author: Mr. Justice Haul

text:
    Frank C. Rathje, Appellant, v. Clarence Serb et al., Appellees. Committee for the Protection of the Holders of the Foreman Trust and Savings Bank et al., Appellants, v. Clarence Serb et al., Appellees.
    Gen. No. 38,501.
    Opinion filed November 4, 1936.
    Levinson, Becker, Peebles & Swirbn, Crowe, Gorman, Sheridan, Mulder & Wesselink and John C. Tucker, all of Chicago, for appellants; Benjamin V. Becker and Don M. Peebles, of counsel.
    McInerney, Epstein & Aevey, of Chicago, for certain appellee; John L. McInerney, Louis M. Mantynband and Sidney R. Zatz, all of Chicago, of counsel.
    Shulman, Shulman & Abrams, of Chicago, for certain other appellee; Meyer Abrams, of counsel.
   Mr. Justice Haul

delivered the opinion of the court.

There are two appeals here from an order entered in the superior court of Cook county on July 13, 1935.

This opinion will cover both appeals. The order referred to, together with the court’s finding, is as follows:

“This cause coming on again to be heard on the petition of Frank C. Rathje, Successor Trustee, the petition of the Committee for the protection of the holders of the Foreman Trust and Savings Bank as Trustee, First Mortgage Participation Certificates, and upon the objections thereto, and the prayer therein for the removal of a Successor Trustee and upon the evidence heretofore taken in open court, and the arguments of counsel, which were considered and held under advisement of the Court to this date, and the Court having examined the pleadings and the records in said cause and having given due consideration to the matters pending before it, Finds:

“(1) That Frank C. Rathje was appointed Successor Trustee by decree of this Court and that by the terms of the decree it was provided as follows:

“ ‘Frank C. Rathje, as Successor Trustee, shall act in said capacity under supervision of this Court, and the Court retains jurisdiction of the cause for the purpose, among other things, of supervising the management, control and conduct of the affairs of the trust estate, and the Court further retains jurisdiction of all the res thereof. Frank C. Rathje, as Successor Trustee, under direct supervision of this Court shall continue to manage, control and direct the affairs of the said trust estate until the further order of this Court, and this Court retains jurisdiction of this cause for the purpose of determining each and every question which may arise under the terms of said indenture of trust and specifically for the purpose of determining the questions presented by the cross bill of Committee heretofore filed in this cause, and all other questions relating to the sale of the res of said trust estate.’

“(2) Thereafter the said Committee filed its petition for approval of plans of reorganization and said Successor Trustee filed his application to sell the trust assets pursuant to said plan of reorganization, and certain beneficiaries of the trust appeared in court, objected to the plans, and sought the removal of the Successor Trustee for malfeasance and misfeasance in office and also to enjoin the Committee from carrying out its plans.

“(3) Among the charges made against the Trustee, it was called to the attention of the Court the fact that on January 17,1933, a decree was entered finding certain parties guilty of fraud, and decreed and adjudicated that the Foreman Trust and Savings Bank in its corporate capacity, and A. G-. Becker & Co., the issuing house, were severally obligated to reimburse and account to the Successor Trustee for the benefit of the trust estate the principal amount of $418,500.00, together with interest on the several trusts • in the respective amounts of $42,500.00, $122,500.00, $67,-500.00, $186,000.00, making a total of $837,000.00, less credits for interest on funds collected to be ascertained upon a final accounting; that thereafter the defendants prosecuted an appeal, which was later dismissed, and the Successor Trustee executed a release of error, and thereafter on July 12, 1933, the Successor Trustee and the Committee joined in a consent decree to vacate the former decree, and to release the said bank and A. G-. Becker & Co. from the foregoing obligations upon a pretended settlement, and obtained fees by virtue of the last decree in the amount of $63,000.00, but that the objectors contend that the second decree was a nullity due to the fact that the Court was without jurisdiction. after the entry of the final decree to modify or vacate its decree, and that the Trustee was without authority to release anything on behalf of the beneficiaries of the trust, and its acts were therefore null and void.

“(4) That while the matter was pending under the consideration by this court, and while said Successor Trustee acted as the officer of this Court under its exclusive jurisdiction, and after he and the Committee have both invoked the jurisdiction of this court to consider the plan of reorganization for the purpose of depriving this court of its jurisdiction and to remove the res from the control of the court, the said Committee and Successor Trustee without the consent and approval of this court, filed their petitions in the District Court of the United States for the removal of the trust estate from this Court for the purpose of depriving it from passing upon the merits of the plans submitted to it, and they also sought to obtain the approval of the same plan in the Federal Court, and to escape thereby from the adjudication on the merits thereof by this Court.

“(5) That the Successor Trustee, the officer of this Court, did thereafter appear in the District Court of the United States, and presented his petition for an injunction to restrain this Court from proceeding against the officer who was appointed by it, and under whose supervision and control he was, and he thereby interfered with the due administration of justice, and tended to place this Court into disrepute.

“ (6) That in order to protect the jurisdiction of this Court as well as its dignity and to preserve the trust property it is necessary to remove the Successor Trustee and to appoint a Successor in his place.

“It is therefore ordered, adjudged and decreed that Frank C. Rathje be and is hereby removed forthwith as Successor Trustee of the trust described in the decree heretofore entered in this cause, and the Trust Company of Chicago be and is hereby appointed Successor Trustee under the same power and authority as was heretofore vested in said Frank C. Rathje as Successor Trustee under the decrees heretofore entered in this cause, and the said Successor Trustee upon the filing of the acceptance and a bond in the sum of $100,000.00 may take any and all steps necessary for the purpose of enforcing the terms of the original decree, and the said Frank C. Rathje,, his agents and attorneys, be and are hereby directed to forthwith deliver to the Successor Trustee all of the trust property of every nature and description, and to file a final account within 20 days from the date hereof, and the Court reserves jurisdiction to pass upon such final account and to thereafter release him from his bond.”

Appellants seek the reversal of this order.

It is stated in the brief of appellants that the order appealed from was entered on the court’s own motion. This statement is not contradicted, and in view of the fact that nothing appears in the record to the contrary, we will assume that such is the fact.

As stated, two appeals were taken from this order. They are numbered 38,501 and 38,529 in this court. By order of this court, the two appeals have been consolidated for the hearing. A motion to dismiss the appeals was made by the Trust Company of Chicago, the successor trustee appointed by the court in the order hereinbefore set forth. This motion has been reserved to the hearing. In case No. 38,501 in this court, the notice of appeal was filed by William T. Bruckner, Burt C. Hardenbrook, A. K. Selz and David B. Stern, described as the Committee for the protection of the holders of the Foreman Trust & Savings Bank, as Trustee, First Mortgage Participation Certificates, In case No. 38,529 in this court, the notice of appeal was filed by Frank C. Rathje.

On the 1st day of August, 1927, an instrument described as “An Indenture of Trust” was entered into between the Foreman Trust & Savings Bank and A. Gr. Becker & Co. As shown by the record, the substance of this agreement is that the Foreman Trust & Savings Bank, as trustee, agreed to receive certain funds from A. Gr. Becker & Co., and to invest such funds in notes secured by first real estate Mortgages on improved real estate in the county of Cook and State of Illinois. By the terms of this agreement, certificates were to be issued by the trustee indicating certain stated beneficial interests in these notes and mortgages, which were to be sold to the general public, and these certificates so issued, as stated, were to be and were secured by first mortgages to be purchased by the trustee. In pursuance of the contract referred to, A. Gr. Becker & Co. deposited with the Foreman Trust & Savings Bank, in three separate series, the sum of $6,000,000. A large amount of these certificates were issued and sold to the general public. Defaults were made in interest payments due on these notes, and a bill was filed in the superior court.of Cook county by certain certificate holders, which charged that the Foreman Trust & Savings Bank, and others named, were guilty of misconduct. The bill sought an accounting, the removal of the trustee, and the appointment of a successor trustee. The agreement between the Foreman Trust & Savings Bank and A. Gr. Becker & Co., upon which this whole proceeding is predicated, contains the following provision:

“Anything in this Indenture contained to the contrary notwithstanding, the holders of a majority in amount of the Certificates then outstanding of the series for the security of which said securities are pledged shall have the right to direct and to control the method and place of conducting any and all proceedings taken under or subject to this Indenture with respect to said securities or the enforcing of the rights and remedies relating to such series.”

