text:
    The People of the State of Illinois ex rel. Oscar Nelson, Auditor, Appellee, v. Sherrard State Bank et al., Defendants and Appellees. Charles F. Schurr et al., Appellants.
    Gen. No. 8,185.

      Heard in this court at the February term, 1930.
    Opinion filed July 7, 1930.
    Geo. W. Wood and R. W. Olmsted, for intervenor Gust Weiss. Connelly, Weld, Walker & Searle and James Allen, for other appellants.
    Watson & Duvall, for appellees.
   Mr. Justice Jones

delivered the opinion of the court.

The Attorney General filed a hill to dissolve the Sherrard State Bank. The executor of the last will and testament of Stephen Goodlow, deceased, together with a number of others, as judgment creditors of said Bank, filed intervening petitions, by which they sought to have the assets of another bank, known as the Sherrard State Banking Company, segregated and applied ratably first to the payment of the said judgments, and then the overplus, if any, to other creditors. The petitions also prayed that in case the assets so to be segregated are insufficient to pay the said judgments in full, then the court may determine whether Andrew Russel is personally liable, by reason of his conduct, as then auditor of public accounts, in the disposition of the assets of the said State Banking Company. Upon a hearing, the chancellor denied the prayer of the intervenors and dismissed the petitions. From the order of the chancellor in that behalf, an appeal has been perfected to this court.

On September 5, 1923, the Sherrard State Banking Company was in failing circumstances and unable longer to carry on a banking business. Confronted with this situation, its directors entered into an agreement with Sherrard State Bank, whereby the latter took over a large part of the assets of the Banking Company, and guaranteed the payment of depositors and certain other creditors of that institution, not including the intervenors. In fact, the intervenors were not then judgment creditors. Their claims arose out of alleged torts and were not reduced to judgment until a year or more thereafter.

Counsel for intervenors present a large number of propositions in support of their effort to have the decree reversed. Summed up, they are that the contract between the two banks was void as to the intervenors, first, because (a) it was inhibited by the Banking Act, Cahill’s St. ch. 16a, ¶ 1 et seq., (b) by the Criminal Code, Cahill’s St. ch. 38, ¶ 38 et seq., and (c) by the Bulk Sales Act, Cahill’s St. ch. 121a, ¶ 1 et seq.; and second, because it was constructively fraudulent and an attempt to give a-preference to a portion of the Banking Company’s creditors.

The validity of that contract was before this court in Sherrard State Bank v. Vernon, 243 Ill. App. 122. In that case a suit was brought against certain directors of the Banking Company on a guaranty they had given the State Bank at the time the contract was entered into between the two banks. The directors defended on the ground that such contract was invalid. We held it was not invalid, but was binding and enforceable.

The intervenors in this case say that they are not bound by the decision in Sherrard State Bank v. Vernon, supra, because different issues and different parties are here involved; that the effect of certain statutes was not presented to or considered by the court in the Vernon case; and that the validity of the contract is now raised by persons who were not parties to the former suit and who are not estopped to raise the question. In this contention, counsel are quite right. Because of the different parties, different interests and different questions involved, the doctrine of res adjudicate, cannot be invoked against the intervenors. More than that, it is doubtful if the doctrine of stare decisis can be applied to an opinion of the Appellate Courts of this State, in view of section 17 of the Appellate Court Act, Cahill’s St. ch. 37, ¶ 49, which provides that the opinion of such courts shall not be binding authority in any cause or proceeding, other than that in which it may be filed. However, the provisions of the Banking Act were considered by us in the Vernon case and our further study of them in connection with this case convinces us that the contract is in no wise contrary to the provisions of the Banking Act.

It was urged in that case that the contract was beyond the power of either bank to make, and therefore ultra vires; that the affairs of banks are controlled by statute; and that the only manner in which a bank in failing circumstances can dispose of its assets, or be wound up, is by action of the auditor of public accounts. This court decided that the contract did not contemplate a merger, a consolidation, or a dissolution of the Banking Company, and that it was manifestly not the object of the parties to dissolve such bank for some time, at least. We expressed the view that a , course of conduct had been followed which is not uncommon where a bank is in a failing or perilous condition, and another bank or group of banks, in an effort to save it or prevent a “run,” take over a large amount of its assets, in consideration of a guaranty to pay off its liabilities. It was said that “sound reasoning dictates that the directors of a bank in failing circumstances' should have the right to. enter into such a contract as the one here involved, not only as a matter of law, but as a matter of public policy.”

A similar question was presented to this court in Candor v. Mercer County State Bank, 257 Ill. App. 192. It was held to be the general rule that where a bank is in failing condition and has become financially involved and insolvent, and the creditors are pressing their claims, the directors may dispose of the assets without the sanction of the stockholders, when it is deemed of imperative necessity. (Oskaloosa Savings Bank v. Mahaska County State Bank, 205 Ia. 1351, and cases collated in 5 A. L. R. 932, and 60 A. L. R. 1210.) It was further said that to deny this right would freeze the assets of such a bank and paralyze its opportunity to pay its creditors.

Section 4 of “An Act for the Protection of Bank Depositors” (Criminal Code, Cahill’s St. ch. 38, ¶ 41) is claimed to render invalid the contract here involved. It provides that it shall not be lawful for any bank to assume payment of, or to guarantee to pay the principal of, or interest on, any bonds, notes, or other evidences of indebtedness of, for, or on account of any person or persons, company, or incorporations; and any assumption, liability, or guaranty, whereby the deposits or trust funds of the guarantor bank can be jeopardized or impaired, shall be null and void. We are of the opinion that this contention is untenable and is without avail to the interveners. In the first place, the statute, by its terms, would only render the assumption of liability of the Sherrard State Bank null and void, in case it resulted in jeopardizing or impairing the deposits or trust funds of the guarantor bank. It would not necessarily render the entire contract invalid, but only the assumption clause. The transfer of the assets from the Banking Company to the Mercer County State Bank would still be operative. But however that may be, the only persons who could be prejudiced by the guaranty or assumption of liability by the State Bank would be its stockholders, depositors, and creditors. None of them are complaining because of such guaranty. The intervenors are not interested in the State Bank, either as stockholders, depositors, or creditors. Their interest is in the Banking Company, whose deposits and liabilities were assumed and guaranteed. Such assumption was made for the benefit of the Banking Company, of which the intervenors are judgment creditors. Under the circumstances, they were not prejudiced by the assumption of liability. They have no right to complain or ask that a decree of court be reversed on that account.

Counsel for intervenors vigorously urge that the transfer of assets by the Bank Company to the Sherrard State Bank was in violation of the Bulk Sales Law, and therefore void as to them. As herein-before stated, the claims of the intervenors arise out of alleged torts. Stephen Goodlow left certain notes payable to him with the Banldng Company for collection. The cashier collected principal and interest to the amount of $7,758.18 and failed to account to Goodlow.' The record does not show that such failure to account was known to the State Bank at the time the contract was made. On October 28, 1918, nearly four years before the contract in controversy was entered into, the Banking Company was robbed and a number of Liberty , Bonds of patrons of the bank was stolen. Some three years afterwards, a few of such patrons made demands upon the bank to restore the bonds or their equivalent, but they did nothing else in respect to them. A year or more after the Banking Company had transferred a large portion of its assets to the State Bank, these patrons obtained judgments by default against the Banking Company and became the intervenors in this proceeding. The chancellor held that the intervenors were not creditors on September 5,1923, within the meaning of the Bulk Sales Act, and further that the act has no application to the transaction in question.

