author: Mr. Presiding Justice Riess

text:
    Estella Schroeder, Appellee, v. Police and Firemen’s Insurance Association, Appellant.
    Gen. No. 9,117.
    Opinion filed April 24, 1939.
    Gunn, Penwell, Lindley & Burk, of Danville, for appellant; Harold F. Bindley and Horace E. Gunn, of counsel.
    Steely, Steely, Graham & Dysert, of Danville, for appellee; Walter V. Dysert and H. J. Hasch, of counsel.
   Mr. Presiding Justice Riess

delivered the opinion of the court.

An appeal was taken from a judgment in the sum of $2,000 rendered by the circuit court of Vermilion county against the defendant appellant, Police and Firemen’s Insurance Association, a corporation, upon the verdict of a jury in favor of plaintiff appellee, Estella Schroeder, beneficiary named in the insurance policy of William Schroeder, deceased.

The action is predicated upon a certificate of insurance issued by the appellant company which provides that there shall be payable to the beneficiary therein named at the death of such insured member the sum of $200 and which further provides for the payment of $2,000 to the beneficiary when the member “shall through external, violent and accidental means receive bodily injuries which shall independently of all other causes result — in the death of the member.” The policy and by-laws further provide as follows: “I agree that the benefits of this Association so far as accidental injury is concerned shall not extend to any bodily injury, or death, happening directly or indirectly in consequence of disease — or to any death or disability which may have been caused wholly or in part by mental or bodily infirmities or disease. ’ ’

The complaint contains two counts, the allegations of which are substantially identical. It alleges that William Schroeder was a fireman in the city of Dan-ville ; that on the date of his death while on duty at a fire, he upended a ladder, which accidentally came in contact with overhanging wires, and required him to lower it and to go through the physical exertion and strain of upending it again, and that such excitement, overexertion and strain upon his heart accidentally caused and brought about his death.

The defendant’s answer denied that the insured’s death was caused by external violence and accidental means, and denied that the accidental means, if any, acting independently of all other causes, caused the death and alleged that the insured died of natural causes or disease, namely, angina pectoris. Defendant admitted liability for and tendered payment of the $200 due under the death clause, but denied liability for the payment of the $2,000 under the accident clauses for which suit was filed.

It appears from the evidence that William Schroeder, deceased, a man about 46 years of age, had been employed by the city of Danville, for a period of 18 years as a fireman. On April 23, 1936, while on duty at a fire station, he suffered a severe attack of angina pectoris and became cold, clammy and unconscious. He was taken in an ambulance to a hospital, where he was revived by the administration of hypodermic heart stimulants and the use of ice packs, and a complete physical examination was made. The doctor found him to be suffering from pain in his chest and down his left arm and his illness was diagnosed as angina pectoris. He was treated for that ailment from April 23 to July 24, 1936, when he was permitted to return to his work as fireman. During this period, he received approximately 42 visits from his physician.

The evidence shows that angina pectoris is a disease of the heart, which comes in sudden seizures or attacks, some of which are very painful and severe and cause death almost instantly. The disease is incurable and becomes progressively worse. Between attacks and seizures the person subject to the disease may appear normal and healthy and may suffer no pain or discomfort, but excitement or exertion may bring on an attack or seizure at any time.

On November 1, 1936, William Schroeder drove the ladder wagon to a fire at a distance of six or seven blocks from the engine house, where he and another fireman were directed by the fire chief to place a ladder against the side of a house. One witness stated that the ladder weighed 50 pounds and another that it weighed 150 pounds, while one witness stated its length to be 25 and another to be 45 feet. In raising the ladder, it touched against some overhanging wires. He lowered the ladder in order to pass under the wire and placed it upright against the house. Goth, the other fireman, then climbed up the ladder and went on the roof of tire house to cut a hole for ventilation and to allow the smoke to escape. Schroeder climbed the ladder as high as the eaves of the house and remained there a few minutes when he was directed to descend from the ladder by fire chief Davis, who testified: “Schroeder came down and stepped to one side and I went up the ladder.” Schroeder was later found lying unconscious on the running board of the fire truck with his arms hanging down. First aid treatment was given by a bystander in the way of artificial respiration and use of “smelling salts,” but he never revived and apparently died in an ambulance on the way to the hospital.

A post-mortem examination was held by Dr. Wheatley and Dr. Dunham, both of whom testified in the case. No cuts, bruises nor outward marks of trauma were found on the body. It was ascertained that his heart was apparently normal except for certain white calcium deposits in the upper portion thereof and in the arch of the aorta and a condition indicating arterio sclerosis, and the cause of his death was determined and reported by the physicians to be angina pectoris. Upon direct examination, omitting the previous history of the case, medical testimony was given by Dr. Dun-ham and Dr. Wheatley in response to hypothetical questions that his death could have been caused by shock, overexertion or excitement. On cross-examination, including the element of the previous attack of angina pectoris, both gave it as their opinion that he had died of angina pectoris. Further expert testimony was given by Dr. Robert S. McCaughey, who had examined an electrocardiagram made on Schroeder at the hospital in April, 1936. He testified that the eardiagram showed thrombosis and was a classical picture of blood clotting in the heart muscle indicating angina pectoris. In answer to a hypothetical question, he stated that Sehroeder had a degenerative heart circulation and that the condition might have contributed to his death. He also testified that physical exertion would likely produce death in a man who had angina pectoris.

It further appears from the evidence that the deceased had filed a claim and collected disability insurance for a period of 13 weeks on the ground that he was suffering from angina pectoris during the period of such previous illness.

The defendant appellant contends that the verdict was contrary to the evidence and that prejudicial error occurred in the admission of certain evidence and in the refusal to admit certain other evidence, exhibits and hospital records and instructions to the jury offered by the defendant, which latter need not be passed upon in view of our decision herein. Defendant’s motion for a new trial was denied and judgment entered on the verdict.

It is contended by the plaintiff that Sehroeder’s death was due solely to accidental means and was not contributed to by pre-existing disease. What actually occurred at the time of his attack or injury does not appear from the evidence. Several witnesses testified that at 7:00 o ’clock that morning and at the time of leaving the enginehouse he seemed to be in good spirits and in a normal condition and suffering no pain; that he drove the hook and ladder wagon a distance of about eight blocks to the fire and until the time he was found lying on the running board, no evidence of any pain or heart attack are shown to be present.

The previous attacks of angina pectoris and the serious illness that followed were not disputed in the testimony. All the physicians stated that his condition was progressive and incurable and that under stress or strain a renewed attack of angina pectoris would likely follow. The inquest disclosed the impaired condition of circulation, both in the heart and aorta, and when the history of the case was detailed together with the facts that had transpired on the morning of his death with the post mortem findings as detailed in the evidence, all physicians, both for the plaintiff and defendant, gave as their opinion when considering both the history of the previous attack and of the facts so related that his death was due to angina pectoris.

In the case of Paoli v. Loyal Protection Ins. Co., 289 Ill. App. 87, 6 N. E. (2d) 909, the law applicable to contracts for recovery under accident insurance policies is thoroughly discussed. In that case it appeared from the evidence that the deceased was a man of good previous health, aged 57 years, who had taken a wheelbarrow to a lumber yard and was at the time of his injury lifting 95 pound sacks of cement on to the wheelbarrow from a stack of sacks. While in the act of raising a sack, he dropped it, took a few steps and fell down. He was taken to a hospital, placed in bed, became semiconscious and remained in that condition, growing gradually worse, fell into a coma and died three weeks later. A post mortem examination disclosed that an abscess of the brain had formed. A physician testified that in his opinion, at the time the deceased lifted the sack of cement, there was an alteration or impairment in the blood supply to the brain caused by a small hemorrhage due to the break or rupture of a small blood vessel, and that this condition resulted in thrombosis due to clotting which comprised the seat of an infection that later developed into an abscess in the brain. He testified that the deceased had no other condition or infirmity which could have caused his death. It was shown without contradiction that prior thereto, the insured had always enjoyed good health and was a strong, robust person and that while attempting to lift the sack of cement he suffered some impairment of the blood vessels of the brain, “and suddenly fell and became paralyzed and unable to walk,” which happening was the proximate cause of his death. The diseased condition that followed was entirely subsequent to and resulted from a proven accidental injury. The court there said (p. 97): “The record is void of any evidence or any suggestion of any other cause or condition that might have caused his death.”

In the case of United States Mut. Accident Ass’n v. Barry, 131 U. S. 100, 33 L. Ed. 60, 9 Sup. Ct. 755, it is held that the term “accident” was used in an accident policy in its ordinary popular sense as meaning “happening by chance; unexpectedly taking place; not according to the usual course of things; or not as exr pected”; and “that if a result is such as follows from ordinary means voluntarily employed, in a not unusual or unexpected way, it cannot be called a result effected by accidental means; but that if, in the act which precedes the injury, something unforeseen, unexpected, unusual occurs, which produces the injury, then the injury has resulted through accidental means. ’ ’

In the Barry case, supra, the deceased was a doctor of the age of 30 years and was in the company of two other physicians. The other two jumped from a platform safely, but the deceased lit in such a way as to attract the attention of the others. He stated that he thought he was not hurt, but serious injuries followed the incident, from which deceased died. He did the thing he started out to do, and so far as the evidence shows, did it in the way he intended to do it, and some unforeseen thing entered into it. As said in Paoli v. Loyal Protection Ins. Co., supra, in commenting thereon: “Perhaps he lit on his heels; maybe his legs were held unduly stiff. Nobody knows from the record just what happened.” Then, in applying the principle to the facts in the Paoli case, the justice said: “In the case at bar the man intended, of course, to lift and place in Ms wheelbarrow the sack of cement. Perhaps he was standing in a position a little different from what would have been safe; perhaps the sack of cement turned out to be heavier than he anticipated, and consequently, the lift larger. ’ ’ Under the facts set forth in the Paoli and Barry cases, supra, it was held that the question of whether or not the death was due to accidental means was one of fact for the jury.