By a decree entered on January 17, 1933, it was ordered that the Foreman Trust & Savings Bank be removed as trustee, and that Frank C. Bathje be appointed as successor trustee. The record indicates that thereafter on July 12, 1933, by agreement of the parties, a second decree was entered in the cause which reaffirmed the appointment of Bathje as successor trustee, and provided for the settlement of certain matters which, in the original decree, had been left open for an accounting. By each of these decrees, the court ordered:

“That Frank C. Bathje be, and he hereby is, appointed Successor Trustee with all the rights, title,, powers, duties and discretion vested in the Trustee under the terms and provisions of said written agreement or Indenture of Trust dated as of August 1, 1927.”

It is stated, and it seems not to be denied that prior to the filing of the original bill in this cause, more than 95 per cent of the certificate holders in number and amount had deposited their certificates with a committee consisting of Burt 0. Hardenbrook, William T. Bruckner, A. K. Selz and David B. Stern, with the power to act for the benefit of all the depositing certificate holders under the terms of the original agreement between A. Gr. Becker & Co. and the Foreman Trust & Savings Bank.

Subsequent to his appointment as successor trustee, Bathje had made various reports to the court of his acts and doings as such trustee, and he had prayed for and received orders from the court as to his course of conduct and procedure in these matters. Thereafter, this committee apparently concluded that the trust could be more properly and effectively reorganized under section 77-B of the Federal Bankruptcy Act, and accordingly directed the successor trustee to file a petition in the United States Court on May 13, 1935, for reorganization under the provision of that act. Such a petition was filed by the trustee in accordance with these directions. Thereafter, and on May 14, 1935, the judge of the superior court of Cook county who had entered the order appointing Eathje successor trustee called the parties before him, including Eathje, and after examining Eathje, entered the order for his removal as successor trustee, because he had filed this petition in the Federal court without leave of court, and the court appointed the Trust Company of Chicago, trustee, as indicated by the order appealed from.

Briefs are filed here by two “appellees.” One of them is Vernon Tetzke, and as to him, the abstract contains the following:

“Petition alleges that the Successor Trustee and the Committee have combined to carry out a reorganization plan which will deprive the certificate holders of the true value of their securities, and is a part of a scheme of the Committee to control the property of the Trust for'a long period of years; that the Trustee is aligned with the Committee and is proposing to sell the property at less than its fair value, and is not performing his duties; and prays for leave to file his petition and intervene, for an appraisal of the property, fixing of an upset price by the Court, that the Trustee, be directed to bid the upset price at sale; and for an audit of the books of the Trust.”

The abstract indicates that the answer of the ‘1 committee for the protection of the holders of the Foreman Trust & Savings Bank, as trustee, First Mortgage Participation Certificates,” to this petition is as follows :

“Answer denies any combination or conspiracy with the Trustee; alleges that it has cooperated with the Trustee in the management of the property; states that the outstanding taxes and difficulty in financing-makes a reorganization necessary; alleges that no control is retained by the Committee under the plan of reorganization; alleges that the Successor Trustee is without power or authority to purchase the assets of the Trust for the reason that he now has full and complete title to said assets; alleges that Vernon Tetzke purchased his certificates two and a half years after default occurred in the payment of interest and filed his petition in bad faith after having- acquired the certificates for the purpose of attempting to interfere with a reorganization.”

The other “appellee,” The Trust Company of Chicago, is the successor trustee appointed by the order appealed from. No one interested in the subject matter of the litigation, other than these persons, appears here in an effort to uphold the order of the court in removing the successor trustee, and in appointing his successor. The order by which Rathje was appointed successor trustee is not in the record, and we have only the recital of the court in the order removing him to indicate that the court assumed to retain power and control over his actions by the order appointing him.

The record indicates that the United States court has assumed jurisdiction of the matters and things in issue, and it is not for a State court to determine whether or not the Federal court should or should not have assumed jurisdiction in the case. That is a matter for the Federal court to determine.

On the question as to whether or not Rathje should have been removed for his action, we cite the case of Nevitt v. Woodburn, 190 Ill. 283, wherein a trustee had been appointed by the will of George W. Wood<burn, Sr., to execute a certain trust created by the will. A bill was filed in the circuit court of Whiteside county seeking the removal of the trustee. The original trustee appointed by the will had been removed by the court, and a successor trustee appointed. Subsequently, an action for an accounting was brought against the successor trustee. As a defense to this action, he made the defense that, inasmuch as he was an officer of the court and occupied the same relation as a receiver appointed by the court, he could not be made to account for his acts and doings in connection with the administration of his trust in any other court than in the court which appointed him successor trustee. Upon this point, the court held:

“But the defense chiefly relied on below and urged upon us as sufficient ground for the reversal of the decree is, that the appellant Nevitt, having' been appointed by the court trustee to execute the trust created by the will, was to all intents and purposes a receiver of the court, and that having reported to and acted in pursuance of the orders and directions of the court in the cause wherein he was appointed, his acts as such officer cannot be called in question in any other cause, and that it is a contempt of court to bring suit against a receiver without first having obtained permission of the court and in the cause in which he was appointed. The general doctrine contended for by the appellants as applicable to receivers need not be denied, but we are of the opinion that Nevitt did not occupy the position of receiver, but only that of trustee charged with the duty of executing the trust created by the will and in the manner provided by that instrument. A receiver is a person standing indifferent between the parties, appointed by the court to receive and preserve the property or fund in litigation pending the suit. He is an officer of the court, appointed for a temporary purpose, and has no powers except those conferred on him by the order by which he is appointed, and such as are derived from the established practice of courts of equity, Property in Ms possession is in custodia legis, Ms possession being that of the court which appointed him. (Baker v. Backus, 32 Ill. 79; High on Receivers, 2; 20 Am. & Eng. Ency. of Law, 11; Hooper v. Winston, 24 Ill. 354.) But a trustee may be appointed by will, deed or in other ways, without the order of any court and without a suit pending, and his powers, as a rule, are governed by the instrument creating the trust, and not by decree of court. Property in his possession as trustee is not in custodia legis, as in the case of receivers or other officers of the law or of the courts, and he may be called to account by any court of equity obtaining jurisdiction. We find nothing in this record to authorize the conclusion that Nevitt was appointed receiver of the fund in controversy, in the sense contended for, as an officer of the court, but the record, and especially the order appointing him, shows that he was appointed trustee under the will of George W. Woodburn, deceased, and to execute the trust created by the will. In all of his reports, and in his pleadings in the suits to which he was a party, he described himself as such trustee; and not otherwise. True, he was appointed trustee by the court in the suit of Phebe A. Woodburn against Peter Eg*e, (consolidated with other suits), wherein she sought to compel Ege, the trustee appointed by the will, to account, and also to have him removed; but in appointing* Mm the court merely exercised its undoubted equitable powers over trusts and in the removal and appointment of trustees. Prior to his appointment the court had appointed one Sanborn receiver of the fund without removing- Ege as trustee.

“It is said, however, that the order appointing Nevitt required him to perform all of the duties that had devolved upon Sanborn as receiver, and that thereby Nevitt became receiver, — an officer of the court,— and not merely a trustee under the will, in lieu of Ege. We can not so conclude. In the first place, that part of the order was confined to collections from Eg*e and the disposition of such collections. The continuation of the receivership, except as to certain matters not then fully settled in the then pending litigation, became unnecessary, except as to such matters, after the appointment of Nevitt as trustee under the will and his assumption of the duties of the trust, but Sanborn continued to act as receiver for some time after Nevitt was appointed. The duties of Nevitt, when appointed, were measured, in character and duration, by the trust itself, — not by the orders of court entered in the then pending suit. Receivers may be, and often are, appointed to take possession of the fund from the trustee in order to preserve it pending a suit for the removal of and an accounting by such trustee. In such a case it could not be said, either that the receiver was the trustee or that the trustee was the receiver. Nor could it be said, after the removal of the trustee and the appointment of another and the discharge of the receiver, that the new trustee was a receiver and not liable to be called on to account except by application to the court in the cause in which he was appointed. The practice, in equity, in such cases is too well understood to require citation of adjudicated eases.”

