant, and asked also that a decree be entered providing that if there be no redemption by the mortgagor or his assigns within 12 months from the foreclosure sale, appellant be allowed to redeem by paying either the amount of the mortgage indebtedness or the amount bid at the foreclosure sale, by May 27, 1932, and, in default of such redemption, be foreclosed of all interest in the realty.

The court overruled appellant’s demurrer to the bill of complaint and appellant, upon electing to stand by its demurrer, was defaulted and a decree pro confesso entered in accordance with the prayer of the hill as above stated.

No complaint is made as to the time or terms allowed for redemption. Appellant’s sole contentions are that where a mortgage is foreclosed and the mortgaged premises are sold under a decree o.f foreclosure, the property is thereby discharged from the lien of the mortgage, and a judgment creditor who was not made a party to the foreclosure proceeding has a first lien upon the property, as against the purchaser at the foreclosure sale; and that appellee has no such interest in the property as to entitle her to maintain her suit against appellant.

Appellant contends that where a mortgage is foreclosed. and the mortgaged premises are sold under a decree of foreclosure, the property is thereby discharged from the lien of the mortgage, and a judgment creditor who was not made a party to the foreclosure proceeding has a first lien upon the property, as against the purchaser at such foreclosure sale, citing: Wehrheim v. Smith, 226 Ill. 346; Hoffman v. Hanley, 187 Ill. App. 551; Ohling v. Luitjens, 32 Ill. 23; Strause v. Dutch, 250 Ill. 326; and Hack v. Snow, 338 Ill. 28.

Not all of the cases go as far as stated by appellant. Wehrheim v. Smith, supra, goes only so far as to hold that a judgment creditor, not made a party to the foreclosure suit, is not affected by the decree.

In Hoffman v. Hanley, supra, it is held that the rule only applies when the premises are sold for an amount sufficient to pay the mortgage debt in full. In Ohling v. Luitjens, supra, it was held that the complainants had an adequate remedy at law. In Strause v. Dutch, supra, the rule laid down applies only to the parties to the suit and is the same holding as made in Hoffman v. Hanley, supra. None of the cases passes upon the identical question raised in this case. In Hack v. Snow, supra, it was held that the purchaser at a master’s sale acquires no title, legal or equitable, by the issuance of a master’s certificate, and that both before and after the sale under a foreclosure decree the owner of the equity has the same estate in the land, and where he conveys to another, after the foreclosure sale and during the redemption period, his grantee acquires the right of redemption, which, if exercised, renders the foreclosure sale and certificate null and void. It was further held that a purchaser from the owner of the equity of redemption acquires no greater rights than the former owner had. In some of the cases it is held that the mortgagee, with a deficiency judgment under the statute, is entitled to redeem.

It is further contended by appellant that although the amount received at the foreclosure sale may not be sufficient to pay the full amount of the mortgage debt, the property is nevertheless discharged from the lien of the mortgage by such sale and cannot again be subjected to any liability under the mortgage, citing Strause v. Dutch, supra; Hack v. Snow, supra; Hughes & McCart v. Frisby, 81 Ill. 188. The only additional case cited is Hughes & McCart v. Frisby, supra, in which it is held that upon a foreclosure for a portion of the debt and the sale of the property, if the sale ripens into a conveyance, the mortgage is exhausted. However, if the lands should be redeemed, another foreclosure might follow. In other cases it is held, as appellant contends, that the foreclosure of a mortgage or trust deed and sale of the lands, exhausts the power of the mortgage or trust deed as a lien upon the lands. (Ogle v. Koerner, 140 Ill. 170; Davis v. Dale, 150 Ill. 239; Lightcap v. Bradley, 186 Ill. 510, and other cases.)

It is elementary that the purchaser at the foreclosure sale, not being invested with the. legal title to the lands, cannot maintain an action to quiet title to the lands. Hack v. Snow, supra. All of the principles cited by appellant are .applicable to the parties to the suit and those within the jurisdiction of the court and bound by its decree. However, appellee is in a court of equity and may still have relief upon equities in her favor against parties not bound by the decree, and whose rights have not been interfered with, growing out of accident, mistake or fraud. (Cutter v. Jones, 52 Ill. 84; Kelgour v. Wood, 64 Ill. 345; Taylor v. Adams, 115 Ill. 570; Walker v. Warner, 179 Ill. 16; Alsup v. Stewart, 194 Ill. 595, and Odell v. Levy, 307 Ill. 277.)

