author: Mr. Justice Thomson

text:
    S. Ward Hamilton Company, Appellee, v. Channell Chemical Company, Appellant.
    Gen. No. 30,709.
    1. Contracts — when proof in action for breach sufficiently supports declaration to warrant submission to jury. Where the declaration in an action for breach of contract alleged that “plaintiff * * * did * * * make up a large quantity of mop centers and offered and was ready and willing to deliver to the said defendant the balance of said mop centers * * * and requested the defendant to accept and pay for the same * * *, yet the defendant failed to do so, to the damage of the plaintiff in the sum of $50,000,” and there was proof that defendant, while accepting and paying for all mop centers actually made up by plaintiff, notified plaintiff not to make further deliveries, and that plaintiff thus had left on hand a quantity of material purchased for use in completing the contract, such proof sufficiently supported the declaration to warrant its submission to the jury.
    2. Contracts — sufficiency of evidence, in action for breach, to show execution of new agreement by parties after breach. Evidence, in an action for breach of contract to accept and pay for a specified quantity of mop centers to be manufactured by plaintiff for defendant, held not to show that after the failure of the defendant to perform within the time limited by such contract, the parties entered into a new agreement covering the subject matter of the former contract.
    3. Contracts — completion of contract by manufacturer agreeing to make goods to purchaser’s order as prerequisite to suit for damages resulting from failure of purchaser to perform. Under a contract for the manufacture and delivery of a quantity of mop centers, wherein plaintiff agreed to begin deliveries within a certain period and to continue deliveries, “as ordered,” up to a stated quantity daily, and defendant agreed to accept delivery of the entire quantity within 18 months after deliveries began, plaintiff was not required to complete and tender delivery of the entire quantity before suing for damages consequent upon defendant’s failure to perform, where defendant had failed to submit orders as contemplated, and had, after the expiration of the 18 months’ period, accepted and paid for all mop centers then made up, but notified plaintiff not to make further deliveries.
    4. Contracts — sufficiency of evidence to establish an accord and satisfaction between parties following breach. Evidence, in an action for breach of a contract to accept and pay for a quantity of mop centers to be made up and delivered by plaintiff to defendant, held to raise an issue for the jury as to whether there was an accord and satisfaction between the parties subsequent to the defendant’s failure to perform, and to support their conclusion adverse to the defendant on that issue.
    5. New trial — when leave to file affidavit in support of, properly denied. Leave to file, in connection with a motion for a new trial, an affidavit to the effect that opposing counsel had commented, in argument, upon pleas and an affidavit of merits which had been eliminated from the case by the filing of subsequent pleadings, and to the effect further that such withdrawn pleadings had passed into the hands of the jury, held properly denied, where the record failed to show that the comment mentioned had in fact been made, or if made, that objection had been raised thereto, and where neither the facts stated in the affidavit nor the record warranted an inference that the pleadings mentioned actually came •into the hands of the jury.
    6. Damages — evidence inadmissible touching measure of damages for breach, of contract to accept and pay for articles to be manufactured to customer’s order. In an action for breach of a •contract to accept and pay for a quantity of goods manufactured to defendant’s order, under the terms of which plaintiff was required to furnish, at its own expense, the dies necessary for the construction of the articles, it was error to admit evidence, as bearing upon the measure of damages, touching the cost of making such dies.
    7. Damages — loss of profits as measure of damages for breach of contract to accept and pay for articles to be made to customer’s order. Where one has contracted with another to manufacture certain articles, and the customer breaches the contract by refusing to take the articles, or some of them, if the articles have not been manufactured, the proper measure of damages usually will be the contract price less the cost of manufacture, that is, the net profit the manufacturer would have made on the articles refused.
    8. Damages — depreciation in value of material bought for use in completing contract as element in damages recoverable on breach of customer’s contract to accept and pay for articles to be made to his order. Where one has contracted with another to manufacture certain articles, and the customer breaches the contract by refusing to take the articles, or some of them, it is proper to include, as an element of the manufacturer’s damages, the depreciation in value, if any, of materials left on hand which he had purchased to he used in performing the contract, in addition to his loss of profit on the unexecuted portion of the contract.
    9. Damages — when depreciation in value of material bought' to complete contract improperly considered as element of damages recoverable on breach of customer’s contract to accept and pay for goods to be made to Ms order. Where in an action for breach of a contract to accept and pay for a stated quantity of goods to be manufactured to defendant’s order plaintiff’s proof as to the estimated loss of profit upon the uncompleted portion of the contract was based upon a computation taking into account the depreciation in value of materials left on hand which had been purchased to complete the contract, plaintiff was not entitled to have considered, as an additional element of damage, the amount of its loss through such depreciation.
    10. Appeal and error — remittitur as cure for erroneous admission of testimony touching measure of damages in action for breach of contract. Where it appears, on appeal from a judgment for plaintiff in an action for breach of contract, that evidence was erroneously admitted touching the measure of damages, but that such evidence related solely to specific, definite and expressly ascertainable items making up the damages sued for, the error may be cured by remittitur.
    Appeal by defendant from the Circuit Court of Cook county; the Hon. David M. Brothers, Judge, presiding. Heard in the third division of this court for the first district at the October term, 1925.
    Affirmed on remittitur.
    Opinion filed November 17, 1926.
    Rehearing denied December 2, 1926.
    Joseph B. Lawler, for appellant.
    John A. Bloomingston, for appellee.
   Mr. Justice Thomson

delivered the opinion of the court.

The parties to this case entered into a contract on October 3, 1919, by which the plaintiff, S. Ward Hamilton Company, agreed to manufacture and sell to the defendant, Channell Chemical Company, 3,000,000 mop centers. There were three sizes specified in the contract, numbered 3, 4 and 10. The contract called for 750,000 of No. 3, 1,500,000 of No. 4, and 750,000 of No. 10. Under the terms of the contract, the defendant agreed to pay the plaintiff $51.50 per thousand for the No. 3 centers; $46.50 for the No. 4, and $56.50 for the No. 10. The plaintiff undertook to deliver 10,000 centers per day, “If ordered by first party (defendant) in following quantities:” 2,500, No. 3; 5,000, No. 4; and 2,500, No. 10. Deliveries were to be made within one week from the date of the order, and the contract provided that deliveries on No. 4 centers were to begin within eight weeks from the date of the contract; on No. 3, within nine weeks, and on No. 10, within ten weeks. The plaintiff agreed to keep 50,000 No. 4 centers on hand available for immediate delivery, and 25,000 of each of the other sizes. The contract also provided as follows: “The first party (defendant) agrees to accept delivery of the entire 3,000,000 mop centers within eighteen (18) months from date of first delivery.”

The first delivery under the contract was made on December 19, 1919, about IQ weeks after the making of the contract. Between that date and July, 1921, the plaintiff delivered, and the defendant paid for, 2,059,-943 centers, which were all the centers either paid for by the defendant or manufactured by the plaintiff, under the contract. The plaintiff brought this action by reason of the alleged breach of the contract by the defendant in failing to order or take the remainder of the centers, contemplated by the contract, amounting to 904,057.

After alleging the number of centers of each kind taken and paid for by the defendant under the contract, the plaintiff’s declaration alleged that “thereafter the plaintiff * * * did * * * make up a large quantity of mop centers and offered and was ready and willing to deliver to the said defendant the balance of said mop centers * * * and requested the defendant to accept and pay for the same * * *, yet the defendant failed to do so, to the damage of the plaintiff in the sum of $50,000. ’ ’ According to the affidavit of claim, the plaintiff’s claim was made up of $24,500 in loss of profits, $12,000 in ‘ ‘ depreciation of the materials which the plaintiffs purchased,” in order to fill the contract, and $4,000 for dies made specifically for this contract, making a total of $40,500.

The defendant pleaded the general issue, payment in full, and accord and satisfaction. The issues thus joined were submitted to a jury, resulting in a verdict finding the issues for the plaintiff and assessing its damages at the sum of $25,375. Judgment was thereupon entered for the plaintiff, for that amount, to reverse which the defendant has perfected this appeal.