In order to determine whether the Bulk Sales Act has any application to the transfer of the whole, or a major portion of the assets of a bank, it is well that we look to the history of the legislation and judicial decisions in this State. The first Bulk Sales law was enacted in 1905 and was entitled “An Act to Prevent the Sale of Merchandise in Fraud of Creditors.” The Supreme Court, in Off & Co. v. Morehead, 235 Ill. 40, held the act unconstitutional on the ground that the statute arbitrarily selected a class of individuals, to wit, those who owned “stocks of merchandise” and subjected them to special burdens and obligations, from which other persons similarly situated, were exempted. Following this decision, the present Bulk Sales Law was enacted and entitled, “An Act to regulate the sale or transfer of goods, wares, merchandise, and other chattels in bulk and to provide certain penalties in connection therewith.” It provides that the sale, transfer, or assignment in bulk of the major part or the whole of a stock of merchandise, or merchandise and fixtures, or other goods and chattels of the vendor’s business, otherwise than in the ordinary course of trade and in the regular and usual prosecution of business shall be fraudulent and void as against the creditors of the said vendor, unless the provisions of the Act are complied with.

The Supreme Court in Off & Co. v. Morehead, supra, in discussing the discrimination which the act of 1905 made against owners of stocks of merchandise, enumerated several other kinds of property of similar character, which the act should have brought within its domain. In this enumeration are. machinery, tools, finished articles, and raw materials of the manufacturer ; livestock, farm implements, crops, and household goods of the farmer; the business and the property of the hotel keeper; the rolling stock, harness, and horses owned by a livery or transfer company; the presses, printing machinery, and appliances of a publisher; the mining tools and implements of a mine owner; and the machinery, grain and products on hand of a miller. It will be observed that the property mentioned, as being of the same kind and character, and which ought to be included within the purview of legislation relating to the sale of goods and chattels, in bulk, is exclusively tangible property. There is no language contained in the opinion of the Supreme Court from which even an inference may be drawn that the act of 1905 was objectionable because it did not seek to regulate the transfer or sales of intangible property. The legislature, by its enactment of 1913, had before it the decision of the Supreme Court, and undertook to obviate the objections to the Act of 1905. The new act came before the Supreme Court in Johnson Co. v. Beloosky, 263 Ill. 363, and was pronounced valid. By the language of the act, it deals with sales, in bulk, of (1) stocks of merchandise, (2) merchandise and fixtures, and (3) other goods and chattels of the vendor’s business. There is no contention made that the assets of a bank are either a stock of merchandise or merchandise and fixtures. If such assets are to fall within the purview of the Bulk Sales Act, they must be deemed to be “other goods and chattels of the vendor’s business.” Reviewing the history of the legislation on this subject, we are constrained to the belief that “other goods and chattels of the vendor’s business” includes only that class of goods and chattels, which are of the character and type of goods and chattels mentioned in Off & Co. v. Morehead, supra; to wit, tangible property.

There has been a strong effort made to procure uniformity of laws among the various States. Within the field where this endeavor has been made are found Bulk Sales Laws, Negotiable Instruments Laws, and a few others. Fully three-fourths of all the States have enacted Bulk Sales Laws, and after diligent study, we have been unable to find a holding in any jurisdiction, that the Bulk Sales Law includes within its purview, sales and transfers of intangible property. It is a general rule of law that where a number of items are enumerated in a legislative enactment and then supplemented with the term “and other articles, goods” etc., such term means other articles and goods of the class and kind previously enumerated. The class and kind previously enumerated in the Act of 1913 consist only of tangible property, and the Supreme Court in Johnson Co. v. Beloosky, supra, has, in our belief, given sanction to the law with that aspect.

Section 40 of the chapter entitled “Judgments, Decrees, and Executions,” Cahill’s St. ch. 77, ¶ 41, provides that all goods and chattels, real or personal, may be taken and sold on execution, except as otherwise provided by law. In Crawford v. Schmitz, 139 Ill. 564, 566, a constable levied an execution upon a trunk and contents and sold them for $8. About a week after the sale, a promissory note for $2,000 with two interest coupons for $65 each, secured by a deed of trust, and also a number of negotiable bonds, were discovered in the bottom of the trunk. It was held that the purchaser derived no title to the notes and bonds, because the words “goods and chattels,” as used in that statute, do not include choses in action and other intangible property. The words “personal property” employed in section 254, and the words “goods and chattels” in section 137 of the Revenue Act, Cahill’s St. ch. 120, ¶¶ 269 and 155, are held to mean only that species of personal property which is subject to levy and sale under execution. (Loeber v. Leininger, 175 Ill. 484.) The words “goods and chattels” as used in section 7 of the Statute of Frauds, Cahill’s St. ch. 59, ¶ 7, “are the visible and tangible articles and personal property of which actual possession may be had and delivered. " (Davis v. Hincke, 264 Ill. 46.) The words “goods and chattels” as used in section 137 are to be construed as having the same meaning and as comprehending only such personalty as may be made subject to levy and sale under an execution upon a judgment at law. They do not extend to personal property of the character of tax certificates, which are mere choses in action. (Heinrich v. Harrigan, 288 Ill. 170.)

It would be .a strained construction to say that ordinary assets of a bank:are included within the species of property cognizable under the Bulk Sales Law. We do not believe that it was the intention of the legislature to include such property. The Bulk Sales Law is in derogation of the common law and must be strictly construed. (Superior Plating Works v. Art Metal Crafts Co., 218 Ill. App. 148.) In view of our conclusion, that the act has no application, it is unnecessary for ns to decide whether or not the interveners were creditors of the Banking Company on September 5, 1923.

Lastly, the transfer between the banks was not constructively fraudulent or an attempt to give a preference to a portion of the Banking Company’s creditors. From what we have said in this.case, and in Sherrard State Bank v. Vernon, supra, it is apparent that we believe the bank transfer, conducted as it was under the supervision of the State auditor, was for the sole purpose of preventing the collapse of the Sherrard State Banking Company and consequent embarrassment and disaster to the community.

For the reasons we have announced, the decree of the chancellor is affirmed.

Decree affirmed.


source: Caselaw Access Project

author: Mr. Justice Jones

license: Public Domain

text:
    Frank M. Brownlee for the use of George D. Brownlee, Appellant, v. Joseph A. Boggs for the use of George D. Brownlee and William G. Stevenson, Administrator of the Estate of Robert B. Brownlee, Deceased, as Garnishee, Appellees.
    Gen. No. 8,198.
    Heard in this court at the February term, 1930.
    Opinion filed July 7, 1930.
    James A. Allen and Murphy & Kritzer, for appellant.
    Watson & Duvall, for appellees.
   Mr. Justice Jones

delivered the opinion of the court.

Appellee, Joseph A. Boggs, brought a suit in attachment against George D. Brownlee on July 12, 1927. On July 22, 1927, William G. Stevenson, administrator of the estate of Robert B. Brownlee, deceased, was summoned as garnishee. Judgment was entered against the defendant, George D. Brownlee, September 13, 1927, for $5,407.12. The final report of the administrator of said estate was approved October 26, 1928, and the administrator was directed to make distribution of the assets among the heirs at law of said decedent, among whom was the defendant George D. Brownlee, who was found to be entitled to the sum of $3,622.49. It will be observed that the administrator was summoned as garnishee about three months prior to the entry of the order of distribution.

On the day after the entry of the order of distribution, to wit, October 27, 1928, appellant, Frank M. Brownlee, instituted a suit in attachment against George D. Brownlee, and the administrator was summoned as garnishee. Judgment in this suit was rendered against the defendant on February 11, 1929, for $2,532.60.

The garnishee filed an answer in both suits and set forth that the defendant, George D. Brownlee, is an heir and distributee of said decedent, and by the order of the county court of Mercer county, was entitled to receive the sum of $3,622.49; that the county court had directed the administrator to withhold payment of the distributive share of the defendant, pending determination in the circuit court of the said attachment suit of Joseph A. Boggs. The answer prayed that the garnishee be protected by the order of the circuit court in the matter of the several suits pending against him.

Subsequent to the filing of the answers, the attachment suits were consolidated and submitted upon the records in each case and the facts stated in the answers. The court found that Boggs was entitled to receive the whole of said distributive share and entered a judgment against the garnishee to that effect. This appeal seeks to reverse that judgment.

