author: Mr. Justice Matchett

text:
    The Aetna Casualty and Surety Company, of Hartford, Connecticut, Appellant, v. Village of Maywood et al., Appellees.
    Gen. No. 34,937.

      Opinion filed June 22, 1931.
    Haight, Adcock & Banning, for appellant; Edmund D. Adcock, of counsel.
    Moses, Kennedy, Stein & Bachrach, for certain appellee; Hirsch E. .Soble, Herbert H. Kennedy and Arthur Magid, of counsel. Boy Massena and Jacob E. Dittus, for certain other appellees; Donald N. Schaffer, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

This is an appeal by complainant from an order which sustained demurrers to its amended bill and (complainant having elected to stand by) dismissed the same for want of equity. The case grew out of the failure of the Peoples State Bank of Maywood, one of the defendants, which was closed by the direction of the Auditor of Public Accounts on February 8, 1930, and which is insolvent. When the bank failed the Village had on deposit with it approximately $63,000. Complainant had prior thereto executed and delivered to the Village two depositary bonds in which the bank was principal and the complainant surety. The penalties of the bonds were for $30,000. The condition in each of these bonds was that the bank would keep, account for and pay over the money on deposit when demanded by the City of Maywood.

Certain ordinances of the Village in force when these bonds were given named the defendant bank with three other banks as depositary of the village funds. These ordinances provided that the depositary bank before receiving deposits should file with the village clerk a bond with sureties as the board of trustees of the village might direct and approve; that the treasurer of said village “is hereby further required not to deposit or to have deposited with either of said banks at any time, moneys or funds belonging to said Village in excess of the penal sum of such bond of said bank on file at such time.” Before the failure of the defendant bank Grace E. Schroeder was the village treasurer and had, pursuant to the provisions of these ordinances, executed and delivered a bond in the penal sum of $75,000, in which defendant Great American Indemnity Company was surety. The condition of this bond was that she would “faithfully perform such duties as may be imposed on her by law and shall honestly account for all money that may come into her hands "in her official capacity.” The Village had no other depositary or indemnity bonds except those above described.

The bill avers that Schroeder failed to perform her duties as village treasurer by making deposits in the Peoples State Bank in excess of the aggregate penal sum of the depositary bonds furnished by the bank, and that the Great American Indemnity Company is liable under her bond for all such money deposited; that the excess sums were wrongfully deposited by the treasurer and wrongfully received by the bank and constitute trust funds, for which the Village is entitled to a preferred claim against the assets of the bank; that the total amount of deposits in excess of $30,000 was wrongfully mingled with other funds of the bank; that the total amount of the funds of the bank and of the trust fund, including other trust funds of the bank similarly mingled, was not depleted or dissipated below an amount equal to the excess deposits of the Village in the bank and said other trust funds; that the general assets of the bank at the time it became defunct as aforesaid were increased and were benefited to the extent of such excess deposits.

The bill avers on information and belief that the creditors of the bank through suits which have been brought, one of which is for the purpose of establishing a liability of the stockholders, will receive dividends or payments upon their claims from the assets of the bank; that these will amount to approximately 50 per cent of the total amount of the respective claims; that the Village will not make any attempt to enforce any claim against the treasurer or her surety; that it will not attempt to enforce any claim it may have that deposits illegally made in the bank are trust funds for which the Village is entitled to a preferred claim; that the attorney for the Village announced for it the intention to collect $30,000 from the complainant under the depositary bonds and to collect dividends from the assets of the bank in .the circuit court proceedings and thereby collect substantially its entire claim without any recourse whatsoever to the bond of the treasurer and her surety and without asserting any claim that the funds illegally deposited were trust funds and therefore entitled to a preference over the general creditors of the bank.

The bill also avers that complainant has offered to pay the Village $30,000, being the aggregate penalties of the depositary bonds, “upon the understanding, to be properly evidenced in writing, that the complainant was or shall be subrogated to the right of the Village pro rata to the extent of such payment, or upon the enforcement by the said Village of Maywood of its rights against the said Grace E. Schroeder and the Great American Indemnity Company, her surety, or upon enforcing its right to have the illegal deposit as aforesaid adjudged a trust fund entitled to a preference”; that the Village "has refused to accept this offer, to assert its rights against the treasurer and her surety, and to assert its rights to have the illegal deposit adjudged a trust fund entitled to a preference.

The bill further avers that the ordinances of the Village were a part of the transactions in connection with the making, execution and delivery of the depositary bonds; that complainant executed the same by reason of and in reliance upon the ordinances of the Village and upon the observance of the same by the Village treasurer with reference to the amounts of the deposits to be made in the defendant bank; that complainant relied, and was entitled to rely, upon the principal and the surety of the bonds performing their duties and obligations thereunder to pay to the Village the amount of any excess deposits over the penalties of the depositary bonds of complainant in the event of the failure of the bank.

The bill avers that in the event the Village is able to carry out its intention as expressed, complainant may be without remedy to participate in any dividends in the proceedings; that the Village may participate to the full extent of its claim amounting to $63,000; that by collecting approximately $31,500, which with the collection of $30,000 from complainant, the Village would be made approximately whole, and the village treasurer and her surety would not be compelled to contribute their just share arising by virtue of the failure of the village treasurer to observe and fulfill the terms of the village ordinances; that this would be unconscionable.

The bill also avers that the Village threatens immediate suits at law upon the bonds; that complainant would not have an adequate defense thereto and is therefore entitled to an injunction and to a decree of the court compelling the treasurer and her surety to pay to the Village the excess of the deposits in the bank over and above the penalties of the depositary bonds of complainant, or to an injunction against the prosecution of any suits at law by the Village against complainant until the Village has established the excess deposits as a preferred claim in the proceedings pending in the circuit court or until the Village has collected on the official bond of the treasurer; that complainant offers to pay the amount of the penalties of the bonds when a decree is entered directing the village treasurer and her surety to pay the amount of the excess deposits over and above the penalties of the two depositary bonds of complainant, and complainant consents that a decree may be entered directing it to pay to the Village the amount of the penalties of its depositary bonds or such amount as the court may determine by its decree, it should pay when such decree is entered against the village treasurer and her surety; that the decree should provide that complainant should be subrogated pro rata to the amount of its payments with the treasurer and her surety and to the rights of the Village against the Peoples State Bank of Maywood in. the proceedings in the circuit court to wind up the affairs of said bank and to enforce stockholders’ liability. Complainant avers that it does not have a full, complete and adequate remedy at law and prays for relief according to the allegations of the bill.

The question to be determined is whether there is' any equity in the bill, and in determining that question the truth of all the allegations well pleaded must be assumed. Complainant says that there is equity in the bill; that the rights of the parties became fixed on February 8, 1930, and that “complainant was then entitled, upon payment to the Village of an amount of money equal to the penalties of the depositary bonds, to be subrogated pro tanto to the rights of the Village against the bank in the winding-up proceedings, and also in the stockholders ’ suit to enforce stockholders ’ liability, and to have the Village recognize this right”; that the failure of the. Village to accept the offer of complainant to pay upon the conditions set forth entitled complainant to contribution against the village treasurer and her surety, Great American Indemnity Company; that if the relief asked is not granted complainant will be placed at the mercy, fancy or whim of the Village to prefer the village treasurer and her surety as against complainant; that the effect would be to compel complainant to pay the entire amount of-deposit claim, although it is liable for less than half of it, and then to compel by proper proceedings subrogation to the rights of the Village against the bank in the winding up and stockholder liability suits, and then to proceed against the village treasurer and her surety for contribution, all of which would require numerous suits in equity or at law.