In the case of Christ v. Pacific Mut. Life Ins. Co., 312 Ill. 525, 144 N. E. 161, in seeking recovery under an accident policy, it was shown that the insured had~contracted typhoid fever from drinking contaminated water and died as a result thereof, and the same question was raised as to whether or not under the facts stated, the beneficiary could recover under the theory that the insured lost his life by “external, violent and accidental means.” In holding that there was a right to recover, the Supreme. Court said: “The means by which disease is acquired being the entrance of the typhoid bacilli into -the system, if the means of such entrance are accidental the resulting typhoid fever and its fatal effect may also be said to be accidental. ’ ’

When, however, there is an existing disease or bodily infirmity, which co-operating with the accidental means, results in death, the accidental means is not the sole and independent cause of death and there can be no recovery under the accident provisions of the policy.

The language quoted in the Barry case, which is recognized as a leading case, is approved in Higgins v. Midland Casualty Co., 281 Ill. 431, 118 N. E. 11, and Ebbert v. Metropolitan Life Ins. Co., 289 Ill. App. 342, 7 N. E. (2d) 336.

In the case of Ebbert v. Metropolitan Life Ins. Co., supra, insured met his death after the administration of an anaesthetic taken while undergoing a tonsillectomy and the beneficiary under the policy sought recovery of an additional amount under a double indemnity clause of the policy, which provided that in case death was the result “directly and independently of all other causes, of bodily injuries sustained through external, violent and accidental means,” — and not “caused by, or contributed to, directly or indirectly, or wholly or partially, by disease, or bodily or mental infirmity.” The proof showed that the insured was suffering from disease, which was held by the court of review to have directly contributed to his death and the judgment of the lower court was reversed on the ground that “the preponderating weight of the evidence' here indicates that the insured was suffering from disease which directly contributed to his death. The evidence also shows that his death was not the result ‘ directly and independently of all other causes of bodily injuries sustained through external, violent and accidental means. ’ ”

In that case the authorities are fully discussed and distinguished. A similar case in which prior disease was a contributing cause is that of Wayne v. Travelers Ins. Co., 220 Ill. App. 493, wherein recovery was sought in an action on an insurance policy, and the evidence was held to show that death was not caused by toxicity of a drug' administered by hypodermic injection, but was due to the pre-existing disease of chronic syphilis. The court made the following finding of facts: “We find that the death of John Beakley, the insured, did not result from bodily injuries effected directly and independently of all other causes, through external, violent and accidental means, and we find that his death was caused directly or indirectly, wholly or partly, by the disease of syphilis from which he was suffering, and that the policy of insurance does not cover such a loss.”

In the instant case it is undisputed that the deceased had previously suffered a severe attack of angina pectoris of 13 weeks ’ duration and was confined in a hospital or his home for a period of 3 months for which illness he had claimed and collected disability insurance; that the disease in question is progressive and incurable, and that sudden stress or strain upon the heart would tend to bring on a renewed attack and result in death at any time-; that when this previous history of disease was considered, all of the physicians held the opinion that death was due to angina pectoris.

In view of the undisputed facts appearing in the record in this case, we hold the finding of the jury was contrary to the evidence on the issues submitted. Under the facts and circumstances in evidence, we find and hold, upon a rehearing herein, that the death of William Sehroeder, the insured, did not result from bodily injuries effected directly and independently of all other causes, through external, violent and accidental means, and we find that his death was caused directly or indirectly, wholly or partly, by the disease of angina pectoris and the degenerative condition of his heart from which he was suffering and that the policy of insurance does not cover such loss.

The judgment of the lower court upon said verdict will therefore be reversed with the above finding of facts.

Reversed with finding of facts.


source: Caselaw Access Project

license: Public Domain

text:
    Standard Oil Company, Appellee, v. The Town of Patterson and Curtis L. Bawdy, Defendants. Curtis L. Bawdy, Appellant.
    Gen. No. 9,171.

      Opinion filed April 24, 1939.
    Beal B. Smith, of White Hall, and Whiteside & Vogt, of Carrollton, for appellant.
    Bellatti, Samuel & Arnold, of Jacksonville, for appellee.
   Mr. Presiding Justice Riess

delivered the opinion of the court.

Plaintiff appellee, Standard Oil Company, an Indiana corporation, recovered judgment in the circuit court of Greene county, Illinois, in the sum of $3,072.67 against the defendant appellant, Curtis L. Bawdy, commissioner of highways of Patterson township in said county, upon trial of the cause without a jury, from which judgment an appeal was taken to this court.

The complaint consisted of four counts, in the first three of which, plaintiff sought recovery of the amount of principal and interest alleged to have been due and collected for the payment of certain anticipation warrants issued to the plaintiff in attempted payment of an account for items of merchandise consisting of gasoline, oil and tires sold and delivered to defendant, but that said moneys so levied and collected were not so set aside but were unlawfully converted and expended by the defendant for other purposes. The fourth count, as finally amended, sought recovery on an open account for said merchandise.

On April 5, 1937, defendants filed motions to strike the various counts of the complaint and the same were stricken as to the defendant, town of Patterson, and amended as to defendant appellant herein. Defendant then filed a second motion to strike the amended complaint on July 9, 1937, setting up numerous specific grounds in support thereof, which motion was heard and denied by the court and leave was granted to answer by August 15, 1937, which answer was filed on August 14th with a written demand for trial of the issues of fact by a jury.

The answer admitted the issuance of the purported warrants by one A. L. McClay, a preceding commissioner of highways of said township for the intended purpose of paying plaintiff for materials delivered on open account, but alleged that the warrants were issued contrary to law and were void when issued; that by accepting the warrants, plaintiff was estopped from suing on the claim; that the material was furnished without the written consent of the county superintendent of highways for use in the construction of a project, the total cost of which was in excess of $200; that at the time of the purchase of said merchandise, there were no funds in the treasury of the road and bridge funds nor taxes levied to pay the same and further denied liability of defendant for payment of either principal or interest on the open account, to all of which plaintiff filed its reply denying* all new matters of affirmative defense set up in the answer.

The case was tried by the court without a jury; the trial court holding that by defendant’s failure to file a written demand for jury trial at the time of filing appearance, in compliance with the requirements of section 64 of the Practice Act (Ill. Rev. Stat. 1937, eh. 110, par. 188 [Jones Ill. Stats. Ann. 104.064]), the defendant had waived the same.

Albert McClay, then commissioner of highways of Patterson township, had purchased from the plaintiff through its agent and station at Hillview, Illinois, various amounts of gasoline, oil and several miscellaneous items, all of which purchases were entered upon 224 sales tickets exhibited in evidence, ranging in amounts from $1.35 to $70.22, and five separate tickets, numbered 225 to 229, for tires used on highway trucks bought at Whitehall, Illinois. The purchases were for separate sales of such supplies at current retail market prices on various dates, the dates and amounts of which appeared on the sales tickets and in the plaintiff’s ledger so offered in evidence and were explained and corroborated by plaintiff’s witnesses McClay, Wear and Gilcrist. The amount of such purchases varied, but none of them were in excess of $100. The gross amount of said sales, consisting principally of gasoline, so sold and delivered between March 10, 1930, and June 13, 1934, aggregated $3,622.67, upon which a credit of actual payments of $550 had been given, leaving the remaining* account alleged to be due and for which judgment was entered in the amount of $3,072.67. The date of the first sales ticket offered and admitted in evidence and alleged to be unpaid was April 9, 1932, and the last June 14, 1934. The purchases were made within the period of five years before suit was filed herein.

It appears from the evidence that the gasoline and other items represented by said sales tickets were used by former Commissioner McClay and his agents in the operation of road machinery on the highways of the township and generally distributed over the same and were not used on any particular project or otherwise than in general improvement, repair and maintenance of highways in the township during the years of 1932 to 1935, inclusive; that each sale was a separate transaction; that from time to time McClay received from plaintiff’s auditors statements of the account for verification and that they were always correct; that all items were so received by him or his agent and used during his incumbency in office; that during said time, various strips of said highways were improved with macadam and grading, and a part of said work consisted of building a rock road between Hillview and Patterson in 1932, in which certain labor was furnished through State and federal agencies, including IERC and CWA labor and federal trucks; that in addition thereto, by subscription of citizens about $4,500 was contributed toward making said repairs; that the repairs included general road work with crushed stone and in numerous places the highway was repaired and holes filled with crushed stone, and in servicing the highway.

A portion of the labor on this work was done under what was designated as Greene County Project 11, whereunder the above mentioned agencies of the federal and State governments contributed labor in four adjoining townships and villages, which labor thus furnished was not under any specific contract nor was it for use in any particular place, but for use generally upon the highways of two townships, including said township and two villages therein.

