author: Mr. Presiding Justice MoSurely

text:
    Anna Hymen, Appellee, v. R. J. Anschicks, Appellant.
    Gen. No. 36,466.

      Opinion filed April 10, 1933.
    Fisher, Boyden, Bell, Boyd & Marshall, for appellant ; Earl K. Schiek, of counsel.
    Philip A. Weinstein, for appellee.
   Mr. Presiding Justice MoSurely

delivered the opinion of the court.

Judgment by confession under a power of attorney in a lease was entered against defendant for $525; defendant moved that the judgment be vacated and set aside and supported the motion with a petition and affidavit; the court denied said motion and defendant appeals.

Defendant was a tenant of plaintiff under a written lease demising the premises for a term commencing October 1, 1930, to September 30, 1931; the judgment was for rental for May, June and July, 1932, and plaintiff affirms that this was authorized under the terms of the lease which provided for an extension or holdover as follows: After providing that the term shall expire September 30, 1931, the lease says, “and from year to year thereafter, unless and until this lease shall be terminated ..at the date last above mentioned, or at a like date in any subsequent year thereafter, by the giving by either party to the other of not less than sixty (60) days’ notice in writing of such termination, which said notice shall be delivered in person or sent by registered mail, when to Lessor, at the place stipulated herein for the payment of rent, and, when to Lessee, at-the address of the demised premises.”

The power of attorney to confess judgment authorizes judgment against the lessee “for the amount of rent which may be then due, by virtue of the terms hereof, or of any extensions or renewals hereof, or by virtue of any hold-over after the termination hereof, and which may be in default, as aforesaid. . . . ” If the power exists to confess judgment for rental for a period subsequent to September 30, 1931, it must be by virtue of these provisions of the lease.

We are of the opinion that, following Weber v. Powers, 213 Ill. 370, the power to confess judgment for rent for a period after the date stated in the lease as the termination, is invalid. This was the material question in the Weber case. It was said there that it was the settled doctrine of this court that the authority to confess judgment without process must be clear and explicit, and must be strictly pursued; and that, if there is no power to enter the appearance of the debtor and confess the judgment, such judgment is a nullity, binds no one, and may be attacked collaterally for want of jurisdiction in the court to render it. The crux of the decision was, that where a lease has expired by its terms, the character of the subsequent tenancy, if any, raises a question of fact, and that the power to confess judgment is not a power to confess such a fact but only to confess such facts as appear from the lease. The court said:

“The fact of a renewal, or the fact of a holding over, is a fact dehors the written lease and the terms of the written power of attorney, contained in the lease. A judgment by confession must be for a fixed and definite sum, and not in confession of a fact, that can only be established by testimony outside of the written documents, required by the statute to be filed in order to enter up a judgment by confession.”

This is applicable to the instant case. By the terms of the lease the lessee had the option, by giving 60 days’ notice in writing, to terminate the lease on September 30, 1931; the power of attorney did not authorize a confession that such notice had not been given. This was a question of fact upon which defendant was entitled to a trial. In Weiss v. Danilczik, 262 Ill. App. 551, another division of this court had occasion to pass upon a similar question. There the power of attorney provided that judgment could be entered by virtue of the terms of the lease, “or of any extensions or renewals hereof, or by virtue of any holdover after the termination hereof,” the same language as in the instant case. The court held that the defendant was a hold-over tenant, and that the power to confess judgment for rent accruing during the term of the lease cannot be extended to rental accruing after the term of said written lease, and that such a judgment by confession was without authority of law.

Plaintiff cites two cases in opposition. In Morris v. Taylor, 199 Ill. App. 588, the judgment by confession was opened and defendant permitted to defend. The principal question decided was the validity of the provision extending the lease unless the defendant should give 60 days’ notice of his intention-to terminate the lease on the date of its expiration. The validity of the authority to confess judgment for rental accruing during this extended period was hot raised or discussed either in the briefs or opinion. In Williams v. Veeder, 195 Ill. App. 413, the only question involved was the validity of the provision for an extension of the lease. The holding of the Supreme Court in Weber v. Powers is conclusive of the question before us, and the power to confess judgment in the present case was without authority of law.

What we have said is sufficient to dispose of this case. However, we shall note briefly another point made by defendant. By his affidavit in support of his motion to vacate the judgment, defendant shows that the lease expired by its terms September 30, 1931, and that the judgment by confession was entered for May, June and July, 1932; that about September 24, 1931, defendant entered into an oral lease of said premises through Nathan Hymen, who was the husband of plaintiff and her duly authorized agent, for a period commencing October 1, 1931, and expiring April 30, 1932; that pursuant to this agreement he vacated the premises on April 20, 1932, having paid all the rent to April 30th.

It is well settled that an executed parol agreement may be shown to defeat a recovery upon an instrument under seal. Yockey v. Marion, 269 Ill. 342; Snow v. Griesheimer, 220 Ill. 106; Worrell v. Forsyth, 141 Ill. 22; Doyle v. Dunne, 144 Ill. App. 14.

For the reason that the authority to confess judgment cannot be extended to the subsequent lease, the judgment is reversed and the cause remanded.

Reversed and remanded.

Matchett and O’Connor, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice McSurely

license: Public Domain

text:
    The People of the State of Illinois, Defendant in Error, v. John V. Morse, Plaintiff in Error.
    Gen. No. 36,492.
    Opinion filed April 10, 1933.
    Alfred Roy Hulbert, for plaintiff in error.
    Thomas J. Courtney, State’s Attorney, for defendant in error; Edward E. Wilson, Grenville Beardsley and Albert Woll, Assistant State’s Attorneys, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Defendant was charged with having violated the statute regulating the business of making loans, Cahill’s St. ch. 74, If 27. Upon trial he was found guilty and fined $100. He seeks a reversal in this court.

The section involved reads in part:

“It shall be unlawful to make any loan of money, credit, goods, or things in action in the amount or to the value of three hundred dollars ($300) or less, whether secured or unsecured and charge, contract for, or receive a greater rate of interest than seven per centum per annum therefor, without first obtaining a license from the Department of Trade and Commerce. as herein provided. . . .

“The license shall be kept conspicuously posted in the place of business of the licensee.”

The specific charge in the information is that defendant, without such a license, made a loan of money to one Arthur J. Bell at a rate of interest greater than seven per cent per annum. Defendant argues here that the evidence shows that the transaction on which the charge is based does not come within this act.

Arthur J. Bell, the complaining witness, testified that he took his automobile to defendant’s place of business to have some repair work done; after the car was examined he was told that the job would cost about $36; subsequently he was told it would cost an additional amount; he says he signed some papers and later on got his car after the repairs were made, but was not satisfied with the job; afterwards he got a notice through the mail that defendant was preparing to foreclose a chattel mortgage on the car; apparently the car was sold and there was a deficiency; the witness testified categorically that “Mr. Morse did not lend me any money. I did not receive any money from him.”

Defendant testified that he had been in the business of repairing and painting automobiles for 17 years; that he does business under the name of Bell Auto Bepair & Painting Co.; that the complaining witness, Arthur J. Bell, brought his car to the defendant’s place of business to have the valves ground, carbon cleaned and certain adjustments made; he was told the costs would be in the neighborhood of $36; subsequently, on examination, it was found that the water jackets around the cylinders were cracked and that the motor would have to be rebuilt; defendant so informed Mr. Bell, who gave defendant an order for a complete rebuilding of the motor and other things; Mr. Bell could not pay for the job all at one time, so an arrangement was made with him to pay in instalments; a note was signed to this effect, secured by a chattel mortgage on the car; Mr. Bell made one cash payment of $10 on his bill and gave his note for the balance, payable in monthly instalments with interest at three per cent per month for 12 months. Defendant testified that Bell had never paid any of the instalments on his chattel mortgage note; defendant also said, “I did not lend him any money and I gave him no money”; that he did the work and took Bell’s note in payment for same with a chattel mortgage, and “charged him 3 per cent a month because he could not pay all at one time.” Defendant also testified that he formerly loaned money on automobiles but had not done that for over a year; that he was “not in the automobile banking business.” It is admitted that defendant did not have the license from the Department of Trade and Commerce provided in the act. ,

In People v. Stokes, 281 Ill. 159, which involved the constitutionality of this statute, it was held that the object of the law is to regulate the business of making loans of small sums of money to wage earners and salaried people. It seems to be conceded that defendant was not in the business of making loans, but it is said that the statute is so drawn as to cover a single transaction. People v. Stokes, supra. This court applied this statute to a single transaction in Raming v. Peyser, 259 Ill. App. 152, but in that case the uncontradicted evidence showed that the plaintiff loaned the defendant the amount of money involved.