Complainant claims the right to be subrogated to the rights of the Village of Maywood upon the bond given by its treasurer, and its bill proceeds upon the theory that this may be demanded as a right upon the offer to make the Village whole with respect to its loss but only to the amount of the penalty named in its bond, although the facts averred show that if there is any right to subrogation it would be a legal rather than a conventional subrogation. The distinction between subrogation which is legal and that which is conventional was pointed out in Loeb v. Fleming, 15 Ill. App. 503, Where this court said:

“It is well settled that a surety can neither at law nor in equity call for an assignment of the claim of the creditor against his principal, or be clothed, by the mere operation of law, and upon principles of equity, with the rights of an assignee of such claim, unless he has paid the entire debt of the creditor. A pro tanto assignment will not be allowed. Gannett v. Blodgett, 39 New Hamp. 150; Swam v. Patterson, 7 Md. 164; Commonwealth, etc. v. Ches. & Ohio Canal Co., 32 id. 501; Magee v. Leggett, 48 Miss. 139; Vest v. Voss et al., 74 Ind. 565; Harlan v. Sweeny, 1 Lea (Tenn.) 682; 1 Lead. Gas. in Eq., 4th Am. Ed. 152; Sheldon on Sub., sec. 127; Brandt on Suretyship, sec. 266, and cases in notes.”

In that opinion this court also said in substance that a conventional as distinguished from a legal subrogation was sometimes recognized by the courts; that it is a subrogation arising from an express agreement with the creditor, in which case it was no objection that it extended only to a part of the mortgage or other security. See also the note in American and English Anno. Cases, vol. 6, p. 204, where the cases from different jurisdictions are collected.

In 25 Ruling Case Law 1318, after statement of the general rule that a person is not entitled to subrogation until the claim of the creditor is paid in full and that a pro tanto assignment or subrogation will not be allowed, it is said:

“In several cases the rule has been applied where a bank having public funds on deposit has become insolvent and the surety on a bond given to secure the deposits has paid the loss to the extent of his liability on the bond, the amount paid, however, being less than the total claim against the bank. In such a case the surety is not entitled to share in the dividends paid by the insolvent bank to its creditors for an amount proportionate to that which the payment made by him bears to the total claim due by the bank to the principal. There is authority for the rule that where the right of subrogation is the result of an express agreement, a partial payment may be considered as effecting a pro tanto assignment of the creditor’s security ; but where the claim to a pro tanto subrogation is based on a contract, before a court will permit subrogation that would be to the detriment of the obligee the contract should be so certain as to admit of no doubt on that question.”

The reason for the rule seems to be that the bond is intended to secure the whole debt, and it would obviously be inequitable to compel an assignment by the creditor when only a portion of his debt has been in fact paid. There is no limitation in the bond here in question as to the obligation to repay the money deposited, although the amount which might be recovered from the surety is limited to the penalty of the bonds — in this case $30,000. Such has been the construction put upon similar bonds in Schiff v. Continental Nat. Bank & Trust Co., 255 Ill. App. 333, and the rule has also been applied in other jurisdictions. Knaffl v. Knoxville Banking & Trust Co., 133 Tenn. 655, 182 S. W. 232; Commissioner of Banking v. Chelsea Savings Bank, 161 Mich. 691, 125 N. W. 424. Complainant, however, relies on Cole v. Myers, 100 Neb. 480, 160 N. W. 894; Minshull v. American Surety Co. of New York, 141 Wash. 440, 252 Pac. 147; National Surety Co. v. Salt Lake County, 5 F. (2d) 34, (C. C. A. 8); City of Ortonville v. Hahn, 181 Minn. 271, 232 N. W. 320, and United States Fidelity & Guaranty Co. v. McClintock, 26 F. (2d) 944, as authorities for pro tanto subrogation under circumstances such as are stated in the bill.

Cole v. Myers, as the opinion in that case states, is based on the rule as announced in Ex parte Rushforth, 10 Ves., Jr. 409, followed in Gray v. Seckham, L. R. 7 Ch. (Eng.) 680, and the opinion says that the doctrine is “firmly established” as indicated by a review of the cases in Ellis v. Emmanuel, 1 Exch. Div. (Eng.) 157. This opinion further states that Ex parte Rush-forth, above cited, was criticized in Knaffl v. Knoxville Banking & Trust Co., 133 Tenn. 655. In the Cole case the statute of Nebraska provided in substance (as the ordinances of the Village here provide) that the treasurer should not have on deposit in any bank more than the maximum amount of the bond given by any particular bank, and the Nebraska court held that the surety for. the bank would be entitled to participate in the dividends of the insolvent bank before the creditors were paid from the assets; that the treasurer’s surety could not trace through subrogation to the treasurer a right to dividends superior to that of the surety for the bank. The opinion states:

“The treasurer’s compliance with the statute would have prevented the bank from incurring an indebtedness to the county in excess of $10,000. In that event the debt of the bank would have been paid in full. By making an over-deposit contrary to the letter of the law, the treasurer incurred a personal liability to the county which otherwise would have had no existence. Neither the treasurer nor his surety will be permitted to make use of this wrongful act to establish a right to dividends superior to that of the bank’s surety.” The court further states that the rule that there could be no subrogation until the principal who was indemnified had been paid in full did not apply to such a state of facts.

In Minshull v. American Surety Co. of New York, 141 Wash. 440, 252 Pac. 147, the opinion of the court states that “except for the amount involved” Cole v. Myers “is exactly the same in its facts as is the instant case, and the question for determination is the precise one which is before us.” The opinion distinguishes the case of National Surety Co. v. Salt Lake County, 5 F. (2d) 34, saying that there “the statute did not compel the treasurer to take security from the depositary. ’ ’

.In City of Ortonville v. Hahn, 181 Minn. 271, 232 N. W. 320, the court states the general rule that the doctrine of subrogation cannot operate until the creditor has been paid in full, and says: “Literally appellants state the rule correctly,” but that the fallacy of appellants’ claim was in the fact that they attempted to make plaintiff’s claim for an excess deposit a portion of the claim which plaintiff held against the depositary sureties, which it was not. There, too, the court relies on Cole v. Myers and Minshull v. American Surety Co. Neither the Knaffl case nor other numerous authorities to the contrary seem to have been called to the attention of the court. Moreover, in Scotts Bluff County v. First Nat. Bank of Oering, 115 Neb. 273, 212 N. W. 617, on' the authorities of State ex rel. Davis v. People’s State Bank of Anselmo, 111 Neb. 126, 196 N. W. 912, and State ex rel. Davis v. Farmers’ State Bank of Winside, 112 Neb. 597, 200 N. W. 173, it was held that a surety could not be permitted to interpose such a defense. Neither the Myers case nor the other authorities we have mentioned appear to have been cited or called to the attention of the court.

In People of Sioux County v. National Surety Co., 276 U. S. 238, the Supreme Court of the United States considered a case begun in the state court of Nebraska, but transferred to the federal court for diversity of citizenship, and it was there urged that since the statute of the State forbade the deposit of the county funds by the county treasurer in excess of fifty per cent of the authorized capital stock of the bank, the sureties were not liable for the excess deposits. The trial court, however,' gave judgment for the full amount, and the court of appeals reversed that judgment. The opinion of the Supreme Court states that the court of appeals relied on Cole v. Myers and other cases, and said:

“The correctness of this interpretation of the Nebraska decision is questioned here, but all doubts on that point have been set at rest by a later decision of the state court. In Scotts Bluff County v. First Nat. Bank of Gering, 115 Neb. 273, decided since the entry of judgment below, the Supreme Court of Nebraska held that the statute does not have the effect asserted, and that within the amount of the bond a county may recover from the surety the full amount of the deposit even though it exceed fifty per cent of the authorized capital of the depositary.

“We accept this construction of the statute and accordingly set aside the conflicting interpretation of the court below, even though it antedated the determination by the State court.

