author: Mr. Justice Gridley

text:
    Samuel Mitchell and Cody Trust Company, Appellants, v. Jack Robinovitz et al., Defendants. Peerling Marble Company et al., Appellees.
    Gen. No. 36,544.
    Opinion filed November 21, 1933.
    Defress, Buckingham, Jones & Hoffman and Frank Madden, for appellants; Vincent O’Brien and Frank Madden, of counsel.
    A. S. and E. W. Froehlich, Alfred Lubin, Nelson, Burton & Quindry and Frances E. Spooner, for appellees ; Edmund W. Froehlich and Alfred Lubin, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

This appeal is prosecuted by complainants to reverse a decree of the circuit court of Cook county, entered December 9, 1932, and amended December 12, 1932, in a foreclosure proceeding, in which the four cross complainants were mechanics’ lien claimants. The controversy arises over those portions of the amended decree which award to the cross complainants prior liens, over that of the holder of certain bonds secured by the first mortgage, as to the building or improvements on the property.

A bill was filed in the circuit court by Alexander T. Spare and Chicago Title & Trust Co., as trustee, for the foreclosure of- a second mortgage recorded ¡as document No. 9904612. Among the parties made defendants were the four lien claimants, who severally filed intervening petitions or cross-bills seeking a foreclosure of their liens. Subsequently in the same court complainants filed their bill for a partial foreclosure of the first mortgage, recorded December 28, 1927, as Document No. 9882519, making said lien claimants and others parties defendants, and they filed answers and cross-bills. Thereafter the two causes were consolidated as Mitchell et al. v. Robinovitz et al., No. B-194087, and the consolidated causes were referred to a master to take proofs and report his conclusions. The master’s lengthy report was filed on December 16, 1931. There was also a supplemental report.

The complainant, Mitchell, owned and held certain matured bonds and coupons, secured by the first mortgage, which had not been paid, and the master found what was the amount due to him. The master also found the respective amounts due to said four lien claimants, but recommended that the question of their “right to priority against improvements” be reserved “until after the entry of the decree herein and the sale of the premises.” The master also found that numerous other parties had furnished labor and materials in the erection of the building which had enhanced the value of the premises, that some had valid liens and that others had waived their liens, etc. Complainants filed exceptions to the master’s report to the effect (a) that he had “failed to find the order of priority of the liens of various parties upon the. premises, ’ ’ and (2) that he had failed to find that the liens of the four lien claimants “are prior on the improvements on the property . . . only to the extent that their respective work and labor had enhanced the value of said improvements.” In the decree as amended, which was entered after argument upon the exceptions, it is recited that no exceptions to the master’s reports were taken except those of the complainants, and it is ordered that such exceptions be overruled and that the reports of the master be approved and confirmed. And the court found the particular amount that was due to the complainant, Mitchell, as the owner and holder of certain bonds secured by the first mortgage, and also the amounts that were due respectively to said four lien claimants, for which each “has a lien hereinafter more particularly defined.” And among other findings of the court are the following:

• “8. That by agreement of Edmund W. Froehlich, assignee of the claim of Oscar F. Peterson, and by agreement of the other parties to the cause, said Froehlich stipulates that its priority be found to coordinate with that found in favor of Floor-it Company and other liens hereinafter found to be co-ordinate with that of the lien of Floor-it Company.

“9. That to secure the sums, respectively, found due the defendants (naming said four lien claimants), they have, without priority or preference between them, valid and subsisting liens upon said premises, which liens are, as to the vacant land, subordinate and inferior to, first, the lien of trust deed Document No. 9882519, hereinafter found, and second, to the lien hereinafter found of trust deed Document No. 9904612, and which liens are, as to the entire improvement erected and now standing on said premises prior and superior to the claim and lien on said improvement of each and every of the remaining parties to this cause, including said ‘Unknown Owners.’