Other testimony concerning the work of repair and government aid in road building in the township was given, but we find that the trial court did not err in holding that the various separate sales of gasoline and supplies used in operating the machinery in said district were not so sold for use upon or as a part of any particular contract, plan or project, the cost of which was in excess of $200, which would require the approval of the county superintendent of highways in compliance with subpar. 5, par. 56, ch. 121, Ill. Rev. Stat. 1937 [Jones Ill. Stats. Ann. 120.058], but were in the nature of an open running account of separate sales and deliveries, none of which required the previous approval of such county superintendent.

Although the judgment does not state upon which count recovery was had, and the invalidity of the anticipation warrants would preclude judgment under the first three counts, it is not necessary that the count upon which judgment is entered be specified, since recovery upon a cause of action well stated in one count and duly proven by the greater weight of the evidence is sufficient.

A quasi public corporation has the power to make the contracts necessary to enable it to exercise powers conferred, and perform duties enjoined upon it by law. Euziere v. Highway Commission of Town of Rock-ville, 346 Ill. 131, 134, 178 N. E. 397; People v. Spring Lake Drainage & Levee Dist., 253 Ill. 479, 97 N. E. 1042.

The evidence clearly shows that no single purchase made by appellant from appellee exceeded the sum of $200; hence it was unnecessary for the commissioner to procure the written consent of the county highway superintendent for any such purchases under the provisions of subpar. 5, par. 56, ch. 121, of Illinois Revised Statutes of 1937, as contended by appellant. Euziere v. Highway Commission of Town of Rock-ville, supra. The amount of plaintiff’s demand under the fourth count was fully established by the sales tickets, ledger accounts and oral testimony of the witnesses. The appellant had the prima facie power to purchase materials for the purposes stated. County of Coles v. Goehring, 209 Ill. 142, 70 N. E. 610.

The appellant argues that there was not sufficient money in the treasury to discharge the obligation created herein. The commissioner of highways is powerless to incur an indebtedness in excess of the money in the treasury or the taxes levied to discharge it. Euziere v. Highway Commission of Town of Rockville, supra. The law does not require, however, that at the time a commissioner of highways enters into a contract within the scope of his power or authority, there be not only an adequate tax levy, but also sufficient money actually collected from the levy to pay the indebtedness created by the contract. American Mexican Refining Co. v. Wetzel, 350 Ill. 575, 580, 183 N. E. 593. We hold the principles announced in the Engiere case, supra, to be applicable to and controlling under the facts herein.

It appears from the evidence that sufficient taxes had been levied to meet the amount of the obligation during the years in which the respective purchases were made. The gasoline and supplies were furnished under the numerous purchases and were received and used in operating road machinery at various places in the improvement, repair and maintenance of the highways by the commissioner of the district within the scope of his powers and in the performance of his statutory duties, and an implied contract exists on the part of the commissioner to pay for the same. The issuance of warrants not in conformity with statutory requirements did not relieve the district of its obligations to pay the demand sued upon, nor did the acceptance of void warrants estop the plaintiff from suit upon its account.

While no interest would be chargeable as provided in the terms of the invalid anticipation warrants, no such interest was allowed by the trial court in the judgment. Municipal and quasi public corporations are not liable for the payment of interest in the absence of an express agreement to that effect. County of Coles v. Goehring, supra. American Mexican Refining Co. v. Wetzel, supra.

We hold that there is no force in the 'appellant’s contention that he was unlawfully deprived of his constitutional rights of a trial of the issues of fact by a jury. The provisions of section 64 of the Practice Act (Ill. Rev. Stat. 1937, ch. 110, par. 188 [Jones Ill. Stats. Ann. 104.064]) effective on January 1, 1934, specifically sets forth the terms upon which the right of trial by jury is to be asserted. No demand for a trial by jury was made at the time the defendant entered its appearance, and we cannot by judicial construction change the plain and unambiguous language of this statute by extending the time for filing such demand for jury trial until the .issues have been settled by the pleadings.

While we have not discussed all of the errors assigned by the appellant, we have fully considered the same and find no reversible error in the record. The judgment of the circuit court of Greene county will therefore be affirmed.

Judgment affirmed.


author: Mr. Justice Fulton

text:
    John W. Cherry, Appellee, v. The Aetna Casualty and Surety Company, Appellant.
    Gen. No. 9,142.

      Opinion filed April 24, 1939.
    Acton, Acton & Baldwin, of Danville, for appellant; Edmund D. Adcock, of CMcago, and William M. Acton, of counsel.

      Hutton, Clark & Hutton and Gunn, Penwell, Lindley & Burk, all of Danville, for appellee; Horace E. Gunn and H. Ernest Hutton, of counsel.
   Mr. Justice Fulton

delivered the opinion of the court.

This was an action in debt on a penal bond commenced in the circuit court of Vermilion county on September 23, 1927. The appeal is from a judgment entered against the defendant, appellant here, for the sum of $121,980.78, on March 4, 1938. The subject matter out of which this controversy arises has been involved in serious litigation both in the federal and State courts for many years.

In 1925, the Danville Hotel Company undertook the construction of a nine-story hotel building in Dan-ville, Illinois, and Charles Benson, Inc., entered into a contract with the company to build the same for $604,899, in cash and common stock of the par value of $217,800. In order to provide funds for the construction of the hotel the company applied to Caldwell & Company of Nashville, Tennessee, to underwrite an issue of first mortgage bonds to be secured by a trust deed on the building. The general contract with Benson, Inc., provided that the owner should have the right to require the contractor to furnish bond covering, the faithful performance of the contract and the underwriting agreement dated February 13, 1926, also disclosed on its face that the money from the bond issue was to be disbursed only upon proof that it had been expended in the construction of the building and that liens were waived and satisfied. It contained a further provision that the owner should have the right to require the contractor to furnish bond covering the faithful performance of the terms of his contract.

The mortgage or trust deed was given to the Liberty Central Trust Company and others, as trustees, dated March 1,1926, and secured bonds aggregating the sum of $700,000; It was recorded on April 5, 1926. It provided that the owner should furnish, in addition to the proceeds from the bond issue, all moneys necessary to furnish and equip the hotel. The underwriting agreement further provided that 10 per cent of the amount realized from the bond issue, for. underwriting fee, $12,000, for premium on the surety bond and the architect’s fee amounting to over $47,000, be retained out of the $700,000, so that the amount available for construction amounted to something over $570,000. After considerable negotiation between the contractor, Benson, Inc., Caldwell & Company and the appellant a surety bond in the penal sum of $822,699, was issued on May 3, 1926. The bond ran to the Dan-ville Hotel Company as obligee. The. obligors were Chas. Benson, Inc., principal and The Aetna Casualty & Surety Company, (appellant) surety. The condition was as follows:

“Now, therefore, the condition of this obligation is such that if the Principal shall faithfully perform the Contract on his part, and satisfy all claims and demands, incurred for the same, and shall fully indemnify and save harmless the Owner from all cost and damage which he may suffer by reason of failure so to do, and shall further reimburse and repay the Owner all outlay and expense which the Owner may incur in making* good any such default, and shall pay all persons who have contracts directly with the Principal for labor or materials, then this obligation shall be null and void; otherwise it shall remain in full force and effect.

“Provided, however, that no suit, action or proceeding by reason of any default whatever shall be brought on this bond after twelve months from the day on which the final payment under the Contract falls due. ’ ’

As the building was nearing completion the hotel company defaulted in its payments to Benson, Inc., under the contract and later in July, 1927, was declared a bankrupt by the United States District Court. Thereafter, the trustee in bankruptcy filed a petition to marshal the liens and sell the property of said bankrupt free from all liens and incumbrances. In that petition all of the subcontractors, trustees for the bondholders, Benson, Inc., and the appellant surety company were made parties defendant. After a full hearing the court ordered that the property of the Danville Hotel Company be sold free of liens and that the liens of subcontractors were to be superior to that of the mortgage securing the bonds.

Under the provisions of the trust deed securing the bonds, the bondholders were given the right to bid in at any sale and deliver bonds in payment of the sale price to the extent of the principal and unpaid interest in lieu of cash.

The record disclosed that there were subcontractors who had not been paid who would ultimately be entitled to mechanics liens prior to the lien of the trust deed, and the court therefore ordered in the decree of sale that if the bondholders should bid for the property at the sale, they should deposit sufficient cash prior to the sale, to cover the amount of any prior liens that might later be established. In compliance with this order the bondholders deposited with the trustee in bankruptcy, as a condition precedent to bidding at the sale, the sum of $200,000. The bondholders bid at the sale and purchased the real estate for $586,668.18, which was less than the amount of bonds held by them.

In a later hearing it was ascertained that the amount of the mechanics lien claims entitled to have priority and to be paid from the sum deposited by the bondholders in order to discharge the liens and accrued interest thereon was the sum of $92,492.08.

The appellant here required the contractor to obtain waivers of liens from subcontractors who had furnished labor and materials prior to May 3,1926, the date the bond was executed. These lien waivers were secured but misrepresented the true facts. The contract price of the subcontractor in each instance was raised to an amount larger than the actual contract, and a receipt and waiver given for an amount that would leave due upon the contract the actual amount thereof. The total these several contractors raised and the amounts of their contracts amounted to $115,350, and these waivers were delivered to Caldwell & Company as disbursers of the bondholders money, and caused them to believe that the said amount had been paid out for labor and materials under the building contract. As a matter of fact a very small part of said sum had actually been paid. Because of this fact, the United States District Court in passing upon the claims of Benson, Inc., and the appellant surety company in the bankruptcy court, held that claimants were clearly estopped to set up any claim for mechanic’s lien as against the mortgagee.