The powers and duties of the original trustee and necessarily the successor trustee were fixed and determined by the trust agreement. Evidently the original trustee was removed for not performing its duties. The record indicates that Rathje’s appointment as successor trustee was ratified by all of the parties in interest, inasmuch as it appears that the second decree entered in the cause ratifying the appointment, was entered by consent of all these parties. The parties in interest, under the terms of the trust agreement, directed Rathje to file the petition in the Federal court, and in doing so, he was only performing his duty, as defined in the trust agreement.

We are of the opinion that the court was in error in removing him for doing what it was his duty to do. Therefore, the judgment and order of the superior court of Cook county removing him and appointing the Trust Company of Chicago as successor trustee, is reversed. In view of this holding, it will not be necessary to pass upon the motion to dismiss the appeals.

Reversed.

Denis E. Sullivan, P. J., and Hebel, J., concur.


source: Caselaw Access Project

author: Mr. Justice Hall

license: Public Domain

text:
    George J. Maniatis, Appellant, v. Frank A. Carelin et al., Appellees.
    Gen. No. 38,568.
    Opinion filed November 4, 1936.
    George L. Quilioi, of Chicago, for appellant; Walter Clifford Bowman, of Chicago, of counsel.
    Jacob G. Grossberg, of Chicago, for certain appellee.
   Mr. Justice Hall

delivered the opinion of the court.

On June 26, 1929, complainant filed a bill of complaint in the circuit court of Cook county against the defendants, seeking the cancellation of certain contracts. On September 25, 1931, after issues were joined on the bill and answers filed, it was ordered that the cause be referred to Boswell B. Mason, master in chancery, to take proofs, and that the master file his report covering the testimony, together with his conclusions of fact and law, within 40 days from the date of the entry of the order. On December 19, 1932, a further order was entered in said cause, which recites that on motion of the solicitor for George Checoras, defendant and cross complainant, the cause was re-referred to the same master in chancery of said court, to take proofs upon the cross-bill and complaint filed in said cause by George Checoras, and the separate answers of the cross defendants, George J. Maniatis, Northern Trust Company, Frank A. Carelin, Lillian Carelin and James Nickoloau, and the replications to the answers, and to report his conclusions of fact and law with convenient speed. It was further recited that said order of reference was entered without prejudice to the order of reference theretofore entered, and without prejudice to any proceedings had or taken before the master, and pursuant to the previous order, and that all proceedings had or taken before the master stand and remain as before the entering of the last order referred to.

On October 2, 1934, an order was entered in the circuit court dismissing the cause for want of prosecution.

On July 2, 1935, George J. Maniatis, complainant in the bill of complaint, filed a petition in the circuit court to vacate the order dismissing the cause for want of prosecution. In this petition it is alleged inter alia that on June 26, 1929, complainant filed a bill for an accounting and other relief; that issue was joined upon the bill and answers thereto, and that on September 25,1931, the cause was referred to a master to take proofs; that on December 22, 1931, George Checoras, one of the defendants, filed his answer and cross-bill; that on December 19, 1932, an order was entered re-referring the cause to Eoswell B. Mason, master in chancery, to take proofs. It is further alleged in this petition that prior to the filing of the cross-bill and to the reference thereon to the master, complainant had attended before the master and had introduced testimony in support of his bill, and that upon the order referring the cause to the master on said cross-bill, a stipulation had been entered into by the parties that all testimony offered in support of complainant’s bill should be considered as testimony offered in support of the cross-bill; that thereafter for a considerable period ending about June, 1934, hearings were had before the master, evidence was introduced on behalf of complainant and on behalf of cross complainant, and on behalf of Frank A. Carelin; that the proofs were closed about the first .part of the month of June, 1934, when the cause was argued and submitted to the master for a decision; that the master had taken the cause under advisement preparatory to making his report; that the testimony taken before the master consisted of approximately 1,500 typewritten pages, together with 100 exhibits of documentary evidence submitted to the master. It is further alleged that the cause was inadvertently placed on the trial call of Judge William V. Brothers, and that on June 13, 1934, an order was entered ruling defendants to close their proofs within 60 days, and further ordering that the cause be placed upon the September, 1934, trial calendar, which last mentioned order was also entered by inadvertence, inasmuch as all proofs had been closed, and that at the time said order was entered, the cause was then pending before said master, awaiting his report; that while the said cause was so pending before the master, and on or about July 26, 1934, said Eoswell B. Mason, master in chancery, died without having made a report. It is further alleged that on September 18, 1934, by reason of the order to place the cause on the trial call, which had been inadvertently entered, the cause appeared upon the trial call of another judge of the circuit court of Cook county, and that upon the call of said calendar, said cause was ordered continued until October 2, 1934; that on October 2, 1934, the cause again appeared on the trial call of the last mentioned judge, that counsel for complainant appeared and informed the court that the cause had been referred to the master, and that the master had died, and the court, therefore, suggested that the parties have the cause re-referred. It is further alleged in this petition that no order wras entered at this time, no further proceedings were ‘had, and that no one appeared in court at the last mentioned time, except the solicitor for complainant; that counsel for complainant at the last mentioned time stated that he would confer with the other solicitors in the case and arrange to have the cause re-referred; that thereafter the solicitor for complainant entered into negotiations with the solicitor for the defendant, Frank A. Carelin, in an effort to obtain a stipulation or agreement whereby the testimony taken and documentary evidence introduced before the master might be used as testimony taken before the court or before a master to whom the cause might be re-referred in order to obviate the necessity and the great expense of re-taking the enormous amount of testimony already taken, and that if such stipulation be entered into, that it provide that the evidence already introduced might be used upon the resumption of the cause upon the new reference. It is further alleged that thereafter on October 2, 1934, the case was called for trial and the clerk inadvertently entered the order dismissing the cause for want of prosecution, which order was not directed to be entered by the court. It is alleged that the entry of said order dismissing the cause for want of prosecution was done without notice to the complainant, or notice to his solicitor, that neither the complainant nor the solicitor were informed of the fact that said order had been entered until after they had negotiated for some months with Jacob A. Gross-berg, and that they were in the midst of such negotiations at the time the cause was dismissed, and that he was informed of such dismissal by Jacob A. Gross-berg, solicitor for defendant, after the term at which such order of dismissal was entered and after the next succeeding term had past, and that more than 90 days had past since the entry of such order.

In this petition seeking that the order of dismissal be set aside, complainant urges that he has a just and meritorious cause of action as set forth in his bill of complaint, which would be disclosed by an examination of all the testimony and documentary evidence introduced on the hearings, and that unless the order be set aside, the complainant will suffer irreparable injury and loss. This petition was sworn to.

In further support of the petition seeking to have the order of dismissal set aside, petitioner offered proof to the effect that on October 2, 1934, when the cause was called before a judge of the circuit court, that the said judge’s attention was directed to the facts concerning the status of the case before the master in chancery. It is shown by the record that there had been no judicial determination of any of the issues involved in the cause. The court denied this petition because of lack of jurisdiction to entertain it. This is an appeal from that order. A motion to dismiss the appeal for various reasons has been reserved to the hearing.

In our opinion, only two questions are involved here. These questions are whether or not the court was in error in refusing to set aside the order of dismissal,

which was inadvertently entered and whether or not this order can be reviewed under the petition filed.