The question involved is whether or not a creditor of an heir and distributee can proceed by garnishment under the Attachment Act, Cahill’s St. ch. 11, 21, before an order has been entered by the probate court directing a distribution. The contention of appellant is that garnishments under the Attachment Act cannot be sustained against an administrator or an executor unless and until an order of distribution in favor of the heir or distributee has been entered by the probate court. Formerly, a judgment against an administrator or an executor as garnishee could not be obtained, unless service was had upon the garnishee after an order of distribution had been entered. (O’Connell v. McClenathan, 248 Ill. 350.) But the amendment of 1915 to section 1 of the Garnishment Act, Cahill’s St. ch. 62, ¶ 1, made it lawful to summon administrators and executors as garnishees at any time. It provided, however, that no final judgment shall be rendered against them until after an order of distribution has been made by the county court having jurisdiction of the administration of the deceased person’s estate. Boggs’ suit was brought under section 21 of the Attachment Act, Cahill’s St. ch. 11, ¶ 21, and it is claimed that the amendment to the Garnishment Act cannot be resorted to, for the reason that section 13, article IV, of the Constitution, provides, “No law shall be revived or amended by reference to its title only, but the law revived, or the section amended, shall be inserted at length in the new Act.” And therefore Boggs’ suit was prematurely brought.

The former holdings against garnishments of administrators and executors were based on the doctrine that assets in the hands of an administrator, before order of distribution, were in custodia legis. (Millison v. Fisk, 43 Ill. 112.) It has been a general rule of law, with few exceptions, that the doctrine of custodia legis, in the absence of express statutory sanction, precludes garnishee process against an administrator or an executor prior to the settlement of the estate. (Wheeler v. Chicago Title Trust Co., 217 Ill. 128; 28 C. J. 77.)

The inhibition against garnishment of administrators in Illinois was never to be found in the statute. It arose from judicial decision based upon the above-mentioned doctrine. Were it not for the application of that doctrine by the courts, there would have been nothing in the way of summoning an administrator as garnishee. The application of the doctrine was found to result in frequent hardships and injustice. It was because of this situation that the amendment of 1915 was enacted. The effect of such amendment was to declare that property in the hands of an administrator before order of distribution should no longer be deemed in custodia legis. The enactment was safeguarded by providing that no final judgment should be entered against the administrator until after the order of distribution and it forbade the heir or distributee from assigning or transferring his interest in the assets after garnishment.

The 21st section of the Attachment Act has been held to be in pari materia with the Garnishment Act. (Capes v. Burgess, 135 Ill. 61.) The provisions for making garnishment effective are found in the Garnishment Act. To hold that the amendment to section 1 of the Garnishment Act is not available to creditors, who institute suits under the Attachment Act, would be to annul the effort of the legislature to destroy the doctrine of custodia legis, so far as it had been made to apply to administrators and executors.

Appellee was entitled to the judgment he obtained in the circuit court and therefore that judgment is affirmed.

Judgment affirmed.


author: Mr. Justice O’Connor

text:
    Charles J. Stromberg, Appellant, v. The Peoples Life Insurance Company et al., Appellees.
    Gen. No. 34,331.
    Heard in the first division of this court for the first district at the April term, 1930.
    Opinion filed June 17, 1930.
    David D. Stansbury and George F. Callaghan, for appellant.
    John V. Sees, William C. Hartray and Stedman, Kesler, Lewis & Feinstein, for certain appellees. Igoe & Flaherty, for appellee Mississippi Valley Life Insurance Company.
   Mr. Justice O’Connor

delivered the opinion of the court.

By this appeal, complainant, Charles J. Stromberg, seeks to reverse an order entered by the superior court of Cook county on March 25,1930.

Complainant contends that the appeal is authorized by section 123, chapter 110, Cahill’s statutes, which provides for appeals from interlocutory orders or decrees. The pertinent part of that section is: “Whenever an interlocutory order or decree is entered in any suit pending in any court in this State . . . appointing a receiver, or giving other or further powers ... to a receiver already appointed, an appeal may be taken from such interlocutory order or decree to the Appellate Court. . . . The party taking such appeal shall give bond, to be approved by the clerk of the court below, to secure costs, in the Appellate Court.” Complainant filed his bond with the clerk of the superior court and it was approved by him. The bond recites that “The condition of the above obligation is such, that whereas, an interlocutory order giving other or further powers to a receiver already appointed was entered in this cause on the 25th day of March, A. D. 1930, in the superior court of Cook county.”

The record discloses that on December 5, 1929, complainant filed his bill against the Peoples Life Insurance Company and others, alleging among other things that the assets of the company were impaired; that its business ought to be reinsured in some other company; prayed that a receiver be appointed to conserve the assets of the company and that an order be entered restraining certain defendants from disposing of any of the assets of the insurance company. On the next day an order was entered enjoining the defendants, until the further order of the court, from disposing of any of the assets of the insurance company, and on December 20, an order was entered restraining certain acts of certain defendants and appointing Erwin A. Meyers receiver of all the property and assets of the insurance company with full power to collect, marshall, conserve and safely keep the assets upon the complainant giving bond in the sum of $25,000, and the receiver in the sum of $50,000; and it was further ordered that when Meyers should have qualified he should forthwith solicit and diligently attempt to procure a contract of reinsurance whereby the policies issued by the Peoples Life Insurance Company should be reinsured in some responsible life insurance company to the best interest of the policyholders of the Peoples Life Insurance Company. The order further provided that nothing contained in it should authorize the receiver to liquidate or attempt to liquidate the Peoples Life Insurance Company.

The bonds required by the order were executed and approved and Meyers entered upon the discharge of his duties and endeavored to secure a reinsurance contract. One of the defendants to the bill was the Mississippi Valley Life Insurance Company which, prior to the filing of the instant bill, had been endeavoring to enter into an agreement of reinsurance with the Peoples Life Insurance Company. Certain charges were made against the Mississippi Valley Life Insurance Company in the bill of complaint which we think unnecessary to mention here. On February 3, 1930, the Mississippi Valley Life Insurance Company filed its petition in the proceeding, setting up' that it had offered to enter into a reinsurance contract which had been approved by the Director of Trade and Commerce of Illinois and had been approved by the stockholders of the Peoples Life Insurance Company. On February 14, an order was entered granting Leo H. Lowe, Director of Trade and Commerce of Illinois, leave to file an intervening petition. The intervening petition was filed and the prayer was that the Peoples Life Insurance Company be liquidated as provided by the statute and that it be dissolved and to that end that a receiver be appointed “after the reinsurance of its business by Meyers (the receiver then in possession), to the end that said Erwin A. Meyers, when he has completed the duties imposed upon him by the order of his appointment may be discharged and relieved, and the receiver appointed by the Director of'Trade and Commerce may then enter upon his duties to finally liquidate all the affairs.” On the same date an order was entered requiring complainant and the defendants to show cause why a receiver should not be appointed pursuant to the statute of Illinois and the insurance company dissolved. Complainant did not answer this petition and an order was entered defaulting him for failure to do so. The record discloses that afterwards, Alvin K. Keys was appointed receiver by the Director of Trade and Commerce, pursuant to paragraph 105, sec. 3, chap. 73, Cahill’s 1929 Statutes. Receiver Meyers made his report and prayed that it be approved and that he be directed to turn over the property to Keys and an order was entered accordingly. Keys afterwards entered into a reinsurance contract with the Mississippi Valley Insurance Company and his action in this respect was approved by the chancellor, as evidenced by the order of March 25,1930, and from which complainant says he prosecutes this appeal. It further appears from the order that the action of the Director of Trade and Commerce, appointing Keys as receiver, was approved and confirmed and the bond of Keys was also filed and approved. Keys was authorized and directed to execute the reinsurance contract with the Mississippi Valley Life Insurance Company which had theretofore been approved by the Director of Trade and Commerce and Keys was ordered and directed to turn over all the assets of the Peoples Life Insurance Company to the Mississippi Valley Life Insurance Company in accordance with the reinsurance agreement, except that he was authorized by this order to retain $25,000 for the payment of receivership costs and administration. It was further provided that Keys make an appraisement of the assets and the proper notice be published as required by statute in such case; and that the court retain jurisdiction for such further proceedings as might be deemed necessary and proper.