“10. That to secure the sums found due Samuel Mitchell, he has a valid and subsisting lien on said premises, including the land and improvements, as to the vacant land only subordinate and inferior, .first, to the continuing lien of said trust deed Document No. 9882519, as security for the payment of all bonds and coupons maturing subsequent to December 1,1930, and of all costs and charges accruing thereunder, and as to the improvements on said premises subordinate and inferior only to the liens on said improvements hereinabove found in favor of the defendants (naming said four lien claimants), and to the continuing lien of said trust deed Document No. 9882519, as security for the payment of all bonds and coupons maturing subsequent to December 1, 1930, and to all costs and charges accruing thereunder, but prior to the rights of all other parties to the above entitled cause.”

And the court ordered and decreed inter alia that, unless the several amounts found due to Mitchell, and also to said four lien claimants, and also to certain other named parties, are paid to them within 10 days from the date of the entry of this decree, then the said real estate, building, etc. shall be sold at public auction for cash to the highest and best bidder; that the master execute the decree, give notice of the time and place of the sale and give to the purchaser a certificate of sale, recording a duplicate thereof; and that out of the proceeds of the sale the master retain his disbursements and commissions and pay the taxed costs, and hold the entire remainder subject to the further order of the court, “the court hereby expressly reserving jurisdiction to ascertain the relative value of the land and improvements . . . and to direct distribution accordingly.”

Counsel for complainants, in urging a reversal or modification of the decree, state in their printed brief and argument here filed the opposing theories of the parties substantially as follows: That complainants’ theory is that under section 16 of the Mechanics’ Liens Act, Cahill’s St. ch. 82, 16, the lien creditor is preferred as against the prior mortgagee “only as to the value of the improvements erected on the premises by him, and not to the value of the entire improvement erected by himself and the other contractors”; and that the theory of said four lien claimants is that they are “to be. preferred to the value of the entire improvement erected by all contractors and not merely to the value of the particular improvements erected by them.” In another part of their brief complainants’ counsel state their contention as follows:

“As against a prior mortgagee a contractor is preferred only to the value of the improvements erected by him, and the mortgagee is preferred to the extent of the value of the land, including in that term, the-enhanced value produced by labor and materials furnished by other contractors who have been paid, or who have waived, released or failed within the necessary time to assert their liens.”

In section 16 of the present Mechanics’ Liens Act, which became in force on July 1, 1903, it is provided in part as follows: (Cahill’s St. 1931, ch. 82, 16, p.1800):

“No incumbrance upon land, created before or after the making of the contract under the provisions of this act, shall operate upon the building erected, or materials furnished, until a lien in favor of the persons having done work or furnished material shall have been satisfied, and upon questions arising between incumbrancers and lien creditors, all previous incumbrances shall be preferred to the extent of the value of the land at the time of making of the contract, . . . and the lien creditor shall be preferred to the value of the improvements erected on said premises, . . . and the court shall ascertain by jury or otherwise, as the case may require, what proportion of the proceeds of any sale shall be paid to the several parties in interest. . . . ”

It will be noticed that in the section it is provided that no prior incumbrance upon the land “shall operate upon the building erected or materials furnished, until a lien in favor of the persons having done work or furnished material shall have been satisfied,” and that “the lien creditor shall be preferred to the value of the improvements erected on said premises.” It will further be noticed that the section does not specifically provide, as complainants’ counsel would have it construed, that the lien creditor shall be preferred only to the value of the improvements erected by him upon the premises. And we have not been cited to any decision of our Supreme Court, or of any of our appellate courts, where the particular construction contended for has been adopted in a case arising since the present section 16 has been in force.

In the case of Albrecht v. Buelow, 191 Ill. App. 481, decided in February, 1915, this division of this court had occasion to compare said section 16 with similar provisions in former mechanics ’ lien acts, and we said (p. 487):