In Weil v. Mulvaney, 262 Ill. 195, a similar question arose, and the Supreme Court said:

“The principal question discussed in the briefs is whether the order of May 1,1912, dismissing the cause for want of prosecution, in the absence of counsel for both parties, on the general call of the trial calendar, while the order of reference to the master was still in force, was merely erroneous or was it void. . . . We are not prepared to hold that the dismissal of a bill in chancery for want of prosecution while the cause is still pending on a reference to a master might not, under certain circumstances, be proper. The failure to prosecute might, consist in a failure to proceed under the order of reference to the master or to take any steps in preparation for the final disposition of the cause. But such is not the situation presented on this record. Manifestly, neither counsel expected that the cause, after a reference to a master, was to be placed on the regular calendar or that it would be heard until the master had made his report to the court. Clearly, the cause was dismissed because neither the clerk nor the trial court had made any notation on the trial calendar that the case had been referred to a master in chancery. The provision of section 21 of the Practice Act of 1907 that ‘all causes shall be tried, or otherwise disposed of, in the order they are placed on the docket, unless the court, for good and sufficient cause, shall otherwise direct, ’ does not affect the situation here. The court had practically otherwise directed by the order of reference, which beyond question, was overlooked inadvertently by the trial judge in entering the order dismissing the case in the absence of both counsel. The order was erroneous and not void.”

In McClay v. Williamson, 247 Ill. App. 141, under a similar state of facts, the court, upon the authority of Weil v. Midvaney, supra, reversed the order of dismissal, and said:

“The Circuit Court had the power to enter the order of May 1, 1912, dismissing the case, but being entered without notice to either party, with the clear understanding on the part of both that the matter was still pending before a master in chancery, it was plainly a misuse or abuse of the power of the court and therefore erroneous. If application had been made to the trial court to set it aside at the same term at which this order was entered such application should have been allowed, but after the term had passed it could only be set aside on writ of error or appeal. ’ ’

The petition here is filed under the provision of section 72 of the Practice Act (Ill. State Bar Stats. 1935, ch. 110, IT200), which provides as follows:

“The writ of error coram nobis is hereby abolished, and all errors in fact, committed in the proceedings of any court of record, and which, by the common law, could have been corrected by said writ, may be corrected by the court in which the error was committed, upon motion in writing*, made at any time within five years after the rendition of final judgment in the case, upon reasonable notice. When the person entitled to make such motion shall be an infant, non compos mentis or under duress, at the time of passing judgment, the time of such disability shall be excluded from the computation of said five years.”

In Madden v. City of Chicago, 283 Ill. 165, where a motion was made to vacate the entry of an order for dismissal, and where the facts were similar to the facts in the case at bar, the Supreme Court said:

‘ ‘ Plaintiffs in error contend that the circuit court erred in re-instating* the cause, first, because it had lost jurisdiction; second, the mistake sought to be corrected, if any,' was one of law and not of fact; and third, the error, if any, in striking the cause from the docket of July 18,1914, was cured by the general order of June 17, 1915, by which the cause was re-instated on the trial calendar.

“Section 89 of the Practice Act abolishes the writ of error coram nobis and provides that all errors of fact committed in the proceedings of any court of record, and which by the common law could have been corrected by that writ, may be corrected by the court in which the error was committed upon motion in writing made at any time within five years after the rendition of final judgment. In support of their contention that the error, if any, committed in striking the cause from the docket was one of law and not of fact, plaintiffs in error cite and rely upon a line of cases which hold, in substance, that any error intervening where a court is called upon to make a judicial determination is an error of law and not of fact. As disclosed by the affidavit in support of the motion to reinstate, the court, upon the calling of the calendar on July 18, 1914, performed no judicial act based upon a consideration of facts presented. Under the rule of court the call of the calendar was had merely for the purpose of enabling the attorneys in the cases to express their wishes as to whether the cases in which they were respectively employed should be set for trial, continued or stricken from the docket. It was the duty of the minute clerk, under this rule of court, to indicate merely the desire of each attorney as expressed, and the court, in making the order, merely followed the minute made by the clerk. This was not a judicial determination, and if by error the clerk did not correctly note the request of an attorney the mistake was one of fact and not of law, even though the court acted upon the error made by the clerk. Defendant in error and his attorneys having responded on the call of the calendar that the case was for trial and having been assured by the clerk that the request was understood, were warranted in assuming that the cause would be placed on the trial calendar and tried in due course. The mistake was clearly one of fact and not of law, and it was proper to entertain the motion made, under the provisions of section 89 of the Practice Act. The fact that the cause was re-instated under a general order and thereafter dismissed for want of prosecution does not effect the situation. Defendant in error had no notice that the cause had been stricken. Had it been placed on the trial calendar, as requested, it would not have been affected by the general order re-instating all causes which had been stricken from the docket, and defendant in error was not bound to take notice of that order. The court did not err in re-instating the cause.”

We are of the opinion that the court has jurisdiction, that the prayer of the petition should have been granted, and that the court should have vacated the order dismissing the cause for want of prosecution. The motion to dismiss the appeal is denied. The judgment is reversed and the cause is remanded for a hearing.

Reversed and remanded.

Denis E. Sullivan, P. J., and Hebel, J., concur.


author: Mr. Justice Hebel

text:
    Chicago Title and Trust Company, Defendant in Error, v. Millie A. Suter et al., Defendants. Louis Knaus and Hanna Knaus, Plaintiffs in Error.
    Gen. No. 38,533.

      Opinion filed November 4, 1936.
    Rehearing denied November 27, 1936.
    Robert D. Melioic, of Chicago, for plaintiffs in error.
    Fisher. Boyden, Bell, Boyd & Marshall, of Chicago, for defendant in error; Horace A. Young, Samuel M. Mitchell and Robert Q-. Sprague, all of Chicago, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

This cause is in this court upon a writ of error by the plaintiffs in error Louis Knaus and Hanna Knaus, defendants in the trial court, to review the record in’ a certain proceeding pending in the circuit court of Cook county, Illinois, wherein the plaintiff below, Chicago Title and Trust Company, instituted a foreclosure proceeding making the above named Louis Knaus and Hanna Knaus owners of the equity of redemption of the property described in the trust deed, defendants. Subsequently, on December 4, 1933, the court entered a deficiency decree in the proceeding, and on November 9, 1934, the named defendants filed a verified petition, and upon the facts as stated in the petition, prayed that the deficiency decree entered in this cause against Millie A. Suter be set aside and vacated for want of personal service of summons upon this named defendant, and further, that an order be entered finding the moneys and rents collected by defendants Louis and Hanna Knaus from the premises as owners of the equity of redemption and paid over by them to the Chicago Title and Trust Company, as trustee, as directed by an order of the court, to be the property of your petitioners (the defendants), and directing further that the complainant account and repay to these defendants the moneys so obtained, together with interest as provided for by law.

Thereafter upon a hearing, the court on January 21, 1935, entered the following order:

Ordered that the personal judgment entered against Millie A. Suter in the above entitled cause on December 4,1933 in the decree entered herein on said date for the sum of $3,372.98, together with interest thereon at the rate of five per cent per annum from the 27th day of November, 1933, be and hereby is vacated and set aside, without prejudice however to the decree entered herein on December 4, 1933, confirming and approving the foreclosure sale herein and finding a deficiency of $3,372.98 due to the complainant, and finding that the pledge of the rents, issues and profits of and from the premises foreclosed in the above entitled cause was not extinguished by the decree of foreclosure and sale or by the sale thereunder; and without prejudice to the retention of jurisdiction by the court provided for in said decree entered herein on December 4, 1933, for the purpose of examining, auditing and approving the accounts of Chicago Title and Trust Company, a corporation as Trustee under the trust deed as aforesaid, and for the purpose of appointing a receiver for the premises involved in the above entitled cause for the remainder of the fifteen months’ period of redemption if it shall be deemed expedient or necessary to preserve or protect the rights and interests of the parties hereto.”