In the original hearing of this cause in the circuit court the appellee relied upon three theories of recovery, to wit:

1. That the plaintiff had a right to recover as a third party beneficiary under the bond. Appellant demurred to this assignment and the demurrer was sustained by the trial court.

2. Plaintiffs maintained that the bondholders were entitled to recover as subrogees of the hotel company. Demurrer was also sustained as to this assignment and the appellees abandoned this theory of recovery.

3. The plaintiffs claimed the right to recover as subrogees of the subcontractors and materialmen who had direct contracts with Benson, Inc., the general contractor, on the ground that in order to protect their mortgage lien the bondholders were required to satisfy such subcontractors mechanics ’ liens against the mortgaged property.

Many pleas, demurrers, replications and other pleadings were filed with reference to the above assignments. A thorough discussion of the pleadings as they appeared on the former hearing is contained in the opinion of this court on prior consideration of this cause and -reported in 285 Ill. App. 601.

. This court reversed the ruling of the trial court in sustaining the said demurrers and in the main upheld the theories advanced and relied upon by the appellees and denied the defenses claimed by appellant. The case was remanded to the circuit court of Vermilion county for further proceedings not inconsistent with that opinion.

Briefly, this court held on that appeal, First, that the plaintiffs were entitled to recover on the theory of subrogation,- Second, That the contractual obligation of the bond in question was entered into for the direct benefit of the bondholders and that under the rule announced in the case of Carson, Pirie, Scott & Co. v. Parrett, 346 Ill. 252, the bondholders would have the right to sue the surety company in case of default on the bond as third parties beneficiary; Third, That the suit was instituted within the limitation of time placed in the bond and the additional assignment of breaches were proper so long as they were within the general statute of limitations; Fourth, That the satisfaction of the judgment in the case of the receiver for the use of subcontractors Yeager and the Carson-Pay-son Company, decided by this court, and reported in 264 Ill. App. 199 [Cherry for use of Yeager v. Benson, Inc.], did not bar the right of the appellees to proceed with this suit.

After the remanding order was filed in the circuit court, the pleadings were adjusted and orders entered to comply with the findings of this court. Thereafter the appellant filed additional pleas to which replications and other pleadings were considered by the trial court. They were long and voluminous but appellant concedes the important questions and issues raised by the pleadings and the testimony are four in number.

1. Whether a consideration of the bond in controversy and the circumstances surrounding the parties at the time of its execution show that the appellee was intended to be benefited under the third party beneficiary count.

Appellant contends that on the previous appeal this court held the allegations of the count claiming the right to recover on the theory of third party beneficiaries to be sufficient in law, and that such decision would not be controlling now because of the new facts and circumstances contained in its additional pleas and the testimony introduced at the trial.

The facts and circumstances upon which appellant relies to show that the bond was not intended for the benefit of the bondholders are briefly: (a) That the Danville Hotel Company and Charles Benson, Inc., entered into a contract for the construction of a hotel building whereby the contractor was to be paid by the owner the sum of $604,899.80, in cash; (b) Caldwell & Company agreed to underwrite the bond issue for $630,000, deposit the proceeds as the building progressed with the right to withhold sufficient funds to entirely complete the building free and clear of liens and with the agreement that the hotel company should furnish any additional funds; (c) That the underwriter did not require of the owner a performance and completion bond; (d) That the underwriter before selling the bonds required evidence of the secondary financing and was falsely informed that $434,000 worth of stock had been sold.

In studying this record we cannot accede to the position urged by appellant that the benefit to the bondholders was incidental and not direct. The fact that the underwriters required certain things to be done with reference to secondary financing or were falsely informed concerning the same, would only tend to emphasize the care and caution taken by them in protecting the lien of the bondholders. Whether the bond was termed a performance and completion bond or merely a contract bond would not in any manner change its terms. Contracts between the owner and the contractor and the manner in which the underwriters agreed to disburse the proceeds from the sale of bonds does not convince us that their interest in the bond was incidental.

The conduct and actions of the parties in the negotiations for a bond and the surrounding circumstances shed more light upon that question. The evidence clearly shows that Caldwell & Company were intensely interested in the bond. They were furnishing the money to build the hotel, selling the bonds to purchasers upon the representation that the trust deed securing the bonds would be a first lien upon the hotel property. They were the first ones to suggest a bond; they insisted that the form and the terms should be approved by them; that the bond should be given before any money was paid out from the proceeds of the bond issue. A long series of letters and communications between Caldwell & Company and the agents of the appellant concerning the form and contents' of the bond preceded its execution. These and many other facts disclosed by this record lead us to believe that Caldwell & Company representing the bondholders were intended to directly benefit by the terms of the bond and although not mentioned in the bond were entitled to institute suit for a breach thereof. The case of Carson, Pirie, Scott & Co. v. Parrett, 346 Ill. 252, we believe is authority for this holding and is applicable to the facts in this case. In that case the court said: “The test is whether the benefit to the third person is direct to him or is but an incidental benefit to him arising from the contract. If direct he may sue on the contract; if incidental he has no right of recovery thereon.”

In the present case the condition of the bond required the principal and the surety to pay all persons who had contracts directly with the principal for labor or materials, which made all the subcontractors, who furnished labor or materials, directly interested in the bond. We held in the former opinion that because the appellee was compelled to pay the subcontractors in cash before they were permitted to bid at the sale made under the order of the United States District Court, that they became subrogated to the rights of such subcontractors and were entitled to all the remedies which the subcontractors possessed as against appellant.

2. The second problem confronting the court is whether the appellees’ right of recovery is barred by laches and estoppel. This suit was started in September, 1927, and before the petition to marshal liens was filed in the federal court. The bankruptcy proceedings over the estate of the bankrupt hotel company were not concluded until February, 1930.

It is reasonable that no action would be taken in this suit during that period of time. The appellant denied any liability as to the claims of Yeager and the CarsonPayson Company and judgment was taken on their claims in December, 1930. An appeal was taken by appellant to this court. As the appeal raised the fundamental defense of no liability on the bond, even to subcontractors, it was natural for the bondholders to await the outcome of that suit. The appeal was decided in this court in January, 1932. (264 Ill. App. 199.) Within the same year new assignments of breach were filed and a long series of involved pleadings followed. From the rulings of the trial court on the pleadings another appeal was prosecuted. In April, 1936, the opinion of this court heretofore referred to was released. When remanded to the circuit court of Vermilion county additional.and voluminous pleadings were again filed. A trial on the merits then followed and after judgment this appeal. From the inception of the litigation the appellant has stubbornly resisted every effort to hold it liable under the bond. Under such circumstances we can find no unnecessary delay on the part of the appellee.

As to the estoppel, we can find no evidence of fraud or misconduct on the part of appellee or no requirement of the law that they should have submitted the claims of this suit to the federal court in the bankruptcy proceeding’s. We believe the trial court properly denied the defense of laches and estoppel.

3. The third question raised by appellant and argued earnestly and exhaustively is that appellees’ right to recovery is barred by the doctrine of res adjudicates,. Appellant insists that the bankruptcy proceedings determined that it was discharged from any and all liability under its bond; that the effect of those proceedings was to exonerate the appellant from any obligation under its bond and that the issue presented by the appellee in this case could have and should have been determined in the proceedings in the federal court. An examination of the pleadings and orders of the United States District Court does not disclose that any issue was raised as to the liability of the appellant under its bond. Nor do they disclose any issue or finding which can be construed to exonerate appellant from its obligations under such bond.

It might be a source of argument as to whether or not all controversies between the bondholders and the appellant could have been determined in the bankruptcy court. Appellant relies on the principles announced in the cases of Godschalck v. Weber, 247 Ill. 269 and Harmon v. Auditor of Public Accounts, 123 Ill. 122, where it is stated:

■ “Nor is such former judgment or decree conclusive only as to questions actually and formally litigated. It is conclusive as to all questions within the issue whether formally litigated or not.

“It is elementary that the doctrine of res adjudicaba extends not only to the questions that were actually decided in the former case, but to the whole controversy, and is conclusive as to all questions within the issue whether formerly litigated or not.”

The present case was a suit on the bond while the primary purpose of the bankruptcy proceedings was the administering of the estate of the Danville Hotel Company which entailed the allowance of claims, the fixing of priorities, the sale of the assets and distribution to creditors.

The obligations of appellant under its bond were not directly in issue. Certainly the precise question was not raised nor determined by the federal court. Its jurisdiction to pass upon the exact problems in this case might be seriously questioned. Before a fact or question in some former suit can be claimed to be res adjudicaba in a subsequent suit, as estoppel by verdict, certain requirements must be shown to exist. When the second suit is on a different cause of action, claim or demand, the judgment in the first suit is an estoppel only as to the point or question there actually litigated and determined, and not as to other matters which might have been litigated and determined. The burden of proof is on him who invokes the estoppel. Harding Co. v. Harding, 352 Ill. 417.

We are in accord with the holding of the trial court that res adjudicaba is not a proper defense in this case.

We also approve of the finding of the trial court on the question and the amount of interest allowed.

• The questions involving the sufficiency of the pleas as to 12 months’ limitation for starting* suit and appellees’ right to subrogation have been heretofore passed upon by this court adversely to the contention of appellant.