In the instant case no money was loaned. The transaction was the ordinary one where the debtor is unable to pay in full in cash and an arrangement is made whereby he may pay in instalments. It is a matter of common knowledge that under such circumstances the debtor generally obligates himself for a larger amount than he would pay on a cash on delivery basis. A special reason for this exists with reference to a bill for automobile repairs, payable in instalments, where the debtor is given possession of the automobile and is likely to depreciate its value by use or accident.

The statute is clearly applicable only to a case involving the loaning of money. It should not be enlarged by construction so as to include an arrangement whereby a bill for repairs may be paid in instalments.

This is not a variance between the proof and the charge. The proof fails to support the charge and the defendant should have been acquitted.

For the reasons indicated the judgment is reversed.

Reversed.

Hatchett and O’Connor, JJ., concur.


author: Mr. Justice Matchett

text:
    Sarah Samuels, Appellant, v. Gertrude Meyerovitz et al., Appellees.
    Gen. No. 36,339.

      Opinion filed April 10, 1933.
    Frederick W. Winkler and Robert H. Eberle, for appellant.
    Arkin, Berman & Marks, George Gillette and O. G. Kinney, for certain appellees.
   Mr. Justice Matchett

delivered the opinion of the court.

This appeal is by complainant from an order entered after pleas of intervenors had been sustained dismissing the amended bill of complaint for want of equity.

Complainant is the owner of bonds Nos. 33 and 83 for the sums of $500 and $1,000 respectively, dated January 3, 1927, maturing by their terms January 3, 1934, and drawing interest at six per cent per annum. These bonds are a part of an issue of $100,000 of such bonds secured by a trust deed of the same date, executed and delivered by Gertrude Meyerovitz and Max Meyerovitz, whereby they conveyed premises in Cook county, Illinois, to the Schiff Trust & Savings Bank, trustee.

Default having been made in the payment of interest and also in the payment of $2,500 of the principal on January 3, 1932, and these defaults continuing, complainant, pursuant to the terms and provisions of the trust deed, declared the whole indebtedness due and payable, and on January 25, 1932, made a written demand upon the Schiff Trust & Savings Bank as trustee that it foreclose the trust deed. However, prior thereto, on January 20, 1932, defendant Schiff Bank executed and recorded its resignation as such trustee, and thereupon complainant, upon the theory that there was a vacancy in the office of trustee and that section 1 of article 4 of the trust deed, which provides that an individual bondholder cannot maintain a suit to foreclose upon the refusal of the trustee after demand to do so, was therefore inoperative, filed her bill to foreclose for the benefit of herself and all other owners of the bonds which she had declared due.

The original trust deed by section 3 of article 8 provided :

“In case resignation of said Schiff Trust and Savings Bank, as Trustee, or its inability or failure to act, the Chicago Title and Trust Company, a corporation of the State of Illinois, is appointed and constituted successor in trust to said Trustee under this deed for the uses and purposes expressed herein and said successor in trust shall thenceforward be the party intended herein by the word ‘Trustee’ and upon said successor’s acceptance of this trust all right and in- • terest of said Trustee in said premises and in this deed shall vest in said successor in trust, who shall thereupon be vested with all the power, rights, estates and interest and charged with all the duties and obligations of said party of the second part under this deed.”

The Chicago Title & Trust Co. was not made a defendant to the bill, and it was not alleged in the bill that any demand had been made upon it to bring foreclosure proceedings prior to the filing of the complaint. The original trustee filed its resignation on January 20, 1932, as already stated. Six days thereafter and one day after the filing of the bill, the Chicago Title & Trust Co. filed of record an acceptance of its appointment as successor trustee. It thereupon intervened in the suit and filed a plea, as did the Schiff Trust & Savings Bank, questioning the right of complainant to maintain a suit in behalf of all the bondholders. As already stated, these pleas were sustained and the bill dismissed.

The theory upon which the pleas were filed was that by reason of the provisions of section 3 of article 8, upon the resignation of the trustee, th¿ successor in trust at once became the trustee, while complainant contends that this section of the trust deed is repugnant to and irreconcilable with section 3 of article 5 of the trust deed, and that said section 3 is therefore controlling. Said section 3 provides as follows:

“In case the Trustee hereunder shall resign, be removed, or be dissolved or otherwise become incapable of acting hereunder, a successor or successors may be appointed by the holder or holders of a majority in amount of the bonds then outstanding hereunder, by an instrument or concurrent instruments in writing duly signed by them and recorded in the Recorder’s Office of the County or Counties wherein the mortgaged property is located; or in case said bondholder or holders shall not appoint a new trustee of trustees hereunder as aforesaid within thirty days after any such vacancy shall occur, then the holder or holders of any one or more of said bonds may apply to any Court in any county wherein said mortgaged property or any part thereof is located, having general chancery jurisdiction, for the appointment of a new trustee hereunder, upon such notice to such person or persons as the Court may direct, or upon such notice as shall be in accordance with the statute or the rules of such Court. ’ ’

Section 4 of the same article provides in substance that each successor trustee “appointed hereunder” shall execute and acknowledge and record an instrument accepting the appointment ‘ ‘hereunder ’ ’ and shall thereupon become fully vested with the estate, etc.

However, complainant contends that section 3 of article 5 and section 3 of article 8 being entirely repugnant, section 3 of article 5 must prevail as the earlier clause of the instrument, and that for the same reason section 3 of article 8 must be rejected as being part of the instrument. Complainant cites well known authorities which sustain the rule that in case of repugnancy between two sections of the same instrument, the earlier must prevail. Bouvier’s Law Dictionary, p. 1056; 41 Cyc. 451; 18 Corpus Juris, 268; 8 R. C. L., §§ 88, 1043, and Nave v. Bailey, 329 Ill. 235.

While the rule exists as these authorities show, it is resorted to by the courts with regret and usually in despair of finding a reasonable interpretation. As Professor Williston says, “It is obvious, however, that such a rule is extremely artificial, and can only be accepted as a last resort.” Williston on Contracts, vol. 2, sec. 624, p. 1208. In Harper v. Hochstim, 278 Fed. 102, 20 A. L. R. 1232, the opinion expressing the reluctance of the court to resort to the application of this rule, said:

“It cannot be doubted that it is only when parts of a written agreement are so radically repugnant that ‘there is no rational interpretation that will render them effective and accordant that any part must perish. ’ Rushing v. Manhattan, etc., Co., 224 Fed. 74, 139 C. C. A. 520.”

See also 13 Corpus Juris § 497, p. 535, where it is said: “In any event a subsequent clause may be rejected as repugnant only where it cannot be given effect by any fair or reasonable interpretation of the entire contract, the rejection of a repugnant clause being an expedient which the court will have recourse to very reluctantly. ’ ’

We cite the above authorities in this case, not unmindful of the facts which here appear or of authorities which complainant cites, holding that the provision of a trust deed that the trustee only can maintain a foreclosure suit may be said to a certain extent to create an exception to the general principles, and that it is a rule of convenience to facilitate the conduct of the suit which under proper circumstances must give way; (Farmers Loan & Trust Co. v. Northern Pac. R. Co., 66 Fed. 169); that the right to maintain a suit is primitive and fundamental in its character (Schultze v. Van Doren, 64 N. J. Eq. 465; Chicago & Vincennes R. Co. v. Fosdick, 106 U. S. 47); that a trust deed may be foreclosed in a court of chancery even when the office of trustee is vacant (Waughop v. Bartlett, 165 Ill. 124; Wheelwright v. St. Louis, N. O. & O. Canal Transp. Co., 56 Fed. 164; Ettlinger v. Persian Rug & Carpet Co., 142 N. Y. 189).

The decisions in these cases are all based upon the fundamental principle with which this court agrees, that the trustee is created for the benefit of the bondholders, that his office exists for their benefit, and that his powers must be exercised in their interest. The duties of such trustee, however, are toward all the bondholders and not part of them. There is a clear distinction between the duties of a trustee where the creditors are numerous and his duties where there is but a single creditor. Where the creditors are only a few in number the courts of this State have held that they are necessary parties to the proceeding, but where they are many, for the convenience of all and in the interest of all, the trustee assumes and undertakes the active duty of representing and protecting all.