The weight of authorities is clearly to the effect that the provisions of the ordinances will not be incorporated into the bonds and that the same formed no part of the contract between the Village of Maywood and the complainant. Estate of Ramsay v. People, 197 Ill. 572; Gregg v. Hinkle, 29 N. M. 576, 224 Pac. 1025; City of Cheyenne v. Maryland Casualty Co., 13 F. (2d) 401 (D. C. Wyo.); Carson v. DeWitt County (Tex. Civ. App.), 23 S. W. (2d) 411; State v. Pederson, 135 Wis. 31, 114 N. W. 828; People of Sioux County v. National Surety Co., 276 U. S. 238. These authorities hold that there cannot be subrogation pro tanto under such circumstances. Schiff v. Continental Nat. Bank & Trust Co., 255 Ill. App. 333; United States v. National Surety Co., 254 U. S. 73; Jenkins v. Na tional Surety Co., 277 U. S. 258; Hanlon v. Union Bank of Medina, 247 N. Y. 389; Commissioner of Banking v. Chelsea Savings Bank, 161 Mich. 691, are a few of the numerous authorities that might be cited to this point. Indeed, the authorities to the contrary are all based upon the reasoning set forth by the Lord Chancellor in Ex parte Rushforth, where he said:

“Take the case of two sureties, each for the separate sum of 10,000 1.; each, paying the principal creditor, would be entitled to stand in his place for the sum paid. It would be very strong to hold that, as they have taken but one surety, he shall be in a worse situation. I think, the bankers are not entitled in equity to say, as against the surety, that their demand is more than 10,000 1., the amount of the bond he has given; upon which he would be prima facie entitled to stand in their place; as to the residue of their debt, they ought to be considered, if I may so express it, as their own insurers. He is entitled to stand in their place; but not for the whole sum of 10,000 1.; for the money produced by the sale of the estate must be considered as received by the bankers. He will, therefore, be entitled to stand in their place for the difference.”

In Knaffl v. Knoxville Banking & Trust Co., 133 Tenn. 655, after quoting the above in part, the court said:

“We think there is fault in the reasoning of this case, and that it is not in harmony with the principles of equity governing the doctrine of subrogation. The condition of the bond was to pay such sums as would be advanced to the principal without limiting the amount which should be advanced. The fault in the reasoning is readily seen when it is considered that the obligee may first apply all that the principal obligor can pay, and then resort to the bond for any amount left unpaid not exceeding the amount of the penalty; for it is the final amount left unpaid by the principal which is intended to be secured by the surety. ’ ’

This reasoning seems to us conclusive. We think that all the cases upon which complainant here relies come to a wrong conclusion by assuming the same false premise. The loss for which complainant here will be liable is the net loss sustained by the Village of Maywood after it has received all the dividends it may be entitled to receive from the insolvent bank. The amount for which the surety company should answer was not limited in the bond except to the full extent of the amount deposited, although the Village of course would be limited in its recovery necessarily to the penalty named in the bonds. That was the only limitation.

As to the assertion that the excess deposits in the bank constitute a trust fund for the benefit of the Village of Maywood and that the same would be a preferred claim to which complainant has a right to be subrogated, Maryland Casualty Co. v. Fouts, 11 F. (2d) 71, gives a complete negative answer. Neither can the bill be sustained as one for contribution between complainant and defendant surety company. The bonds severally executed by these surety companies are not for the same principal. This fact alone would prevent a recovery on that theory. Of the many cases which might be cited to this point, we cite a few. Golsen v. Brand, 75 Ill. 148; Conover v. Hill, 76 Ill. 342; Wanack v. Michels, 215 Ill. 87; Southern Surety Co. v. Tessum, 178 Minn. 495, 228 N. W. 326; Southern Surety Co. v. Nichols, 239 Mich. 158, 214 N. W. 137. A further reason that the bill cannot be maintained upon that theory is that the sureties are not in any respect by reason of the execution and delivery of the respective bonds, sharers of a common burden or liability. Trego v. Estate of Cunningham, 267 Ill. 367; Weger v. Robinson Nash Motor Co., 340 Ill. 81; 50 Corpus Juris 278-9. Moreover, complainant has no such prevailing equities as would require a court of chancery to compel defendant surety company to contribute to its loss. The real party at fault primarily is the bank, which failed to pay back the money deposited with it, and complainant is the surety for the bank and has no better equity than has the bank. As between the bank which failed to repay money deposited with it and a village treasurer who made the mistake of trusting the bank when technically, she ought not to have done so, there can be no question in a court of conscience as to which would have the superior equities, and without a superior equity complainant cannot maintain its bill. The authorities are all to that effect. A discussion of them would lengthen this opinion unduly.

For the reasons already indicated the decree is affirmed.

Affirmed.

O’Connor, P. J., and MqSurely, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    John Stave et al., Appellees, v. The Great Atlantic & Pacific Tea Company, Appellant.
    Gen. No. 34,946.

      Opinion filed June 22, 1931.
    Ashcraft & Ashcraft, for appellant; Bussell F. Locke, of counsel.

      Krinsky, Levitan & G-lassner, for appellees.
   Mr. Justice Matchett

delivered the opinion of the court.

This is an appeal by defendant Tea Company from a judgment for $140 entered upon the finding of the court.

The statement of claim alleges that about May 1, 1928, plaintiffs and defendant entered into a written lease (which was attached to and made a part of the statement of claim) whereby plaintiffs demised to defendant premises described as 7050 Crandon avenue, Chicago, for a term to expire April 30, 1930; that at the expiration of the term defendant held over and continued to use the premises and paid rent for the months of May and June, and that by virtue of the terms of the lease rent for July in the sum of $140 was due, which defendant refused to pay.

The affidavit of merits admits the execution of the lease, the occupation of the premises, and the payment of rent.as alleged; but denies that rent for July was due by virtue of the terms of the lease; avers that pursuant to said terms, defendant on April 12, 1930, by a writing served upon plaintiffs, terminated the lease and on July 1, 1930, vacated the premises.

At the close of the evidence, at the request of plaintiffs, the court held as facts that defendant held over at the expiration of the lease and plaintiffs as landlord elected to hold defendant as a year to year tenant; that under the evidence defendant held over as a tenant on the terms described in the lease for the additional term of one year from and after April 30, 1930. The court further held as a matter of law that when a tenant holds over after the expiration of his lease, at the election of the landlord he should be treated as a tenant or a trespasser, or might be considered as ,a tenant from year to year.

Defendant objected to the findings of fact and of law as made by the court and made a motion to set aside the findings and assessment of damages and for a new trial and a motion in arrest of judgment, all of which were overruled.

There is practically no dispute as to the facts. The lease under which defendant held the premises was admitted in evidence and provided:

“The lessee, by continuing to occupy the leased premises, after the expiration of the original term of its tenancy hereunder, or after the expiration of any renewal period thereof, except the last of said periods, shall be deemed and considered to have elected to avail itself of its then current right to renew this lease unless it shall have clearly and unequivocally manifested a contrary intention.”

While in possession under the lease, on April 12, 1930, defendant wrote to the agent of plaintiffs:

“It is necessary that we vacate the store room at 7050 Crandon avenue, Chicago, Illinois.

“We shall appreciate it very much if you will advise us to whom, when and where you desire us to deliver the keys of said premises upon vacating same.

“We thank you for a reply to this letter at your earliest convenience. ’ ’

Plaintiffs made no response to this letter, and defendant continued in possession of the premises after the last day of April, 1930, when the lease expired.

May 5, 1930, the attorneys for plaintiffs wrote defendant, stating in substance that their clients had not received “remittance for your rent for the month of May, 1930, for the premises at 7050 Crandon avenue,” and asking if defendant would be kind enough to make remittance. May 12, defendant replied:

“Tour communication of May 5, 1930, addressed to the Tea Company at 7050 Crandon avenue has just been received by the writer, and we wish to confirm our advice to the agents of the above property that we will send them a check in the amount of the rent due them for the use of the above store during the temporary period in May.

“At the present writing we do not know just when it will be convenient for us to vacate this store but expect that in a very few days we will be able to move. If this is working a hardship on the owners or if it is inconvenient to them, we can move immediately and will do so.