In Walker v. Warner, supra, the court held: “The purchaser at the sale under the decree of foreclosure takes the interests of the defendants, and also of the mortgagee, divested of any equity of redemption on the part of all persons who are parties. Although the grantee of the mortgagor, who.is not a party, is not affected, yet his interest, which remains the same, is only a right to redeem. By the foreclosure and sale and the master’s deed thereunder, the legal title becomes vested in the grantee in such deed, and leaves nothing in the mortgagor, or his grantees, who are not parties to the proceeding, except the right to redeem in equity. Inasmuch as the interest of the grantee of the mortgagor, who is not made a party to the foreclosure, is merely a right of redemption, the right which he has is an equitable one, and must be asserted in a court of equity. The views thus expressed are sustained by the following authorities: Carroll v. Ballance, 26 Ill. 9; Oldham v. Pfleger, 84 id. 102; Taylor v. Adams, 115 id. 570; Rose v. Walk, 149 id. 60; Cutter v. Jones, supra; Kelgour v. Wood, 64 id. 345; Kenyon v. Shreck, 52 id. 382; West v. Reed, 55 id. 242; Seaman v. Bisbee, 163 id. 91; Barrett v. Hinckley, 124 id. 32; Mulvey v. Gibbons, 87 id. 367; Bryan v. Kales, 162 U. S. 411; Bryan v. Brazius, id. 415.”

In Odell v. Levy, supra, the court further held:

“The decree of foreclosure as to the plaintiffs in error was void. They were not parties to it. They were the equitable owners of the equity of redemption, and it is well settled that a decree of foreclosure in a proceeding to which the person having the equity of redemption is not a party is a nullity as to him. (Rodman v. Quick, 211 Ill. 546.) There was no authority for making them parties to the decree of foreclosure and binding them by the sale made under it by means of a supplemental bill. Since the decree was void as to them, the court could not in any kind of a proceeding give it any validity against them. Their land was subject to the mortgage debt in accordance with the terms of the mortgage, which could be enforced against them only in accordance with the usual and ordinary process of foreclosure. A decree to which they were not parties was not even prima facie evidence against them of anything and they could not through any proceeding be bound by its terms. The purchaser at a foreclosure sale upon a decree to which the owner of the equity of redemption is not a party and which is therefore void as to him becomes the equitable assignee of the mortgage and acquires the legal title to the land which was in the mortgagee, but the right of the owner of the equity of redemption to redeem will be unaffected by the decree. (Cutter v. Jones, 52 Ill. 84; Kelgour v. Wood, 64 id. 345; Alsup v. Stewart, 194 id. 595; Rodman v. Quick, supra.) If the supplemental bill can be maintained as an adjunct or addition to the original suit, it must be regarded, so far as the plaintiffs, in error are concerned, as an original suit, constituting, together with' the original bill, one case, which the complainants were bound to prove in its entirety against the defendants from the beginning.”

In the case at bar appellee’s bill is a bill requiring appellant to redeem; it is also a bill to foreclose and prays for alternative relief and there is a prayer for general relief.

In Rodman v. Quick, 211 Ill. 546, it is held that: “Where the foreclosure proceedings are irregular for the want of proper parties and the mortgagee purchases at the sale, it amounts to no more, so far as relates to the rights of persons not made parties, than an entry for condition broken, and if a stranger to the proceedings and mortgage becomes a purchaser, he will, as to those not made parties and having an equity of redemption, take an equitable assignment of the mortgage. Jackson v. Bowen, 7 Cow. 13; Robinson v. Ryan, 25 N. Y. 320; Ten Eyck v. Casad, 15 Iowa 524.

“If, then, as to appellant, the foreclosure proceeding and sale were null, it must follow that appellant’s right to redeem does not depend upon or is not affected by such proceeding and sale, but is controlled by the equitable rights existing between appellant and Mrs. Quick, as holder of the mortgage. Divested of the features of the foreclosure proceeding and sale, the rights of Mrs. Quick under the mortgage, so far as they relate to appellant, were, to have the amount of her debt, with interest to the time of the redemption, together with such taxes and interest thereon as she may have paid under authority of her mortgage and to preserve title, and there might be added thereto necessary repairs. But these amounts could not be augmented by costs and attorneys’ fees in the foreclosure proceeding, by which appellant is held not to be affected because not made a party thereto. 2 Jones on Mortgages, sec. 1084; Gage v. Brewster, 31 N. Y. 218; Moore v. Cord, 14 Wis. 213; Benedict v. Gilman, 4 Paige, 58; Vroom v. Ditmas, 4 id. 526; Bondurant v. Taylor, 3 G. Greene, 561; Hosford v. Johnson, 74 Ind. 479; Gaskell v. Viquesney, supra; Jones v. Dutch, 92 N. W. Rep. 735; Dougherty v. Kudat, 93 id. 317; Childs v. Childs, 10 Ohio St. 339; Williams v. Rouse, 124 Ala. 160.”