Finding no substantial error in the record the judgment of the circuit court of Vermilion county is hereby affirmed.

Affirmed.


text:
    Oziah Finley et al., Appellees, v. Elsie Rowand et al., Defendants. T. Whittier Taylor, Defendant in Cross Complaint and Samuel V. Jinkins, Appellant.
    Gen. No. 9,173.
    Opinion filed April 24, 1939.
    Ralph M. Jinkins and Samuel V. Jinkins, both of Danville, for appellant.
    Colfax T. Martin, of Danville, for appellees.
   Mr. Justice Fulton

delivered the opinion of the court.

Ezra G. Finley, a resident of Vermilion county, died on the 14th day of January, A. D. 1914, testate. His last will and testament was duly proved, admitted to probate and filed for record in the probate court of said county. By the terms of his' will, he directed that his wife, Martha E. Finley, hold the same for her sole use and benefit for and during the period of her natural life. The will further provided that upon her death the estate be divided share and share alike among his eight children. Martha E. Finley became deceased on January 30, 1934. The eight children and sole and only heirs-at-law of Ezra Gr. Finley were the following: Armilda Witherspoon, sometimes known as Hilda Witherspoon, James M. Finley, Oliver Finley, Oziah Finley, Fannie Talbott, John Finley, Elmore Finley and Henry Finley. On August 19, 1936, Armilda Witherspoon died intestate leaving Elsie Rowand and Gertrude Taylor, daughters, Clyde Witherspoon, a son, and Fred C. McDavid, a grandson, as her sole and only heirs-at-law. Clyde Wither-spoon was duly appointed administrator of the estate of his mother, which was settled in the probate court of Vermilion county.

In order to pay the indebtedness of the Armilda Witherspoon estate, it became necessary to file a petition for leave to sell her undivided one-eighth interest in the real estate owned by her father, Ezra G. Finley, at the time of his death. Upon the sale of the same the appellant Samuel V. Jinkins purchased the said one-eighth interest and received an administrator’s deed therefor on the 6th day of December, A. D. 1937.

On the 26th day of November, A. D. 1937, the seven living children of Ezra G. Finley filed a complaint for partition in the circuit court of Vermilion county seeking the division and partition of 80 acres of land owned by the said Ezra G. Finley. The administrator of the estate of Armilda Witherspoon, deceased, her children and heirs-at-law, and Samuel V. Jinldns were made parties defendant to the complaint filed. On the 6th day of December, A. D. 1937, the same day he received his administrator’s deed, Samuel V. Jinldns filed his answer to the complaint and also a cross complaint making one T. Whittier Taylor an additional party defendant. On December 17,1937, the said T. Whittier Taylor filed his written entry of appearance and an answer to the cross complaint stating that he was a tenant of the East 40 acres of the land in question and that his lease would expire on the last day of February, A. D. 1938. On the same date the plaintiffs filed an amendment to the complaint setting forth specifically that they were each the owner of an undivided one-eighth interest in the real estate sought to be partitioned and that the defendant Samuel V. Jinkins, appellant herein, was the owner of the other undivided one-eighth interest. Also on said date the plaintiffs in the cause filed a motion to dismiss the cross complaint and to make T. Whittier Taylor an additional party defendant. On April 2, 1938, the appellant, Samuel V. Jinkins, filed a motion to strike the motion to dismiss cross complaint and a further motion to strike the amendment to the complaint. Upon hearing of said motions the court denied the motion to strike the amendment to the complaint, denied the motion to strike the motion to dismiss the cross complaint, and granted the motion of the appellees to strike the cross complaint. On the 9th day of April, A. D. 1938, a further hearing on the merits of the case was held and after the testimony was heard the court entered a decree of partition on the complaint and the amendment to the complaint filed herein. The decree for partition found the rights and interests of the parties, described the real estate and appointed commissioners directing them to make the division and partition of the said real estate. It is this decree which the appellant, Samuel V. Jinkins, seeks to reverse by this appeal.

Appellants principal complaint is that in a partition suit where the original complaint fails to name all the necessary parties or to properly describe, their interests, and a cross complaint is filed which does name all the necessary parties and properly describes their interests, a decree should be entered on the cross corn-plaint. In support of his contention he relies largely upon the cases of Winemiller v. Mossberger, 355 Ill. 145, and Jones v. Taylor, 261 Ill. App. 403.

In the Winemiller case the pleadings were extensive and covered a long period of time. In that case the amended bill was filed long after the amended and supplemental cross-bill. The original bill failed to name all the necessary parties, such as one of the heirs-at-law and owners of undivided interests in the land sought to be partitioned. One of the tracts of land was improperly described and the bill defective in other particulars. In such case it was necessary for the interested parties to file a cross-bill setting up the rights of the parties correctly and to properly describe the real estate in question. The burden of the litigation was caused by reason of the errors appearing in the original bill filed. Under such circumstances it was held that the court properly proceeded with the partition under the cross-bill even though the original bill was afterwards amended so as to properly name 'the parties and their interests.

In the Jones case, the court also held that the decree of' partition should have been granted upon the cross-bill and not upon the original bill because the latter was defective and accountable for the burden of the litigation.

In this case the allegations of the complaint were somewhat scant but they did set forth, in effect, that the seven plaintiffs were each the owners of an undivided one-eighth interest in the real estate and that the estate of their sister, Armilda Witherspoon, was the owner of the other undivided one-eighth interest. Samuel V. Jinldns was made a party defendant, although at the time the complaint was filed he had not yet received the administrator’s deed which conveyed the interest of the Witherspoon estate to him as the purchaser of the premises at the sale of real estate to pay debts.

The appellant also complains that T. "Whittier Taylor, being a tenant of a portion of the real estate, was a necessary party and a complete decree for partition could not be entered until his rights as a tenant were adjusted. However, the oral testimony of Oziah Finley states that he rented the premises to T. Whittier Taylor with the understanding* that as soon as the crop was harvested the lease expired; that said tenant’s crop was completely harvested at the time the suit was hied. Ho contradiction of this proof was introduced in evidence by Taylor or the appellant upon the hearing of the cause. "Under such circumstances, T. Whittier Taylor was not a necessary party to the partition suit.

The trial court elected to proceed upon the original complaint and the amendment thereto. The rights of all of the parties including those of the appellant were accurately and completely set forth in the decree. We are of the opinion that the court did substantial justice between all of the parties and that the appellant was not injured- in any particular by the entry of the decree. While his cross complaint did set up the rights of the parties more specifically and more in detail than the allegations of the original complaint still no necessary party was omitted and the rights of the parties were not in any manner changed from those set forth in the original complaint.

For the reasons advanced the decree of the lower court is hereby affirmed.

Affirmed.


author: Mr. Justice Hates

text:
    Floyd H. Kilgore and Ira Kilgore, Formerly Trading as Kilgore Implement Company, for the use of John Decre Plow Company, Appellee, v. State Bank of Colusa, Appellant. International Harvester Company, Appellant, v. John Deere Plow Company, Appellee.
    Gen. No. 9,177.

      Opinion filed April 24, 1939.
    James D. Baird, of Carthage, for certain appellant.
    Edward C. Mack, of Carthage, for certain other appellant.
    Edward S. Martin and O ’Harra, O ’Harra & Roeth, all of Carthage, for appellee.
   Mr. Justice Hates

delivered the opinion of the court.

This is an action in garnishment, brought by Floyd H. Kilgore and Ira Kilgore, formerly partners under the name of Kilgore Implement Company for the use of John Deere Plow Company, against the State Bank of Colusa, as garnishee, to subject six hundred five dollars and one cent ($605.01), deposited in the name of F. H. Kilgore, to the payment of a judgment recovered by John Deere Plow Company in the circuit court of Hancock county, Illinois, on May 20, 1935, against said Floyd H. Kilgore and Ira Kilgore, formerly partners. The International Harvester Company, by leave of court, was permitted to intervene as claimant- to the same, basing its contention upon two conditional sales contracts which it had entered into with Floyd H. Kilgore as its dealer, — the said International Harvester Company being manufacturers of farm implements. Said contracts provided that, the title to all goods shipped under said contracts with the right of repossession for default is reserved by the company until the purchaser has made full payment in cash for all goods and that prior to full settlement in cash, the purchaser shall have no right to sell or dispose of any goods delivered thereunder, except for value received in the ordinary course of trade and upon the express condition that prior to the delivery of any of said goods to a customer, the dealer shall secure from said customer a full settlement in cash or good and bankable notes, and that the proceeds of all resales shall be considered the property of the company in lieu of the goods so sold, and held in trust for it and subject to its order, until all sums due under said conditional sales contract have been fully paid as provided in paragraph 4 of said contract.

The intervenor further contends that the provisions in said conditional sales contracts are not only binding upon Floyd H. Kilgore, the purchaser, but also binding upon any judgment creditor of his, — in this instance the John Deere Plow Company.