It is important, therefore, to ascertain here from the document, if possible, the intention of the parties to it. A careful examination of the whole trust deed has led us to the conclusion that these clauses are not, as complainant contends, irreconcilable and repugnant. In the first place, an examination of these two sections discloses a fundamental difference in the words used for the purpose of designating the succession. In article 8 the words used indicate a present appointment to a future position upon the happening of a contingency. The verb used indicates a present power and authority. The tense of the verb is present. The language is: “The Chicago Title and Trust Company, a corporation of the State of Illinois, is appointed and constituted,” etc. The mood of the verb is indicative, while in article 5 the tense is future and the mood subjunctive. There is also a clear distinction between these two articles, in that in article 8 the appointment is made by the parties to the instrument or writing, while in article 5 the appointment is to be made by the indefinite persons who may in the future be holders of the bonds or in default of these for thirty days, then by some court. Article 5 therefore comes into the picture only in case the Schiff Trust & Savings Bank and the Chicago Title & Trust Co. have both been disqualified. Its provisions look only to a future contingency, while article 8 clearly indicates a present appointment. The sections are therefore not repugnant. They both refer, it is true, to the appointment of a trustee, but section 3 of article 5 .becomes operative only upon the failure of those named in article 8 to function. The two sections are not contradictory. They are complementary, and by this construction we are able to give effect to the whole instrument and harmonize it upon the theory that each article expresses an intention of the parties rather than upon the assumption, which would seem improbable, that the parties inserted a whole section by which they meant nothing at all. This construction appears to be consistent with the language of the whole instrument and also/with the purpose for which it was brought into existence.

It is argued that the Chicago Title & Trust Co. recognized that the provisions of article 5 were applicable to it by filing its acceptance of record as provided for in that article. The mere filing of a document, however, cannot change the construction of these sections which is compelled by a consideration of the words used and the language of the whole instrument.

We hold that upon the resignation of the Schiff Trust & Savings Bank as trustee, the Chicago Title & Trust Co., by the provisions of the trust deed, became the successor trustee, and that under the terms and provisions of that deed it was the proper party to bring foreclosure proceedings in behalf of all the bondholders in case such proceedings were for their interest.

The decree is therefore affirmed.

Affirmed.

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


author: Mr. Justice Matghett

text:
    Michael J. Chambers, Appellant, v. City of Chicago et al., Appellees.
    Gen. No. 36,349.

      Opinion filed April 10, 1933.
    Samuel Kart and Crow & Loeff, for appellant.
    William H. Sexton, Corporation Counsel, and Francis J. Vurpillat, Assistant Corporation Counsel, for appellees.
   Mr. Justice Matghett

delivered the opinion of the court.

This is an appeal by Chambers (who was the petitioner in the trial court) from a decree which adjudged that a former decree recovered by him in the character of a taxpayer was void for the reason that a court of equity was without jurisdiction of the subject matter; that the separate pleas of respondents to the jurisdiction should be sustained; that a rule to show cause why respondents should not be punished for disobeying the former decree should be dismissed, and that respondents should recover their costs against the petitioner.

October 25, 1928, Chambers, as resident and taxpayer, filed his bill in equity, in behalf of himself and others, against the City of Chicago, a municipal corporation, George K. Schmidt, as comptroller of the city, Thomas J. Houston, Archibald J. Carey and Edward J. Denemark, as the then civil service commissioners, and Richard W. Wolfe as commissioner of public works of the city. The bill averred that Wolfe as commissioner of public works was illegally employing non-civil service temporary appointees under the title of laborers, in violation of the civil service law which provided that only civil service employees should be employed in that capacity. It set up that a large number of civil service laborers were being kept out of employment and prayed an injunction restraining the employment of temporary appointees and for other and further relief.

A general demurrer was filed by the then defendants which was sustained, whereupon the petitioner by leave filed an amendment setting up further alleged facts as to the employment of non-civil service appointees in the position of laborers and in particular setting up the names of the civil service laborers who were then unemployed and the temporaries employed illegally as alleged. The amendment to the bill prayed substantially the same relief as the original bill and for general relief.

The record does not disclose that any answer was filed but on November 8, 1928, a final decree was entered in the matter (as the present decree finds) by consent of the attorneys for the parties to the cause.

This former decree states: ‘ ‘ This cause is now submitted to the court for hearing upon the bill for permanent injunction as in said bill prayed. The chancellor, after the hearing of the cause and the argument of counsel, and after being fully advised does now find for said petitioner, Michael J. Chambers, and against the respondents above named, that said petitioner is entitled to a part of the relief in said bill prayed, that is that the City of Chicago, a municipal corporation, George K. Schmidt, as City Comptroller, Richard W. Wolfe, as Commissioner of Public Works, and Thomas J. Houston, Archibald J. Carey and Edward J. Denemark, as Civil Service Commissioners, that each and all said respondents should be enjoined and restrained from further employing. or continuing in their employment, any person or persons who have not complied with the Civil Service laws and with the Civil Service rules of the City of Chicago with respect to examination and the certification for employment in the classified Civil Service of the City of Chicago in any and all cases respectively where there is any civil service eligible on the original eligible list of the Civil Service Commission, that is any person or persons legally qualified for certification and appointment to such civil service employment, and in whose stead the said person or persons who have not so complied with the Civil Service laws and rules are, or may be, illegally and wrongfully appointed.” This decree was entered November 8, 1928.

More than two years thereafter complainant served notice that on September 3, 1931, he would appear before a judge of the circuit court and ask a rule that respondents show cause why they should not be held in contempt of court for violation of the provisions of the foregoing original decree. The notice was addressed to the City of Chicago, a municipal corporation, Anton J. Cermak, mayor, M. S. Szymczak, comp-trailer, Richard J. Collins, Joseph P. Geary and Leonard D. White, civil service commissioners, A. A. Sprague, commissioner of public works, Willard A. Jackson, commissioner of gas and electricity, Daniel J. Carmody, fire commissioner, Myron D. Reynolds, city engineer, Henry A. Allen, mechanical engineer in charge of the operating division; William J. Lynch, harbor master, Benjamin F. Lindheimer, Ernest J. Kruetgen, Horacio B. Hackett and Joseph D. Higgins, members of the board of local improvements, and William H. Sexton, corporation counsel.

In support of this motion complainant filed a petition which was verified by him as of his own knowledge except “as to those matters which are stated upon information and belief.” The petition sets up verbatim the decree entered November 8, 1928, and alleges that since the order for injunction was issued the mayor, the comptroller, the members of the civil service commission, the commissioner of public works, the commissioner of gas and electricity, the fire commissioner, the acting city engineer under the supervision of the commissioner of public works, the mechanical engineer in charge of the operating division under the supervision of the commissioner of public works, the harbor master under the supervision of the commissioner of public works, and the president, the vice president and the members of the board of local improvements, “have not complied with the order of Court granting said Injunction, but on the contrary have violated said order of court and are continuing to employ groups of temporary employees, thereby depriving the regular, legally qualified Civil Service eligibles from work, as provided by law.”

The petition avers that ruses have been employed by defendants for the protection of the employment of temporary help, and a list of the names and addresses of such alleged temporary laborers in each department is set up; that the action is adverse to the entire Civil Service Act and purpose of it, and that if such matters are allowed to be continued, the civil service will have no meaning whatsoever to the City of Chicago.

The officials heretofore named are made defendants, and it is alleged that it is only through the combination of various department heads and defendants that the violations can be perpetrated. The petitioner prays for an order holding the City of Chicago and said officials in contempt of court for their failure to comply with the decree hereinbefore set forth.