Two days later complainant moved that he be allowed to appeal from the order of March 25 but the motion was denied; three days later complainant filed his bond as stated, which he contends was authorized by section 123 of the Practice Act, Cahill’s St. ch. 110, ¶ 122, his contention being that the order of March 25 was interlocutory.

We have refrained from discussing the allegations of the bill and the several petitions arid answers filed for the reason that we are of the opinion that the case is not properly before us. We think the order of March 25 does not come within the purview of provision 123 of the Practice Act. That section provides that where a court of chancery appoints a receiver or gives further powers or property to a receiver an appeal may be taken. But in the instant case Keys was not appointed by the chancellor but by the Director of Trade and Commerce of Illinois, as provided by statute. Paragraph 105, section 3, chap. 73 of the statute which has to do with the liquidation and dissolution of insurance companies provides that when a life insurance company is insolvent, proceedings may be instituted by the attorney general to liquidate and dissolve the company; that a petition be filed setting up the necessary facts, and on application to the court the court may, in its discretion, issue an injunction, etc., or may, on hearing, find “that sufficient cause exists for the appointment of a receiver to take possession of and conduct the business of such company until the further order of the court having jurisdiction in the premises. And in case such order showing cause for such appointment shall be made, the director shall thereupon appoint some competent person, resident of the State of Illinois, as such receiver.”

Counsel for complainant’s argument is, as we understand it, that the court appointed Keys receiver by the order of March 25 and that he succeeded receiver Meyers; that the court gave him further powers than those that had theretofore been given to receiver Meyers and therefore section 123 of the Practice Act applies. We think this contention cannot be sustained. Meyers was appointed receiver upon a bill filed by Stromberg, who alleged that he was interested in the Peoples Life Insurance Company. The receiver was appointed to take charge of the assets and to conserve them and endeavor to enter into a reinsurance contract for the benefit of the Insurance Company’s policyholders. Keys was appointed receiver by the Director of Trade and Commerce, as authorized by the statute, upon a petition filed by the attorney general. We think an order appointing a receiver under the insurance statute above mentioned is not made an appealable order by section 123 of the Practice Act.

Whether the court should have allowed complainant an appeal from the order of March 25, as he prayed, and whether that order is a final, appealable order for which a writ of mandamus might issue to compel the allowance of such an appeal, or whether the cause is still pending in the trial court, obviously we do not decide, because such questions are not before us.

Under the proper practice, there being no appeal before us, the cause will be stricken from the docket of this court. Mississippi Valley Manufacturers’ Mut. Ins. Co. v. Bermond, 39 Ill. App. 267; Gage v. Arndt, 114 Ill. 318; Chicago P. & S. W. R. Co. v. Trustees of Marseilles, 104 Ill. 91; City of Chester v. Wilson, 15 Ill. App. 239.

Cause stricken.

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


author: Mr. Presiding Justice Matchett

text:
    University of Chicago, Appellant, v. City of Chicago, Appellee.
    Gen. No. 33,872.
    O ’Connor, J., dissenting.
    Heard in the first division of this court for the first district at the October term, 1929.
    Opinion filed June 30, 1930.
    Shannon & Morrill, for appellant.
    Samuel A. Ettelson, Corporation Counsel, Gotthard A. Dahlberg, Wm. T. Crilly and Joseph J. Thompson, Assistant Corporation Counsel, for appellee.
   Mr. Presiding Justice Matchett

delivered the opinion of the court.

This appeal is one of ten pending in this court, in all of which the City of Chicago was defendant in the trial court and in all of which certain owners of property theretofore made defendants in proceedings brought by the city to condemn their property under the Local Improvement Act, Cahill’s St. ch. 24, ¶ 120 et seq., are plaintiffs.

While the forms of action are different, the questions to be decided in these cases are identical, namely, whether a final and unconditional judgment for compensation, less benefits, entered in conformity with section 32 of the Local Improvement Act, Cahill’s St. ch. 24, ¶ 155, draws interest from the date upon which it is entered.

The parties seem to agree that if the right of the payment of interest exists under that statute, either an action on the case or in assumpsit is appropriate. In each of these cases the question was raised by a general demurrer filed by defendant City to the declaration of plaintiff. In each case the demurrer was sustained, and plaintiff electing to stand by the declaration judgment was entered in favor of the City. The property owners by their several appeals challenge the ruling of the trial court upon this question.

In the instant case the declaration avers that the petition of the City to condemn was filed on July 26, 1922; that on August 13, 1924, an order was entered fixing compensation to the University for the sum of $380,847; that on August 18 thereafter the City elected to have a final and unconditional judgment entered on the finding, and that no appeal has been taken nor writ of error sued out to review the same; that on February 11, 1925, by stipulation in writing between the University and the City, it was recited that the University contended that the judgment drew interest from the date of its entry, and that the City was without right to take possession until such payment was made; that the City contended that the judgment did not bear interest, and that it had the right to take possession upon the payment of the amount of the judgment, less the assessment as provided by section 32; that it was therefore agreed that the City might make payment without prejudice; that upon payment of the full amount, less assessment without interest, the City might take immediate possession but with the right reserved to the University to sue for and collect the same; that on May 2, 1925, the City entered upon and took formal possession of the premises; that the University demanded payment of interest, which was refused, and that thereupon plaintiff sued.

It is contended in the first place by plaintiff that section 3 of the General Statute on Interest (Cahill’s Ill. Stat. 1929, ch. 74, § 3) is applicable and controlling. That section provides in substance that judgments' recovered before any court or magistrate should draw interest at the rate of 5 per cent per annum from the date of same until satisfied.

The Local Improvement Act of 1897, with its amendments (Cahill’s Ill. Stat. 1929, pp. 340-363) seems to provide a complete special statutory proceeding whereby cities, villages and towns are given power to make local improvements by special assessment, by special taxation of contiguous property, by general taxation, or otherwise. It provides for the creation of a board of local improvements, for the enactment of ordinances and for condemnation proceedings. It provides that where in the course of such proceedings private property is to be taken or damaged for public use, a petition must be filed, all parties' interested made defendants and summoned, and a jury impaneled to ascertain and assess the damages. Section 26 provides that upon the return of the verdict the court shall enter such judgment or decree as the nature of the case may require, hut that no final judgment shall be entered as to any of the property until all the issues of the case have been disposed of, “including revised or recast rolls, if any.”

Section. 30 provides that any final judgment on the verdict of the jury or finding of the court where the jury has been waived “shall be a lawful and sufficient condemnation of the land or property to be taken, upon the payment of the net amount of such finding, as hereinafter provided,” and that such judgment shall be final and conclusive as to the damages and benefits unless appealed from, but that no appeal or writ of error may delay the proceedings if the petitioner shall file its written election to proceed with the improvement; notwithstanding such appeal or writ of error, in which case it shall file its written election so to do and deposit as directed by the court the amount of the judgment and costs, after deducting benefits; that in such case the petitioner shall become liable to pay to the owner the difference between the amount deposited and the amount ultimately adjudged to be just compensation, with interest at the rate of 5 per cent per annum from the date of the making of the deposit.

Section 31 provides that upon proof of payment or deposit as directed, the court shall enter an order “that the petitioner shall have the right, at any time thereafter,” to take possession or damage the property.

Section 32 provides that upon the return of a verdict in case no motion for a new trial is made, or if made, overruled, “the petitioner shall within ninety days after final judgment as to all defendants, both as to the amount of damages and compensation to be awarded and benefits to be assessed, elect whether it will dismiss said proceeding or enter judgment on said verdict. If it shall elect to enter such judgment, it shall become thereby bound and liable to pay the amount thereof, whether such assessment be collected or not, and such judgment or condemnation shall not be conditional. Petitioner shall not thereafter be permitted to withdraw from such proceeding, or to dismiss the same, without the consent of all parties whose land is thereby condemned, except as hereinafter provided."