In support of its appeal, the defendant first contends that the trial court erred in denying its motion for a peremptory instruction, for several reasons. It is contended that the plaintiff failed to prove its case as alleged in its declaration. In our opinion, that contention is not supported by the record. It is true that the proof does not show that the plaintiff made up “a large quantity of mop centers,” beyond those taken and paid for by the defendant, as the declaration alleges. But the declaration also alleges that the plaintiff “offered and was ready and willing to deliver to the said defendant, the balance of the said mop centers,” and requested the defendant to accept and pay for them but that the latter refused to do so.

The evidence submitted in behalf of the plaintiff tends to show that on July 11, 1921, the plaintiff had on hand, ready for delivery, a large quantity of centers of the different sizes, amounting in value to approximately $19,000 at the contract price; that the plaintiff had then been carrying “a large inventory for something like eight months, expecting them to take deliveries,” and that during the previous six months, there had been “no regular deliveries, as called for in the contract.” The record shows that representatives of the plaintiff called at the plant of the defendant in November, 1920, to see “why they were not resuming deliveries,” telling the defendant that plaintiff “had a large quantity of mops on hand and did not feel as though we could carry them any longer”; that the defendant represented that its business was very poor and they could not take the centers in large quantities at that time but they hoped business would pick up after the first of the year; that the parties “had continual conferences with reference to mops, after that time, for at least two or three months,” and that at such a conference held in July, 1921, the plaintiff insisted it must have an immediate settlement for all the centers it then had on hand. The result of that conference was that the defendant gave the plaintiff three trade acceptances, one for $4,963.63, due in 60 days, one for $4,963.63, due in 90 days, and another for $9,927.29, due in 120 days, in payment for all the centers which the plaintiff then had on hand, and asked the plaintiff to hold them at its factory until the defendant requested delivery, and that all of them were afterwards delivered to the defendant. It appears from the evidence submitted by both parties that at this time the defendant had begun the manufacture of its own mop centers, and the plaintiff’s evidence is to the effect that the defendant requested the plaintiff not to “make up any more mops at the present time because we don’t know how well they will go because we are making a new style mop.” The evidence submitted by the plaintiff is further to the effect that some time later, the witnesses stating they could not fix the time definitely, within several months, representatives of the plaintiff again saw the defendant, asking what the defendant “was going to do about the balance of the contract,” and the defendant’s representative said they didn’t want any more mops. Some effort was made to see if the defendant could make some use of the material the plaintiff had remaining on hand for the purposes of this contract, but it came to nothing. The record shows that there were times when the plaintiff was behind in deliveries and others when, as already stated, the defendant requested the plaintiff to make no more deliveries until further notice. The record also shows that there were times when the defendant was asking the plaintiff to make deliveries on one of the sizes, far in excess of the daily quantity called for by the contract, saying that it was experiencing a large demand for that size but little demand for the others. In our opinion, this proof sufficiently supported the plaintiff’s declaration to require the trial court to submit it to the jury.

It is further contended that the trial court should have given the jury the peremptory instruction requested by the defendant, because, on the plaintiff’s own theory of the case, recovery could not be had on the original contract entered into by the parties, because that contract expired by its own terms, 18 months after the first delivery was made in December, 1919, namely, in June, 1921, and that, after that time, in July of that year, the parties entered into a new arrangement or contract. The evidence on this point is conflicting. That which was submitted in behalf of the plaintiff does not tend to show that the parties entered into a new contract in July, 1921. Peterson, the secretary and treasurer of the plaintiff company, testified that when settlement was made by the parties for the mop centers the plaintiff then had made up and on hand, and the defendant gave the plaintiff the three trade acceptances referred to, one Andrews, representing the defendant, stated that inasmuch as the defendant was giving the plaintiff these trade acceptances for all the centers then on hand, the defendant “expected us to sign a release for the contract,” but that he replied that plaintiff could not do that as it had on hand a large quantity of material purchased for the execution of this contract, on a high market which at that time had fallen, off considerably, “but we would be willing to give them a like amount of stamping for some other mop or some other stamping which they could use in their plant,” and that Andrews replied that “maybe” they could do that, “and the thing was left on that basis.” On cross-examination, this witness testified that at the time of the July conference, when the defendant asked that the plaintiff execute a release of any further liability under the contract, the representatives of the plaintiff said: “No, we would not do it, — we would not consider anything of that kind.” Hamilton, the president of the plaintiff company, testified that at the time of the conference between the parties in July, 1921, after the defendant had requested a release and the plaintiff had refused to give it, Channell, president of the defendant company, said: “Well, * * * we will take the mops (which plaintiff then had on hand) and we will fix the other about the material later.” It is not shown by any of the testimony submitted by either party that any arrangement was later made about the material left on hand. Plaintiff submitted testimony tending to show subsequent conferences in which the plaintiff attempted to have the defendant take the balance of the contract. Defendant submitted testimony to the contrary. Moreover, we cannot agree with defendant’s contention that the contract expired by its own terms, 18 months after the first delivery. By the terms of the contract, the defendant did agree “to accept delivery of the entire 3,000,000 mop centers” covered by the contract, within that period. But the contract also provided that plaintiff was to make deliveries within one week from the date of the orders sent in by the defendant, and the plaintiff further agreed to make delivery of 10,000 mop centers per day “if ordered” by defendant in the proportion of 5,000 of No. 4, 2,500 of No. 3 and 2,500 of No. 10. It is not shown that defendant did order in that proportion. On the contrary, as previously pointed out, there is correspondence in the record showing the contrary. There is further conclusive proof in the record that there were considerable periods when the defendant was requesting plaintiff to retard deliveries or hold them off altogether. There were other periods when defendant was urging increased deliveries of some of the centers. The agreement of the defendant to accept delivery of all the centers covered by the contract within the time specified was for the benefit of the plaintiff. The latter did not seek to take advantage of that provision of the contract but after 18 months expired the plaintiff delivered, and the defendant took and paid for, a large quantity of centers, and the plaintiff submitted evidence tending to show that it urged the defendant to submit orders for the balance but that the latter declined to do so. It is apparent that under the terms of this contract, and under the evidence to which we have referred, it could not successfully be contended, as defendant attempts to do, that before the plaintiff could have a claim for damages against the defendant for a breach of this contract, it would be necessary for the plaintiff to make up and tender the balance of the mop centers called for by the contract.

It is the defendant’s further contention that the peremptory instruction should have been given because the proof shows there was an accord and satisfaction of the contract between the parties. In our opinion, that contention is not borne out by the record. We have already referred to some of the evidence submitted, touching that question. In addition to that referred to above, there was the following: Hamilton testified that at the conference between the parties in July, 1921, Channell said the defendant would pay the plaintiff for the mop centers the latter then had on hand, “if you fellows will cancel the balance of this contract,” which the plaintiff declined to do because of the material remaining on hand, and that Channell then said defendant would take the centers then on hand “and we will fix the other about the material later.” Channell testified to the contrary, saying that at the time of this conference there was some talk about releases; that defendant called up its lawyers, who advised them to get releases; that the conversation between the parties was not as testified to by plaintiff’s witnesses; that “they agreed to give a release,” and that Peterson then called attention to the loss plaintiff was going to suffer on the material remaining on hand and that defendant’s representatives said they would use it if they could and that he (Channell) said to Andrews that if plaintiff would deliver such material to defendant’s plant, the latter would pay for it. Channell testified on cross-examination that when he handed Peterson and Hamilton the defendant’s trade acceptances, “they walked out settled in full. ”

On that testimony, not only is it true that the issue of accord and satisfaction was for the jury, but we are further of the opinion that it is clear this court could not properly overturn the verdict of the jury holding there was not an accord and satisfaction. No release was then given, but Channell testified the defendant agreed to send one later. Plaintiff’s testimony is to the contrary. It would be very unusual for defendant to give approximately $20,000 in trade acceptances, on the basis of a release of all further liability under the contract, on merely a promise that such a release would be forthcoming. The trade acceptances were not drawn as though they constituted payment in full on the contract. Each recited: “The obligation of the acceptor hereof arises out of the purchase of goods from the drawer.” Howard, who was acting as vice president of the defendant company, was a lawyer, admitted to practice at the Illinois Bar, testified that he could have drawn a release. He was present when the trade acceptances were given and executed them in defendant’s behalf, and yet no release was taken from the plaintiff.