Respondents filed several pleas which they designate as pleas to the jurisdiction of the court, in each of which it is alleged that the particular respondent is not a party defendant to the original suit; that said suit was directed solely against Richard W. Wolfe, as commissioner of public works, George K. Schmidt, as comptroller, and the then civil service commissioners, and that they were the only defendants impleaded in that suit, the only defendants against whom any relief was sought, the only defendants named in the decree entered, the only defendants against whom the decree was directed and against whom any injunction or restraining order was directed, and the only defendants upon whom the decree operated; and setting up the decree, each defendant avers that the only defendants against whom any relief was prayed and the only relief sought were set out in the prayer for relief in the original cause; that the petition in the original cause impleaded only Wolfe, as commissioner of public works, for injunctive relief upon allegations against said Wolfe in his capacity as commissioner of public works, that he was employing and keeping in his employ a number of ‘‘emergency employees” in lieu of civil service employees alleged to be civil service laborers who were wrongfully laid off; that this was the sole issue for any injunctive relief sought by petitioner; further, that the civil service commissioners and the comptroller were impleaded only for such alleged conduct as was indirectly and incidentally involved and made necessary as the result of the alleged conduct of Wolfe; that the original petition alleged that the Commissioners were “about to certify the necessity for immediate appointment of the said temporary laborers and the said George K. Schmidt, as comptroller of the City of Chicago is about to issue warrants upon the public funds of the City of Chicago raised by general taxation and also water taxes for the payments of the said temporary laborers for compensation for such employment”; that petitioner alleged that such action would constitute an illegal act and an illegal appropriation of moneys raised by general taxation to the prejudice of the petitioner as a taxpayer; that the only additional relief asked by petitioner in the original cause was that the commissioners should be enjoined from holding a certain civil service examination, which relief was denied by the chancellor and was not included in the decretal order entered in the cause.

Each of the pleas alleges:

“And this defendant, pleading as aforesaid, further says that he was not named in said original petition, nor complained of therein, nor was any relief sought by the petitioner as against him, nor was he by any and all of the allegations in said petition contained in any manner impleaded in the issues in said original petition presented; that the issues tendered against this defendant in this collateral proceeding by way of a charge of contempt of court against him was in no manner, in substance or form, germane to the issues tendered and the facts alleged in the original petition in said cause; that the facts now for the first time alleged against this defendant are entirely foreign to the facts and issues presented against those who were defendants to the original suit, and do not constitute in whole or in part any portion of the subject matter involved in the original cause presented; that the facts charged by the present petition to constitute contempt of this court do not come within the purview of the original petition, issues tendered thereon and the decretal order entered in said cause.”

The pleas further aver that petitioner pleaded no facts and sought no relief except in his capacity as taxpayer; that the facts alleged in the petition against respondents were not in whole or in part the facts complained of by petitioner in the original suit and did not constitute the subject matter involved in the original suit upon which the decretal order was based; that the facts pleaded in the contempt petition violated no rights that petitioner as a taxpayer was by the original suit decreed to have and constituted entirely new subject matter over which the court in the original suit had no jurisdiction and over which the court cannot now have jurisdiction as against respondents, over whom the court for the first time is asked to assume jurisdiction of the persons and the subject matter involved in this petition for contempt. Wherefore respondents prayed judgment if the court should take cognizance of the action.

Demurrers filed to these pleas by petitioner were overruled by the court, and an order dismissing the petition from which this appeal is taken by petitioner was entered.

Petitioner rightly contends that it was not proper practice to demur to the pleas; that the pleas should have been set down for hearing so that their sufficiency might have been considered. It is agreed, however, that a demurrer thus interposed might be regarded as surplusage, the plea itself being in the nature of a demurrer. Lester v. Stevens, 29 Ill. 155.

Petitioner also contends that the pleas were not good pleas to the jurisdiction, citing Puterbaugh’s Chancery Pleading & Practice, 6th ed., p. 122, for the failure to point out another court having jurisdiction. In the seventh edition by the same author, vol. 1, section 133, at page 199, he explains more fully:

“A plea to the jurisdiction does not dispute the right of the complainant in the suit, but simply asserts either that his claim is not a fit subject of cognizance in a court of equity or that some other court has jurisdiction. If the bill shows upon its face that the court has no jurisdiction, the objection may be taken by demurrer, otherwise it may doubtless be taken by plea, in which case, however, it would, properly speaking, be a plea in bar and not technically speaking, a plea to the jurisdiction, the distinguishing feature of the latter being that it points out another court having jurisdiction. ’ ’

Story’s Eq. PL, 10th ed., sec. 711, is cited. The mere name by which the pleading is designated does not appear to us either important or controlling. By whatever name it may be called, the facts remain that respondents by their pleas challenged the jurisdiction of the court both as to the persons cited and as to the subject matter of the proceeding, and that challenge was sustained by the trial court and presents the controlling question for consideration by this court, in which we must assume the facts to be as stated in the pleas.

Petitioner points out that judgments and decrees of court which have jurisdiction are final and conclusive between the parties until reversed in a direct proceeding in the manner provided by law, and that they cannot be attacked collaterally, citing Sheahan v. Madigan, 275 Ill. 372, and many other cases. The proposition is not controverted, but here jurisdiction of both parties and subject matter is denied by the pleas.

Petitioner further urges the proposition that a proceeding to enforce a judgment or decree is collateral to the same, and that upon such proceeding no inquiry into the regularity or validity of the decree can be permitted. That is the general rule but it is not applicable where the court entering the decree was without jurisdiction, as these pleas aver.

Petitioner contends also that an injunction restraining the doing of certain acts is binding not only upon those against whom it is entered but also upon those who have knowledge of it, and cites Parsons v. People, 51 Ill. App. 467, and Flannery v. People, 127 Ill. App. 526, where such is stated to be the rule of law applicable under circumstances entirely different from those disclosed by this record.

Petitioner urges that if a court has jurisdiction to grant an injunction it should be obeyed while it remains in force by anyone having knowledge of its existence though not a party to the proceeding in which it was granted. O’Brien v. People, 216 Ill. 354; Mears Slayton Lumber Co. v. District Council, 156 Ill. App. 327, are cited, and are cases where it was so held (but again) under circumstances clearly distinguishable from those disclosed by this record, where the pleas set up facts showing a lack of jurisdiction.

Petitioner urges the proposition that an injunction against a municipal corporation binds its officers or persons acting for it who have notice of the writ and of its contents, although not parties to the suit, and that they may be punished for violation, and cites Phillips v. City of Detroit, 2 Flippin’s (U. S. C. C.) 92, which was a suit against a municipality for the alleged infringement of a patent — clearly distinguishable for that reason.

Other cases are cited, all of which are distinguishable on the facts which, as stated in the pleas in brief, are that by consent of the parties in litigation concerning certain named employees, a decree, general in its nature, directing named officials of the city government to observe the law, is now sought to be enforced by contempt proceedings at another time, years subsequent to its entry, with respect to other and different persons and against other and different officials, most of whom are not even successors in office of those formerly impleaded, without summoning these officials, filing a bill against them, presenting an issue or giving them any opportunity whatever to be heard upon the merits in their own defense. Under the pleadings we must assume that the facts stated in these pleas are true, and assuming them to be true we hold that the court was wholly without jurisdiction of the persons of the officials cited, and that the petition was properly dismissed.

The order is therefore affirmed.

Affirmed.

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


author: Mr. Justice O’Connor

text:
    Lottie Greengard, Appellant, v. Louis Katz et al., Appellees.
    Gen. No. 36,336.

      Opinion filed April 10, 1933.
    Harry Z. and Bernard Perel, for appellant; Harry Z. Perel and Abraham: H. Haller, of counsel.
    Pines, Morse & Stein and Arthur P. Feigen, for appellees; Alvin E. Stein, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Complainant brought a suit to foreclose a trust deed executed by Louis Katz and his wife, on a 99-year leasehold given to secure their promissory notes in the aggregate sum of $65,000, some of which notes had been paid. The defense interposed was that the transaction was usurious in that the defendants had received only $50,000 for the notes aggregating $65,000. The case was referred to a master who found that the defense of usury was unavailable, and recommended a decree of foreclosure as prayed for in the bill. The amount he found to be due, which included principal, interest, insurance premiums and costs, was $44,635.01. Exceptions to the master’s report were sustained, the chancellor holding that the defense could be interposed that complainant was entitled to receive only the $50,000 in payment of the 53 notes without interest. There was also included in the decree insurance premiums advanced by complainant, interest thereon, aggregating $1,965.87, and $750 solicitors’ fees, a total of $5,896.32. A decree of foreclosure was entered for this amount, and complainant appeals.

The record discloses that October 1,1924, defendants Louis Katz and Rose Katz, his wife, leased certain premises from the board of education of the City of Chicago for 99 years, and being desirous of improving the premises with a garage, on April 15,1925, executed their 53 promissory notes of that date in the aggregate sum of $65,000. Notes Nos. 1 to 51, both inclusive, were each in the sum of $625, note No. 52 was for $16,550, and note No. 53 was for $16,575; note No. 1 being due January 15, 1926, and one of the notes Nos. 2 to 51 became due each month thereafter. Notes Nos. 52 and 53 were due five years after their date, and all bore interest at the rate of 7 per cent per annum. The loan was made through Marks & Co., who disbursed the money in payment for the garage, and it is undisputed that but $50,000 was paid out.