In determining the question of whether section 3 of the Interest Act is applicable to a final and unconditional judgment entered under section 32 of the Local Improvement Act, it would seem, if regard is had alone to the words of these statutes, the language would compel us to hold that section 3 of the Interest Act is applicable and that a judgment entered under section 32 of the Improvement Act would draw interest at the rate of 5 per cent from the date of its rendition. This seems to have been the construction put upon final judgments in condemnation proceedings where the proceedings were under the Eminent Domain Act as authorized by the Constitution of 1848. In Cook v. South Park Commissioners, 61 Ill. 115, the court said:

“We think that interest should be allowed upon judgments, when final, in proceedings of this character. They are within the spirit, if not the terms, of the statute which allows interest upon all judgments recovered."

Cook v. South Park Commissioners was followed in the later case of Illinois & St. Louis R. Co. v. McClintock, 68 Ill. 296, where the proceeding was under section 15 of the Condemnation Act approved and in force June 22,1852 (see Session Laws of 1852, p. 151.)

The same rule was applied in Beveridge v. West Chicago Park Commissioners, 100 Ill. 75. That was a proceeding to condemn vacant land for a boulevard under the authority of a statute which directed that the land in question should be taken for that purpose. A judgment for compensation was entered July 25, 1870, and provided that upon deposit or payment of the amount of damages allowed, title to the real estate should vest in the Park Commissioners. Payment was not made by the Commissioners, however, until November 28, 1879, and then the principal only, without interest, was paid, plaintiff reserving the right to sue for the interest, which he did. The trial and the appellate courts held that plaintiff could not recover and entered judgment against him, but upon writ of error from the Supreme Court the judgment was reversed. The opinion states that the Commissioners were obligated to pay the damage within a reasonable time, and failing to do so on demand, became liable to pay interest; that the demand operated as an offer to yield possession upon payment of the money; that the rights of the parties were unalterably fixed; that the plaintiff could not resume ownership nor the commissioners abandon the property; that they were both under legal duty “irrevocably fixed by the judgment.” The court stated that the owner could not be oppressed by postponing payment indefinitely; that “the law can never tolerate such oppression and wrong, and not afford some compensation for the infliction of the injury.” The opinion distinguishes South Park Commissioners v. Dunlevy, 91 Ill. 49, in that the question there in issue was whether interest might be recovered on the value of the land from the date of filing the petition, and also distinguishes the cases of Illinois & St. Louis R. Co. v. McClintock, 68 Ill. 296; City of Chicago v. Barbián, 80 Ill. 482, and City of Chicago v. Palmer, 93 Ill. 125, saying, “the judgment was not final and binding on the party seeking condemnation, as the corporate body had the legal right to abandon the proceeding and refuse to take the property.” In this case, however, by the express language of section 32 of the Local Improvement Act, the judgment entered in a proceeding to condemn under that act is made final and unconditional.

The City of Chicago, however, contends that the levying of a local assessment is not the taking of private property for public use under the right of eminent domain but, on the contrary, is the exercise of the right of taxation inherent in every sovereign State; that the provision of the Constitution that private property shall not be taken for public use without just compensation to be ascertained by a jury, has reference solely to the exercise of the power of eminent domain, as distinguished from the right to levy taxes. For the same reason it is said that clauses in the Constitution, which declare that no person shall be deprived of his property without due process of law and that private' property shall not be taken for public use without just compensation, do not apply to special assessments; that if the assessment is a rightful exercise of the power of taxation, nothing has been exacted under the right of eminent domain, and that no compensation need be made except that which is supposed in all taxation to be derived by the taxpayer from the application of the money raised to the purpose for which the tax is levied. People v. Mayor of Brooklyn, 4 N. Y. 419; Cooley on Taxation, vol. 2, pp. 1183-1184; Lewis on Eminent Domain, vol. 1, sec. 5, p. 10, and Dillon on Municipal Corporations, vol. 2, 4th ed., sec. 138, are cited to this point.

Prior to the enactment of the Constitution of 1870, no law existed whereby public improvements might be paid for by special assessment, and it was held that apart from the exercise of the taxing powers, property could not be taken to satisfy a special assessment, except under the power of eminent domain. City of Chicago v. Larned, 34 Ill. 203.

There is no doubt a clear distinction, as the authorities point out, between the taking of property by taxation or special assessment and a proceeding to take the same for public use under the Eminent Domain Act, but this distinction has no application to facts such as here appear. The sections of the Local Improvement Act which we have already summarized, provide for condemnation of property and for compensation for the taking of it and for the damage to it. That, too, is the case stated by the declaration.

We are aware that the cases above cited, which hold the Interest Act to be applicable, all arose in condemnation proceedings and under a constitution and statutes different from those which we are here required to construe; further, that under section 10 of the present Eminent Domain Act (Cahill’s Ill. Stat. 1929, ch. 47, ¶ 10) a judgment for compensation entered in a proceeding to condemn property under that act, is by the provisions of the act conditional and not final, and that as the same has been consistently construed by this and the Supreme Court of the State, a judgment entered pursuant thereto does not draw interest until the condemnor takes possession of the property. That statute, however, expressly provides a remedy for the property owner in case the condemnor, who has obtained a conditional judgment, acts oppressively.

Plaintiff further contends that unless interest is allowed on this final judgment, it will not receive just compensation for the taking of its property. Section 13 of article 2 of the Constitution of 1870 provides:

“Private property shall not be taken or damaged for public use without just compensation. Such compensation, when not made by the State, shall be ascertained by a jury, as shall be prescribed by law.”

In Geohegan v. Union Elevated R. Co., 266 Ill. 482, the Supreme Court considered a case which was brought against defendant to recover for damage to plaintiff’s real estate by reason of the operation and maintenance of an elevated railroad in front of his property. The court held that an instruction which told the jury that plaintiff might recover interest upon the amount of damages sustained was erroneous; that “in the absence of any statutory provisions controlling, the special rules in respect to interest must be derived from constitutional principles requiring just compensation to be paid for property taken.” The opinion cites Cook v. South Park Com’rs, 61 Ill. 115, and states:

“It is apparent from the reasoning of this court in these and other decisions touching the question of interest in eminent domain proceedings, that interest was allowed in such matters after judgment, because then the amount of damages was considered fixed or liquidated. "

In Mecartney v. City of Chicago, 273 Ill. 276, the opinion of the court refers to the constitutional provision as to the necessity of compensation where private property is taken and says that the correct rule is stated in Appleton Water Works Co. v. Railroad Commission, 154 Wis. 121, which is in substance that just compensation means present value presently paid and “if payment is not to accompany the taking but is to be postponed to a later period it must certainly be upon the payment of interest for the deferred period.”

We think it must be held that this provision of the Constitution is applicable to the taking of private property, whether the proceeding in which the property is taken is one under the Eminent Domain Act or under the Local Improvement Act. The argument that the construction of section 32 for which the City contends would violate the provision of the Constitution with reference to the payment of compensation is not without force.

It is true, as the City suggests, that until such time as petitioner takes actual possession of the property, the owner is not deprived of the entire use of it. It must, however, be apparent that the entry of a final and unconditional judgment as provided by section 32 does have the immediate effect of taking away from the owner his absolute dominion over his property. He cannot sell it to another. He cannot lease it to another. He cannot improve it as he might wish to do. He cannot even arrange to make that use of his property for which it is in his opinion best adapted., Its personal use value alone remains; its exchange value is completely destroyed. It is apparent that substantially the dominion of the owner over his property is removed from the time a final and unconditional judgment is entered, such as is provided for in section 32. An owner, it is true, may remain in possession of his property but only at the sufferance of the condemnor.

The City contends for a construction of this statute which would give to it, for an unlimited time and at its pleasure, the right to wrest from the owner the possession of his property upon the payment, without interest, of an amount fixed as its value at an indefinite time prior to the date upon which it may be taken. Such a construction of this statute seems inconsistent with the guaranties of our Constitution and rather conforming to the ancient rule that “the king can do no wrong.” That rule finds little favor in our system of jurisprudence. On the contrary, our Constitution summons sovereignty itself to the bar of justice.

Plaintiff contends that its construction is compelled by a consideration of the historical development of the local improvement and condemnation laws of this State. We regret that the brief of defendant declines to recognize the importance of this argument. Defendant replies:

“Not much importance attaches to the historical development of the law in these cases. The law as it has existed since they were inaugurated governs.”