In connection with the motion for a new trial, counsel for the defendant asked leave to file his affidavit in which he set forth that counsel for plaintiff, in his closing argument to the jury, commented upon the pleas and affidavit of merits filed by the defendant to the plaintiff’s original declaration, although such pleas and affidavit of merits had been eliminated from the case, as the plaintiff had later filed an amended declaration to which the defendant had filed new pleas and an affidavit of merits. In this affidavit, sought to be filed by counsel for the defendant in connection with the motion for a new trial, counsel further set forth that when he returned to the court room where the trial of this case took place, on the morning the verdict was returned, it came to his attention “that a copy of said pleas and affidavit of merits * * * was with all the said Exhibits as given to him at the time by the said bailiff” of the trial court, and that he then called the court’s attention to the fact that these pleadings “had been returned from the jury room along with the Exhibits,” and that they had been submitted to the. jury together with the exhibits, without his knowledge. In our opinion the trial court did not err in denying defendant’s motion for leave to file this affidavit. It is not shown by the record that counsel for plaintiff commented on these pleadings in the course of his closing arguments, or that objection was made, if he did do so. Further, the only facts set up in this affidavit are that when counsel for the defendant came to the court room on the morning the verdict was to be read, he found these pleadings among the exhibits which were handed over to him by the bailiff. That they had gone to the jury room with the exhibits, is necessarily the conclusion of the affiant. There is no proof in the record showing that they, in fact, did go to the jury.

The defendant complains of an instruction on the subject of damages which the trial court gave and also contends that the trial court erred in refusing to give an instruction which was tendered on the subject of the giving of the trade acceptances. The record fails to show that the defendant objected to the action of the court as to either of these instructions. However, there was no error in refusing the instruction on the giving of the trade acceptances. The court gave an instruction on that subject which fully covered the question from the defendant’s point of view.

We have previously handed down; an opinion in this case. After that decision was announced both parties filed petitions for a rehearing and both petitions were allowed. Neither of the parties, however, filed any reply to the petition of the opposite party for rehearing. The questions hereinafter referred to in this opinion (which were also covered in the former opinion) were the matters covered by one or the other of the parties in the rehearing petitions. We reach the same result in the present decision, as in the one previously handed down, but for somewhat different-reasons.

The instruction on damages of which the defendant complains authorized the jury, in case a verdict was returned for the plaintiff, to award as damages, not only the difference between the cost of manufacture and the contract price on the unexecuted portion of the contract, but also the loss represented by the difference “between the cost of the material purchased in preparation for the contract, if any, and the fair market price thereof at the time of the breach of the contract,” and also the loss of the dies. In view of the fact that no objection or exception is shown by the record in connection with the giving of this instruction, we would not be warranted in reversing the judgment on this ground. But, in connection with the argument presented on this instruction the defendant also contends that the trial court erred in its rulings on the evidence submitted by the plaintiff, in the matter of its damages. The defendant not only objected to much of this testimony when it was offered, but later moved to strike it out. In our opinion, some" of it was admissible and some of it was not. The witness Peterson was properly permitted 'to state that he* had computed the profit of the plaintiff in the* manufacture of the mop centers covered by the contract, and that it was 33% per cent based on the contract price and the cost of raw material, labor and' overhead. He was shown to be entirely familiar with that end of plaintiff’s business. Defendant had full opportunity to test the basis of his knowledge as to profits', on cross-examination. But this witness was further permitted to testify, over objection, that the? cost of the dies, pro rated, so as to apply to the unexecuted portion of the contract, was $3,332, although the contract provided that plaintiff was to “furnish at its own expense all dies necessary for the construction” of mop centers, defendant to have the privilege of changing the design of centers, in which event it was to stand the initial cost of the first dies. In this ruling we are of the opinion the trial court erred. The cost of the dies could not be permitted to enter into the plaintiff’s damages in any respect under the provisions of the contract.

Over the repeated objections of the defendant, the witness Peterson was permitted to testify that plaintiff had on hand 422,222 pounds of steel, which it had purchased to cover the unexecuted portion of this contract; that plaintiff had paid an average of 5 cents a pound for it, and that in July, 1921, and the succeeding months, this material was worth one and one-half to two cents a pound, and that the shrinkage in the value of this material amounted to $13,566.67. This witness testified that the plaintiff used all of this material, subsequently, to manufacture other articles, figuring it at the then market value.

Where one has contracted with another to manufacture certain articles and the latter breaches the contract and refuses to take the articles or a part of them, if the articles so refused have not been manufactured, the proper measure of damages will usually be the contract price, less the cost of manufacture — that is, the net profit the manufacturer would have made on the articles refused. Kingman & Co. v. Hanna Wagon Co., 176 Ill. 545; Central Trust Co. v. John M. Smyth Merchandise Co., 222 Ill. App. 347. But where the manufacturer in proceeding to carry out the contract to manufacture, either buys or enters into a contract to buy, all the materials necessary to manufacture the articles called for by his contract, and when such contract is later breached, the value of such material, so purchased, or contracted for by the manufacturer, has depreciated, another element enters into the damages of the manufacturer, which he should be permitted to recover, which element is represented by the shrinkage in the value of materials purchased or contracted for. In fixing the amount of damages recoverable in such a case, the theory of the law is that the manufacturer may recover such damages as will put him, as far as practicable, in as good a position as he would have occupied, if the contract had been carried out. In such a situation as we have referred to, if the contract had been carried out, the manufacturer would not only have received his full profit under the contract, but he would also have received an amount from the other party to the contract sufficient to reimburse himself in full for the amount he had either paid out or obligated himself to pay for his materials. Where the value of those materials left on hand has not depreciated, this element of damage will of course not be present, as the manufacturer will have the materials on hand' still valued at the full cost price. But if the materials have depreciated in value, this element of loss presents itself. For instance, in the case at bar the uncontradicted testimony is that the plaintiff bought all the material needed to fulfill its contract, at. a price of five cents a pound, and when the contract was breached, the plaintiff had on hand over 400,000 pounds of material. If the contract had been carried out, the plaintiff would have used up this material on the contract and would have received, in addition to his profit, an amount sufficient to meet the material cost in full at the price of five cents a pound. But now, with the contract breached, and over 400,000 pounds of material left on hand, the plaintiff is not only deprived of its profit on the unexecuted portion of the contract, but it has received nothing with which to reimburse itself for the cost of this material at a price of five cents a pound, and the material itself can reimburse it for such cost, only to the extent of its present value, which is two cents a pound. Therefore, we are of the opinion, such being the circumstances, that the plaintiff’s proper measure of damages is the loss of profits on the unexecuted portion of the contract, plus the depreciation in the cost of the material left on hand. Therefore, the evidence objected to, covering the amount of the material left on hand, its original cost and its value as of the date of the breach of the contract, was competent and material and the court properly overruled the objections.