When the building was completed it was conducted by Katz and his wife as the “Prairie Garage.” May 19, 1925, Katz and Ms wife assigned one-half of their interest in the 99-year lease to Joseph Einhorn, the father of Mrs. Katz. April 21,1926, Louis Katz and his wife, Joseph Einhorn and his wife, and Edward A. Schroeder executed and sent to the Secretary of State proper documents to incorporate the business then being conducted on the premises as the “Prairie Garage.” Louis Katz subscribed for 187 shares, Bose Katz, his wife, 187 shares, Joseph Einhorn, 187 shares, Lena, his wife, 187 shares, and Edward A. Schroeder, 2 shares, a total of 750 shares, the par value of wMch was $100 a share or a total of $75,000. There was no preferred stock and the capital stock was all to be paid for by the property and business then being conducted as the “Prairie Garage,” including the unexpired term of the 99-year lease, the machinery, fixtures, stock, furniture and equipment, all of which was valued at $75,000. And it was stated that the property to be turned in in payment of the $75,000 par value stock was subject to an incumbrance of $62,500, which the evidence shows was the balance due and unpaid of the $65,000 notes. Two days afterward the Secretary of State issued a charter to the “Prairie Garage, Inc.,” which was then created a legal corporation under that name. On the 21st of April, 1926, Katz, his wife, and Einhorn assigned all their right, title and interest in the 99-year leasehold to “The Prairie Garage, Inc., an Illinois corporation. ” Seven days thereafter, April 28, 1926, pursuant to a resolution passed the day before by the board of directors of the Prairie Garage, Inc., the Prairie Garage, Inc., by Edward A. Schroeder, its president, and Joseph Einhorn, its secretary, accepted such assignment. Afterward the board of education of the City of Chicago consented to the assignment of the lease to the Prairie Garage, Inc.

The evidence further shows that immediately after the certificate for the two shares of stock was issued to Edward A. Schroeder, he indorsed and turned it back to the corporation, and the evidence is further to the effect that Louis Katz and the other parties, who had conducted the Prairie Garage before it was incorporated, continued to operate it after the incorporation.

It is undisputed that the individuals who operated the Prairie Garage and the Prairie Garage, Inc., paid on account of the $65,000 notes, for which but $50,000 was received, $49,362.05, which latter sum included insurance premiums of $2,542.50. The notes aggregating $65,000 are admittedly tainted with usury, and the question is, whether the defendant, the Prairie Garage, Inc., a corporation, can avail itself of this defense. Complainant takes the position that it cannot for two reasons: (1) that the defense of usury is personal to the Katzes, the mortgagors, and since the evidence shows that after the Katzes executed the notes and trust deed, they and Einhorn conveyed the property to the Prairie Garage, Inc., subject to the amount then due and owing on the mortgaged notes, namely, $62,500, the defense of usury was thereby waived by the Katzes, the mortgagors. And since complainant dismissed the suit as to the Katzes, the defense of usury cannot be invoked by the garage corporation; and (2) that in no event can a corporation interpose the defense of usury because the statute expressly prohibits it.

As to the first contention, it is argued that in the statement filed by the incorporators with the Secretary of State, they swore and acknowledged that the $75,000 par value of stock was to be paid in full by conveying the property and business of the incorporators, then being operated as the Prairie Garage, including the 99-year leasehold interest, to the corporation, and that such property was then incumbered for $62,500, and these facts show that the property was appraised at $137,500 — $75,000 plus $62,500; and that this conduct on the part of the incorporators was a recognition that the mortgage was legal and valid, and in support of this contention the cases of Valentine v. Fish, 45 Ill. 462; Crawford v. Nimmons, 180 Ill. 143; Wilson v. Reed, 262 Ill. App. 230, and other cases are cited. In the Valentine case the court said, p. 468: “The doctrine is well established, that the owner of land who has given a usurious mortgage upon it, may sell or mortgage the land to another, generally, and give to such purchaser or mortgagee, by express agreement, the same right to contest the validity of the first mortgage as he had himself. But he may Affirm the validity of the usurious mortgage by selling only the equity of redemption in the mortgaged premises, or by selling or mortgaging the land, subject in express terms to the previous mortgage; in which case the purchaser or subsequent mortgagee will be entitled to the equity of redemption merely, and cannot question the validity of the prior mortgage.”

In the Crawford case, supra (180 Ill. 143), it was held that the defense of usury is personal to the mortgagor and those in privity with him, but his grantee may make the defense in the absence of any agreement that he is to pay the incumbrance with usury. In that case the owner of property executed a mortgage to secure his note for $2,000 with interest at eight per cent per annum. Afterward the mortgagor conveyed the property by warranty deed for an express consideration of $3,500, “subject to a certain mortgage indebtedness of $2,000 and interest thereon.” Afterward a bill to foreclose the mortgage was filed against the mortgagor and his grantee, but the bill was dismissed as to the mortgagor, leaving the grantee as the sole defendant. The bill as amended alleged that the mortgagor conveyed the premises in question to his grantee for the agreed price of $3,500; that the grantee retained $2,500 of the purchase price to pay the mortgage. The answer denied any deduction from the purchase price on account of the incumbrance or that the grantee retained $2,500 or any sum from the purchase price for the purpose of paying off the mortgage; and further set up the defense of usury on the face of the note, which bore eight per cent interest while the statute allowed but seven per cent. There was no evidence as to the amount of the consideration except the recital in the deed. The trial court held that on account of this recital this defense could not be made. The Supreme Court held this ruling was erroneous, and said, p. 147: “In considering the question as to what shall be regarded as an affirmance by the mortgagor of the amount and validity of the mortgage debt, it is, perhaps, not easy to reconcile all the expressions used in the different opinions. It has sometimes been said, in substance, that if the mortgagor sells the land subject, in express terms, to a previous mortgage, the purchaser cannot question its validity; but when the cases are examined it will be found that additional facts have been required to prevent the grantee from making the defense. In all the cases where it has been held that the grantee cannot question the validity of the mortgage, he has purchased the property on the basis of a clear title, at an agreed price, and has assumed to pay the mortgage debt as a part of the consideration, or the amount of such debt has been deducted from the purchase price of the land on the basis of such clear and complete title. In such cases the grantee has paid to his grantor that part of the purchase price representing the estimated value of the equity of redemption and has reserved the amount of the incumbrance, which he has either agreed to apply in satisfaction of it or which he has held to protect himself against the incumbrance by exercising his option to pay it and save the property or to let it go under the incumbrance. The expression noted above was used in Valentine v. Fish, 45 Ill. 462, but in that case the defense was allowed, although there were four successive conveyances of the mortgaged premises, in which the deeds were made subject, in express terms, to the usurious mortgage. In Maher v. Lanfrom, supra, the case of Valentine v. Fish was discussed, and it was said that although the conveyances were all in terms subject to the mortgage, the defense of usury was allowed to the mortgagor and the remote grantee. It was not considered that there was any estoppel from the mere fact that the conveyances were made subject to the mortgage.”