We have already pointed out that in cases construing statutes enacted under a former constitution, interest was allowed where the judgment entered was final and irrevocable, and that under the same constitution it was held that property could not be taken to satisfy a special assessment except under the power of eminent domain. City of Chicago v. Larned, 34 Ill. 203. Section 15 of the act of 1852 of the Eminent Domain statute (see Illinois Stat. 1852, p. 151) expressly provided that judgments entered in proceedings to condemn property should be final and conclusive between the parties, and, as we have already pointed out, such judgments were held to draw interest from the date of entry. It was also held that proceedings to take property for the purpose of satisfying a special assessment could only be maintained under the provisions of that statute. City of Chicago v. Larned, 34 Ill. 203.

Section 9 of article 9 of the Constitution of 1870 (see Cahill’s Stat. 1929, p. 22) authorized the General Assembly to vest the corporate authorities of cities with power to make local improvements by special taxation of contiguous property or otherwise. Thereafter the act of April 10, 1872, in force July 1, 1872, was enacted (see Gross’ Stat. of Illinois, chap. 25, art. 9, p. 89). Section 53 of that statute provided that where property was taken or damaged by proceedings authorized thereunder, the city or village might file in the same proceeding a supplemental petition, praying the court to cause an assessment to be made for the purpose of raising the amount necessary to pay the compensation and damages that might be awarded.

Enacted by the same legislature, the Eminent Domain Act (approved April 10 and in force July 1, 1872) provided the manner in which property might be taken for condemnation. Gross’ Stat. of Ill., pp. 155-157. Section 9 thereof provided that no benefits or advantages accruing to the lands affected might be set off against compensation in a proceeding to condemn, and section 10 provided that upon the report" of the jury, the judge shall make such order “as to right and justice shall pertain,” ordering that petitioner enter upon such property and the use of the same, upon payment of full compensation, as ascertained as aforesaid. The provision of the former act to the effect that the judgment between the parties should be final was omitted.

By an act approved June 18,1891 (see Session Laws 1891, p. 80), section 53 of article 9 of the Cities and Villages Act required the city or village to take the land sought to be appropriated or damaged within two years after the entry of the judgment. The same amendment authorized the court, upon failure of the city so to do, to enter an order requiring the city or village to pay for such land within a short day, and in default thereof to dismiss the proceeding. If the court found that the land was taken and not paid for, then it should order payment of the compensation with interest from the date of making.

By the act of June 4, 1897 (see Laws of Illinois, 1897, pp. 101-135), a complete local improvement act was passed and laws inconsistent therewith repealed. The amendment of 1891 to section 53 of article 9 was omitted from that act, and apparently the present section 32 (which we are required to construe) was enacted in lieu thereof.

The same legislature, by an act of May 14, 1897, amended section 10 of the Eminent Domain Act (see Laws of Illinois, 1897, p. 218) so as to provide that in case the petitioner shall dismiss his petition or fail to make payment of full compensation within the time named in the order, the court or judge shall upon application of the .defendants make such order in the case for the payment by the petitioner of all costs, expenses and reasonable attorney fees as might be right and just.

It is necessary to an intelligent consideration of the decisions of the Supreme Court that these various statutes be kept in mind.

In City of Evanston v. Knox, 241 Ill. 460, the Supreme Court recites this legislation quite at length and considers a number of cases construing these statutes. The opinion states:

“To obviate the evils urged as resulting under the workings of the former statute, said section 53 of article 9 was amended in 1891, providing that the city or village must take possession of the land condemned within two years from the entry of judgment, otherwise the property owner could, on motion, after the expiration of the two years, have the proceedings dismissed as to his property (Harris v. City of Chicago, 162 Ill. 288), but the city could not dismiss after two years without the consent of the property owners. (Pearce v. City of Chicago, 169 Ill. 631.) By the Local Improvement Act of 1897 it was attempted, through specific provisions, to cover fully this subject so as to protect the interests of both petitioner and property owners, and at the same session of the legislature section 10 of the Eminent Domain Act was also amended so as to give the property owners some remedy if their property was not taken after condemnation.”

It is difficult to understand what the learned judge who wrote the opinion in that case could have meant when he said that by the provisions of the Local Improvement Act the legislature attempted “to cover fully this subject so as to protect the interests of both petitioner and property owners,” if section 32 is to be construed in such a manner as to again subject the owners of property to the same conditions that existed prior to the enactment of the amendment of 1891. These considerations seem to compel the conclusion that when the legislature provided in section 32 that if the petitioner elected to enter a judgment he should become bound thereby whether the assessment was collected or not; that the judgment should not be a conditional judgment, and that he might not thereafter be permitted to withdraw from the proceedings or to dismiss the same without the consent of all the parties; that it was the intention of the legislature that the right of all the parties should be irrevocably fixed and determined by the judgment entered. The question may be asked as to why, if this is the construction to be placed upon it, the legislature did not also specifically provide by this section that the judgment should draw interest. The answer is that a statute already existed which provided that any judgment having the qualities such as this section provides, would draw interest from the date of entry.

Defendant contends for the unqualified rule that a judgment in a condemnation suit draws interest from the date upon which possession is taken by the condemnor and cites a long line of authorities, some of which so hold and in others of which the opinion of the court is expressed to that effect. With the exception of City of Chicago v. Roth, 334 Ill. 132, not one of these cases purports to construe the Local Improvement Act of 1897, which we are here required to construe. Some of these cases are damage suits for injuries to property; others arose under the Eminent Domain Act of 1852; others under the Eminent Domain Act of 1872; yet others, under article 9 of the Cities and Villages Act. Decisions construing these statutes, it seems to us, do not state the law now applicable.

City of Chicago v. Barbian, 80 Ill. 482, is one of the cases much relied on. That was a case arising after 'the adoption of the Constitution of 1870 and the enactment of legislation pursuant thereto. A petition for mandamus was filed to compel a levy and collection of a tax for the payment of a sum, ascertained and reported by a jury to be compensation for damages sustained by the relator by reason of the widening of North State Street in Chicago. The court entered judgment on the finding, a motion for a new trial having been withdrawn on December 3, 1873. On June 1, 1874, the City repealed the ordinances under which the proceedings were brought. The opinion of the court in that case held that no property had been taken or damaged because the City had not taken possession, and in answer to a suggestion of the injustice that might result from having such judgment suspended indefinitely over property, the court said that unless the condition should be complied with within a reasonable time by the payment of damages and taking possession, the proceeding would be regarded as abandoned and that a court of equity would, if need be, stay any attempt to proceed under it.

That case consistently held that interest would not be allowed upon the judgment, but it cannot be a controlling authority in the construction of statutes evidently intended to remedy the wrongs which that decision made possible.

South Park Commissioners v. Dunlevy, 91 Ill. 49, involved proceedings brought to condemn land under section 2 of the act for the exercise of the right of eminent domain, in force July 1, 1872, and the court, of course, followed the case of City of Chicago v. Barbian, supra.

In City of Chicago v. Palmer, 93 Ill. 125, the City had taken possession of property condemned for the use of a street, and it was held as a matter of course that interest might rightfully be included in the judgment.

Epling v. Dickson, 170 Ill. 329, was an action in chancery to collect judgments which had been obtained against a railroad company on account of its having taken possession of the plaintiffs’ property. The court allowed a recovery of the face amount of the judgment but refused to allow interest on the judgments or costs. The court held that the costs followed the judgments and that interest should have been allowed, upon the authority of Cook v. South Park Commissioners, 61 Ill. 115, and City of Chicago v. Palmer, 93 Ill. 125.

In City of Danville v. Danville Water Co., 180 Ill. 235, the water company brought an action in assumpsit based on a contract with the City. The City filed certain pleas to which plaintiff demurred, and the City electing to stand by its pleas, judgment was entered for damages with 5 per cent interest thereon. The court held, following Vider v. City of Chicago, 164 Ill. 354, and other cases, that the City was not chargeable with interest on claims against it.