It appears from the record that Kilgore deposited the moneys received by him from the resale of machínery which he acquired from the International Harvester Company to his own account in the Colusa Bank. He also deposited, in the same account, his individual funds, and the money he received in the sale of clover seeds, and from the sale of goods other than those purchased from the International Harvester Company. From time to time he wrote checks on this account, — some to the International Harvester; other checks for his individual business; his individual obligations. On March 15, 1935, Kilgore had in his account the sum of sixty-three dollars and thirty-five cents ($63.35), and on that date he paid the International Harvester Company of America ten dollars and ninety cents ($10.90) for a corn shelter. He then owed the company other moneys. On May 21, 1935, the date of the writ of garnishment, Kilgore was indebted to the International Harvester Company in the sum of sixty-five hundred ($6,500) dollars. At the time of the filing of the interplea, Kilgore was indebted to the International Harvester Company for six thousand five hundred fifty-eight dollars and seventy-seven cents ($6,558.77), for goods received from the International Harvester Company between November 1, 1934, and October 1, 1935. It is therefore impossible to state, whether or not the funds he withdrew from this account between the 13th day of March, 1935, and the 21st day of May, 1935, and which he paid to the International Harvester Company, aggregating four thousand three hundred seventy-three dollars and thirty-nine cents ($4,373.39), were for the six particular items mentioned in the interplea, or whether they were the proceeds from the sale of other property. He had on deposit at the time the writ was served six hundred five dollars and one cent ($605.01). The six particular items mentioned in the interplea were sold for eight hundred fifty-three dollars and one cent ($853.01). This $853.01 was intermingled with his individual funds, and funds arriving out of the sale of clover seed and other goods not purchased from the International Harvester Company, so that it is impossible fo identify the $605.01 as the proceeds of the resale of the six articles set up in the interplea.

It appears from the record that Kilgore had had considerable dealings with the International Harvester Company over a long period of time and involving several thousand dollars. During this time a representative of the International Harvester Company made regular calls on the dealer and he made the International Harvester Company a large number of payments by check, all from this same checking account which was in his individual name, so the reasonable deduction is that the Harvester Company had knowledge of how Kilgore was handling the various transactions.

In the case of Allis Chalmers Mfg. Co. v. Moore, 31 F. (2d) 50, it appears in that case that the goods were sold by the bankrupt; the proceeds received and used by him as his property with the knowledge, consent and approval of the petitioners.' The court held that the petitioners thereby waived any right which it might have to or lien on the proceeds received by the bankrupt and sale of the said goods, even though it appears the agent testified that it was the understanding between him and the bankrupt at the time of the sale that the proceeds should be held by the bankrupt for the petitioner. The court held this as wholly inconsistent with the acts of the parties, and if there was any such agreement, it was clearly waived and abrogated by their subsequent conduct.

Although section 20, ch. 121½ of the Statute on Sales [Ill. Rev. Stat. 1937, § 20; Jones Ill. Stats. Ann. 121.24], provides for the conditional sale of specific goods so as to reserve the title to the chattels in the vendor until the purchase price is paid, there is nothing in this statute that provides for following these funds and earmarking them after a resale, and section 20 is limited by section 23 of the same act, which provides if the property is resold without the consent of the vendor, a purchaser on the resale is protected, if the vendor has done any act precluding him from denying the seller’s title. Legislature makes provisions, under this section, to protect an innocent purchaser where the real owner has led the purchaser to believe by his conduct that the dealer had the right to sell.

It cannot be held that when the vendor consents to a resale in the ordinary course of a dealer’s business, and the vendee is given the indicia of ownership; sells the property to his customer; passes title to him; is permitted by the vendor to retain the proceeds in his own hank account and treat the same as his own, that under the provisions of the conditional sales act he can then hold those proceeds upon the theory of a reserved title hereto or a trust in the same, as against a judgment creditor of the vendee, levying a garnishment writ on the same.

The only language in the conditional sales contract in which the International Harvester Company base their claim for the creation of a trust is the following: “That the proceeds of all resales shall be considered the property of the company in lieu of the goods so sold and held in trust for it, and subject to its order as provided in paragraph four hereof, until all sums due under this contract have been fully paid.” The language in itself is uncertain and ambiguous. In the first instance, it provides that the proceeds of all resales shall be the property of the company. Up to this point, there is no separation of the legal and equitable title, but it simply provides for exclusive ownership in the company. The next clause, “in lieu of the goods so sold and held in trust,” the words “so sold” of course modify goods, and “held in trust” is open to a double construction. First, “goods held in trust” as -descriptive of the goods before the sale, and second, the proceeds of the sale held in trust. It further appears that these conditional sales contracts are on regular forms drawn by the International Harvester Company.

The declaration of trust must make reasonably certain its material terms so that a court may enforce its execution. 65 Corpus Juris 270, sec. 50'. These terms include first, the subject matter or property embraced within the trust; second, the beneficiaries or persons in whose behalf the trust is created; third, the nature and quantity of the interests which they are to have; and fourth, the manner in which the trust is to be performed. If any of these necessary elements are not described with certainty, no trust is created. Marble v. Marble’s Estate, 304 Ill. 229, 235.

To constitute a valid trust of personal property there must be a declaration by a person competent to create it, a trustee, designated beneficiaries, a certain and ascertained object, a definite fund or subject matter, and its delivery or assignment to the trustee. Gurnett v. Mutual Life Ins. Co., 356 Ill. 612, 618.

The contention that a trust results from the meager language used in the contracts in question, when considered in connection with the facts, incidents and circumstances in this case, is a strained and illogical construction of the law governing trusts, and an effort to extend the provisions of the statute providing for conditional sales contracts unreasonably beyond its defined limits.

In its simplest elements, a trust is a confidence reposed by one person called a trustee, for the benefit of the other called a cestui que trust, with respect to property held by the former for the benefit of the latter. Although a trust is not considered a contractual relation, it may arise out of a contract, and it may arise by implication no less than by expressed words, but expressed trusts and trusts implied from the language of the instrument must inherently possess the legal specifications which will enable a court to decree its administration in accordance with the wishes of the settlor, who alone has the power to assent to it and to declare it. The primary object of a trust being to confine the powers of the beneficiaries and to deprive them of any power to dispose of and manage the trust. 65 Corpus Juris 218, Sec. 7.

Upon the most casual consideration, it is readily apparent that the contracts in question meet none of the cardinal principles laid down by the law governing expressed trusts. To hold that a valid trust exists under the contract and circumstances in this case would invade a wholly new field for the law. Every manufacturer and wholesaler in selling merchandise to retail dealers that was for resale to the consuming public, would have a precedent whereby they could rubber stamp on their invoices or delivery receipts the words, “on resale, proceeds to be held in trust.” The law would then have the task of attempting to follow these proceeds into the merchant’s bank account and separate them into the various trust accounts. This is a new and unknown field in law and commerce, and would lead to much confusion and an unwarranted extension and annexation to the law of governing conditional sales contracts that is for the legislature to extend rather than the courts.

The policies of the courts of Illinois have been to guard zealously against secret liens not expressly provided for by the statutes. For the reasons herein stated, the judgment of the circuit court is hereby affirmed.

Judgment affirmed.


author: Mr. Justice Stone

text:
    D. N. Schultz et al., Appellees, v. Harry L. Gilbert, Trading as Gilbert Truck Lines, Appellant.

      Opinion filed March 13, 1939.
    Joe Crain, of Mound City, and C. S. Miller, of Cairo, for appellant.

      Joseph O’Sullivan, of Mound City, J. Kelly Smith, of Mounds, and Asa J. Wilbourn, of Cairo, for appellees.
   Mr. Justice Stone

delivered the opinion of the court.

In this case plaintiffs, eight in number, joined their separate complaints in one action against the defendant, charging him with the negligence of his servant in operating his truck so as to injure the plaintiffs. The collision which brought about the injuries occurred on bond issue Route 2 in Pulaski county, Illinois. The suit was brought in the circuit court of Pulaski county.

The facts are not particularly material here, as this case calls for a construction of section 66 of the Practice Act [Ill. Rev. Stat. 1937, ch. 110, § 190; Jones Ill. Stats. Ann. 104.066], which is as follows:

“In all civil actions each party shall be entitled to challenge five jurors without showing cause for such challenges. Where there is more than one plaintiff or more than one defendant, the judge shall allow additional challenges not to exceed three in number to each additional plaintiff or defendant without showing cause.”

On the examination of the jurors, a juror by the name of Raymond Redcloud was tendered by the plaintiffs to the defendant and on his examination stated that he had been employed by the plaintiff, Alfred Shumaker, and that his employment would cause him to lean towards the side of Alfred Shumaker; that he would be biased and prejudiced in the trial of the cause. He was challenged for cause and the court examined him and after having explained that it was his sworn duty to disregard any feeling of prejudice and try the case upon the law and the evidence, asked the juror if he would do that, and the juror said he would, whereupon the challenge was overruled. Further examination was had in the presence of the reporter wherein the same evidence was repeated and he again admitted his prejudice, and stated that it would take more evidence for him to return a verdict against Shumaker than it would for him, and that the way the most evidence was, was the way he felt he should go. The challenge for cause was renewed and denied and the defendant was obliged to exhaust his peremptory challenges.

In this case the defendant was not a resident of the county and the plaintiffs were all residents of the county and were known to nearly every one of the jurors. The plaintiffs exhausted their five challenges and were permitted additional challenges by the court, under the court’s interpretation of section 66 of the Practice Act. These were allowed without their being assigned to any particular plaintiff. The defendant having used five peremptory challenges also challenged the juror, Lewis Brown, a personal acquaintance of most of the plaintiffs, without assigning cause. This challenge was denied by the court under the holding that additional challenges were not allowed to each side, but only for each additional plaintiff.