“We appreciate your co-operation and trust that the suggested arrangement will be satisfactory to all concerned. ’ ’

This letter was noted “Atten. Mr. James J. Class-e ner.” May 13, attorneys for plaintiffs replied that the letter was received in the absence of Mr. Glassner, who would return the next Monday, and added, “You will undoubtedly hear from him on this subject at that time. ’ ’

On July 2, defendant wrote the agent of plaintiffs:

“Be: 7050 Crandon avenue.
“Our Mr. MacKenzie delivered the keys' for the above store to your office on Monday, June 30.
“We are writing to advise you that we have entirely vacated the premises. At the time we notified you of our intention to vacate, we did not anticipate remaining in possession of this store after May 1, but by reason of our delay in getting possession of our new store, it was necessary to remain where we were.
“We did so believing that due to our past pleasant relations with the owners there would be no objection. We are of the opinion that our remaining in the store room did not cause any loss to the owners and do not feel that we ougffit to be penalized double rental, but if the owners insist, we are perfectly willing to pay you as provided by law,”

July 9, 1930, attorneys for plaintiffs acknowledged receipt of this letter, which had been forwarded to them, and said:

“As we previously advised your Mr. Clark, our clients take the position that you are holdover tenants, and liable for one year’s rent. Accordingly, we must insist that payment of the July rent, which is now past due, be made.”

The rent for May and June was paid by the check, of defendant for the sum of $280. It is agreed that after July 1, 1930, plaintiffs gave instructions that a “For Rent” sign should be placed on the outside of the premises, and evidence was offered in behalf of defendant tending to show that sometime between May 1 and-15, 1930, a “For Rent” sign was placed in the window of the premises, and that it was placed there by someone representing himself to be the agent of plaintiffs. There was also evidence tending to show that this sign had been seen by one Arthur Martin between May 1 and May 15, and that the sign bore on it the name of the agent of plaintiffs.

On the other hand, one of the plaintiffs testified that immediately after being notified of the letter of April 12, 1930, he placed a sign in the window of the premises; that he thought one of the boys took' the sign down, and that one of - the managers of the A. & P. Company put the sign in the store; that he thought the sign was put up sometime before May but he did not know the date because he himself did not put it up. On cross-examination he stated that he did not remember whether he pulled the sign off the window or directed the store manager to take the sign down. He testified in rebuttal that the sign was at the time of trial still in the window of the premises.

Defendant contends in the first place that as a matter of law where a tenant has given notice of his intention to quit the premises at a time mentioned in the notice at which the tenant would have a right to quit by the lease and does not deliver up possession thereof accordingly, such tenant is liable to pay to the landlord double the rent or sum which would otherwise be due, and that the landlord has no election to hold the tenant for a further term by virtue of the tenant’s holding over after the expiration of his lease. This proposition of law is based.upon defendant’s construction of section 3 of the Landlord and Tenant Act (Cahill’s Ill. Rev. St. 1929, ch. 80, ¶ 3), which provides as follows:

“If any tenant shall give notice of his intention to quit the premises by him holden, at a time mentioned in such notice, at which the tenant would have a right to quit by the lease, and shall not accordingly deliver up possession thereof, such tenant shall pay to the landlord or lessor double the rent or sum which would otherwise have been due, to be collected in the same manner as the rent otherwise due should have been collected. ’ ’

Defendant argues that this provision of the statute is mandatory and creates an obligation upon the tenant at all events and under the conditions determined by his occupancy of the premises, to pay double rental and also creates a reciprocal obligation upon the landlord to accept the obligations of double rental as imposed by the statute. In other words, defendant contends that this section creates an exclusive remedy which is obligatory on the landlord and changes the well known rule of the common law to the effect that when a tenant holds over without right, the landlord may at his option treat him as a trespasser or as a tenant for another term. (Clinton Wire Cloth Co. v. Gardner, 99 Ill. 151; Goldsborough v. Gable, 140 Ill. 269; Condon v. Brockway, 157 Ill. 90.)

Plaintiffs contend that the statute in question does not change the rule of the common law, but grants an additional and cumulative right, and they cite a number of authorities which state in substance the rule to be that where a statute grants a right or remedy other than that given by the common law but does not expressly by its terms or necessarily by implication supersede or limit the common law, such right or remedy is held to be additional and cumulative. This proposition would hardly seem to need the citation of authorities. A few of the cases so holding are Gadwallader v. Harris, 76 Ill. 370; Smith v. Laatsch, 114 Ill. 271; Mackin v. Haven, 187 Ill. 480; and People v. Clark, 268 Ill. 156.

The argument of defendant is not convincing. We are not referred to any case which construes section 3 of the statute in conformity with this contention, but defendant cites a number of cases, e. g., People v. Abbott, 274 Ill. 380, where a statute had been enacted directing that money should be set apart to constitute a pension fund and the word “shall” was used in that connection. It was held that the word should be construed as mandatory. Defendant also cites People v. Hoffman, 236 Ill. App. 1, where the word “shall” as used in a statute prescribing punishment for the crime of larceny was held mandatory. The distinctions between such cases and a statute purporting to define the rights of landlords and tenants are too obvious to require discussion.

Defendant says, however, that if the landlord is not bound reciprocally with the tenant, then it is apparent that the legislature made an absolutely futile gesture in the enactment of section 3, since the landlord already had his remedy by virtue of the provisions of section 2 of the same act. Section 2 makes tenants or others in possession liable for double rent in case of a wilful holding over after a demand for possession in writing by the landlord. Section 3 gives the landlord the right to collect double rent against one who, being a tenant under a lease, notifies the landlord he will vacate but fails to do so. The distinction between the two sections is clear. The section is not a “futile gesture” but grants merely an additional and valuable right and remedy.

■In the second place, defendant contends, that assuming section 3 does not change the rule of the common law, the presumption that a tenant holding over after the expiration of a yearly term is a tenant from year to year is rebuttable, and that where the evidence shows that a tenant holds over under an agreement with the landlord that the tenant shall pay rent for the period of his occupancy only, then the tenant becomes a tenant at will and cannot be held for rental for any period after surrender of the premises to the landlord. Defendant cites Peck v. Christman, 94 Ill. App. 435; Weber v. Powers, 213 Ill. 370, and other cases. There is no question that such an agreement might have been made, but this record is entirely bare of any evidence tending to show that defendant held over pursuant to any such agreement. Not a scintilla of evidence appears in the record which tends to show any negotiations prior to May 1, 1930, looking to the further occupation of the premises. Defendant says:

“We ask the court to consider this letter of May 12th and while admitting that the letter is a self-serving declaration, we confidently believe that in seeking to determine the intention of the landlord with respect to his tenant in this regard, this court will consider the letter of May 12th as having great probative value in that the letter confirms advices previously given to the agents of the property involved to the effect that the defendant purposed to occupy the premises for a temporary period in May.”

We have searched the record in vain for evidence of these “advices” previously given to the agents of the property, and if such advice had been given, the evidence must have been easily available to defendant. On the other hand, the letter of July 2,' 1930, written after the controversy had arisen (and it is fair to infer under legal advice) states that defendant did not anticipate remaining in possession of the store after May 1st but found it necessary to do so. The letter also practically acknowledges a holding over without right by stating that while defendant does not feel it ought to be penalized by paying double rent, it is perfectly willing to pay “as provided by law” in case plaintiffs insist defendant should do so.

On the uncontradicted facts appearing in this record, we think defendant held over without any agreement or understanding with plaintiffs, and that under the well known rules of the common law and the statute, plaintiffs had three possible elections — To hold defendant (1) as a trespasser, (2) as a tenant for another term, (3) under the statute for double rent during the time it was in possession of the premises. Plaintiffs elected to hold defendant as a tenant for another term at the same rental. This they had a right to do.

The judgment is affirmed.

Affirmed.

O’Connor, P. J., and McSurely, J., concur.


author: Mr. Justice Hatchett

text:
    Minnie Wilson et al., Appellees, v. Edythe Reed et al., Appellants.
    Gen. No. 35,006.

      Opinion filed June 22, 1931.
    Needham, Hubbard & Hulks, for appellants.
    Schuyler, Dunbar & Weinfeld, for appellees; Lawrence Nelson, Jr., of counsel.
   Mr. Justice Hatchett

delivered the opinion of the court.