Moll v. Sanitary District of Chicago, 228 Ill. 633, was an action where the declaration alleged that the Sanitary District brought a proceeding to condemn and damages of $6,000 were awarded; that the district deposited the money and took possession of the land; that upon appeal of plaintiff the judgment was reversed, and that on another trial plaintiff’s damages were assessed at $20,312.80; that the court entered judgment in favor of plaintiff for the amount of the verdict with interest from its date only; that plaintiff moved for an allowance of interest from the date of the former judgment, which motion was denied. The demurrer to the declaration was sustained, which, upon appeal to the Supreme Court, was reversed.

In City of Chicago v. Thomasson, 259 Ill. 322, Thomasson, as the assignee of three judgments for compensation, rendered in a proceeding by the City to condemn land for local improvement under section 9 of the Cities and Villages Act of 1872, filed a petition in the condemnation proceeding in which he prayed that an absolute and unconditional judgment for the amount of the damage with interest from September 1, 1893, on which date the City had taken possession of the premises, might he entered. The City answered, and upon hearing the court dismissed the petition, and the order, upon appeal to the Supreme Court, was affirmed, the ground of the decision being that by a voluntary surrender of the property by the owners without compensation therefor, the owners had voluntarily waived their right under the statute to demand payment of their award before the land could be taken. The court, however, intimated that as the City had failed to exercise due diligence in proceeding to collect assessments with which to pay for the damage done in the taking of the property, it would be liable in an appropriate action, and its decision was put upon the distinct ground that the court had no jurisdiction in any event to enter the judgment prayed for.

In Mecartney v. City of Chicago, 273 Ill. 276, Mecartney, as plaintiff, brought an action on the case against the City to recover damages for alleged negligence in its failing to levy and collect special assessments to pay for the compensation awarded in special assessment proceedings. The cause was tried by the court without a jury and judgment was entered in Mecartney’s favor, which, upon appeal to this court, was reversed and the cause was taken to the Supreme Court by a writ of certiorari. The opinion of that court, reviewing authorities, held that the action would lie. The court said that the property owner in such a case was not in the same position as a contractor who had agreed to look to the proceeds of a special assessment for his pay; that the plaintiff was not limited to remedy by mandamus to compel defendant to proceed to perform its duty; that the question of the amount of damages that might be recovered was not affected by the form of action; that the decision in City of Chicago v. Thomasson, supra, did not touch in any manner the question of the liability of the City for negligence nor the question of whether plaintiff would be entitled to interest from the time possession was taken. As the trial court however held that plaintiff was entitled to recover for expenses and attorney’s fees in attempting to enforce the City’s liability, this was held to be error, for which the judgment was reversed and the cause remanded. The original proceeding for condemnation in this case was also under section 9 of the Cities and Villages Act of 1872. The question, therefore, of the proper construction of section 32 was not involved in the case.

In so far as the briefs advise us, section 32 of the Local Improvement Act has been construed by our Supreme Court in three cases. In People v. Weaver, 330 Ill. 643, the court defined the term “final judgment” as used in that act, stating:

“ ‘Final judgment,’ as used in section 32, means the same as it does in section 26 of the act, where it is said: ‘But no final judgment shall be entered as to any of the property embraced in said roll until all the issues in the case have been disposed of, including revised or re-cast rolls, if any.’ It is the judgment entered after all the issues between the petitioner and the defendants have been decided.”

The question for decision on the record there was whether the final judgment in a proceeding to condemn under the Local Improvement Act could be vacated after the term at which it was entered, and the court expressly held that it could not.

In City of Chicago v. Roth, 334 Ill. 132, it appeared on April 23, 1925, the City of Chicago filed a petition to condemn under the Local Improvement Act of 1897 as amended; that final judgment was entered January 20, 1927, awarding $4,700 for the land taken and assessing $413 against the remainder of the lot as benefits. The assessment against the lot was certified for collection and was paid by the owners on September 20, 1927. The owners moved a building off that part of the premises condemned and paid the contractor for doing the work. The City, without paying the judgment, immediately took possession of the condemned property. On November 15, 1927, the owners filed their petition in the original condemnation proceedings, setting up these facts and asking an order on the City to pay interest on the award from January 20, 1927, to the date of the final judgment, at the rate of 5 per cent. Upon hearing this petition was dismissed. The court stated that it was unable to find in the act any authority for the entry of such a judgment, referring the owners to Mecartney v. City of Chicago as indicating their remedy, but held that since the court was without authority under the statute to enter the order prayed for, the petition was properly dismissed and the judgment affirmed. As the case was decided on the question of jurisdiction, the question of whether the judgment should include interest was not necessary to a decision of the case, although the question was raised in the petition. We search the opinion in vain for any indication of the attitude of the court upon that question.

In City of Chicago v. McCluer, 339 Ill. 610, a case decided by the Supreme Court at this June Term, 1930, the court considered certain consolidated cases involving the validity of proceedings under the Local Improvement Act and judgments under section 32 fixing awards to property owners for property taken for improving and widening North La Salle Street. It was there contended that the entire proceedings should have been dismissed because the City of Chicago had no money available in the fund set aside for the payment of the property to be condemned, because the people of Chicago had voted against granting the City of Chicago the right to issue bonds for the payment of the property to be condemned, and because the City was indebted in a large sum of money and therefore was not in a position to make payment for condemned property. A motion that all orders entered by the trial court should be vacated and set aside and the cause dismissed for these reasons, was made October 19, 1928. The court however, stated:

“When appellee elected to enter the judgment herein it thereby became bound and liable to pay the amount of such judgment whether the assessment is collected or not. (Local Improvement Act, sec. 32.) The City of Chicago is a very large municipality. The final judgment in this case, under the statutes, is an obligation on it to pay. The judgment is final as far as the city is concerned and cannot be set aside after the lapse of ninety days (People v. Weaver, 330 Ill. 643); and even though the city has not on the day of the judgment order or at the end of a reasonable period following the judgment, — that is, after the assessments have been either collected or are in default— sufficient money to pay the awards, the court will by proper action enforce the judgment against the city. Non constat that because it does not now have the funds on hand, when the time comes to meet the liability it will not have sufficient funds derived from an authorized bond issue, from increased taxation or from some other source, to meet the same.”

If a judgment such as this lacks any of the essentials of a judgment quod recuperat, the briefs of the City fail to point them out.

We realize that the precise question presented has neither arisen nor been decided in any case which has been called to our attention, but by reason of the plain language used in section 3 of the Interest Act and section 32 of the' Local Improvement Act, by reason of the provisions of our Constitution which seem to require full compensation for property taken or damaged for public use, by reason of the historical development of the law on this subject as hereinbefore recited, — we are persuaded to the conclusion that it was the intention of the legislature that in proceedings brought for the condemnation of property under the Local Improvement Act, the judgment fixing the amount of compensation when final and unconditional, as provided in section 32, draws interest at the rate of 5 per cent from the date of entry.

For the reasons indicated the judgment of the trial court is reversed and the cause remanded to the trial court with directions to overrule the demurrer.

Reversed and remanded with directions.

McSurely, J., concurs.

Mr. Justice O’Connor dissenting: In my opinion, the Supreme Court of this State is committed to the doctrine that a property owner, whose property has been condemned for street purposes by a municipality, is not entitled to interest on the compensation fixed for the property which has been taken, until the municipality has taken possession of it. Mecartney v. City of Chicago, 273 Ill. 276; Beveridge v. The West Chicago Park Commissioners, 100 Ill. 75; Cook v. South Park Commissioners, 61 Ill. 115; Illinois & St. Louis R. Co. v. McClintock, 68 Ill. 296; City of Chicago v. Barbian, 80 Ill. 482; South Park Commissioners v. Dunlevy, 91 Ill. 49; Tudor v. Chicago & South Side Rapid Transit R. Co., 164 Ill. 73; City of Chicago v. Palmer, 93 Ill. 125; Moll v. Sanitary Dist., 228 Ill. 633.