Under the law as announced in the Crawford case, we are of opinion that the mere recital in the statement filed by the incorporators, which stated that all of the capital stock was to be paid for by conveying the property and business known as the Prairie Garage to the corporation, and that the property was subject to an incumbrance of $62,500 did not preclude the defendant, the Prairie Garage corporation, the assignee of the mortgagors, from interposing the defense of usury. There was some oral evidence offered on the question whether the property conveyed by the incorporators to the corporation in payment of the $75,000 stock, was appraised at $137,500, as tending to show that the $62,500 incumbrance on the property was included in the appraisal; but we think this evidence fails to show that any specific appraisal was made or any specific value placed upon the property. Complainant contends that this oral evidence tends to prove that the property conveyed in payment of the stock was of the value of $150,800. We will not stop to analyze the argument of counsel for complainant in this respect because we are of the opinion it would serve no useful purpose. From a careful consideration of all the evidence in the record, we think there was no specific value placed on the property by the incorporators. But we are further of the opinion that whatever view may be taken of the law, as to whether the defense of usury may be interposed by the grantee of a mortgagor, where the conveyance is made subject to the mortgage, it is of no avail here because there was, in fact, no sale by the mortgagors to the defendant, the Prairie Garage, Inc. The parties who owned the 99-year lease and the garage, and who were operating it, merely changed the form of the interest which they had from a personal interest in the property to a corresponding proportionate interest in the same property in the corporation. The undisputed evidence is that the Katzes and Einhorns agreed among themselves to incorporate for the purpose of continuing the business of conducting the garage, and the assets of the business were transferred to the corporation, each of the persons receiving his or her aliquot part of the capital stock of the business which was transferred to the corporation. As we said in Chicago Smelting & Refining Corp. v. Sullivan, 246 Ill. App. 538, quoting from Andres v. Morgan, 62 Ohio St. 236: “The members of the partnership may be said to have simply put on a new coat. ” See also Acorn Lumber Co. v. Friedlander Box Co., 240 Ill. App. 425. We are also of the opinion that the defendant, the Prairie Garage, Inc., is not precluded by sections 5 and 6 of chapter 74, Cahill’s 1931 Revised Statutes, from interposing the defense of usury. Section 4, ch. 74, provides, in substance, that in written contracts persons may agree upon seven per cent interest, but that with respect to moneys loaned to corporations they may agree upon any rate of interest. By section 5 it is provided, in substance, that no person or corporation shall directly or indirectly receive a greater rate of interest than seven per cent except from a corporation; and by section 6, that if any person or corporation shall contract to receive, except from a corporation, a greater rate of interest than seven per cent upon any written or oral contract, such person or corporation shall forfeit the whole of the interest, and that all contracts executed after the statute shall take effect “except contracts in which a corporation shall be the obligor . . . shall be deemed usurious, and only the principal sum due thereon shall be recoverable.” We think these sections which provide that a contract may be made with a corporation whereby the corporation may agree to pay more than seven per cent, does not apply to the instant case, because the contract here, viz., the promissory notes, was not made by the corporation, the Prairie Garage, but by the Katzes, and the statute provides that if such contract called for more than seven per cent, all of the interest should be forfeited. This was a defense that could be made by the Katzes and is equally available to their assignee, the Prairie Garage. This is the holding in the case of Merchants Exchange Nat. Bank of New York City v. Commercial Warehouse Co. of New York, 49 N. Y. 635.

The defendant, Prairie Garage, Inc., has assigned cross-errors, claiming that the court should have decreed the dismissal of the bill because there was no default at the time the bill was filed, for the reason that when all the payments and the insurance premiums advanced were credited, there remained but $3,180.45 due; that the bill was filed November 23, 1929, and at that time notes numbered 52 and 53 for $16,550 and $16,575 respectively, making a total of $33,125, were not due and did not become due until April 15, 1930. And applying the payments made, as is done by the decree, after eliminating the usury, these two notes, although not due by their terms, were paid, except $3,180.45. The decree was entered July 29, 1932. At that time all of the indebtedness evidenced by the notes was overdue. The decree specifically finds that on August 15, 1928, 1929, and 1930, complainant advanced $1,657 for insurance premiums. So it appears that before the bill was filed there was a default in payment of insurance which complainant advanced in 1928. In a suit in equity the rights of the parties are determined as of the time the decree is entered, as the equities of the case may require, and not at the time the suit is instituted as is the rule in actions • of law. Baker v. Salzenstein, 314 Ill. 226. The court did not err in refusing to dismiss the bill.

A further point is made by complainant that the court erred in reducing the fees of complainant’s solicitors from $3,500, as recommended by the master, to $750, as provided in the decree. There is testimony in the record to the effect that $3,500 would be a usual, reasonable and customary charge for the work performed by complainant’s solicitors, but on cross-examination of the witnesses it was admitted that if the amount involved was but $5,000, such services would be reasonably worth from $750 to $1,000. There is no contest in this case except on the question of the availability of the defense of usury, so it appears that a great part of the services rendered by complainant’s solicitors was unwarranted. Thompson v. Carins, 294 Ill. 270. Upon a consideration of the record on this point, we are unable to say that the finding of the chancellor was so inadequate as to warrant interference on our part.

The decree of the circuit court of Cook county is affirmed.

Decree affirmed.

HcSurely, P. J., and Hatchett, J., concur.


text:
    Paul W. Schroeder, Defendant in Error, v. Electric Apparatus Company, Plaintiff in Error.
    Gen. No. 36,402.
    Opinion filed April 10, 1933.
    Heile, Cavender, Milchrist & Kaiser, for plaintiff in error.
    Edwin L. Waugh, for defendant in error.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff, as assignee of the lessors in a written lease, caused judgment by confession to be entered in the municipal court of Chicago against the defendant lessee for $4,920, $4,900 of which was for rent and $20 for attorney’s fees, and the defendant sues out this writ of error seeking a reversal of the judgment.

The only point made by the defendant is that plaintiff’s statement of claim does not state a cause of action because there is no allegation, as required by section 18 of the Practice Act, that plaintiff, who is the assignee of the lessors, was the bona fide owner of the chose in action, and further, that it fails to allege how and when he acquired title. In Cooper v. Anderson, 246 Ill. App. 1, where suit was brought on a lease by the assignee of the landlord, we held that it was not necessary for the plaintiff to comply with section 18 of the Practice Act because it was not applicable to a suit brought by an assignee of a landlord, but that section 14 of the Landlord and Tenant Act, Cahill’s St. ch. 80, applied. In that case, after stating defendant’s contention that the declaration did not state a cause of action as required by section 18 of the Practice Act, we said, pp. 12 and 13: “ The pleadings, however, disclose that plaintiff’s suit is brought and maintained under the provisions of section 14 of the Landlord and Tenant Act, Cahill’s St. ch. 80. . . . That section, not section 18, is applicable. (See Barnes v. Northern Trust Co., 169 Ill. 112, and Barr v. Florentine Alabaster Co., 174 Ill. App. 256.) ”

Moreover, in the instant case the defendant made no motion to open up or vacate the judgment and for leave to defend; and it has been held in VonHermann v. Berry, 102 Ill. App. 658, that a writ of error will not lie to vacate a judgment entered by confession where the defendant fails to make a motion in the trial court to have the judgment opened up or vacated.

The judgment of the municipal court of Chicago is affirmed.

Affirmed.

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


text:
    Louis Oppenheimer, Appellant, v. Peabody, Houghteling & Company, Appellee.
    Gen. No. 36,426.
    Opinion filed April 10, 1933.
    Alfred M. Loeser and Jaffe & Green, for appellant. >

    Peabody, Westbrook, Watson & Stephenson, for appellee; Mark R. Hart, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff brought suit against defendant to recover $2,000 he had paid defendant for the purchase of certain bonds, which sale he claimed had been illegally made because there had been no compliance with the Illinois Securities Law. There was a trial before the court without a jury, and at the close of plaintiff’s case, on motion of defendant, the court found against plaintiff, judgment was entered on the finding and plaintiff appeals.

Plaintiff alleged in his statement of claim that on October 18, 1927, and February 16, 1928, defendant sold him two first mortgage bonds of the Gotfredson Corporation, Limited, organized and doing business under the laws of the Province of Ontario, Canada, for which he paid $2,000; that these bonds were not Class A, Class B, or Class C securities as described in the Illinois Securities Law of this State but were Class D securities as described in section 8 of that act, Cahill’s St. ch. 32, and that defendant had not complied with the Illinois Securities Law by filing certain documents with the Secretary of State. Plaintiff further alleged that the Gotfredson Corporation, the issuer of the bonds, was a foreign corporation and had not complied with section 39 of the same act, Cahill’s St. ch. 32, If 292; that he had tendered the bonds to defendant and demanded his money, which defendant refused.

Defendant admitted in its affidavit of merits that on February 16,1928, it had sold one of the bonds to plaintiff, and that on October 18, 1927, it delivered to plaintiff another bond in exchange for one of the Sinclair Consolidated Oil Corporation bonds. It denied that the bonds of the Canadian company were Class D securities, and alleged that at the time of the sale and exchange of the bonds they had been qualified for sale by the defendant under the Illinois Securities Law as Class C securities, and averred that the transaction was legal in every respect.