However, in figuring the profits the plaintiff would have received on the unexecuted portion of the contract, the material cost should be figured at the. price which the plaintiff paid for it, which in this instance was five cents. The witness Peterson testified that in figuring the profits which the plaintiff would have made on the balance of the contract if it had been completed, he figured this material not at its cost price of five cents a pound, but at two cents a pound which was its value at the time the contract was breached. In so doing it will be seen that the plaintiff absorbed the shrinkage in the value of the material left on hand, into its loss of profits. In other words, on such a basis, the shrinkage in the value of the material becomes a part of the 33% per cent loss in profits on the unexecuted part of the contract. Of course, the plaintiff may not recover the element of damage represented by the shrinkage in the value of material left on hand, both in that form and also as an element in the loss of profits. For example, 33% per cent on the unexecuted portion of the contract amounted to $15,-266.21. According to the testimony of Peterson, that amount was arrived at by figuring the cost of steel on the unexecuted portion of the contract at two cents a pound. But that witness also testified that the amount the plaintiff actually paid for this steel was five cents a pound. At the time the contract was breached the value of this material had depreciated three cents a pound. That depreciation was absorbed into the loss of profits when that loss of profits was based on a material cost of two cents a pound, rather than the actual cost of five cents a pound. The plaintiff will, therefore, have received the full amount of the shrinkage in the value of material if it is paid a loss of profit on the unexecuted portion of the contract, figured at 33% per cent, based on a material cost of two cents a pound. Such being the case, the plaintiff may not be permitted to receive that shrinkage in value of materials as another and additional element of loss. To permit it to do so would be to permit it to get the benefit of that element twice, once as an element in the loss of profits and again in the shape of shrinkage in the value of material. For the foregoing reasons, we are of the opinion that the amount referred to by the witness Peterson, as loss in profits on the unexecuted portion of the contract, which was $15,266.21, represents all that the plaintiff is entitled to recover from, the defendant by reason of the breach of this contract.

It is urged by the defendant that if this court holds that parts of the evidence which were offered on this question of damages were incompetent, and if it is held that the trial court erred in submitting such evidence to the jury, then it is impossible to cure such error by a remittitur, as it cannot be ascertained just what effect such evidence had on the jury in returning the verdict for $25,375. In support of that contention the defendant cites Chicago, M. & St. P. R. Co. v. Hall, 90 Ill. 42; Chicago & E. I. R. Co. v. Donworth, 203 Ill. 192; Lauth v. Chicago Union Traction Co., 244 Ill. 244; Lyons v. Chicago City Ry. Co., 258 Ill. 75; Stadler v. Chicago City Ry. Co., 180 Ill. App. 313; and Newcomb v. Chicago City Ry. Co., 192 Ill. App. 74. In our opinion these cases may all be distinguished from the situation presented in the case at bar. For example, the Donworth case was an action for injuries caused by the alleged negligence of the railway company. The plaintiff recovered a judgment of $5,000. This court found error in the record and to avoid the effect of it the plaintiff was permitted to enter a remittitur in the sum of $2,000, whereupon, this court affirmed the judgment in the sum of $3,000. On appeal to the Supreme Court it was held that certain opinion evidence which was admitted by the trial court was incompetent and should not have been admitted. The court then said: “To what extent the damages were so enhanced it was not possible for the Appellate Court to ascertain. * * * In such state of case the error in the admission of the evidence cannot be cured by the entry of a remittitur.” The same situation was present in the Lauth case, where the trial court improperly admitted evidence relating to mental anguish, suffered by reason of impending death, and the jury was permitted to take that into . consideration in fixing the damages. The court held that the error in admitting such evidence could not be cured by remittitur, as the error had been committed as to a substantial fact bearing upon the right of recovery, in a respect which was not susceptible of computation. The same situation was presented in the Lyons case, where the plaintiff recovered a judgment of $7,000 in the trial court, which was reduced by a remittitur of $2,500 in this court, where it was held that certain evidence which the jury had before them, on the question of damages, should not have been admitted. On appeal to the Supreme Court that court said: “It may be that this improper evidence accounted for a large part of the verdict. Such an error in the admission of evidence is not susceptible of computation, and even a remittitur cannot cure it.”

In all these cases, the evidence held to have been erroneously admitted was related to the damages as a whole. In the case at bar, however, the evidence complained of related to specific, definite, expressly ascertainable items making up the damages sued for —the loss of profits, the shrinkage in value of the material left on hand, and the dies. That being the case the effect of the admission of the evidence complained of, and which we consider incompetent, is susceptible of computation in exact figures, and we are, therefore, of the opinion that the error pointed out is such as may be cured by a remittitur.

From the evidence in the record relating to the different specific items of damages claimed, we hold that the plaintiff was entitled to receive, as the total amount of damages, $15,266.21, whether that amount be considered as the profits the plaintiff would have received if the contract had been carried out, including the shrinkage in the value of the steel, inasmuch as the material cost was figured at two cents a pound in determining that figure, or whether that amount be considered as the loss of profits with the steel figured at five cents a pound, which would make the loss of profits $1,699.54, plus the shrinkage in the value of the material left on hand, as a separate item, which was $13,566.67, which items, added together, equal the sum of $15,266.21.

For the foregoing reasons, the judgment of the circuit court is affirmed upon condition that the plaintiff file a remittitur in this court within 10 days, in the sum of $10,108.79, in which event two-fifths of the costs in this court will be taxed against the plaintiff and three-fifths against the defendant. Should such remittitur not be filed, the judgment appealed from will be reversed and the cause will be remanded to the circuit court for a new trial.

Judgment affirmed on remittitur.

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


source: Caselaw Access Project

license: Public Domain

text:
    The People of the State of Illinois, Appellee, v. Richard E. Westbrooks, Appellant.
    Gen. No. 30,957.
    1. Appeal and error — waiver of constitutional questions by■ perfecting appeal to Appellate Court. By perfecting an appeal to the Appellate Court from a judgment determining the appellant to have been in contempt of court, such appellant waives any contention that the issuance of the attachment was in violation of his constitutional rights.
    2. Contempt — sufficiency of finding as basis for order adjudging respondent guilty of contempt of court. A finding that respondent was counsel for defendant in a case pending in criminal court, and that he failed to appear in such court when the case was called for trial, although notified by the sheriff so to do on the specified day and hour, held sufficient as a basis for an order adjudging him to be in contempt of court.
    3. Contempt — failure of counsel for defendant in criminal cause to appear in court on notice by sheriff of time for trial as

      contempt. The failure of counsel for a defendant in a cause pending in criminal court, to appear in court when the cause comes on for hearing, after having been notified to appear therein on a specified day and hour, may amount to an indirect contempt of court.
    4. Contempt — necessity of opportunity for hearing before punishment for indirect contempt. One alleged to have been guilty of an indirect contempt of court may not be punished summarily, but must be given an opportunity to show cause why he should not be punished therefor.
    5. Contempt — waiver of right to entry of rule to show cause before punishment for contempt of court. Where, notwithstanding the failure of the judge to enter a rule to show cause giving one accused of an indirect contempt of court an opportunity to purge himself thereof, the accused voluntarily appears in court and offers testimony for the purpose of so purging himself, he will be deemed to have waived the failure of the judge to enter such rule.
    6. Appeal and ebbok — presumptions from record- on appeal from judgment of contempt of court. Where on appeal from a judgment determining respondent to be in contempt of court the record Shows that respondent appeared in court in person, and does not show that he objected to the proceedings upon the ground that the court had failed to enter a rule to show cause why he should not be punished, and the order of court determining him to be in contempt recites that the court was fully advised in the premises, it must be presumed that no objection was made to the omission to enter such rule, that respondent was given an opportunity to purge himself of the alleged contempt, and that the court deemed his showing insufficient.

      7. Appeal and error — want of bill of exceptions covering hearing of one accused of contempt as precluding contention evidence insufficient to support finding and order. In the absence of a bill of exceptions preserving the proceedings at a hearing accorded one accused of contempt of court, the respondent will not be heard, on appeal from a judgment of guilty, to contend that the court erred in making the findings and order upon which the judgment appealed from was based.
    Appeal by defendant from the Criminal Court of Cook County; the Hon. Harry B. Miller, Judge, presiding. Heard in the third division of this court for the first district at the March term, 1926.
    Affirmed.
    Opinion filed November 17, 1926.

      Ellis & Westbrooks, Blaine G. Alston, William B. Bruce and Benjamin A. Browning, for appellant; Richard E. Westbrooks, of counsel.
    Robert E. Crowe, State’s Attorney, Edward E. Wilson and Clarence E. Nelson, Assistant State’s Attorneys, for appellee.
   Mr. Justice Thomson

delivered the opinion of the court.