Complainants (owners of certain notes of Nancy DeSpain secured by a trust deed which was executed by Nancy DeSpain on November 29, 1927, conveying to Lawrence Nelson in trust certain premises therein described) filed a bill to foreclose the trust deed. The bill alleged the death of Nancy DeSpain; that Edythe Beed, a defendant, was the owner of the equity of redemption; that there had been a default in the payment of principal note No. 21 for $250 due October 5, 1929, and of interest due on that date for $73.13; that there was a further default in the payment of a special assessment and of interest coupons due June 1, 1929, on a prior trust deed executed to secure bonds aggregating $100,000, and that by reason of these defaults complainants had elected to declare the whole sum due and payable.

Defendant Edythe Beed answered the bill admitting the execution of the notes by Nancy DeSpain for the principal sum of $18,500, denying that Nancy DeSpain was indebted to Lawrence Nelson & Company, to whom the notes and trust deed were delivered. She averred that on November 29, 1927, Nancy DeSpain entered into a contract with Lawrence Nelson & Company, wherein and whereby Lawrence Nelson & Company agreed to loan and did thereafter advance to and on behalf of Nancy DeSpain the sum of $15,200; that said $15,200 was the entire consideration advanced by Lawrence Nelson & Company for the notes aggregating $18,500; that said notes on their face bore 6% per cent per annum; that because of the interest exacted being far greater than 7 per cent as allowed by the statute, the agreement was illegal and usurious and complainants were without right to collect any interest.

The cause was put at issue and referred to a master who reported in favor of complainants. Defendants Edythe Reed et al. filed objections, which were overruled by the master and which by order of the chancellor stood as exceptions to the master’s report. On the hearing the chancellor overruled these exceptions and entered a decree of foreclosure which defendants seek by this appeal to reverse.

Numerous points with citations of authority are made in the briefs, but the matters argued upon the assignments of error resolve themselves into two, namely, (1) whether the defense of usury was sufficiently pleaded and proved; (2) assuming that it was, whether defendant Edythe Reed is in such position that she will be permitted to interpose the defense. It is of course elementary that in this State the defense of usury must be specially pleaded. Hibernian Bank Ass’n v. Chicago Title & Trust Co., 217 Ill. App. 36; Harris v. Bernfeld, 250 Ill. App. 446. Section 7 of chapter 74 (Cahill’s St. ch. 74, ¶ 7; Smith-Hurd’s Ill. Rev. Stats. 1929, p. 1741) expressly provides:

“The defense of usury shall not be allowed in any suit, unless the person relying upon such defense shall set up the same by plea, or file in the cause a notice in writing, stating that he intends to defend against the contract sued upon or set off, on the ground that the contract is usurious.”

Assuming here that the defense of usury was sufficiently raised by the pleadings, it remains to consider whether the evidence sustains that defense.

Edythe Reed did not testify and the only evidence submitted in behalf of her contention in this respect is a written contract entered into between Nancy DeSpain and Lawrence Nelson & Company on November 29,1927. Lawrence Nelson was called as a witness on behalf of Edythe Reed and testified to the genuineness of the signatures to this contract and that the trust deed and the notes referred to in the agreement are the same as those referred to in the foreclosure proceeding. The agreement provided in substance that Nancy DeSpain agreed to sell to Lawrence Nelson & Company for the sum of $15,200, 40 promissory notes dated November 29,1927, and that these notes shall be secured by trust deed of even date; that Nancy DeSpain agreed to furnish a mortgage guarantee policy guaranteeing these notes to be a second lien, the cost of the policy to be deducted from the purchase price of the notes; that if there should be any defects in the title or if the mortgage should not be a second mortgage, Nancy DeSpain agreed to reimburse Nelson & Company for reasonable expenses incurred and services rendered; that Nelson & Company, in consideration of the foregoing, agreed to purchase the notes for the sum of $15,200. The agreement recites:

11.. . inasmuch as the improvements on said property are not fully paid for, it is hereby agreed that the party of the second part, upon receipt of said notes, trust deed and mortgage guarantee policy, shall disburse the" proceeds in payment of unpaid contracts for the construction of the building.”

The burden of proof being upon defendant to establish the truth of her defense, we think it can hardly be held that the mere introduction of this contract in evidence and proof that it had some reference to the notes and the mortgage was sufficient to establish the affirmative defense of usury. The elements necessary to establish that defense are set forth in Clemens v. Crane, 234 Ill. 215, and the law seems to be that if an agreement can reasonably be construed as non-usurious, it should be so construed. Mosier v. Norton, 83 Ill. 519; Mumford v. Tolman, 157 Ill. 258. These cases also establish the rule that the law is diligent to discern any artifice, device or scheme to cover up usury and that oral evidence is always admissible as against the writing of the parties to establish such fact. The bare introduction of this contract in evidence without proof of other facts which, if true, must have been easily available, would hardly seem to establish that defense.

The master found that the conveyance of the premises by Mrs. DeSpain to Mrs. Reed “was in consideration of the sum of ten dollars ($10) and other good and valuable considerations, and that it appears from said conveyance that the said indebtedness secured by said trust deed sought to be foreclosed herein was a part of the consideration for said conveyance, and that said Edythe Reed became liable therefor and cannot now claim that said loan was usurious. ”

If the finding of the master be construed to mean that Mrs. Reed is personally liable to pay the mortgage of $18,500, we disagree with such finding because there was not sufficient evidence upon which to base it. There was no evidence as to what Mrs. Reed paid for the property other than the recital in the deed and we think the recital is insufficient to hold her personally liable and the decree approving the master’s report in this respect is wrong.'

The defendant contends that the notes were .usurious and that such defense was -available to, Mrs. Reed. Having set up in her answer the defensb of usury, it was incumbent upon Mrs. Reed to prove it. No evidence was offered by Mrs. Reed nor is there any evidence in the record as to the consideration received by Mrs. DeSpain for the notes and trust deed. The agreement made between Mrs. DeSpain and Lawrence Nelson & Co. above referred to, and by which Mrs. DeSpain agreed to sell and Lawrence Nelson & Co. agreed to buy the $18,500 notes and trust deed for $15,200 by paying- out the latter sum towards the construction of a building on the premises, did not prove that the notes and trust deed in suit were delivered by Mrs. DeSpain to Lawrence Nelson & Co., nor did it prove or tend to prove that Lawrence Nelson & Co. had paid out for Mrs. DeSpain the $15,200, or any part thereof.

The notes and trust deed were offered in evidence and there was testimony to the effect that complainant, Minnie E. Wilson, owned notes of the face value of $5,000, Lawrence Nelson & Co. notes aggregating $6,500, and Ethel K. Schuber notes aggregating $2,000. Whether these notes were any or all of them delivered by Mrs. DeSpain to Lawrence Nelson & Co., or how they came to be owned by the three complainants, is not shown by any evidence.

Complainants, however, seem to rely upon other grounds, and assuming that the evidence was sufficient to establish usury they contend that the defense of. usury is personal to the debtor and to those in privity with him. It has been so held in several cases, including Union Nat. Bank v. International Bank, 123 Ill. 510, and Hibernian Banking Ass’n v. Davis, 295 Ill. 537. They assert the unquestioned rule (which is a necessary corollary) that, the mortgage debtor may affirm the usury and thus deprive his grantee of the right to plead it, and they argue that Edythe Reed does not have the right to interpose the defense of usury of which Nancy DeSpain might have availed herself. The evidence in the record bearing upon this contention also is somewhat meager. The uncontradicted evidence tends to show that on February 27, 1928, Nancy DeSpain made, executed and delivered a warranty deed providing: “. . . for and in consideration of the sum of Ten Dollars and other good and valuable consideration in hand paid, Conveys and Warrants to Edythe Reed of the City of Highland Park, County of Lake and State of Illinois, the following described Real Estate, to-wit:

“Subject to a Trust Deed to Chicago Title & Trust Company, Trustee, dated June 1, 1927, recorded as Document No. 9674241, given to secure bonds aggregating $100,000.00 and to a Trust Deed to Lawrence Nelson, Trustee, dated November 29, 1927, recorded as Document No. 9855697, given to secure notes aggregating $18,500.00.”