The evidence shows that plaintiff bought the two bonds from defendant, paying for them with money and the Sinclair bond; that the bonds were executed by the Gotfredson Corporation of the Province of Ontario, Canada, and that plaintiff tendered the two bonds to defendant and demanded his money, which was refused. Plaintiff also offered (and it was admitted over defendant’s objection) a certificate from the Secretary of State of Illinois, certifying that the Gotfredson Corporation was not licensed to transact business in this State, and offered further evidence as to the usual, reasonable and customary fee for such services as plaintiff’s counsel had performed in the case. This is substantially all the evidence in the record. ,

Plaintiff contends that since the Gotfredson Corporation, issuer of the bonds, was a foreign corporation, it could not qualify its bonds so that they might be legally sold in this State until it had complied with the law regulating the admission of foreign corporations to transact business in this State and also with the Illinois Securities Law, and that having failed to do either, the sale was void. In suport of this it is argued that section 39 of the Illinois Securities Law, Cahill’s 1931 St. p. 784, requires a foreign corporation that desires to sell its securities in this State to file certain documents and statements with the Secretary of State, and that such statements and documents shall not be filed until such foreign corporation has complied-with the law regulating the admission of foreign corporations to transact business in this State, and that it is the public policy of this State to render void all transactions made with foreign corporations where such corporations have not complied with all the laws of this State relating to foreign corporations. We think there is no merit in this contention. The bonds in this case were not sold by the Gotfredson Corporation but by defendant, Peabody, Houghteling Company, an Illinois corporation. And there was no offer to prove that the bonds were Class D securities.

Plaintiff further contends that since it was admitted in the pleading that the bonds in question were not Class A or Class B securities, they must be in either Class C or D, which required that the bonds be qualified under the Illinois Securities Law before they could be legally sold, and that “The plaintiff contends that the securities sold to him show on their face that they are Class D securities. Hence, it was incumbent upon defendant to show the contrary, i. e., that the securities were Class C as claimed in its plea”; that defendant submitted no evidence showing that the bonds were Class C securities; and that this burden was cast upon defendant by virtue of the 2nd paragraph of section 37 of the Illinois Securities Law. That paragraph is as follows: “In any action, civil or criminal, where the seller or issuer relies for his defense upon any of the exemptions provided for in this Act, the burden of proof to establish such exemption shall be upon such issuer or seller.” Plaintiff alleged in his statement of claim that the bonds in question were not securities in Class A, B, or C, but that they were “securities in Class ‘D’ as described in section 8 of said law.” We think that paragraph 2 of section 37, above quoted, does not place the burden upon the defendant to prove that the bonds in question belonged to any particular class of securities but applies to exemptions some of which are those mentioned in section 5 of the act. Plot v. Chartrand, 237 Ill. App. 117. Under section 5 it is provided that under certain conditions one may sell his own property for his own account; that capital stock of a corporation when sold to its stockholders without the payment of any expense or commissions to agents, solicitors or brokers, securities when sold by any bank or trust company, etc., securities when sold to any corporation or broker or dealer in securities, when securities are sold at judicial sale or by a receiver in bankruptcy at public auction, need not be qualified under the act. Section 5, it is true, refers specifically to Class B securities, and section 4 of the act, in defining Class A securities, among other things, defines one class of A securities as those listed and dealt in on the New York, Boston and Chicago exchanges; and it has been held that if in a particular case the defendant seeks to show that stocks were listed on such exchanges to escape liability, the burden is on the defendant to show that fact. Trakas v. Cokins, 224 Ill. App. 327. We think the foregoing are some of the exemptions referred to in paragraph 2 of section 37.

Since in the instant case plaintiff in his pleading-predicated his right to a recovery on the claim that the bonds in question were Class D securities, the burden was upon him to sustain this allegation. People v. Revesz, 229 Ill. App. 616; Piot v. Chartrand, 237 Ill. App. 117; People v. Gillett, 243 Ill. App. 41. To sustain his contention plaintiff relies chiefly upon Abhau v. Grassie, 262 Ill. 636; People v. Love, 310 Ill. 558; Trakas v. Cokins, 224 Ill. App. 327, and Dobal v. Guardian Finance Corp., 251 Ill. App. 220.

' The Abhau, case was a bill to enforce a mechanic’s lien. The defense was that complainant had not taken out a license as contractor as required by an ordinance of the City of Chicago. A decree was entered in complainant’s favor and an appeal taken direct to the Supreme Court, claiming section 4 of the Mechanics’ Liens Act was unconstitutional. There was no evidence in the record as to whether complainant had a contractor’s license as required by the city ordinance — no proof was offered on this question by either side. And the question discussed was, On whom was the burden of proof 1 The court held that no general rule could be laid down to' govern each case but that each case depended largely upon the particular facts, and that the authorities were not in harmony. The court held in that case that the burden was on the defendant, who had set up such defense in his answer. The court discussed a number of autkorities, some of which hold that in an indictment or in a penal action for violating a statute, where the prosecution is in behalf of the People, the authorities agree that the burden is on the defendant. The court further held that the weight of authority is to the effect that where the question of such a license was only collaterally involved, the license would be presumed unless there was proof to the contrary by the other party. And continuing the court said (p. 639): “The courts have also usually held that a defense against foreign corporations suing in the State, based on non-compliance with the acts as to foreign corporations, is an affirmative one, the burden of proving noncompliance resting upon the person asserting it.” In that case the Illinois Securities Act was in no way involved, and the court only announces the general rule as to which side has the burden of proof in a particular case.

In the Love case (310 Ill. 558), the defendants were indicted for selling Class D securities without complying with the Illinois Securities Law. The evidence showed that the securities were all of Class D. A paragraph of the syllabus is: “An indictment charging defendants with the sale of Class ‘D’ securities without compliance with the Securities Act need not negative the exemptions enumerated in section 5 of the act, as that is a matter of defense.” The court there said (p. 564): “Counsel for plaintiffs in error argue that securities which fall under Class ‘D’ may be treated as under Class ‘B’ where the circumstances of of the sale are such as to come within some one provision of section 5 relating to sales of securities in Class ‘B’; that there is no violation of the statute in this case because the only sale charged in the indictment was made to John W. Howard, who was a stockholder in the issuer corporation, and that under paragraph 2 of section 5 of the act plaintiffs in error were entitled to sell the stock to him without first filing a statement with the Secretary of State.” The court then said that even if the legal contention be sustained, the evidence in the case was contrary to the defendant’s contention; that the evidence showed the stock was sold and not distributed among its stockholders without payment of commissions or expenses (which sales were exempted by that section), and that the sale was not an isolated one, which was also exempted by the act, because the evidence showed there were other sales and that the seller had received compensation for his services in disposing of the stock. The court continuing said (p. 566): “Without deciding whether class *D’ securities may be exempt as under class ‘B,’ the record does not show the sale to come within the provisions of paragraph 2 of section 5 of the act.” It was further contended in that case that the indictment did not charge the commission of a crime because it did not negative the exemptions enumerated in section 5. The court held that since the indictment charged the sale of Class D securities without compliance with the act, it was not necessary to allege further that the stock was not such stock as was exempted by section 5. On this question the court said (p. 567): “Nor is it necessary that the indictment negative the exemptions enumerated in section 5 of the statute. The offense lies in selling class ‘D’ securities without full compliance with the Securities Law. If there has not been a compliance with the law plaintiffs in error are guilty. If they did not make such sales, or in making them complied with the statute, such is a matter of defense which will defeat the action. The indictment is sufficient.” The Love case does not hold, as counsel for plaintiff contends, that the burden was on defendant to prove that the bonds in question were not Class D securities but were Class C securities. On the contrary We think it holds, in effect, that where one is charged with violating the Securities Law by selling Class D securities without compliance with that law, the burden is upon the one making such charge, and the strong intimation is that the exemptions mentioned in paragraph 2 of section. 37 of the act refer to the exemptions mentioned in section 5 of the act, as we have above stated. We think the holding in the Love case warranted the trial court in entering judgment against the plaintiff.

We have examined all the other eases cited by the plaintiff but are clearly of the opinion that none of them is in point and that it would serve no useful purpose to discuss them here.

Plaintiff having alleged in- his statement of claim that the bonds sold by the defendant to him were Class D securities, the burden of proof to sustain this fact was upon him, and since he offered no proof on this question the judgment of the municipal court of Chicago is affirmed.

Affirmed.

McStjrely, P. J., and Hatchett, J., concur.


text:
    In re Petition of Frank Gaida, Insolvent Debtor. Frank J. Gaida, Appellee, v. Peter Florian, Administrator of the Estate of Katharine Florian, Deceased, Appellant.
    Gen. No. 36,442.

      Opinion filed April 10, 1933.
    M. Mayhall Smith, for appellant.
    No appearance for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

Frank J. Gaida filed his petition in the county court of Cook county, praying that he be discharged from the custody of the sheriff, who held him under a capias issued under a judgment rendered against him in an action brought under the Injuries Act, Cahill’s St. ch. 70, in the circuit court of Cook county. There was a hearing before the court and he was discharged, and the administrator, who was the plaintiff in the circuit court case, appeals.