By this appeal the respondent, Westbrooks, seeks to reverse a judgment of the criminal court of Cook county, wherein he was adjudged to be in contempt of court, and ordered to pay a fine of $10. The record discloses that on November 13, 1925, a judge presiding over one of the branches of the criminal court of Cook county ordered that an attachment for contempt issue against the respondent, by reason of his failure to appear as counsel for defendant in a cause then pending in the criminal court, and for his “failure to appear in court after having been notified by the Sheriff of Cook County to appear in court Friday, November the thirteenth, at 9:30 A. M.” The writ of attachment in the record shows that it was served. The record shows further that on the same day the court entered an order as follows: “This day come the People, by Robert E. Crowe, State’s Attorney, and the said defendant in his own proper person also comes. And the court being fully advised in the premises, and it appearing to the court that the said defendant, Richard E. Westbrooks, was in contempt for failure to appear as counsel for said defendant, Hartley Williams, in cause No. 37176, the People of the State of Illinois v. Hartley Williams, also for failure to appear in court after having been notified by the Sheriff of Cook County to appear in court Friday, November the thirteenth (13th) A. D. 1925, at 9:30 A. M. it is therefore ordered that he be held in contempt of court and ordered to pay a fine of ten dollars ($10).”

In support of Ms appeal the respondent alleges that the issuance of the attachment was in violation of certain constitutional provisions. These are matters which this court may not consider and they were waived by respondent when he perfected his appeal to this court.

It is next contended that the order finding the respondent guilty of contempt is insufficient on its face and the order itself shows that the court erred in entering it, because it fails to indicate anything which could be considered as constituting a contempt of court. In our opinion, the order is entirely sufficient. It finds facts sufficient to show that the respondent was counsel for the defendant in a criminal case pending before the court, and that he failed to appear as such counsel after he had been notified by the sheriff so to do, bn the day in question at a specified hour. The absence of counsel from the court room at the time when the case in which he was engaged comes before the court, especially after having been notified by the sheriff to be in court at such specified day and hour, may amount to a contempt of court. If such failure to appear does amount to a contempt, it is an indirect contempt, such as the court may not purnsh summarily, without awarding the respondent an opportunity to show cause. In re Clark, 208 Mo. 121; In re McHugh, 152 Mich. 505, 116 N. W. 459. However, if the trial judge fails to enter a rule and give the respondent an opportumty to answer and purge himself of the alleged contempt, as he might by showing a good reason for his absence (Wise v. Commonwealth, 97 Va. 779), which would be the proper practice, nevertheless, if respondent voluntarily appears in court and offers his testimony, or that of others, for the purpose of explaimng his failure to appear, and respondent is thus given full opportumty to purge himself of the contempt charged against him, and he thus has the same opportunity to make a defense as if a rule had been entered to show cause, then, by such conduct, he waives the failure of the court to enter a rule, and may not thereafter object to the proceedings on that ground. In re McHugh,, supra. It appears, from the record before us, that is what happened here. When respondent failed to appear as counsel for defendant in a pending case, an attachment was issued for him, which shows that it was served on the day it was issued. The respondent says in his brief filed in this court that he attended the trial court on the day in question, voluntarily, after being notified over the telephone that the judge wanted to see him; and that the attachment which had been issued was served on him after he reached the court room. This, however, is in our opinion immaterial, for, the record shows, the respondent was before the court in person. The order of the court recites that the court was fully advised in the premises, and that it appeared to the court that respondent was guilty of contempt, by reason of his failure to be before the court as counsel at the time appointed. We are bound to presume from this record that some showing was made on this question before the trial court and that respondent had his opportunity to be heard. If respondent objected to the proceedings, -by reason of the fact that the court had not entered a rule to show cause, or if, having come into court, respondent requested an opportunity to purge himself from the alleged contempt, but was denied such opportunity, it was incumbent upon him to preserve such matters in a bill of exceptions, which he has not done. We are bound to assume, as the record stands, that respondent made no point of the fact that a rule had not been entered, and, further, that he was given an opportunity to purge himself of contempt, and made such showing as the facts warranted, but that the court found that such showing was insufficient. Respondent does not urge that the court erred in that regard, nor could he do so successfully, in the absence of the preservation of the proceedings that took place, by a proper bill of exceptions.

For the reasons given, the judgment of the criminal court is affirmed.

Judgment affirmed.

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


author: Mr. Justice Thomson Mr. Presiding Justice Taylor

text:
    William F. Fitzgerald, Appellee, v. Albert L. Christy et al., Appellants.
    Gen. No. 31,285.
    1. Appeal and error — scope of review on appeal from, interlocutory injunction. An interlocutory order granting an injunction will be affirmed, on appeal, unless it clearly appears that in issuing such order the court improperly exercised its discretionary powers.
    2. Injunctions — sufficiency of bill to warrant exercise of discretionary power of court to grant interlocutory order. Facts alleged in bill asking temporary injunction to restrain defendants from taking any action in violation of agreement between complainant and defendants as sole stockholders of a corporation, which gave complainant power to veto any change in the officers" or salaries, or proposal to incur expense or pay dividends, and conditioned any change in by-laws upon a unanimous vote of the stockholders, held to show that the court did not abuse its discretion in granting the order.
    3. Corporations — validity of agreement between Stockholders giving oné veto power over change in corporate officers, and financial policy. Agreement between three sole stockholders of a corporation giving to one power to veto any .change in the corporate officers or their salaries, or any proposal to incur expense or declare dividends, and prohibiting any change in the by-laws except by unanimous vote of the stockholders, held valid and binding as between such parties, being neither unconscionable nor contrary to public policy and involving no violation of Cahill’s St. ch. 32, If 20, declaring what shall constitute a quorum for the transaction of corporate business.
    4. Injunctions — when breach of agreement between stockholders of corporation properly restrained by temporary injunction notwithstanding its possible invalidity. It was within the discretion of the court to grant an interlocutory injunction restraining defendants from taking any further action in violation of an agreement between the complainant and defendants, as sole stockholders of a corporation, which gave complainant power to veto any change in the corporate officers or their salaries, or any proposal to incur expense or declare a dividend, and conditioned any change in the by-laws upon a unanimous vote of the stockholders, notwithstanding the possible invalidity of such agreement, where such defendants had illegally voted large salaries to themselves as officers, over complainant’s protest, and were taking steps to oust complainant from the office he held and from any participation in the conduct of the corporation.
    5. Equity — sufficiency of verification of bill for temporary injunction. A bill of complaint verified by the complainant personally, who made oath that he knew the contents of the bill "and that the same is true of his own knowledge, except as to the matters which are therein stated to be on information and belief, and that as to those matters, he believes them to be true,” held sufficiently verified.
    Appeal by defendants from the Circuit Court of Cook county; the Hon. William V. Brothers, Judge, presiding.. Heard in the third division of this court for the first district at the October term, 1926.
    Affirmed.
    Opinion filed November 17, 1926.
    Ernest D. MacDougall, for appellants.
    Delbert A. Clithero and McNitt & McCormack, for appellee.
   Mr. Justice Thomson

delivered the opinion of the court.

This is an appeal from a temporary injunction order entered on motion of the complainant on the hill of complaint filed by him the day previous to the entry of such order, the demurrer of the defendants to said bill having been filed on the day the order appealed from was entered.

The facts alleged by the complainant in his bill of complaint were the following: In August, 1910, the complainant leased certain property, of which he was the owner, to one Sandow and the two defendants, Christy, in which said lessees proceeded to conduct a moving picture theater. That lease -ran to September 30, 1913, at a rental of $175 a month. Sandow and the Christys could not get along together and they made an effort to sell their leasehold. In August, 1911, the Christys came to the complainant and told him that Sandow was about to apply for a receiver as a result of their inability to get along together and they stated that they did not have enough money to buy out Sandow’s interest in the theater business, nor was Sandow in a position to purchase their interest, and they solicited the financial aid of the complainant, to enable them to work out the situation and continue the operation of the theater. This led to a number of interviews between the complainant and the Christys, and also Sandow. Mutual accusations of dishonesty were made by the Christys and Sandow. Sandow was about to institute legal proceedings, which he had threatened, when the complainant, at the solicitation of the Christys, agreed to buy out Sandow’s interest in the moving picture project, and entered into an agreement with the Christys to conduct the theater through a corporation, one-third of which was to be owned by the complainant, and one-third by each of the two Christys.