The defendants, Louis and Hanna Knaus, seek to reverse this order on the ground that there is no valid deficiency decree in favor of the plaintiff, as trustee, or otherwise, and so admitted on the record, and none in its favor authorized by law, and therefore there exists no premise at law or in equity for the Chicago Title and Trust Company, a corporation, to further withhold from the defendants $3,410 and interest on an accounting of such funds, as provided by law. They therefore pray that an order may be entered by this court directing that an order be entered in this cause vacating the order striking defendants’ petition filed herein and restoring the same to the record and directing that the prayer thereof be granted by directing that the Chicago Title and Trust Company, in whatever capacity held, pay to the defendants the rents, issues and profit in the sum of $3,410 deposited under order of the court of April 12, 1933, together with interest as may be ascertained upon an accounting.

The petitions filed by the defendants are limited to vacating the entry of the deficiency decree and the refund of the moneys paid under the order of April 12, 1933, to the Chicago Title and Trust Company amounting to $3,410; and the whole theory of their right to recover is based upon the fact that the court was without jurisdiction to enter a^deficiency decree in the above matter, for the reason that the defendant Millie A. Suter, the maker of the note and signer of the trust deed was not personally served with summons, and that the deficiency decree of December 4, 1933, being erroneous for want of service upon this defendant, the decree entered on Jan. 21,1933, was a nullity, and did not come within the meaning- of sec. 16 of Ill. State Bar Stats. 1935, ch. 95, If 17, of an act entitled “Mortgages,” which provides:

“In all decrees hereafter to be made in suits in equity directing foreclosure of mortgages, a decree may be rendered for any balance of money that may be found due to the complainant over and above the proceeds of the sale or sales, and execution may issue for the collection of such balance, the same as when the decree is solely for the payment of money. And such decree may be rendered conditionally at the time of decreeing the foreclosure, or it may be rendered after the sale and the ascertainment of the balance due: Provided, that such execution shall issue only in cases where personal service shall have been had upon the defendant or defendants personally liable for the mortgage debt, unless their appearance shall be entered in such suits.”

Of course there being no personal service on Millie A. Suter, the order of deficiency entered by the court was erroneous, for the reasons stated above. However, in this case the contention is that the court has jurisdiction to impress a lien upon the rents and profits that may be collected during the period of redemption for the amount of the deficiency, provided the rents are pledged by the trust deed, regardless of whether or not" a valid decree in personam is entered against the person liable for the indebtedness.

The deficiency decree entered in this case finds:

“. . . that the Trust Deed foreclosed in the above entitled cause contains a pledge of the rents, issues and profits of and from the premises foreclosed in this cause as additional security for the indebtedness secured by said Trust Deed and that the pledge of the rents, issues and profits of and from said premises was not extinguished by the decree of foreclosure and sale heretofore entered herein or by the sale thereunder.”

Therefore, under this trust deed entered into by the defendant Millie A. Suter, the rents and issues of the premises were pledged to be applied in redemption of whatever amount may be due under the terms of the mortgage.

A conveyance of the rents by the trust deed gives to the mortgagee a lien upon the rents during the period of redemption, which will be enforced, and in support of this position plaintiff cites the case of First Nat. Bank of Joliet v. Illinois Steel Co., 174 Ill. 140, wherein the court said:

“Rents and profits are the subject of mortgage. Jones in his work on Mortgages (vol. 1, sec. 140), says: ‘A mortgage may be made of rents under a lease, and although a right of entry be given to the mortgagee, the mortgage is a mere security, like any other mortgage of real estate, and the mortgagor-remains the real owner until foreclosure and sale. ’ In section 771 he says: ‘A mortgagee has no specific lien upon the rents and profits of the mortgaged land unless he has in his mortgage stipulated for a specific pledge of them as part of his security. ’ This was expressly stipulated in this mortgage given by the Ashley Wire Company to appellee. Had there been no deficiency after the foreclosure sale of the Ashley Wire Company property and plant, the rents would have belonged to the owner of the equity of redemption. Under the express agreement in the mortgage, there being a deficiency of $5,316.50 after the sale, the Illinois Steel Company had an equitable right to have the rents and profits applied towards the payment of the deficiency decree, from the time of the foreclosure sale until the expiration of the time of redemption, and this right might properly be enforced on an application to the court to appoint a receiver. ’ ’

This court in the case of Fidelity Trust & Savings Bank v. Ahlgrim, 278 Ill. App. 147, wherein the facts are similar to those in the instant case, said:

‘ ‘ There is no question but that under the authority of this statute a chancellor could enter a decree for any balance found due the complainant after the sale. The proviso to the effect that no execution should issue, however, except where there was personal service to collect the unpaid balance from the defendants, is clear and in conformity with the common law. The original owner of the equity and the mortgagor having, however, mortgaged the rents, issues and profits in the instrument on which the bill of complaint is based, has granted to the mortgagee a right which he can enforce in a court of equity and the only way in which this can be done is by the court decreeing the payment of the rents, issues and profits during the period of redemption to the mortgagee until the deficiency has been exhausted or the period of time has elapsed. This is not in the nature of a personal judgment in so far as the rents, issues and profits are concerned, but is an enforcement of the lien granted by the trust deed to an interest in the real estate consisting of the rents and profits derived therefrom. In our opinion the decree in this respect was proper, even though the final decree after sale ordered execution to issue to satisfy the deficiency. This part of the final decree was invalid for want of power in the chancellor, but the balance of the decree was valid and should be sustained. ’ ’ And from these authorities, to which the attention of the parties in the instant case has been called, we are of the opinion that notwithstanding a personal decree was not entered in this case against the maker of the note, still by the provisions of the trust deed, which was signed by this defendant Millie A. Suter, she pledged the rents of the premises in question that may be collected to be applied in payment of the indebtedness, and the decree is clear upon this question, for the court in its final order decreed that all net rents received by the Chicago Title and Trust Company, a corporation, as trustee, be applied during the period of redemption on account of the deficiency decree, of the Chicago Title and Trust Company, and the amount so applied in pro tcmto satisfaction of the amount of the deficiency decree. Bolton v. Starr, 223 Ill. App. 39.

The total amount of the indebtedness found to be due by the court in its decree is $31,581.97, and according to the master ’s report and distribution the amount received for the premises was $29,000. The deficiency, therefore, found by the court between the amount of the decree and the sale price is $3,372.98, including interest, being the balance not satisfied by the foreclosure sale of the premises. Therefore the court was justified in impressing a lien upon the rents and profits that may be collected during the period of redemption and applying such, if any, toward the reduction of the amount of the deficiency.

The defendants here on appeal contend that the trustee purchased some of the bonds secured by this trust deed and thereby obtained an advantage or profit. There is nothing in the evidence as to any profit which may have been derived by the trustee, and it is not clear that the bonds were obtained for gain. As far as the record shows it may have been for the benefit of all the bondholders. However, the Supreme Court of this State made this significant statement in its opinion in the case of Darst v. Bates, 95 Ill. 493:

‘ ‘ The suggestion that Alden being a trustee was prohibited from becoming interested in the trust fund, can have no force. His duty, as trustee, was simply to sell the property to satisfy the mortgage — and this could not be in anywise affected by the circumstances of what particular person might become the owner, legally, or equitably, of the notes secured. Indeed, it is quite common to make the holders of the notes or their assignees trustees in mortgages, with powers of sale; and this has repeatedly received the approval of this court. Longwith, et al. v. Butler, 3 Gilm. 32; Strother v. Law, 54 Ill. 413; Bloom v. Van Rensselaer, 15 id. 503.”

There remains hut one question to be considered, and that is the question of ultra vires.

The plaintiffs in error have not offered in evidence the charter of this corporation in order to point out from the charter itself that the trustee acted without power granted by the State to carry on this class of litigation. The lack of evidence in the record showing what the corporate powers were would not justify this court in considering the question as it is here presented. For the reasons stated in this opinion, the decretal order entered by the court is affirmed.

Order affirmed.