Complainants contend that by selling the equity of redemption and by expressly providing that the sale was made subject to the mortgage, the mortgagor affirmed the usury and that her grantee cannot now question the validity of the mortgage in that respect. The earliest authority relied upon is Henderson v. Bellew, 45 Ill. 322. In that case it appeared that Robert Bellew executed a deed of trust on April 4, 1863, to Henderson to secure Bellew’s note for $850, drawing interest at 10 per cent. The land conveyed was sold to Patrick Bellew, who took a deed from Robert containing a proviso that it was subject to the trust deed. Upon default in payment of the note the trustee was about to sell when Patrick filed his bill to enjoin the sale upon the ground that when the note was given, although on its face it drew 10 per cent interest, there was an agreement between the maker and the holder that it should in fact draw 13 per cent and that interest had been paid at that rate up to February 1,1865. The facts as alleged were proved upon a hearing and an injunction was granted upon the payment of $68.50. The opinion of the court states that the question of usury in a court of equity may only be raised on equitable terms but that independently of this principle Patrick had no more concern with the usury paid by Robert than he would have had with a gift of the same amount which Robert might have chosen to make to Henderson; that Henderson “claims simply to enforce the deed of trust according to its terms, and the complainant toók the land expressly subject to this deed. ’ ’ The opinion of the court also states:

“There is some discrepancy in the authorities as to how far other persons besides the debtor may raise the question of usury. We hold the better rule to be, that, if, in a sale of land subject to a mortgage tainted with usury, the purchaser is informed of the fact of usury by the vendor, and authorized by him to set it up as against the mortgage, the abatement to which the mortgage would be subject on account of usury thus constituting an element in the price of the land, the purchaser in such circumstances would be at liberty to raise the question.

“But if, as in the present case, the mortgage on its face draws only legal interest, and the purchaser buys from the mortgagor subject to the mortgage as it stands, no reference being had in the price to any hidden taint of usury, the presumption is that the vendor desires the mortgage paid according to its terms, and it is not for the purchaser who has bought the land expressly subject to the mortgage, and who has probably been allowed for it in the purchase money, to undertake to evade its full payment by setting up usury.’’ The opinion further states that by selling expressly subject to the usury, the mortgagor affirmed it. Shufelt v. Shufelt, 9 Paige (N. Y.) 137, 145; Post v. Dart & Bank of Utica, 8 Paige (N. Y.) 639, 641; Green v. Kemp, 13 Mass. 515; Reading v. Weston, 7 Conn. 413; Post v. Bank of Utica, 7 Hill (N. Y.) 391, 406; DeWolf v. Johnson, 10 Wheat. (U. S.) 367; Valentine v. Fish, 45 Ill. 462.

In Maher v. Lanfrom, 86 Ill. 513, Hugh Maher made a trust deed to secure a loan held to be usurious. He then conveyed the premises to one Walton for the use of Mrs. Maher, the consideration being money loaned by Mrs. Maher — a gift of former years from her husband. Walton surrendered the deed, and Hugh Maher then conveyed the premises to James Roberts by a warranty deed for the express consideration of $25,000. Roberts quitclaimed and released the premises to Mrs. Maher, who was his sister, the actual consideration being the $50,000 previously loaned by Mrs. Maher to her husband. In defending a bill to foreclose' Mrs. Maher pleaded usury, and the court held that having taken without any actual notice or knowledge of the incumbrances and since nothing had been deducted from the price of the land when she purchased on account of the mortgage, she therefore took not by agreement but by operation of law, and that the obligation could only be imposed as it legally existed. The court said:

“The property was conveyed to Roberts, by deed, with full covenants, and as it was to be by him conveyed to Mrs. Maher, it was the same, virtually, as if made to her by a mortgagor competent to convey. It seems to be the doctrine generally recognized that if a party purchases from a mortgagor without any deduction from the price oh account of the incumbrance, the grantee thereby becomes invested with the right to interpose the same defenses as might have been made by the mortgagor. In such a case the conveyance amounts to an authority to the purchaser to interpose the defense of usury. See Dix v. VanWyck, 2 Hill, 522; Post v. Dart, 8 Paige 639; Shufelt v. Shufelt, 9 Paige 137; Brolasky v. Miller, 1 Stockt. 807; Daub v. Barnes, 1 Md. Ch. 127; Greene v. Tyler, 39 Penn. 361; Newman v. Kirshaw, 10 Wis. 333; Berdan v. Sedgwick, 40 Barb. 359 — opinion by Allen, one of the judges of the present Court of Appeals.”

In Essley v. Sloan, 116 Ill. 391, Essley borrowed $2,000, giving Ms note for that amount secured by a trust deed. He afterwards conveyed the land to one Drury subject to the trust deed, and an indebtedness from Essley to Drury and Burgett was satisfied by the transfer. At that time the amount of the claims and incumbrances was computed to be $7.68 per acre for the land. Drury conveyed the land to Bigelow for $7,300 subject to incumbrances, naming them, among wMch was the loan of $2,000. Bigelow quit-claimed to Ballard subject to incumbrances. Sloan, the assignee of the note, advertised the land for sale under the trust deed. A bill was then filed by Ballard and Essley to enjoin the sale, alleging usurious interest had been paid. There was a conflict in the evidence as to whether Drury expressly agreed to pay the incumbrances, but it was agreed that all took the land subject to the incumbrances and it was so understood and agreed at the time they purchased. The court said that assuming usury, complainants could not avail themselves of that defense. It also said:

“Essley had the rig’ht, if he chose, to affirm the validity of Ms usurious contract with McKinney, and having conveyed only the equity of redemption, will be held to have done so. Drury and his grantees purchased subject to the incumbrance, with full knowledge thereof, and it in no way concerns them whether, as between Essley and McKinney, the contract was tainted with usury or not. If Essley protected the incumbrance, and provided for its payment by taking that much less from Drury for his land, thereby in effect leaving enough of the consideration of his sale in Drury’s hands to pay off the lien, and Drury so purchased, and paid only the excess he agreed to pay over and above what the incumbrance was understood to be, he is' in nowise injured, and neither he nor those claiming through or under Mm can be heard to complain. Henderson v. Bellew, 45 Ill. 322; Valentine v. Fish, 45 id. 462; Maher v. Lanfrom, 86 id. 513; Darst v. Bates, 95 id. 493; Sands v. Church, 6 N. Y. 347.” This authority would seem to be conclusive were it not for the later case of Crawford v. Nimmons, 180 Ill. 143, on which defendant exclusively relies. For that reason we have given it most careful consideration. The facts would appear to be as follows:

Jesse A. Neal owned land which he mortgaged to secure an indebtedness represented by a note of $2,000 given to John Nimmons. February 28, 1898, Neal conveyed the land by warranty deed to Crawford for an expressed consideration of $3500. The deed contained this clause: “Subject to a certain mortgage indebtedness of $2000 and interest thereon, dated January 2, 1894.” Nimmons filed a bill to foreclose against Neal and his wife and Crawford, but dismissed the bill as to Neal and wife, leaving Crawford the sole defendant. The bill alleged that Neal and wife conveyed the premises for the agreed price of $3,500; that Crawford retained $2,500 of the purchase price to pay the mortgage, and that he became liable to Nimmons for the amount of the mortgage. The answer set up the defense of usury, denied that there was any deduction from the purchase price of the land on account of the incumbrance or that Crawford retained $2,500 therefrom for the purpose of paying the mortgage indebtedness, and alleged an agreement at the time of the purchase that Crawford should be subrogated to the rights of his grantor and should have the right to interpose the defense of usury.

Upon the hearing the only evidence offered was the note and mortgage and the conveyance from Neal and wife to Crawford with proof of signatures and delivery. The decree ordered foreclosure and sale to satisfy the full amount due of $2,483.75. Upon appeal to the Appellate Court the decree was affirmed. (Crawford v. Nimmons, 80 Ill. App. 543.) There was a further appeal to the Supreme Court. The note upon its face was usurious, being for 8 per cent. The bill alleged that there was an agreement that the interest should be only 7 per cent, but no proof was offered upon this point. In the trial court defendant was not permitted to present the defense of usury: For that reason the decree was reversed and the cause remanded.