In number 33872, University of Chicago, a corporation, v. City of Chicago, it appears that the ordinance authorizing the improvement, which was the widening of North Market Street, in Chicago, provided for the condemnation of parts of certain lots, and further provided that the cost of the improvement should be paid for by special assessment, in accordance with the provisions of the Local Improvement Act of 1897, and amendments thereto. It is obvious, under the provisions of the Local Improvement Act, under which this proceeding was brought, that considerable time must necessarily elapse between the date of the entry of the judgment condemning the land and confirming the assessment, and the time the assessment could be collected. August 13, 1924, an order or judgment was entered fixing the amount of just compensation to be paid to the University of Chicago for the taking of its property. The compensation awarded was $380,847. August 18, 1924, the City elected to have final judgment entered both as to the amount of compensation and the benefits assessed. February 21, 1925, the City paid the University of Chicago $62,563.74, and on May 2, 1925, $50,000. On this date, by a stipulation of the parties mentioned in the majority opinion, the City took possession of the property condemned and thereafter, the following additional payments were made: June 11, 1925, $100,000; June 30, 1925, $68,283.26; July 22, 1925, $20,000; August 3, 1925, $40,000; September 4, 1925, $35,000; and March 26, 1926, $5,000, making the total payment of $380,847, the amount the University was awarded.

From the foregoing, it is obvious that there was little delay in the collection and payment of the assessment and no complaint is made that the City did not act promptly in the collection of the assessment and the payment of the awards. And there is no charge in the declaration that the City was in any way negligent in any particular.

In the majority opinion a number of authorities from this State are cited and discussed, beginning with the case of Cook v. South Park Commissioners, 61 Ill. 115, and the argument and holding is that interest is allowable from the date of the entry of the judgment where it is final and unconditional. In my opinion, such is not the holding of the Supreme Court. A reading of these authorities leads to the conclusion that the court allowed interest only from the date possession was taken of the property condemned and not from the date of the judgment. What the Supreme Court held in the Cook case is stated in Illinois & St. Louis R. Co. v. McClintock, 68 Ill. 296, where the court said (p. 297): “The only question here presented is, whether a judgment of a circuit court, on appeal from commissioners condemning lands for right of way, under the act of 1852, relating to that subject, bears interest, where possession of the property condemned is taken and retained by the applicant for condemnation.

“The question was settled by this court in the case of Cook v. South Park Commissioners, 61 Ill. 115. It was there said: ‘We think that interest should be allowed upon judgments, when final, in proceedings of this character. They are within the spirit, if not within the terms, of the statute, which allows interest upon all judgments recovered.’ We are not disposed to depart from the construction thus given to the act.” It will be noted that the court holds that in the Cook case it was held that a judgment bore interest upon the taking possession of the property condemned and not that the judgment should bear interest from the date of its entry.

In the Dunlevy case, supra, one of the questions presented was whether the court erred in “instructing the jury to allow interest on the value of the property from the time the petition was filed until the trial.” And it was held that the interest was not allowable because the commissioners had no right to take possession of the property or to disturb the defendant in the enjoyment of it until the damages had been ascertained and paid. The court there further said (p. 57): “until the possession of the property has been taken, interest cannot be allowed; ... so long as the owner holds the possession and use of the property, the compensation should not bear interest — in other words, that the possession and use of the property must be regarded as an equivalent for interest. " And in my opinion this rule has not been changed by the enactment of section 32 of the Local Improvement Act of 1897. The only change made in the law by that section was to provide that if a municipality desired to abandon a condemnation proceeding, it must elect to do so within 90 days after final judgment and if it did not elect to abandon the proceeding, it must pay the award whether the assessment was collected or not.

In the Mecartney case (273 Ill. 276), the Supreme Court speaking by Mr. Justice Cartwright, reviewed a number of authorities in this State and referred to the Appleton case cited in the majority opinion (154 Wis. 121), and reached the conclusion that interest was not allowable on a judgment entered in the condemnation proceeding until possession was taken of the land condemned. In my opinion the construction placed on a number of the authorities cited in the Mecartney case is at variance with the construction placed upon such authorities in the majority opinion.

In the instant case, the City .having acted with promptness in the collection of the assessment and payment of the award, and no charge being made to the contrary by plaintiff, interest on the judgment is not allowable under all the authorities and the Local Improvement Act of 1897. I think the judgment of the circuit court should be affirmed.


text:
    Joseph Slotkowski, Appellee, v. Alexander J. Zukauskas et al., Appellants.
    Gen. No. 33,894.
    Heard in the first division of this court for the first district at the October term, 1929.
    Opinion filed June 30, 1930.
    Hermann P. Haase, for appellants.
    John Charles Lewe, for appellee.
   Mr. Presiding Justice Matchett

delivered the opinion of the court.

This appeal is by certain defendant owners from a decree of foreclosure. The cause was heard upon exceptions of defendants to the report of a master to whom it had been referred, and these exceptions were overruled and a decree entered as prayed by complainant.

The facts appear to be that on March 17,1925, Alexander Zukauskas and Helen Zukauskas, his wife, made their principal promissory note for the sum of $4,400, with interest at 6 per cent per annum, payable two years after date to the order of themselves; that to secure the payment of said note they made a trust deed conveying the premises in the decree described to B. F. Mastauskas, as trustee; that the note and trust deed .were delivered to Paul Bernowsky, who sometime in the spring of 1926 transferred the same for value to complainant, Slotkowski. Some time after the making of the trust deed the premises seem to have been conveyed to defendants and appellants, Mamert Piotrowski and Josephine Piotrowski, his wife. The exact date of the transfer does not appear, nor does the record show whether at that time the Piotrowskis assumed and agreed to pay this indebtedness. The bill alleges, however, and the answer admits that they were the owners of the premises on September 19, 1928. The answer further avers that on March 17, 1927, defendants paid the note in full and that they are not indebted to complainant or any other person on account of said note.

This is the only defense averred in the answer; but defendants contend here, apparently for the first time, that complainant at the request of Zukauskas agreed to extend the time of payment of the principal note, first, for 30 days and afterwards for an additional 30 days, and that, on the authority of Albee v. Gross, 250 Ill. App. 98, and Metz v. Dionne, 250 Ill. App. 369, defendant purchasers were released by such extension.

There are several reasons why this defense cannot avail. In the first place, that defense was not set up in the answer and was not an issue upon the trial; in the second place, the evidence which we have examined fails to show a valid and binding agreement for an extension, and in the third place, the decree does not find that Mamert and Josephine Piotrowski are personally liable for the debt or any deficiency after sale.

The alleged defense of payment has little, if any more, merit. The master found that interest had been paid on the indebtedness up to and including October 1, 1928, but that no interest or any part of the principal had been paid thereafter.

The evidence shows that defendant owners did not at any time personally come into contact with complainant, but that Bernowsky made payments of interest to complainant from time to time and that when default was made in these payments complainant took * the matter up with Bernowsky, who in turn took it up with the makers of the note, and they in turn informed Piotrowski of the situation.

The evidence indicates that in 1927, Piotrowski executed and gave a mortgage to Zukauskas on real estate situated on 61st Street, the agreement with Zukauskas being that he would cash this $7,000 mortgage and pay the note held by complainant. There is no evidence, however, tending to show that Zukauskas was the agent of complainant in this transaction. The preponderance of the evidence clearly shows that complainant’s note was not paid. It is fair to assume that if it had been paid a release would have been demanded and given.

Bernowsky testified that complainant told him that if the interest was not promptly paid he would start foreclosure; that he went to see Piotrowski about the matter; that Piotrowski told him to call Zukauskas, who would advance the money for him; that at the request of Piotrowski he talked with Zukauskas and told him that he would come over and that he, Zukauskas, would give him the money. Bernowsky further testified that on two occasions thereafter Zukauskas gave him money to pay the interest.

The evidence tends to show that Piotrowski gave a mortgage to Zukauskas and that Zukauskas agreed to pay off this indebtedness to Slotkowski out of the proceeds ; hut this comes short of proving payment.

The equities as between Zukauskas and Piotrowski are not here in issue. As between the parties' to this record the decree is just and it is affirmed.

Affirmed.

O’Connor and McSurely, JJ., concur.