Denis E. Sullivan, P. J., and Hall, J., concur.


text:
    In re Petition of Veronica Chalukonis, Appellee, v. Evelyn Jozwiak, a Minor, by Bridget Sullivan, Her Guardian, Appellant.
    Gen. No. 38,578.

      Opinion filed November 4, 1936.
    David Alswang, Isaac K. Goodman, David J. Schissell and Melbourne A. Chapp, all of Chicago, for appellant ; David Alswang, of counsel.
    No appearance for appellee.
   Mr. Justice Hebel

delivered the opinion of the court.

A petition was filed by the petitioner from which it appears that she was arrested under a writ of Ca. Sa., issued by the circuit court clerk in favor of Evelyn Jozwiak, a minor, for the sum of $12,500, and is now in custody of sheriff of Cook county, under and by virtue of said writ, and is desirous of releasing her body from such arrest or imprisonment by delivering up her property, and prays that such proceedings to that end may be had as are prescribed or required by the laws of the State relating to insolvent debtors.

After a hearing was had upon this petition, the court entered an order that malice was not the gist of the action, and the petitioner having filed her schedule of property, the court adjudicated that the petitioner be discharged and released from the custody of the sheriff of this county. This order was entered on March 23, 1935.

From the record it appears that by the stipulation of the parties on April 30,1934, a jury in the circuit court of Cook county in the case of Evelyn Jozwiak, a minor, by Vincent Jozwiak, her father and next of friend, versus Veronica Chalukonis, returned a general verdict for $12,500 in an action based upon a declaration consisting of four counts, three charging negligence and one malice.

On July 12, 1934, an order was entered by the judge of the probate court of Cook county appointing Bridget Sullivan guardian of Evelyn Jozwiak. On February 27, 1935, a capias was placed in the hands of the sheriff of Cook county upon which the petitioner, Veronica Chalukonis, was arrested on March 5, 1935, and on the same day the petitioner filed her petition under the the Insolvent Debtors Act praying to be discharged. Various hearings were had, and on March 23, 1935, the court entered the order from which an appeal to this court is taken by the respondent.

It appears from the report of the proceedings that evidence was heard by the court which disclosed that an accident occurred on July 12, 1927, at the intersection of 30th street and Lowe avenue, in Chicago, Illinois, and that the petitioner in the operation of her automobile, while turning the corner, ran into respondent’s minor of the age of five years at that time, and injured the child. There is evidence that at the time of the accident the petitioner was under the influence of liquor, and in getting out of her car she staggered over to respondent’s minor, who had been knocked down by her operation of the car and picked up by one of the witnesses, and struck the child with her hand. This the petitioner denied when called to the witness stand by the court.

The action of the petitioner was founded on par. 5, sec. 2 of the Insolvent Debtors Act, eh. 72 of Ill. State Bar Stats. 1935, which section provides:

“When any person is arrested or imprisoned upon any process issued for the purpose of holding such person to bail upon any indebtedness, or in any civil action when malice is not the gist of the action, or when any debtor is surrendered or committed to custody by his bail in any such action, or is arrested or imprisoned upon execution in any such action, such person may be released from such arrest or imprisonment upon complying with the provisions of this Act. ’ ’

As authority for the admission of evidence to determine the question whether malice was the gist of the action, this court’s attention has been called to the case of In re Petition of Blacklidge, 359 Ill. 482.

The court in that case said:

‘1 The judgment, however, is not conclusive that there was malice or that the party was actuated by improper motives, because the verdict may have been returned upon a count which did not include the element. (Jernberg v. Mix, 199 Ill. 254.) It necessarily follows that in a proceeding under section 2 of the Insolvent Debtors Act the petitioner is not estopped by the judgment from showing that the verdict was based upon a count where malice was not the gist of the action. (Buck v. Alex, 350 Ill. 167; Jernberg v. Mix, 199 Ill. 254; Kitson v. Farwell, 132 Ill. 327.) In this case the general verdict of guilty was, in effect, a finding of guilty against Mrs. Blacklidge upon each of the two counts. Prima facie record discloses that malice was the gist of the action, and in the present proceeding she did not attempt to prove that the verdict was returned upon the criminal conversation count, of which malice was not the gist. To avail herself of the remedy afforded by the Insolvent Debtors Act it was essential for her to bring herself within the provisions of the statute by establishing the fact that malice was not the gist of the action. This she has failed to do. ’ ’

Respondent’s contention is that if issues are made upon all the counts in a suit against an insolvent debtor, including one of which malice is the gist of the action, a judgment upon a general verdict is responsive to such issues and prima facie establishes that malice was the gist of the action and the burden is upon the petitioning debtor to show the contrary and that the verdict was not responsive to that count.

It was stipulated between the parties at the trial that there were no written instructions given by the court at the time the trial of this case was had in the circuit court which took place in the absence of the defendant, the petitioner, when reached for trial, and that a general verdict only was returned by the jury.

We might say at this time that it is regrettable the petitioner has failed to appear in this court and give the court the benefit of the theory upon which she bases her right to relief.

It would seem from the record as it is presented to this court that at the time of the accident petitioner was operating' the automobile and ran into and injured respondent’s minor, and while the court had the benefit of the petitioner’s evidence in which she denied that she operated the machine negligently, or that she was under the influence of liquor, still when she stepped from the machine she staggered and wilfully struck the child with her hand after one of the witnesses had picked the child up from the street after the accident, which would indicate malicious conduct at the time of the accident. From all the facts and circumstances in evidence, malice was the gist of the action.

The Supreme Court in the case of In re Petition of Blacklidge, 359 Ill. 482, announced the rule applicable in cases where the question of malice is before the court, and said:

“ ‘Malice,’ within the contemplation of the Insolvent Debtors Act, does not necessarily mean hatred or ill-will but applies to that class of wrongs which are inflicted with an evil intent, design or purpose. It carries the implication that the guilty party was actuated by improper and dishonest motives, with the intention to perpetrate an injury on another. (Lipman v. Goebel, 357 Ill. 315; Greener v. Brown, 323 Ill. 221; Jernberg v. Mix, 199 Ill. 254.) Malice may be made the gist of the action if properly pleaded. (Lipman v. Goebel, 357 Ill. 315; Seney v. Knight, 292 Ill. 206.) Whether malice is the gist of a particular action is to be determined from the charges made in the declaration. (Lipman v. Goebel, 357 Ill. 315; Greener v. Brown, 323 Ill. 221.)”

This proceeding does not come within the provision of sec. 5 of ch. 77, Ill. State Bar Stats. 1935, If 5, entitled “Judgments, Decrees and Executions,” which provides :

“No execution shall issue against the body of the defendant except when the judgment shall have been obtained for a tort committed by such defendant, and it shall appear from a special finding of the jury, or from a special finding by the court, if the case is tried by the court without a jury, that malice is the gist of the action, and except when the defendant shall refuse to deliver up his estate for the benefit of his creditors,” for the reason that the judgment in the case now before this court in the proceeding involved was entered on April 30,1934, and sec. 5 of the act above quoted was amended and approved on July 11, 1935, by amending and inserting in the act these words: ‘ ‘ and it shall appear from a special finding of the jury, or from a special finding by the court, if the case is tried by the court without a jury, that malice is the gist of the action, and except when the defendant.” Therefore, the act as amended was not in force at the time this judgment was entered by the court on the date above set forth, and the section as amended would not control in requiring a special finding that malice was the gist of the action.

We are of the opinion from the whole record as we have it before us that there was sufficient evidence before the jury upon which to find that malice was the gist of the action when the petitioner was driving her car under the influence of liquor, and her subsequent action in striking the child after it had been injured.

The judgment order is reversed and the cause is remanded with directions that the petitioner be remanded to the custody of the sheriff of Cook county, Illinois.

Reversed and remanded with directions.