Pursuant to the arrangement above referred to, the complainant entered into a contract with the two Christys, under date of August 3, 1911, reciting some of the facts to which reference has been made above, and under the terms of this contract complainant agreed to buy Sandow’s interest in the moving picture theater, and it was mutually agreed that the interest of Sandow in the lease above referred to should be assigned to the Christys, and they in turn should assign the lease to the corporation which the parties were to organize. In this contract the parties further agreed that in the conduct of the moving picture theater, which the parties were to continue by means of the corporation to be organized, the complainant should have complete charge of all receipts and disbursements, and that A. L. Christy should manage the theater and all the details of its conduct, other than those of a financial character. It was provided that the stock of the corporation was to be paid for in full by the assignment of the lease and the transfer of all the property of the then existing firm which had been conducting the theater, and that one-third of the capital stock was to be issued to each of the Christys and the complainant; that after the formation of the corporation complainant was to be elected treasurer, one of the Christys, as president, and the other secretary, and each was to be elected a director. It was further mutually agreed by the parties that none of them would sell any of his stock without first giving the other parties an opportunity to buy it, and that so long as the parties to the contract owned the stock, no change would be made in either the officers or the directors, and that certificates of stock should be transferable only with the consent in writing of all the stockholders and that the by-laws to be drawn up should contain a provision that no change was to be made in the salary of any officer of the company except by unanimous consent of the stockholders, and that the by-laws should further -provide that no person be elected a. director except. by the affirm ally a vote nf stockholders holding at least three-fourths of the stock, and that no dividend should be declared, except. by unanimous vote of the directors and no obligations incurred unless authorized by the treasurer and one other officer. The contract also provided that A. L. Christy should receive a salary of $25 per week as manager of the theater and that E. H. Christy and the complainant should render their services without any compensation other than their share of such dividends as might be declared. It also provided that such disagreements as might arise between the parties should be submitted to one Strickler, as arbitrator. No provision was made for a successor to Strickler. Since the parties entered into their contract, Strickler has died.

All the things mentioned in this contract between the parties, which were to be done by them in and about the organization of the proposed corporation, were done pursuant to- the terms of the contract. The corporation was duly organized and is now the defendant Elmo Amusement Company. The complainant and the two Christys became the three directors of the company, — A. L. Christy, its president, and manager; E. H. Christy, secretary; and complainant, treasurer. The capital stock of the corporation was fixed at $5,000, and sixteen and two-thirds shares were issued to each of the three stockholders. The by-laws were duly prepared and adopted by unanimous vote of the three directors, containing all the provisions covered by the contract which the parties had previously entered into.

For the past fifteen years the complainant and the Christys have been conducting the moving picture theater in the premises of the complainant, under lease from him, and it has proven a very profitable venture. For several years last past the Christys have been receiving $20 per week as salary. In 1925 the total income of each of the Christys, in dividends and salary was a little over $10,000, and in the same year the complainant received, as dividends, about $9,000. Recently the Christys have been withdrawing money from the receipts of the theater for various purposes. In 1925, they drew out a total of $157, designated as “supper money,” and $1,100 as “expense money.”

In 1912, the Christys urged the complainant to give the corporation a new lease for five years from and after the expiration of the then existing lease, that date being September 30,1915. Although complainant alleges he had been offered a rental of $400, he agreed to execute the lease requested by the Christys, at a rental of $300, with the understanding that they should continue to conduct the moving picture theater in the premises under the terms of the contract which the parties had previously entered into. This lease was duly executed for the term beginning October 1, 1915, and expiring September 30, 1920. In 1919, upon request of the Christys, the complainant executed another lease at the same rental of $300 per month, again with the understanding that the business of conducting the theater should be continued in accordance with the terms of the contract, — this lease running for ten years from the date of the expiration of the previous one.

Complainant' alleges that the various amounts the Christys have received for expenses, from time to time, designated as supper money and expense money, have been withdrawn by them in fraud of his rights. He alleges that without his consent and in violation of the terms of the contract, the Christys have used re-, ceipts from the theater, in buying an automobile and contracting for garage rent. While the allegations in the bill are not explicit on this point, it would seem that such amounts as complainant alleges were withdrawn by the Christys, contrary to their agreement and without complainant’s consent, were withdrawn by them from the cash received before the receipts were turned over to the complainant as treasurer. It appears from the allegations in the bill that the cash taken in at the theater during the week was turned over to the complainant, as treasurer, on the following Monday morning, up to which time it was in the custody of the Christys, as those in the active management of the theater.

In June, 1925, and again in June, 1926, the Christys urged the complainant to execute a new lease to the corporation, for a term beginning in November, 1930, at which time the present lease will expire. Complainant told the Christys that he would not consider a new lease when the present one had more than four years to run. He called their attention to the proposed widening of Western Avenue and the fact that he could not tell what effect that project might have on his property and that he might desire to sell it. A few weeks later the Christys notified the complainant of a special meeting of the board of directors of the Elmo Amusement Company, to be held at 9.30 a. m. on August 2, 1926, for the purpose of acting on proposed amendments to the by-laws, and fixing the salaries of officers for the ensuing year. At the same time complainant was notified of the annual meeting of the stockholders of the company, to be held at 11.00 a. m. on the same day, for the purpose of electing a board of directors. This notice stated further that following the stockholders’ meeting, the newly elected board of directors would meet, for the purpose of the election of officers and the consideration of any other business that might properly come before the meeting. Complainant attended the special meeting of the board of directors, pursuant to the notice he had received, with his counsel, called the attention of the Christys to the contract which existed between the parties, and was told by them that they cared nothing about the contract, but that they proposed to change the by-laws so that the corporation might be run as other corporations were run. Complainant, through his counsel, notified the Christys that he would take such action as might be necessary to compel them to abide by the terms of the contract. The meeting was called to order by A. L. Christy, as president, and he proceeded to read the minutes of the meeting, which had previously been prepared, reciting the adoption of the proposed amendment to the by-laws by a majority vote, and providing that the salaries of the president and secretary and treasurer be fixed at $15 per week. The complainant again called attention to the fact that the Christys were violating the terms of their contract with him, and he protested against the action which was being taken. The motions adopting the amendments to the by-laws and fixing the salaries were declared adopted, and the meeting adjourned. At eleven o ’clock on the same day the annual meeting of the stockholders was convened with the same result, the two Christys and complainant being elected directors. It seems that no effort was made to convene a meeting of the directors, as such, but the parties, as stockholders, proceeded to elect A. L. Christy, president, E. H. Christy, secretary, and the complainant, treasurer; and resolutions were adopted creating the offices of manager and assistant manager and electing A. L. Christy to the first and E. H. Christy to the second, and providing that the salary of the manager was to be $150, and that of the assistant manager, $100 per week, “payable at the close of each week’s business, from the receipts for such week. ’ ’ All these motions were adopted by the votes of the Christys,— complainant continuing to voice his protest against the action which was being, taken.

Complainant alleges in his bill that immediately after the holding of these meetings, E. H. Christy told Mm that he and his brother had taken the foreg’oing action, securing large salaries for themselves, apart from their share of the profits in the form of dividends, because complainant had refused to execute a new lease to the company for the period beginning in November, 1930, and they “proposed to get as much money as possible out of the enterprise while the present lease was in force.”

On Monday morning, following the holding of these meetings, complainant, as usual, went to the theater to receive the receipts of the previous week, as treasurer. Upon his arrival there the Christys tendered him a receipt for $15 for his salary as treasurer, and requested him to sign it. Complainant declined to receive such amount as salary or to sign a receipt, contending that it was contrary to the terms of the contract which the parties had entered into. Thereupon, complainant alleges, A. L. Christy moved that the office of treasurer be declared vacant, E. H. Christy seconded the motion and A. L. Christy declared the motion carried and the office vacant, and stated that a special meeting would be held to elect a new treasurer. Thereupon, complainant was invited to leave the premises, and he was told, by the Christys that they would change the locks on the doors and the combination of the safe; and they demanded of him that he turn over all the books and records which were in his possession as treasurer. Before complainant left the premises, workmen began changing the locks. Three days later complainant received a notice through the mails to the effect that a special meeting of the board of directors would meet August 21, for the purpose of acting upon the resignation of the treasurer and electing a new treasurer. Complainant and the two Christys, throughout the period of the existence of the Elmo Amusement Company, have been and still are the sole stockholders of the company.