There is no question of estoppel in this case. The estoppel or binding force and effect of a judgment or decree is limited to the parties to the proceeding. The estoppel is mutual as between the parties; and only those who are bound by the judgment or decree can claim its benefits.

Since the doctrine of res adjudícala has no application against or in favor of anyone not a party or privy, no one not a party can claim the benefit of it. (People v. Amos, 246 Ill. 299; MacDonald v. Dexter, 234 Ill. 517.)

As to the appellant in this case, under the authority of Rodman v. Quick, supra, and Odell v. Levy, supra, it has no further rights in the premises than the right of a creditor under the statute to redeem. Appellee’s rights in equity consist of all the equities ivith which she is clothed by virtue of the mortgage or trust deed and the unpaid balance of the mortgage debt. The proceedings had in the foreclosure and sale of the lands heretofore, so far as appellant’s rights are concerned, amount to no more “than an entry for condition broken. ’ ’ Appellee does have a right to foreclose her mortgage as against the rights of appellant until her mortgage debt is fully paid. Under the authorities cited, this proceeding is an original proceeding against appellant, to foreclose appellant’s lien rights and claims in and to said lands, and will involve another sale.

While the parties defendant to the former foreclosure proceeding acquired equities upon redemption in the sale of the lands, and their purchase by appellee and the issuing of the certificate of purchase, no such right or equity accrues to appellant, because it was not a party to said cause; neither is appellant bound by any of the proceedings in said cause. In Odell v. Levy, supra, the cause was remanded to the circuit court and the remanding order and a decree entered. The entry of this decree and its form was appealed from and was later heard in the Appellate Court, Levy v. Odell, 237 Ill. App. 606, and the court held:

“ ‘ Since the decree was void as to them, the court could not in any kind of a proceeding give it any validity against them. Their land was subject to the mortgage debt in accordance with the terms of the mortgage,- which could be enforced against them only in accordance with the usual and ordinary process of foreclosure. A decree to which they were not parties was not even prima facie evidence against them of anything and they could not through any proceeding be bound by its terms. The purchaser ‘at a foreclosure sale upon a decree to which the owner of the equity of redemption is not a party and which is therefore void as to him becomes the equitable assignee of the mortgage and acquires the legal title to the land which was in the mortgagee, but the right of the owner of the equity of redemption to redeem will be unaffected by the decree. . . . The relief sought by the supplemental bill was to make the decree of foreclosure already rendered, and the sale already made, binding on the plaintiffs in error. . This could not be done. . . . The plaintiffs in error had a right to redeem from the mortgage even after the decree and after the sale, which were both void as to them, without paying any of the costs incurred in the foreclosure proceeding; and this would be so if they had come into court as complainants, asking to be allowed to redeem in equity. (Rodman v. Quick, supra.) [211 Ill. 546.] Clearly the plaintiffs in error were entitled to redeem the premises, without regard to the void decree, by the payment of notes, with the interest, and so prevent a foreclosure or sale. Their liability could not be increased by a proceeding to foreclose the mortgage to which they were not parties. (Moore v. Kirby, 76 Wis. 273.) The court had no jurisdiction of the plaintiffs in error in the original suit, and the purchase price at the sale under the original decree could not be the measure of the amount required to redeem. (Bradley v. Snyder, 14 Ill. 263.) The plaintiffs in error are bound by the mortgage but not by the decree or sale. The statute secures to the mortgagor the right to redeem from a decree of foreclosure within twelve months after a sale under the decree, but the decree under review cuts off the right to redeem without any decree of foreclosure. The defendants in error had a right to foreclose their mortgage against the plaintiffs in error, but they could not make the plaintiffs in error parties to a decree of foreclosure rendered in their absence and without an opportunity for a hearing. ’ ”

This court is of the opinion that the rule should be followed, as laid down in Rodman v. Quick, supra, and the cases of Odell v. Levy, and Levy v. Odell, supra.

The decree in this cause, entered December 23, 1931, bound appellant by the results of the sale in the former case and found it was a beneficial sale in the interest of appellant. This was error.

The decree further found that appellant should have the right to redeem within three months after May 27, 1932. This was error. Appellant should be decreed its full statutory time to redeem following a sale in this cause of action, and appellant should not be held to pay any of the costs of the former suit and proceeding.

The decree of the circuit court of Sangamon county is reversed and the cause remanded for further proceedings, in accordance with the views expressed in this opinion.

Reversed and remanded.