Denis E. Sullivan, P. J., and Hall, J., concur.


text:
    In re Estate of Ernest E. Hart, Deceased. Foreman-State National Bank, Appellant, v. Martha P. Hart, Administratrix, Appellee.
    Gen. No. 38,693.
    Opinion filed November 4, 1936.
    Robert L. Wright, of Chicago, for appellant.
    John S. Hummer, of Chicago, for appellee; L. R. Van Ness and Hummer & Hummer, of Chicago, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

This is an appeal by the Foreman-State National Bank, appellant, hereinafter referred to as the Bank, from an order entered by the circuit court of Cook county overruling certain objections made by this Bank to the approval of a distribution of $2,003.19 made by the administratrix, Martha P. Hart, appellee herein, to herself, individually, as sole heir-at-law, on a final accounting in the estate of Ernest E. Hart, deceased.

The final account and report was filed in the probate court of Cook county on May 11, 1933, and the Bank filed verified objections and supplemental objections thereto, which were based upon the fact that the Bank had filed a suit and obtained a decree against the administratrix individually in the superior court of Cook county, which is set forth in full in the supplemental objections, as follows:

“This cause coming on to be heard upon the sworn supplemental bill of complaint filed herein on April 23, 1934, and the answer thereto heretofore filed herein by the defendant, First National Bank of Chicago, said bill having been heretofore taken as confessed against the defendant Martha P. Hart, both individually and as the Administratrix of the Estate of Ernest E. Hart, deceased by an order of default entered herein on June 18, 1934, and the Court being fully advised in the premises, it hereby makes the following findings:

“1. That the defendant Martha P. Hart, also known as Martha Hart Fitzgerald, is still individually indebted to the complaint, Foreman-State National Bank, in the sum of $4,001.49, as heretofore found by this court in the decree entered herein on November 10, 1932, upon the original bill of complaint herein.

“2. That said defendant Martha P. Hart has continued to conceal her whereabouts to the end that personal service cannot be had upon her and has never personally appeared herein so that no decree for the payment of money may be entered against her personally herein and the complainant can only satisfy said indebtedness out of the property of said defendant within this jurisdiction.

“3. That said defendant, Martha P. Hart, in her official capacity as Administratrix of the Estate of Ernest E. Hart, deceased, now pending in the Probate Court of Cook County, holds undistributed assets of said estate to which she is individually entitled as the widow and sole heir-at-law of said decedent Ernest E. Hart.

“4. That the First National Bank of Chicago holds the sum of $332.61 for the account of said defendant, Martha P. Hart.

“5. That the complainant, Foreman-State National Bank, is entitled to have the indebtedness heretofore found herein to be due it from the defendant Martha P. Hart, individually, satisfied out of said bank account and said undistributed share of the assets of said estate of Ernest E. Hart, deceased, now held by her in her capacity as Administratrix thereof.

“Wherefore it is hereby ordered, adjudged and decreed that:

“1. The First National Bank of Chicago is hereby ordered to pay to the complainant the sum of $332.61, now held by said bank for the account of said Martha P. Hart in partial satisfaction of her indebtedness to the complainant herein.

“2. The complainant, Foreman-State National Bank, is hereby granted a first and prior lien upon the undistributed individual share of Martha P. Hart, also known as Martha Hart Fitzgerald, in the assets of the estate of Ernest E. Hart, deceased, now held by her in her official capacity as Administratrix thereof, which estate is now pending in the Probate Court of Cook County, Illinois as file Number 145661, Docket 283, Page 454, for the payment of the balance of said indebtedness, the sum of $3,668.88.

• “3. The defendant Martha P. Hart is hereby further restrained and enjoined as Administratrix of said estate of Ernest E. Hart, deceased, from distributing to herself individually, any of the assets thereof until said lien shall have been satisfied. ’ ’

This decree mentioned in the objections was entered on July 11, 1934, and spread of record in the probate court on August 14, 1934. The objections to this final account and distribution were heard on November 23, 1934, in the probate court, and upon this hearing the objections and supplemental objections were overruled, the final account was approved and the administratrix discharged. Thereafter an appeal was prosecuted to the circuit court, which entered a similar order on July 12, 1935, and from this order the Bank has taken this appeal.

The circuit court of Cook county heard the matter on the probate court record, consisting of the administratrix’ final account and report, objections and supplemental objections filed by the Bank and the order entered in the probate court overruling said objections, approving the final account and report in its entirety and discharging the administratrix. No evidence was introduced by the Bank, but the administratrix introduced in evidence seven documents described in detail as follows:

1. The bill of complaint filed in a suit entitled Foreman-State National Bank v. Martha Hart Fitzgerald, et al., and numbered 556804 in the Superior Court of Cook County on May 2, 1932.

2. The amendment to the bill of complaint filed in said suit on May 27.

3. The decree entered on November 10,1932.

4. The supplemental Bill of Complaint filed on April 23, 1934.

5. The order of default entered on June 18, 1934.

6. The decree entered on July 11, 1934.

7. The publisher’s certificate of publication for claims in Probate Proceeding.

The facts in this proceeding are not in serious dispute; the questions are largely legal ones to which the parties have called this court’s attention, and which it is claimed have ensued in consideration of the objections made by the Bank. The facts are that the Bank filed a creditor’s bill against Martha P. Hart, then described as Martha Hart Fitzgerald, Charles S. Monroe and R Weston Pollard, on May 2, 1932, in the superior court of Cook county, to enforce certain stock subscriptions to the Harbor Securities Corporation, against which the bank held an unsatisfied judgment for $15>000, to satisfy the judgment debt, as the corporation was then insolvent.

Since Martha P. Hart married Bichard I. Fitzgerald subsequent to the death of Ernest E. Hart, and was later divorced from Fitzgerald and resumed the name of Hart, she is referred to in the pleadings in the superior court suit by both names at various times.

The theory of the action against the defendant Martha Hart was that the subscription made under seal by her deceased husband, who had died on May 15, 1929, was enforced against her individually, to the extent of the assets received by her as his sole heir-at-law. It is contended by the defendant that the Bank’s claim had not arisen until after the period for filing claims against the estate had expired.

The bill alleges that Martha Hart had received $29,-354.84 in cash from said estate, that the amount of the liability on decedent’s subscription was $3,340 with interest at five per cent from November 28, 1928, and the existence of the subscription liability was not discovered by the Bank until March 5, 1932. By an amendment filed on May 27, 1932, the Bank alleged that the decedent Ernest E. Hart, Monroe and Pollard were the promoters of the corporation and in control thereof as its officers at the time the subscriptions were made; that they subscribed to the capital stock at $10 per share but only issued and paid for the stock as and when they succeeded in selling it to the public at $50 a share; that the purchasers at $50 a share were, in effect, original subscribers and that the $40 per share profits were not disclosed to other shareholders until 1930 and were recoverable as secret profits, by the corporation, for the benefit of its creditors. The liability of the decedent Hart for these secret profits was alleged to exceed $4,000 and to be enforceable against the defendant Martha Hart to the extent of the assets received by her from his estate upon the same theory on which her liability for the stock subscription was predicated.

On November 10, 1932, a decree was entered in said suit finding that the defendant Martha Hart was indebted in the sum of $4,001.49, on the aforesaid stock subscription. She was then ordered to pay the Bank this sum in partial satisfaction of its judgment against the corporation, and the determination of her liability, if any, for such secret profits was postponed to a subsequent reference to a master in chancery.

The decree was collaterally attacked in a garnishment proceeding entitled Martha Hart Fitzgerald for use of Foreman-State National Bank v. First National Bank and Richard I. Fitzgerald, and held to be void for want of personal service of summons on Martha Hart, described in said suit as Martha Hart Fitzgerald. The case was appealed to this court, and is numbered 36,778 and reported in volume 272 Ill. App. 570. This court held that the service by publication had on the defendant Martha Hart, individually, in the original equity suit in accordance with sections 12 and 13 of the Chancery Act, which provided for such service where a defendant is a resident but conceals himself so that process cannot be personally served, would not support the entry of the aforesaid personal decree against her, entered on Nov. 10, 1932. Subsequent to the filing of this opinion on December 11, 1933, a petition for certiorari was denied by the Supreme Court on April 17,1934.