That case is not at all controlling here. In the first place, the usury there appeared upon the face of the note. Evidence of an express agreement with defendant’s grantor that defendant might interpose the defense of usury was not permitted, and for that error the decree was reversed. "While the language of the opinions is not altogether harmonious, the later authorities seem to interpret the cases we have reviewed as holding that the right of defense of usury is ordinarily a personal one; that the right of a grantee of the mortgagor of property to make the defense rests upon a fiction; that in the absence of any agreement to the contrary there is implied authority to .the grantee to make the defense and that this defense has become a part of the substantive law of the State; that the defense might be waived; that it is waived where the mortgagor, selling property securing a usurious loan, deducts the amount of the obligation from the purchase price; that if the grantee assumes and agrees to pay the indebtedness, there can be no question as to the waiver. Schiele v. Anderson, 252 Ill. App. 390.

In Franklin County Building & Loan Ass’n v. Blood, 255 Ill. App. 175, it is expressly held that where property subject to a mortgage was conveyed, it need not be expressly stated in the deed that the mortgage was a part of the consideration if it can be reasonably inferred that the incumbrance is a part of the consideration for the purchase price, and that whether it was so agreed in express terms is not material; that the purchaser took the property subject to the incumbrance “with full knowledge thereof, and it in no way concerns him as to whether the contract was tainted with usury.”

In the instant case the only consideration named is $10, which practically amounts to stating a nominal consideration. In view of the prior incumbrances, both of which were specifically named and described, it must be apparent that the incumbrances were a part of the consideration for the property conveyed and that the purchaser of the equity took with knowledge of them. Under these circumstances it must be held that the defense of usury was waived and that Edythe Reed as grantee of the equity may not interpose the same.

The decree will be modified in so far as it finds Edythe Reed personally liable, and as modified will be affirmed.

Affirmed as modified.

0’Connor, P. J., and MoSurelt, J., concur.


text:
    The People of the State of Illinois, Defendant in Error, v. Phil Ferron, Plaintiff in Error.
    Gen. No. 35,050.
    Opinion filed June 22, 1931.

      Cohen & Berks, for plaintiff in error; Benjamin E. Cohen and Mayer Goldberg, of counsel.
    John A. Swanson, State’s Attorney, for defendant in error; Otho S. Fasig, Henry T. Chace, Jr., and Edward E. Wilson, Assistant State’s Attorneys, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

An information filed in the municipal court charged that on December 14, 1930, defendant, Phil Ferron, “did then and there unlawfully keep a common gaming house then and there situated at 17 W. Quincy street, within the City of Chicago, County of Cook and State of Illinois, and did then and there permit certain persons to come together and play at a certain game of chance for money and other valuable thing,” contrary to the form of the statute, etc. There was a motion to quash the information, which was denied, and a motion to suppress the evidence, which was overruled. A jury trial was waived, the evidence heard, and a finding of guilty made. Motions to discharge and in arrest and for a new trial were denied and plaintiff was fined $100.

It is urged for reversal that the finding and the judgment are against the weight of the evidence, but a technical defect in the record makes it unnecessary to discuss this point. As already stated, the information charges that defendant kept a common gaming-house at 17 W. Quincy street, within the city of Chicago, county of Cook and State of Illinois. The evidence of plaintiff is to the effect that the unlawful business was carried on in a building located at “17 W. Kinzie street,” Chicago.

In People v. Lewis, 140 Ill. App. 493, there was evidence tending to show that defendant kept a common gaming house at the corner of Dearborn and Twenty-second streets, Chicago, while the information charged him with keeping such a house at 239 East Twenty-second street, Chicago. There was a conviction in the trial court which was reversed upon writ of error to this court, the opinion of the court by Mr. Justice Adams stating:

“It is assigned as error that ‘the proof does not show that the defendant kept a gaming house, or was interested in keeping one, at No. 239 E. Twenty-second street, as charged in the information, ’ and counsel for the defendant contends that the averment of the locus in quo is a material averment, proof of which is essential to conviction. Even in civil cases description of the place is material and necessary to be proved. W. C. R. R. Co. v. Wieczorek, 151 Ill. 579; Wabash West. Ry. Co. v. Friedman, 146 ib. 583; Knuth v. George A. Weiss M. & El. Co., 72 Ill. App. 376, 389; Chitty on Pl., 252. For greater reason this is true in criminal cases, or cases involving a penalty. O’Leary v. People, 88 Ill. App. 60, 65, and cases cited.

“Counsel for the people contend that the deficiency of proof is a mere variance, and cannot be objected to here for the first time. We do not so regard it. It is not a mere variance, but a failure to prove an averment, proof of which is essential to a valid conviction. The omission to prove that the defendant was interested in owning, keeping, etc., a room at No. 239 E. Twenty-second street, for the purpose charged, was a fatal omission.”

In Smith v. State, 107 Tex. Cr. 511, it was held that where an information charged betting and wagering within the corporate limits of Wichita Falls, failure of the State to prove the allegation as to the place of commission of the offense was a fatal variance, and further:

“Where a person, place or thing necessary to be mentioned in an indictment is described with unnecessary particularity all the circumstances of description must be proved and cannot be rejected as surplus-age. ’ ’

As against these authorities the State cites Bergstrasser v. People, 134 Ill. App. 609, and People v. Viskniskki, 169 Ill. App. 230 (aff’d 255 Ill. 384). The Bergstrasser case was decided in the Appellate Court for the third district. It there appeared that the information charged the defendants with unlawfully keeping a slot machine in their saloon at “532 Main street in the city of Quincy.” The- evidence was to the effect that the machine was kept in defendants’ saloon in Quincy, but there was no proof as to the street or number.. The court stated that if the act complained of in the information had been unlawful in one place and lawful in another, then its exact location would have had to be charged and proved, as was declared in State v. Turnbull, 78 Me. 395, and Commonwealth v. Reffron, 102 Mass. 148, but that where the offense charged in the information consisted in doing something which was unlawful in any place, then it was not necessary to charge or prove the exact place where the act was committed, if committed within the jurisdiction of the court. There is a clear distinction between the facts of this case and Bergstrasser v. People, in that here there is affirmative evidence to the effect that the unlawful business was not conducted at the place alleged in the information. There was no such inconsistent evidence there but only an omission to prove the exact street number at which the unlawful business was conducted.

State v. Turnbull, 78 Me. 392, is a case in which defendant was charged with fishing with weirs in a certain river during Sunday “closing time,” and it appeared that this was unlawful only as to certain portions of the stream, while other portions were exempted from the provision. It was held that a complaint which failed to allege that the weirs were located in that part of the river not exempted was insufficient.

In the Heffron case the charge was maintaining a common nuisance for the illegal sale of liquors. The indictment charged that the tenement so kept was in Northampton. Some of the witnesses for the commonwealth on cross-examination testified without objection that the tenement in question was in Williams-burgh and not in Northampton. Evidence in rebuttal was given by a witness who was acquainted with the line between the two towns and who had run it when measuring his own land. He said that the tenement was on the Northampton side of the line. The defendant objected to this evidence, contending that the line between the two towns could only be proved by a record of perambulation by selectmen. There was a conviction, and it was held by the reviewing court that the evidence objected to was admissible. The court, however, said that an offense having no essential connection with the place in which it was committed, like a common assault or a simple larceny, though charged to have been committed in a particular town, might be proved to have been committed anywhere within the county, but that in an indictment for an offense in its nature local, as in the cases of larceny in a building, burglary, arson, desecrating and disfiguring a burying ground, striking in a churchyard, or nuisance in a highway, the allegation of place was a necessary part of the description of the offense, and must be proved as laid. The court further said:

“It was therefore rightly ruled at the trial that the question whether the tenement which the defendant was charged with keeping and maintaining as a nuisance was in Northampton, as alleged, or in Williams-burgh, was material.”

It therefore appears that this authority is against the contention of the State.