The jury thus impanelled found the defendant guilty as to five of the plaintiffs and assessed various damages for each of them. It found the defendant not guilty as to the other three plaintiffs. All were damaged in the same collision and all were subject to the same set of facts as shown by the proof.

The Practice Act provides that the act shall be liberally construed to the end that justice may be done according to the substantive rights of the parties. We are of the opinion that the word “to” in the foregoing section of the act refers to the ratio and that the legislature did not intend that where there are eight plaintiffs they should be entitled to twenty-one extra peremptory challenges and that the defendant would be entitled to none. On the other hand, we are of the opinion that that section insofar as it provides the extra peremptory challenges for one set of parties, because of numbers, also means that the other set, either singly or in numbers, are entitled to the same ratio of peremptory challenges. An analogous case is found in the procedure in criminal trials where each defendant, however many there are, is entitled to the maximum of peremptory challenges. The State, on the other hand, is entitled to an equal number of peremptory challenges that is awarded to all of the defendants. This is done in the interest of justice and the wisdom of it is easily seen. Imagine a case where there are one hundred, defendants, each entitled to ten peremptory challenges ; the aggregate is a thousand; then suppose the people are entitled to but ten. The defendants would thereby be enabled almost to select the jury to their liking to the great detriment of the people represented on the other side. We see no difference in principle. In this case, if there had been one hundred plaintiffs, under the ruling of the court they would have been entitled to three hundred and two peremptory challenges as against five for the defendant. The injustice is obvious. This case presents almost that exaggerated state of facts. Here is a defendant in a strange county where he knew no one; the plaintiffs were all residents of Pulaski county. He was allowed five peremptory challenges and the other side might have been allowed twenty-six under the trial court’s construction of the statute. In this case the injustice appears. The defendant was forced to exhaust his last peremptory to get rid of a venireman who had disqualified himself. This particular venireman was asked if he had a prejudice and he said that he had, and he gave the reasons why. Upon being asked the stock question if notwithstanding his prejudice he could try the case fairly and impartially according to the law and the evidence, he answered that he could. A reporter was brought in and the same procedure was gone through and the same state of mind exhibited by the venireman. The court allowed him to sit. This was within the sound discretion of the court, and the court was probably in the best position to judge, but it is apparent that the defendant did not want this venireman and he was forced either to take him or to exhaust his last peremptory challenge, which in the last instance he did. Then when he undertook to exercise a peremptory challenge on another venireman the court held that he was entitled to none and so he had to take a jury against his wishes and obviously against his better judgment.

The right of peremptory challenge is a right to exclude jurors, not to select them. It enables a party to say who shall not try his case, but it does not enable him to select the particular jurors by whom he wishes his case tried. In the instant case defendant was deprived, by the ruling of the trial court, of his right to say who should not try his case; and the same ruling created a possibility for plaintiffs to select the veniremen they desired to pass on the merits of their respective cases.

A case may well be imagined in which an unscrupulous plaintiff joins a number of “phoney” plaintiffs for the sake of increasing his power to select the jury he wants by use of his extra peremptory challenges, and then when that end has been accomplished, withdraw such fraudulent plaintiffs. This would be a fraud upon the defendant and the court, the avenue to which would seem to be opened by the statute itself.

To uphold the construction placed on this section of the Practice Act by the trial court would grant benefits and advantages to one class and impose burdens and penalties on another class in the same action. Such a construction would render the act obnoxious to the constitution. Where from particular language an interpretation can be given which would permit an equal enjoyment of benefits, or an equal imposition of burdens, such a meaning must be adopted.

We think that the ruling of the court in pursuance of its construction of the above section did not tend to promote justice. We are rather of the opinion that in this particular case it made a fair and impartial trial to defendant highly improbable.

As this case must be reversed because of the erroneous construction by the trial court of this section, we are not under obligation to comment, further on other happenings at the trial. However, since the issue must be tried again we call attention to what seems to us manifest errors, in order that the same may be avoided at the next trial. We are not reversing this case because of the inconsistency of the verdicts, but it seems strange to us that three of these plaintiffs who proved damages,- — -the evidence in some instances uncontradicted, should be denied the right to recover after the defendant was found guilty, while five of the others received substantial damages, under the same state of facts, particularly is this so with reference to the child in the front seat of the automobile, — a child who was incapable of contributory negligence. These facts tend to show that this case or these cases did not have the consideration by the jury which law and justice demand.

Unfortunately the right, under the Practice Act, to join an unlimited number of plaintiffs in one case does not carry with it the knowledge in the jury how to handle the intricate conditions which such a proceeding imposes upon the jury. It is, therefore, important that a jury in such cases should be clearly and accurately instructed.

The court gave to the jury on behalf of plaintiffs the following instructions:

“In estimating the plaintiffs’ damages, if the jury find for the plaintiffs, or either of them, it is proper for the jury to estimate the effect of the injury in the. future upon such plaintiffs ’ health, if any, as well as the effect it has had upon them already, and the bodily pain and suffering, if any, endured by them, including the necessary expense and all damages, present and prospective, which will be a necessary result of the injury, if any, inflicted by the defendant upon the plaintiffs, so far as shown by the evidence.

“If, from the evidence of the case and under the instructions of the Court, the jury shall find the issues for the plaintiffs, or either of them, and that the plaintiffs have sustained damages as charged in the complaint, then, to enable the jury to estimate the amount of such damages, it is not necessary that any witness should have expressed an opinion as to the amount of such damage, but the jury may themselves make such an estimate from the facts and circumstances in proof, if sufficient such facts are in proof, and by considering them in connection with their knowledge, observation and experience in the business affairs of life.

“The Court instructs the jury, that if they shall find the defendant guilty, it will then be their duty to assess the plaintiffs’ damages respectively at such a sum as the evidence may show, if anything, which they respectively have actually sustained as the direct and proximate result of such injury, taking into consideration their loss of time, their pain and suffering, their necessary and reasonable expenses in being cured or attempting to be cured, if such facts are shown by the evidence; and if the jury shall believe, from the evidence, that the plaintiffs or any of them are permanently injured and such injuries are incurable, they should take that into consideration in assessing such plaintiffs’ damages.” These instructions were all erroneous and are subject to the criticisms levelled at them. They treat all the plaintiffs as if they were one; they virtually tell the jury if one may recover they all may. They place as elements of damages some things that some of the plaintiffs could not recover for under the issues, pleadings and evidence in this case. They give the right to the plaintiffs,— any or all of them, to recover for expenses without saying what expenses. They leave it so that if any one is permanently injured they all may recover for permanent injuries. They leave it to the jury to speculate on the amount of damages without any evidence covering certain elements, saying that no opinion of such elements is necessary to be proven. Doctor bills, hospital bills, loss of services are all capable of proof to a mathematical certainty and no jury is entitled to speculate on them, although they are not compelled to separate damages as to injuries in making up the amount due because of injuries. They make no limit to what pain and suffering may be recovered for. Such instructions have been universally condemned. Chandler v. Gifford, 223 Ill. App. 486; Lyman v. Chicago City Ry. Co., 176 Ill. App. 27; Harley v. Aurora, E. & C. Ry. Co., 149 Ill. App. 339; Western Union Telegraph Co. v. Woods, 88 Ill. App. 375; Hopkins v. Whelan, 217 Ill. App. 248.

We realize that it is not easy to make clear to a jury all the issues involved in this lawsuit. However, the same act which allows innumerable plaintiffs to be joined in one law suit, also gives the power to the court to sever the issues when in the interest of justice such severance seems expedient.

The judgments of the circuit court are reversed and the causes remanded to that court for a new trial to be conducted in harmony with the views herein expressed.

Judgments reversed.


author: Mr. Justice Huffman

text:
    Troy L. Long, Receiver of First National Bank of Sheridan, Appellant, v. Farmers and Merchants State Bank of Sheridan et al., Appellees.
    Gen. No. 9,384.

      Opinion filed May 1, 1939.
    George V. B. Weeks and John H. Armstrong, both of Ottawa, for appellant.
    C. B. Chapman, Robert Carr, R. A. Green, Butters & Berry, Harold R. Danger and Hibbs & Pool, all of Ottawa, for appellees.
   Mr. Justice Huffman

delivered the opinion of the court.

The First National Bank of Sheridan, Illinois, assumed the deposit liabilities of the Farmers and Merchants State Bank of Sheridan, by contract entered into on June 22, 1931. Pursuant to the contract, the State Bank delivered to the National Bank its assets, both real and personal, by proper conveyances and assignments, and at such time ceased to do business.

The National Bank suspended business on March 4, 1.933, under the moratorium then declared, and never reopened for business. The present receiver of the National Bank filed this complaint early in 1936, seeking to enforce constitutional liability against the stockholders of the State Bank to recover for the deficit claimed to exist after liquidating the assets of the State Bank and paying its deposit liabilities. Answers thereto were filed, denying that the liquidation contract between the two banks was approved by the auditor of public accounts as provided by section 15 of the Banking Act [Ill. Rev. Stat. 1937, ch. 16½, § 15; Jones Ill. Stats. Ann. 10.16]; also alleging that the National Bank did not perform its contract, in that it did not pay all deposit liabilities of the State Bank and did not liquidate certain bonds that were turned over to it, which bonds depreciated in value until they have become almost worthless. Upon hearing, the court dismissed the complaint for want of equity and appellant prosecutes this appeal.