The complainant filed his bill two days before the time appointed for the meeting at which it was proposed to elect his successor as treasurer of the defendant company. After setting forth the facts recited above, the complainant prayed for the appointment of a receiver, an accounting, a mandatory injunction requiring the Christys to return the amounts they had improperly withdrawn from the receipts of the defendant company, and an order enjoining them from interfering with the complainant in the performance of his duties as treasurer of the defendant company, and from declaring the office of treasurer vacant or attempting to elect some one to that office in complainant’s stead, and also from paying any of the money belonging to the company to themselves or others, pending the appointment of a receiver. The complainant also prayed that the contract which the parties had been working under, signed August 3,1911, be declared valid and binding and that the Christys be required to comply with its terms, or, in the alternative, that the lease on the premises in which the theater is located and operated be canceled.

As already stated, complainant filed his bill of complaint on August 19,1926, and on the following day the defendants’ appearance was filed and also a demurrer. On the same day. the court entered the mandatory injunction involved on this appeal. By that order the court directed that pending further hearing of the case, the matter of conducting the business of the Elmo Amusement Company be continued by the -complainant and the Christys as it had been prior to August 2,1926, and that nothing be done by the Christys in furtherance of their action in changing the by-laws of the corporation on August 2; and ordered that the Christys refrain from interfering in any way with the complainant in the discharge of his duties as treasurer of the corporation. The order also restrained the Christys from drawing the salaries provided for in the resolutions purporting to have been adopted on August 2, pending the hearing of the cause on its merits.

Upon an appeal from an interlocutory order granting an injunction, the question for determination is whether the court below improperly exercised its discretionary powers in respect to issuing an injunction pendente lite, and unless it clearly appears that it has done so, the order should be affirmed. New Ohio Washed Coal Co. v. Coal Belt Ry. Co., 116 Ill. App. 153. In our opinion, it is entirely clear from the bare recitation of the facts alleged by the complainant in his bill of complaint, that the trial court not only did not abuse its discretion in entering the order appealed from, but that such would have been the case if the motion for a temporary restraining order had been denied. The agreement of the parties, in so far as it gave complainant the power to veto any change in officers or salaries or any proposal to declare dividends or incur expenses, and the by-laws, in so far as they contained provisions to the same effect and required a unanimous vote to accomplish their amendment, were valid and binding as between these parties. Faulds v. Yates, 57 Ill. 416; Kantzler v. Bensinger, 214 Ill. 589; Hladovec v. Paul, 222 Ill. 254; People ex rel. Matthiessen v. Lihme, 193 Ill. App. 341; Venner v. Chicago City Railway Co., 258 Ill. 523; Wabash Ry. Co. v. American Refrigerator Transit Co., 7 F. (2d) 335; 2 Cook on Corporations (6th Ed.), art. 622, a, b, o. The three parties who entered into that contract owned all the property of the Elmo Amusement Company, and pursuant to the contract they became the owners of all the capital stock of the company, and, as pointed out in the first case cited above, the mere fact that the property, which all the parties owned, came to be represented by the corporate stock could not interfere with the fact that, being the sole owners of all the property, they were in a position to enter into any contract they saw fit, concerning the use of the property and its management, so long as they did not violate any law or interfere with public policy or the public good.

In Kantzler v. Bensinger, supra, the plaintiffs, as owners of all the capital stock of a corporation, entered into a contract to sell six-tenths of it to the defendants for a stipulated price. The latter were thereby to become the owners of 60 per cent of the capital stock. By the terms of the agreement involving this sale, the defendants who were the purchasers of this stock, agreed that the plaintiffs should be reelected as officers of the corporation for a stated period of years and that their salaries were to be $2,000 a year each. The agreement entered into by these parties also covered the matter of dividends, it being provided that they were to be declared only for an amount not to exceed 10 per cent of the par value of the stock. By the terms of the contract the defendants agreed to purchase the remainder of the capital stock of the parties of the first part at the end of five years at its then book value, which it was agreed would not be less than $50 per share. Complaint was made by the plaintiffs, to the effect that this agreement had been violated in several respects by the defendants. The latter contended that the contract was contrary to public policy and void. In the course of its opinion, the Supreme Court said: “The contract was entered into by all the stockholders of the corporation, and while it may not have bound the board of directors afterwards elected, we think there is no reason in law why it should not be held to be binding upon the defendants and enforceable against them. The entire stock of the corporation was held by the plaintiffs, and in making a contract with the defendants whereby the latter were to obtain at once six-tenths of said stock, it was open to the parties to make any arrangements with regard to the management of the company mutually agreeable to them. The price to be paid for the stock was a matter to be determined by them, and by them only. They owned all the property represented by the stock, and the mere fact that it was represented by corporate stock could make no difference. No other person had any interest in it and no one else could complain.” In this case the court referred to Lorillard v. Clyde, 86 N. Y. 384, where a contract was entered into by competitors in water transportation, whereby they agreed to consolidate under the form of a corporation. The management of the business was given to one of them who was to receive the usual commission on all freight earned, and who guaranteed to the other a stipulated dividend for a given length of time. When the latter endeavored to collect his dividends he was met with the contention that the contract was illegal because it was an attempt to provide in advance for the control of the corporate affairs of the corporation for a term of years and to withdraw such control from the stockholders. As to that contention the court said: “But it is to be observed that the agreement was between the parties who were to contribute the entire capital. * * * I can see no objection, on the score of public policy, to an agreement * * * upon the general plan upon which it is to be organized and conducted, so long as nothing is provided for inconsistent with the provisions of the statute or immoral in itself.” The court held the contract was legal.

In Hladovec v. Paul, supra, a group of retail liquor dealers entered into an agreement, whereby they were to acquire the stock of an existing corporation, each party to the agreement being limited, in his holdings, to ten shares. In the course of its opinion in that case the Supreme Court said: “We see no reason why a number of persons in trade, such as vendors of beer, may not engage in manufacturing the beer they sell their customers, and to that end each contribute an equal portion of the capital used in the manufacture thereof, and share equally in the management of the business and the profits and losses incidental to the business. Such an arrangement would make the parties to the enterprise partners and the enterprise a partnership undertaking. If parties can thus agree to carry on such an enterprise as a partnership, why may not they incorporate under the statute and carry the business on through the medium of a corporation? While an agreement limiting the number' of shares which should be issued to each stockholder would not be binding upon the corporation, we know of no reason why it would and should not bind the parties to the agreement.”

In contending the contrary, defendants have called our attention to a large number of decisions in various jurisdictions. It would be impossible within the reasonable limits of an opinion, to analyze these cases or even any considerable part of them. In our opinion, all of them may readily be distinguished from the case at bar, on the facts presented. Typical of these cases are those of Luthy v. Ream, 270 Ill. 170; Teich v. Kaufman, 174 Ill. App. 306; Morel v. Hoge, 130 Ga. 625, and Jackson v. Hooper, 76 N. J. Eq. 592. In the Luthy case a voting trust agreement was entered into by the holders of 2,001 shares of the stock of a corporation, out of a total of 4,000 shares. By the terms of their contract the voting power of the stock was entirely separated from its ownership for a term of years, “so that the real owners of the property are during that time entirely divested of its management and control or of any participation therein.” The court held that this agreement was contrary to public policy and void, as stockholders could not be “permitted to surrender all their discretion and will in the important matter of voting, and suffer themselves to be mere passive instruments in the hands of some agent who has no interest in the stock, equitable or legal, and no interest in the general prosperity of the corporation.” In the. course of its opinion in that case the court said: “While the pooling of stock for the purpose of electing directors and officers and controlling the management and business of the corporation is not necessarily illegal, an agreement the purpose and effect of which are to permit the affairs of the corporation to be managed by the determination of persons other than its stockholders or by a minority of its own stockholders is invalid,” citing a number of decisions, some of which the defendants are here relying upon. No such a situation as the court commented on in that case is present here. The complainant, under the agreement between these parties, could not conduct the affairs of the Elmo Amusement Company as he chose, without regard to the wishes of the defendants. In other words, they did not submit the management of the affairs of the company to him under the agreement or under the terms of the bylaws. The most that the complainant could do was to veto any change in the status created by the agreement of the parties, and the by-laws adopted pursuant to that agreement.