On April 23, 1934, the bank filed a supplemental bill of complaint in the original chancery suit setting up certain facts, which are in substance as follows:

That Martha Hart had concealed her whereabouts and was still concealed so that process could not be served upon her; that she received a letter notifying her of the pendency of the suit on or about May 10, 1932, and that notice of the suit was served on the attorneys representing her as administratrix in the probate court on July 19, 1932, but that she had failed to file an appearance in the suit;

That she was duly served by publication, duly defaulted and the aforesaid decree was entered against her on November 10, 1932; that the personal decree was held void for want of personal service;

That she owned certain property within the jurisdiction of the court which should be subjected to the satisfaction of her liability in said suit, including a claim to the net assets of the estate of Ernest E. Hart, deceased, as sole heir-at-law of said Ernest E. Hart, which estate is pending in the probate court of Cook county.

The bill then prayed that she be made a party to the supplemental bill both individually and in her official capacity as administratrix and for the entry of an appropriate decree satisfying her liability to the Bank; that she did not file her appearance; that she was served by publication, and on June 18, 1934, was duly defaulted for want of an appearance. On July 11, 1934, the decree was entered which is set forth in full in the supplemental objections filed to the approval of the administratrix’ account.

It is contended by the Bank that by the statement of the case and the statement of facts, the sole issue before the court on the Bank’s objections to the distribution of $2,000 by the administratrix to herself individually was the validity of the superior court decree entered on July 11, 1934, and the Bank further contends that if the decree was valid she of course had no right to make the distribution, as it gave the Bank a prior lien on her individual right to the fund and expressly enjoined her in her official capacity from making distribution to herself individually.

The real test is whether the court had jurisdiction in this case to find the total sum due from Martha P. Hart, upon the service by publication had in this case. The purpose of the court’s finding is to impress a lien upon the amount found to be due against the amount she would receive as the only heir-at-law of Ernest E. Hart, deceased.

No objection seems to have been made that service was had by publication. The only theory of the administratrix of the estate is that the decree entered by the court upon the supplemental bill was a personal one against Martha P. Hart individually, and for that reason the court was without jurisdiction to enter such decree. Assuming that there was no personal service such as would justify the court in entering a decree in personam, still the question we have to consider is whether because of service by publication the case becomes one in rem. The Supreme Court of our State in the case of Bickerdike v. Allen, 157 Ill. 95, in passing upon this question, said:

“A proceeding in rem is not merely a direct proceeding against property, but any action between the parties where the direct object is to reach and dispose of property owned by them or of some interest therein. For example, suits by attachment against the property of debtors, suit for the partition of land, to foreclose mortgages, to enforce liens or contracts respecting property, may be reg’arded as proceedings in rem so far as they affect property in the, State. (Pennoyer v. Neff, 95 U. S. 714.) In such proceedings in rem, where the object is to reach and dispose of property within the State, or of some interest therein, service by publication, or in some mode other than upon the person, may be sufficient. The theory of the law is, that when a man’s property is brought under the control of the court by seizure, such seizure informs and notifies him of the proceedings taken for its sale or condemnation. In such eases, constructive notice is permitted and becomes effectual solely by reason of the attachment or seizure of the property. The jurisdiction of the court to determine the obligations of the defendant constructively notified is incidental to its jurisdiction over the property. The judgment has no effect beyond the property reached or affected in that suit. ‘Jurisdiction is acquired in one of two modes: first, as against the person of the defendant by the service of process; or, secondly, by a procedure against the property of the defendant within the jurisdiction of the court. ’ (Boswell’s Lessee v. Otis, 9 How. 336.) ”

It is of course interesting to note what the court said there, namely:

“The jurisdiction of the court to determine the obligations of the defendant constructively notified is incidental to its jurisdiction over the property.” Therefore, in this case the purpose of the litigation is to establish a lien upon the funds of the estate within the jurisdiction of the probate court of Cook county, and this being so it would seem from what is said by the Supreme Court, the fact that the court found the amount due, is incidental to impressing a lien upon the property of this defendant within the State. The defendant resides in the State, and as administratrix was appointed to administer as provided by statute, so that her place of residence is clear from the record, and from the facts as set forth in the pleadings she has concealed herself so that service of summons could not be had upon her. In this connection the further interesting statement is made by the court in the above cited case:

“Suppose that a defendant resides in this State, and has a known residence here, but conceals himself so that process cannot be served upon him, and that the notice specified in the statute is sent .to him by mail. If he receives the notice so sent, he has received personal notice just as much as though a summons was served upon him by the sheriff. The certificate of the clerk is made proof of the mailing of the notice. ‘Proof of the mailing of notices, properly addressed, is prima facie evidence of their having been received by the party addressed.’ ”

The administratrix contends that the creditor’s bill proceeding in the superior court is a proceeding in personam, and the decree entered therein on July 17, 1934, on substituted service by publication and mailing is void. This contention might be correct if personal service was not had upon the person named in the proceeding and no property located at the place where the cause was instituted and nothing for the court in its decree to direct. However, in this case the defendant is a resident of the county of Cook, in which county the proceeding is pending, and from the facts it is apparent that the defendant is concealing herself so that service of process cannot be had, and if the court finds there is property located within the county, where the suit is instituted, then of course the court must proceed as in rem, and by its decree may impress a lien upon the property found in Cook county. The property upon which the lien was impressed by the decree in this case was property in the hands of this defendant as administratrix, and as well stated by the Supreme Court on the question of service in the cases herein cited, the purpose of such action in rem is to reach and dispose of the property which is within the jurisdiction of the court, and the decree entered in this case has no effect upon the property reached other than by a lien by the decree of the court in the suit pending in the superior court of Cook county.

Now as to the contention of the administratrix of the estate of Ernest E. Hart, deceased, that the superior court had no jurisdiction of the undistributed share of the administratrix of the estate of Hart, and could not grant a valid lien thereon to the Bank, the case of Austin v. Royal League, 316 Ill. 188, is cited, and what we quite agree is the law, is quoted in these words:

“Before there can be a proceeding in rem or quasi in rem there must be a res upon which the court is acting. In the strict sense of the term, a proceeding in rem is one which is taken directly against property or one which is brought to enforce a right in the thing itself. The distinguishing characteristic of judgments in rem is that they operate directly upon the property and are binding* upon all persons in so far as their interest in the property is concerned. Since a judgment in rem operates upon the particular property which is the subject of litigation it does not have any effect in personam and creates no personal liability, especially as against those who, while interested in the property, have not been served with process and have not appeared in the action. A proceeding quasi in rem, while not strictly one in rem, is a proceeding which is taken directly against specific property though the suit is brought against certain named persons. When the purpose of the proceeding* is to affect the interest of a named person in specific property within the State which has at the outset of the proceeding been brought within the control of the court, like the proceeding to foreclose a mortgage, it is a proceeding* quasi in rem. ’ ’ And this rule supports the decree entered in the superior court of Cook county upon the ground already stated in this opinion.

It is also suggested by the • administratrix that the superior court did not have jurisdiction of the undistributed share of the administratrix of the estate of Hart, and could not grant a valid lien thereon to the Bank, and she again cites in support of this position the case of Austin v. Royal League, 316 Ill. 188. This case also supports the decree of the superior court for the reason that in the instant case the res was within the jurisdiction of the court, being the objections filed by the bank to the final report of Martha A. Hart, as administratrix and individually, and the administratrix by her petition in the probate court seeks to have the report approved, and to take individually the sum of $2,003.19, upon which sum the decree of the superior court impressed a lien upon the property within the State for the amount found due in the decree entered in that court, and in our opinion the objections filed were objections which should have been sustained both by the probate court and the circuit court of Cook county.

Other questions are involved, but we do not consider them of importance in view of the conclusions we have reached, and therefore the order of the circuit court is reversed and the cause is remanded with directions to the court to enter such other and further orders as may be consistent with the views expressed in this opinion.

Reversed and remanded ivith directions.

Dehis E. Sullivah, P. J., and Hall, J., concur.