Appellees urge that the contract in question was a liquidating contract as contemplated by section 15 of the Banking Act; that it was made without the approval of the auditor of public accounts, as required by said act, and therefore void. Appellant insists that the contract between the banks was not a liquidating contract such as contemplated by said section 15 of the Banking Act, but that the National Bank is merely a creditor of the State Bank for money advanced by it to pay the liabilities of the State Bank, and that therefore the State Bank is the debtor of the National Bank for any deficiency existing between the assets so transferred and conveyed and the liabilities assumed. From the oral argument had in this case and the briefs filed, it is rather apparent that the action of the trial court in dismissing the suit was in view of the provisions of thé above section of the Banking Act, and the holdings thereunder such as in the Continental Ill. Nat. Bank & Trust Co. v. Peoples Trust & Savings Bank, 366 Ill. 366.

It is claimed by appellant in its bill that it assumed a total liability on behalf of the State Bank of $76,405.57; that its receipts from the assets were $42,530.75; that a deficit exists of $33,874.82; that the sum of $14,016.58 is due on account of charges made for interest and expenses incident to such liquidation; and that this makes a total due to appellant from the State Bank of $47,891.40; This is the sum claimed by appellant to be due it as a creditor of the State Bank, and upon which it predicates the stockholders’ liability. It appears that there is approximately $1,300 of deposits assumed by the National Bank from the State Bank, which were never paid. It further appears that bonds of the par value of $33,832.12 were delivered to the National Bank by the State Bank pursuant to the contract between them, and that certain of such bonds then had a market value of $18,000; that the National Bank did not liquidate these bonds and they have depreciated in market value until they are now worth approximately $3,000. It is claimed by appellees that appellant did not carry out and fulfill its contract, and that a substantial performance on its part was necessary to the maintenance of this suit.

The complaint is predicated on the theory that the National Bank is creditor of the State Bank for money advanced by the former to pay the liabilities of the latter. The complaint alleges the transferring to the National Bank of all the assets of the State Bank, upon condition that the National Bank assume and agree to pay the deposit liabilities of the State Bank. It is -then alleged that the National Bank did not purchase any of the assets of the State Bank, but that the transfer was solely for the purpose of securing the National Bank against loss on account of the liabilities assumed, and that the relationship of debtor and creditor existed between the two banks. Appellant asks that the amount due it from the State Bank be fixed; that the stockholders of the State Bank and the extent of their liability be fixed; and that a receiver be appointed to receive and collect the money from such stockholders upon their constitutional liability, for the benefit of appellant. As above stated, appellant claims that the transaction had between the two banks in the transfer and conveyance of the property and assets of the State Bank to it, was for the purpose of giving security to appellant bank for the repayment of money advanced by it to discharge the liabilities of the State Bank. However, the agreement between the two banks upon which the bill is predicated, discloses beyond question that every asset of the State Bank was conveyed and transferred to the National Bank. The “banking house and site,” of the State Bank were conveyed to appellant. It was provided by the contract that the State Bank should retire from business immediately upon the execution of the agreement and should transact no further business except such as necessary to carry out the agreement between it and appellant, and to bring about a surrender of its charter. The State Bank never resumed business, and by virtue of its contract with appellant, was left devoid of anything with which a banking corporation could do business. Its records and books of accounts were turned over to the National Bank, together with all its property and assets. It .was no longer a going concern, and any corporate functions that might be possible for it to do following this agreement could include nothing but steps taken toward a liquidation. This is not only the effect and result of the contract, but it is a part of the express terms thereof. The National Bank agreed to bring about the liquidation by the unconditional assumption of all the liabilities of the State Bank to its depositors. Therefore, we are unable to escape the conviction that liquidation of the State Bank was the thing sought and intended to be brought about by the contract, and was in fact the motivating cause for the execution thereof. It was the purpose of the agreement. Except for the liquidation of the State Bank by appellant, there was no reason or cause for the contract to be made.

Section 15 of the Banking Act as amended in 1929, permits the liquidation of a bank by a contract in writing, to be first approved by the auditor of public accounts, whereby one bank may assume the debts and demands against the other bank. The purpose of the amendment of 1929 to this section of the act, was to create a statutory sanction to assumption contracts such as we find in this case. The auditor of public accounts has the facilities for determining the financial condition of banks, and thus has the means of determining the advisability of contracts of this character. In this manner he may determine from experience and the information available, whether the calculated assumption of liabilities is advisable on the part of the assuming bank, or whether such action would jeopardize the interests of the depositors and creditors of the assuming bank. In such case it is better to permit the depositors and creditors of the failing bank to sustain their loss, than by an unwise merger or assumption to bring about a corresponding loss and injury to depositors and creditors of both a failing bank and the assuming bank. Thus it has been provided that such contracts, before they shall become legally effective, must be approved by the auditor of public accounts, and it has been so held in the recent case of Continental Ill. Nat. Bank & Trust Co. v. Peoples Trust & Savings Bank, supra. Subsequent conduct of the parties acting under such an agreement cannot serve to render it effective under the statute, unless it has first been approved by the State auditor.

As stated, the contract in this case stripped the State Bank of every vestige of property it had and of every power bestowed upon it as a banking corporation. It was left with no means of ever paying the debt or any interest, as it had no way of making a dollar. The import of the opinion in the Continental Ill. Nat. Batik ease, supra, was that since the contract in that case was ultra vires, the Continental Bank therefore was not a creditor of the Peoples Trust within the meaning of sec. 6 of art. 11 of the Constitution. It would appear that the contract in this case does not vary fundamentally from the contract in that case. It is very similar. Its purpose and object was the same. The manner to be employed for carrying out the terms thereof is practically the same. The situation of the contracting parties is the same. The conditions causing the parties to so act were the same. In other words, it is an attempt by a solvent bank to take over a failing bank for the purposes of liquidation.

The proceedings of the State Bank with reference to the contract, refer to the transaction as a merger of the two banks, in some instances, and as a sale of the State Bank to the National Bank, in other instances. The contemplated transaction is referred to as a sale, in correspondence between the State Bank and the bank examiners. As stated in American Nat. Bank of Mt. Carmel v. Holsen, 331 Ill. 622, 632, if the transfer and conveyance of the assets and property of the State Bank was an outright sale to the National Bank, in consideration of the assumption of its liabilities, then there was no debt left upon which liability of stockholders could exist. But appellant does not accept this version of the matter and insists that it is a creditor of the State Bank, and seeks to maintain its rights as such.

Appellant urges that the contract between it and the State Bank received the approval of the auditor of' public accounts as provided by section 15 of the Banking Act. Appellees urged that no record appears showing the approval of this contract by the auditor; that his approval is an official act of his office and must be made to appear in an express manner, which will remain as a permanent record and memorial of such official act.

Representatives of the National Bank examiner’s office of Chicago, appear to have been important factors in the transaction. Representatives of the State auditor’s office also knew of the proposed action contemplated by the two banks. Appellant urges that since the State auditor’s representatives had knowledge of the negotiations, that the auditor was thereby charged with such knowledge and that his silence amounted to an acquiescence and approval of the plan of liquidating the State Bank, as evidenced by the contract.

The word approval has different meanings depending upon the manner in which it is used, and the subject matter to which it is to be applied. The approval of the State auditor in his official capacity is required to such contracts. The terms of the statute necessarily import the exercise of discretion and judgment on~the part of the auditor in these matters. Under such circumstances, the word approval means more than a mere ministerial act. It involves the exercise of judgment and discretion on the part of such officer, and he in his official capacity must make known his approval with absolute certainty by some affirmative act that is visible, definite and permanent, by his written, signed declaration, so that the same may become and remain an official record of his office. No such form of approval appears in this case.

The fact he had knowledge of the proposed plan or agreement, cannot of itself constitute approval. It is the plain intent of the statute that his power to approve such contracts implies a power to disapprove or to withhold approval. Therefore, he must have knowledge of such an agreement before he could do any of the above.

We cannot agree with appellant’s contention in the above respect. Statutory requirements regarding the approval of an executive officer of the State, when such act involves the exercise of judgment and discretion, means more than the unexpressed mental acquiescence of such officer as an individual. It means that such officer in his official capacity has considered the proposed act and determined that it was proper, and he must make such fact known by a final, direct, affirmative action, signifying his approval by his signed declaration, in his official capacity. Official acts such as here required, cannot depend for decision upon the memory and testimony as to what the unexpressed thought of a public officer was at a former time. The auditor, who was in office at the time in question, cannot now act, and the present auditor cannot act because the entire matter transpired prior to his term of office. The act of approval as contemplated by the statute in this case, imports some outward and favorable indication of the exercise of the auditor’s judgment and discretion, so that his determination in such regard may become a permanent record, and not remain a matter of conjecture.

The public interest is involved in such matters, as well as the funds of the creditors of the respective banks. The statute definitely requires the approval of the auditor of public accounts before such an agreement can become valid and effective, and a formal compliance with such requirement is necessary. If each such venture could cause a relaxing of the statute, depending upon its particular needs, in order to render same effective, the plain intent of the act would be destroyed.

Appellant having assumed the liabilities of the State Bank by the contract, it must necessarily be considered there are no other creditors, and the complaint does not aver any. Under the holding in the Continental Bank case, supra, we are of the opinion that appellant is not such a creditor as will permit the bringing of this suit. The decree of the trial court is therefore affirmed.

Decree affirmed.