The record discloses that Peter Florian, as administrator of the estate of Katharine Florian, deceased, brought an action in the circuit court of Cook county against Gaida to recover for the alleged wrongful death of the deceased and there was a verdict and judgment in plaintiff’s favor. In the instant case the question for decision is, Was malice the gist of the action in the circuit court? If it was, the judgment of the county court discharging Gaida from the custody of the sheriff was wrong and must be reversed. Section 2, ch. 72, Cahill’s 1931 Statutes, page 1606. Levy v. Schikowski, 239 Ill. App. 447. The amended declaration on which the case was tried in the circuit court was in three counts. The first charged that Gaida, the defendant in that case, negligently drove his automobile, as a result of which plaintiff’s intestate, a child of nine years, was struck and killed. The second count charged that Gaida wilfully, intentionally and maliciously drove and operated his machine, as a result of which the child was fatally injured, and the third count charged him with “wilfully and maliciously and without provocation and under circumstances showing an abandoned and malignant heart and with intent then and there to inflict bodily injury, contrary to the statute,” and that as a result of such conduct the child was struck and killed.

In addition to the general verdict finding the defendant guilty and assessing plaintiff’s damages at the sum of $3,000, the jury answered a special interrogatory submitted at the request of counsel for defendant, which interrogatory and answer were as follows: “Was the defendant, Frank J. Gaida, guilty of reckless, wilful and wanton driving at the time of the accident to plaintiff’s intestate? Answer: Yes.” The jury having specifically found that Gaida was guilty of reckless, wilful and wanton driving at the time the child was struck and fatally injured, it was a finding - that defendant was guilty of legal malice. Walldren Express Co. v. Krug, 291 Ill. 472. The special finding was applicable only to the second and third counts of the declaration. Without the special finding, the second and third counts and the general verdict of guilty would not necessarily or affirmatively prove that malice was the gist of the action. Levy v. Schikowski, 239 Ill. App. 447. But with the special verdict in the record before us, the question of whether malice was the gist of the action in the circuit court was adjudicated (Jernberg v. Mix, 199 Ill. 254) and was not the subject of further inquiry in the county court. For this reason the court erred in permitting Gaida to testify as to what the evidence showed on the trial in the circuit court.

It having been adjudicated in the circuit court case that malice was the gist of that action, the court erred in discharging Gaida from the custody of the sheriff, and for that reason the judgment of the county court is reversed and the cause remanded with directions to remand Gaida to the custody of the sheriff of Cook county.

Reversed and remanded with directions.

McSurely, P. J., and Hatchett, J., concur.


text:
    West Side Trust & Savings Bank, Appellant, v. H. Gerstein, Appellee.
    Gen. No. 36,453.

      Opinion filed April 10, 1933.
    John M. Lee and Earl V. Brown, for appellant; Thomas J. Carroll, of counsel.
    No appearance for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff brought an action of forcible detainer against the defendant to recover possession of an apartment. At the close of the evidence there was a finding and judgment in defendant’s favor, and plaintiff appeals.

Plaintiff was the trustee in a deed of trust conveying the premises securing an indebtedness of $45,000. There was default in the payment of an instalment of principal and also in the payment of interest, and by reason of such defaults plaintiff, in accordance with the terms of the trust deed, served notice on the defendant tenant that plaintiff under the terms of the trust deed elected to collect the rents from the tenants and notified the defendant to pay the rent to it. The rent not having been paid, plaintiff served a written notice on defendant demanding immediate possession of the apartment, and defendant having failed to comply with such notice, the instant action was brought.

The evidence further shows that plaintiff employed a janitor and furnished coal and endeavored to take possession of the entire building. Jacob Pollack, one of the mortgagors named in the trust deed, called by the defendant, testified that he was the owner of the building in which the apartment in question is located; that he did not authorize plaintiff to hire a janitor or to buy coal or to collect any rents from the tenants.

No brief has been filed on behalf of defendant, but an examination of the record discloses that the court based his decision on the case of Rohrer v. Deatherage, 336 Ill. 450, from the syllabus of which he read the following : “Upon default in the condition of a mortgage the mortgagee may sue the mortgagor in assumpsit for a judgment upon the personal obligation, he may sue in equity for the foreclosure of the mortgage, or he may ^recovér possession of the mortgaged property by an action of ejectment; and these remedies are concurrent or successive, as the mortgagee may deem proper, and he may pursue any two or all three of the remedies simultaneously. ” It is apparent that the court was of the opinion that the three remedies mentioned in the above quotation were all the remedies available to plaintiff in any circumstances. We think this is a misapprehension. In the Bohrer case the court was not deciding that in no circumstances could the mortgagee have any other remedy. Obviously the court was not considering the question before us, namely, whether the trustee in a trust deed upon condition broken, where the rents and profits are pledged as security for the indebtedness, might not maintain forcible detainer in case the tenant refused to pay the rent to the trustee after proper notice.

So far as we are advised, neither this court nor the Supreme Court of this State has passed squarely on this question. But the underlying principles have all been passed upon many times. In the Rohrer case, supra (336 Ill. 450), the court said (p. 454): “In this State a mortgagor is the legal owner of the mortgaged premises against all persons except the mortgagee and his assigns. (Williams v. Williams, 270 Ill. 552; City of Chicago v. Sullivan Machinery Co., 269 id. 58; Seaman v. Bisbee, 163 id. 91; Barrett v. Hinckley, 124 id. 32; Emory v. Keighan, 88 id. 482; Hall v. Lance, 25 id. 277.) While a mortgage conveys a title as between the mortgagor and the mortgagee, it is only a qualified title as security for the creditor during the existence of the debt, and the mortgagor is regarded as the owner of the land for all beneficial purposes, subject only to the rights of the mortgagee. (Theiner v. Speckin, 290 Ill. 181; Fitch v. Pinckard, 4 Scam. 69.) After condition broken, however, the mortgagee is, as between him and the mortgagor, the owner of the fee.” And continuing the court said (p. 455): “Upon default in the condition of the mortgage the mortgagee has the right to possession against the mortgagor, his grantee, lessee or anyone claiming under him by any right. ’ ’ And in Lightcap v. Bradley, 186 Ill. 510, it was said (p. 520): “For the purpose of protecting and enforcing his security the mortgagee may enter and hold possession by virtue of his title and take the rents and profits in payment of his mortgage debt. . . . When the rents and profits have paid the mortgage debt, both the title and right of possession of the mortgagee are at an end. ’ ’

Under the authorities cited, where a trust deed conveys the rents as security for the indebtedness upon condition broken, the trustee may take possession of the premises, collect the rent and apply it on the indebtedness. And if the rents collected by him are sufficient to pay the indebtedness both the title and right of possession in the trustee are at an end; and this is especially true in the instant case where the trust deed provides that in case of default the trustee may enter upon and take possession of the mortgaged premises and lease the same or any part thereof, etc. If a trustee in such circumstances is entitled to possession and to the rents, may he maintain an action of forcible detainer where the tenant refuses to pay rent or to vacate the premises'? We think this question must be answered in the affirmative. Section 2 of the Forcible Entry and Detainer Act, ch. 57, Cahill’s 1931 St., provides that the person entitled to the possession of lands or tenements may maintain an action to obtain possession of the land or tenements. “Second — When a peaceable entry is made, and the possession unlawfully withheld. . . . Fourth — When any lessee of the lands or tenements, . . . holds possession without right, after the determination of the lease or tenancy by its own limitation, . . . or by notice to quit, or otherwise. ’ ’

We think the instant case comes within the provisions of the second and fourth paragraphs of section 2, above quoted. The defendant was a tenant in the apartment in question and therefore his entry was peaceable, but when he refused to pay rent or surrender possession to.plaintiff he unlawfully withheld possession from plaintiff. Plaintiff therefore comes within the second paragraph and may maintain an action in forcible detainer; and by the fourth paragraph of section 2 it is provided that where the lessee holds possession without right after the termination of his tenancy, an action of forcible detainer will likewise lie. By this paragraph also plaintiff was entitled to maintain the instant case.

The judgment of the municipal court of Chicago is reversed and the cause remanded with directions to that court to enter judgment in favor of plaintiff and against defendant.

Reversed and remanded with directions.

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