In the Viskniskki case the charge was that the defendant rented rooms for the purpose of keeping a common gaming house in a building situated on the southwest half of the northeast half of lot 96 in the town of Carmi. The proof showed that the rooms were situated on the west half of the east half of lot 96, and the court held that this was not a variance and cited the Bergstrasser case and others: The judgment was affirmed by the Supreme Court in 255 Ill. 384, but the question of variance was not discussed in the opinion.- The place of offense, however, was substantially proved.

For the reason stated and on the authority of People v. Lewis, 140 Ill. App. 493, the judgment is reversed and the cause remanded.

Reversed and remanded.

O’Connor, P. J., and McSurely, J., concur.


text:
    Marie Swierczynski, Appellant, v. Walter Swierczynski, Appellee.
    Gen. No. 35,068.
    Opinion filed June 22, 1931.
    Egbert F. Kolb, for appellant.

      No appearance for appellee.
   Mr. Justice Matchett

delivered the opinion of the court.

June 15, 1927, Marie Swierczynski filed a bill for divorce against her husband Walter, and thereafter on July 6 she filed a petition for a writ of ne exeat. The writ was ordered to issue and bond was fixed at $1,000. Defendant was arrested on the writ and gave $1,000 bond, on which Ursula Latecki and Bruno Latecki were sureties. The sheriff returned the writ showing that he had taken defendant into custody and that upon the giving of bond by defendant he was released.

Thereafter defendant answered the "bill of complaint. A hearing was had and a divorce decree entered in favor of complainant with provisions for the payment of alimony and solicitor’s fees. Defendant paid the solicitor’s fees but failed to pay the alimony, and March 31, 1930, upon petition of complainant the court entered an order finding that the alimony had not been paid; that $1,510 was due on that account, and ordering that an execution and a writ of capias ad satisfacienckim issue against defendant. The execution and the capias issued on April 3, 1930, and were returned by the sheriff July 30, 1930, wholly unsatisfied and that defendant could not be found.

November 11, 1930, complainant brought suit in the municipal court on the ne exeat bond against defendant and the sureties. On the same day a summons was issued returnable November 21, 1930, and was duly served. The suit is still pending.

November 28, 1930, defendant appeared in the superior court without notice to complainant and in her absence. On that date there was entered an order which recited that the matter came on to be heard upon a motion for the surrender of defendant by the sureties on the ne exeat bond in order to exonerate the sureties, and that it appeared to the court that defendant was present. It was therefore ordered:

“. . . Defendant be, and he is hereby committed to the custody of the Sheriff to be held until he shall furnish a new Ne Exeat bond of $1,000 as was heretofore ordered or his discharge by due process of law.

“It is further ordered that the said sureties on said bond, Bruno Latecki and Ursula Latecki, are hereby exonerated as bail on said bond and are released from any liability under said Writ of Ne Exeat,”

January 7, 1931, defendant filed a petition in the superior court case setting up the procurement of the divorce, the issuance of the ne exeat writ, the execution of the bond, and the entry of judgment March 31, 1930, for $1,510. The petition averred that November 11, 1930, complainant brought suit in the name of the sheriff for her use against Bruno and Ursula Latecki, filing an action for $1,000 in the municipal court as case No. 2047190, which case was then pending; that on November 28 defendant was surrendered by sureties on the bond and was still in the custody of the sheriff; that the failure of defendant to pay the amount due was by reason of inability beyond his control; that he had been without employment for over a year and a half and was not in possession of any income or any personal or real estate; and prayed that the writ might be quashed and he be discharged.

January 19, 1931, the matter came on to be heard on complainant’s motion to vacate the order of November 28, 1930, releasing the sureties on the ne exeat bond, and an order was entered reciting that the parties were present in open court and that the court found the facts as heretofore set forth; that November 28, 1930, defendant voluntarily surrendered himself in open court without notice to complainant or her solicitors in exoneration of bail of his sureties. The order recites the order of November 28 that suit was commenced by complainant upon the bond on November 11, 1930; that the summons was returnable November 21, 1930; that the sureties were duly served with said summons and filed their appearance in the case, which was then pending and undisposed of; that defendant was committed to jail November 28, 1930, until he gave another bond. It was therefore ordered that the order of November 28 should be modified in that Bruno and Ursula Latecki pay instanter to complainant $10, which was taxed as costs in the municipal court case, and the said sum having been tendered in open court to complainant and refused, it was ordered that the sureties were thereby released from any liability under the ne exeat bond, and that defendant be discharged from the custody of the sheriff. From this order of November 28 complainant has perfected this appeal.

Complainant contends that the order of November 28, 1930, releasing the sureties on the ne exeat bond was void, and that is the question to be decided upon this appeal. We regret that defendant has not appeared. Section 9 of the Ne Exeat Act, chap. 97 (Cahill’s St. ch. 97, ¶ 9; Smith-Hurd’s Ill. Rev. Stat. 1929, p. 1944) seems to be controlling. It provides:

“The surety in any bond for the defendant, as aforesaid, may, at any time before the said bond shall be forfeited, surrender the said defendant, in exoneration of himself, in the same manner that bail may surrender their principal, and obtain the same discharge.”

In Cochran v. People, 140 Ill. App. 596, this court held that the writ of ne exeat was a civil proceeding; that the bond required to be given to exempt defendant from incarceration and detention thereunder was bail in a civil case, and that in the absence of the issuance of a capias and a return thereon as provided by section 20 of chapter 16 of the Revised Statutes (Cahill’s St. ch. 16, ¶ 20; Smith-Hurd’s Ill. Rev. Stats. 1929, p. 195) a recovery upon the bail bond could not be sustained; that it was a condition precedent to the right of recovery upon such bond that a writ of capias ad satisfaciendum should be issued and returned non est inventus, and that the statute was but an enactment of the rule at common law.

In Gear v. Clark, 3 Grilm. (Ill.) 64, 65, the court was called upon to consider the question of whether a surety in a bail bond could surrender his principal on or after the return day of the process sued out against the bail, and the court stated in effect that at common law the delivery of defendant to bail being a matter of record, the party was either entitled to a scire facias or he might bring debt, and that although upon the return of the capias with non est inventus the recognizance was forfeited and the right of action was complete, yet, in view of the hardship on the bail, the courts adopted rules by which the principal might be surrendered afterwards; that in case the plaintiff proceeded by scire facias, the principal might be surrendered on or before the return day of the second scire facias where two nihils were returned on or before the return day of the first scire facias where it was served and the bail would thereby be discharged; that where plaintiff proceeded by action of debt, the principal might be surrendered in open court within eight days after the return day of the process against the bail. 1 Bac. Abr. 342, was cited. The court further said that in this State this discretionary power had been taken away from the courts by the legislature and the whole matter settled by the law as found in the revised statutes, and that the true construction of the statute then existing was that the surrender of the principal after the return day of the process against the bail did not exonerate him.

In Cleveland v. Skinner, 56 Ill. 500, it was held that where there were several sureties on a bail bond and suit was commenced upon the bond against all, the surrender of the principal, either by himself or by one of his bail, before the return day of the original summons in that suit would, upon notice and payment of costs, discharge all; that if service of the summons was upon one only and he failed to make the surrender of the principal and an alias summons issued, and that if before the return day thereof another of the bail surrendered the principal, the surrender would not discharge the one whose liability had become already fixed, but that upon notice and payment of costs, not only the one making the surrender but all his co-defendants who had not been served with summons, would be discharged.

In Zimmer v. Thompson, 286 Ill. 525, suit was brought against the surety on a ne exeat bond, and the court said that the bail had the right to surrender his principal at any time before the forfeiture of the bond in exoneration of himself, and that since he had failed to do so, complainant had the right to enforce the obligation of the bond.

The sum and substance of all the cases seems to be that the issuance of the writ of capias ad satisfaciendum and the return thereof non est inventus has the effect of forfeiting the bond; that the rights of the parties thereby become fixed, and that a surrender by the bail of his principal after that time will not exonerate the surety. The court was therefore without authority to enter the order exonerating the sureties, and it is reversed.

Reversed.

O’Connor, P. J., and McSurely, J., concur.