Likewise, in the Teich, case, supra, an agreement was involved which went very much further, than the one presented in the case at bar. The court in that case said that the contract there involved “-was something more than an agreement to elect one -another as directors, acquire control and management of the company, and secure options on one another’s stock. The courts have frequently upheld contracts of such a character. But it was an agreement to bind and control their judgment as such directors without regard to the interests of the stockholders they represented. Under it, they were obligated as directors to pursue a definite course of action for a series of years, looking specifically to their profit as officials or employees of the company, regardless of the effect upon it or its stockholders.” The court held that the contract involved in that case was invalid because its tendency was to prevent the parties to the contract, as directors, by whom under the statute the corporate powers are to be exercised, from faithfully performing the duties which devolved upon them in their representative capacity. The court distinguished the contract they were there passing upon- from those involved in Faulds v. Yates, supra, and Kantzler v. Bensinger, supra, pointing out that in the former case the agreement did not bind the parties to a specific course of action as directors; and that in the latter case the agreement was entered into by all the stockholders, which was not true of the agreement presented in the Teich case.

The agreement which was before the court in Morel v. Hoge, supra, contained provisions which enabled a minority to control the affairs of the corporation there involved, by dictating the majority of directors to be elected. The court held that contract void because it indefinitely deprived owners of stock of the power to exercise their right as well as their duty to other stockholders and to the public, to so vote in the election of directors as would in their judgment best promote the prosperity of the corporation and enable it to perform its duties. Here again it will be seen was a situation entirely different from that involved here.

In the case of Jackson v. Hooper, 76 N. J. Eq. 592, supra, two individuals having equal shares in an extensive business, acted through two different corporations in which there were boards of directors, containing members who were admittedly dummies. Ultimately, the two individuals fell out and were unable to agree as to the conduct of their business affairs, whereupon the dummies ceased to vote as such, and followed the wishes of one of the owners, as against the other. It was held that a court of equity did not have the power to control the property and the affairs of the two corporations to the extent of eliminating the corporate functions, as mere incidentals and disregarding the law governing the creation, supervision and dissolution of corporations, and treat the interest of the two owners on the basis of a partnership. This case presented some of the elements which were present in other cases we have referred to, in that the parties attempted to create certain corporate directors who were to act without independent judgment and solely at the joint dictation and control of the two real owners of the business. As in the other cases, so in the New Jersey case, it was held that such an agreement was void and unenforceable. The agreement involved in the case at bar had no such features.

The defendants contend that the trial court erred in entering the temporary injunction appealed from because the contract recited by the complainant in his bill of complaint is not enforceable, and they urge that this is so because, among other reasons, it is contrary to the provisions of the statute which proviHesT™7^ muj ority'~ of' the ” directors elected shall constitute a quorum for the transaction of business.” Cahill’s St. ch. 32, |f 20. In our opinion it is immaterial what the agreement of the parties was or -what the by-laws of their corporation provide as to a quorum of the board of directors, for that matter isnotTf all involved in the situation set forth in the bill of complaint or in the matters complained of by the complainant. At all the meetings of the board of directors which are here called in question, all members of the board were present. Apparently a further contention is made to the effect that the provision of the statute being what it is, the agreement of the parties and the provisions of the by-laws to the effect that salaries shall not be voted or changed except by unanimous vote of the directors, and that the by-laws shall not be amended except by such a vote, are invalid. In our opinion the fact that the statutes provide that a majority of the directors elected shall constitute a quorum for the transaction of business does not prevent all of the directors, who include all of the stockholders, agreeing that a unanimous vote shall be required on certain questions. As before stated, we are of thA opimon that tKe agreement in writing to which all of the stockholders and directors of the Elmo Amusement Company were parties, and the provisions of the by-laws of that company, which were adopted by the affirmative action of all of them, in so far as they provide that no salaries are to be voted or changed, and further that said by-laws are not to be altered or repealed, except by unanimous vote of said parties, as directors, are neither unconscionable nor | contrary to the law nor against public policy. It is apparent from the allegations in the bill of complaint that the complainant was a man of some means, property and credit. He was willing to help the Christys out and put enough money into their venture, to eliminate the partner they had been unable to get along with, and unite with them in conducting their motion picture enterprise, upon condition that he would have the handling of the finances of the theater, and that he would have the same control over the question of salaries, expenses and dividends, as they would, so that dividends might not be declared nor increases in salaries provided for, not only unless the Christys agreed to it but, also, unless he agreed to it. We are unable to see any reason why such an arrangement, agreed to by all the parties, should not be carried out. Nor are we able to see why the parties should not be permitted to do it through the medium of a corporation. If, in attempting to do that, they included provisions in their by-laws which are directly contrary to express provisions of the statute, to that extent the by-laws may be invalid. It may be that they included provisions in their agreement which could be called in question by creditors or by the corporation itself as a separate legal entity although not by any of the parties to the agreement as individuals. But such of the provisions of the contract between the Christys and the complainant, and the by-laws of the defendant company, later adopted by them, as are involved in the facts set forth in the hill of complaint, are valid and enforceable, in our opinion.

However, even if we were to hold, as the defendants contend, that the contract of the parties was unconscionable and invalid, and therefore unenforceable, and the by-laws of the company illegal and void, we would, nevertheless, be of the opinion that the trial court did not abuse the discretion vested in it, by entering the temporary restraining order here appealed from. Even if, as the defendants contend, they cannot be compelled to continue to accept merely an equal division of profits, with the small salary provided "for one of them in the contract, they may not be permitted to make a new contract with the complainant, to" suit themselves, and compel him to comply with it.. It is quite obvious that the large salaries which the two Christys voted to themselves, as directors, are -entirely illegal, as the resolutions providing for them were adopted not only with the help of their votes hut by their votes alone. Indeed counsel for the .defendants admitted on oral argument that these salaries were not valid and legal. Without regard, therefore, to whether the contract of the parties is or is not enforceable, they having complied with its terms and conducted their business according to its provisions for fifteen years, and then, according to the allegations of the bill, the defendants having seen fit to vote themselves large salaries, in a manner which they admit to be contrary to the law, it could not be said that the trial court abused its discretion when it entered the order appealed from, providing that those salaries were not to be collected by the defendants and that they were not to interfere with the complainant in the performance of his duties as treasurer of the company, but that the parties were to continue the business in the manner in which they had been conducting it all these years, until the rights of the parties may be determined in a hearing of their controversy on the merits.

Defendants contend that the bill of complaint is not sufficiently verified. The verification is by complainant personally, who makes oath that he knows the contents of the bill of complaint, “and that the same is true of his own knowledge, except as to the matters which are therein stated to be on information and belief, and that as to those matters, he believes them to be true.” That verification is sufficient and proper. George C. Peterson Co. v. Ashphalt Sales Corporation, 235 Ill. App. 592; National Plumbing & Heating Supply Co. v. Illinois Wood Preserving Co., 239 Ill. App. 69; Farrell v. Heiberg, 262 Ill. 407.

For the foregoing reasons, the order appealed from is affirmed.

Order affirmed..

O’Connor, J., concurs.

Mr. Presiding Justice Taylor

specially concurring: I concur in the judgment of the majority opinion, but not in all the reasoning therein expressed. I am of the opinion that it was reasonable for the chancellor, by a temporary restraining order, to preserve the status quo pending a trial of the case on the merits.