“The above quoted portion of section 16 of the present Act is substantially the same as section 20 of the ‘Liens’ Act of 1845 (Laws 1845, p. 347), and'also substantially the same as section 17 of the ‘Liens’ Act of 1874 (Hurd’s Stat. 1874, p. 667), with the exception that in both of said sections of the prior ac£s the words contained in the present section 16, included between the asterisks above shown, do not appear. In the ‘Mechanic’s Liens’ Act of 1895 (Laws 1895, p. 232) it was provided in section 16 thereof that the lien creditors should be preferred to the extent that the market value of the land was ‘enhanced’ by reason of the improvements, and further that where, after a trust deed or mortgage has been recorded, contracts shall be made for the improvement of the property, and the owner shall pay for labor or material in such improvement, ‘the enhanced value thereby given shall be treated as a fund in which the mortgagee and lien-holder shall participate pro rata.’ When the present new act was passed in 1903 the said sections of the Acts of 1845 and 1874 were substantially re-enacted with the addition of said clause, ‘ and the lien creditor shall be preferred to the value of the improvements erected on said premises. ’ ’ ’

In Raymond v. Ewing, 26 Ill. 329, decided in 1861, the court says (p. 343):

“The deed of trust constituted a first lien upon the premises, and improvements thereon at the time the trust deed was recorded; but the statute gives the /mechanics and material men liens, paramount to the trust deed, upon the improvements made by them upon the premises, and the court should have ascertained, by reference or otherwise, the value of these improvements as compared with the whole value of the premises, and given to the petitioners in the lien suit their due proportion of the proceeds of the premises, according to the provisions of the statute. ’ ’

In North Presbyterian Church of Chicago v. Jevne, 32 Ill. 214, decided in 1863, it appears that Jevne and others filed separate petitions claiming mechanics’ liens on the premises for labor and materials severally furnished in the erection of the church edifice; that these petitions were consolidated in one proceeding; that the church, being the owner of other lots exchanged them for the lots in controversy, and, in order to erect the proposed edifice thereon, was compelled to borrow $12,000; that accordingly the church mortgaged the premises to one Lee, for a loan made by him of $12,000, and a conveyance was made to one Hunger; that thereafter in the construction of the edifice about $20,000 in cash was paid out for labor and materials to various workmen and material men, including partial payments made to petitioners; that it was insisted by defendants that “the value paid on the work and materials ought to be added to the naked value of the lots, in favor of defendant, Lee, in the distribution of the proceeds of the sale of the premises”; and that a decree was entered in favor of the petitioners. In reversing the decree because of certain errors therein and remanding the cause for further proceedings, the Supreme Court, after referring to various sections of the then existing “Liens” Act, including section 20 thereof, said (p. 220):

“It will be seen that the mortgagee had a first lien upon the lots, to the full extent of their value, if required to pay his debt. He also had a subsequent lien on the building, subject to the first lien of the workmen thereon. They in like manner had a prior lien on the edifice, and a subsequent lien on the lots. These were the rights, and this was the relation of the parties. Each had a right to have his debt satisfied out of the fund upon which he had a first lien; and if it was not sufficient, out of any surplus that might remain after satisfying that lien.

“The court should therefore have, by a jury or master, ascertained the separate value of the lots, and of the building, and upon it decreed the payment of the several claims. By it the court should have ordered the payment of the mortgage out of the proportion of the fund arising from the lots, and the mechanics out of that arising from the building. If the lots were three-tenths of the value of the entire property, then that proportion of the money should be applied to the payment of the mortgage, and the other seven-tenths to the payment of the lien of the mechanics. If the whole of either fund were not necessary to pay the lien upon it, that lien should be paid in full, and then, if necessary, the surplus of that fund should be applied to the unpaid portion of the lien on the other fund. And if any surplus remained after paying all the claim, it would be paid to the owners. ’ ’

Other subsequent cases decided by our Supreme Court, wherein the holdings in Raymond v. Ewing, supra, and Presbyterian Church v. Jevne, supra, are substantially followed, are Croskey v. Northwestern Mfg. Co. (1868), 48 Ill. 481, 484, 485; Howett v. Selby (1870), 54 Ill. 151, 152; Wing v. Carr (1877), 86 Ill. 347, 351; Grundeis v. Hartwell (1878), 90 Ill. 324, 326; Bradley v. Simpson (1879), 93 Ill. 93, 95, 96; and Condict v. Flower (1883), 106 Ill. 105, 119.

The one Illinois case, relied upon by complainants’ counsel to sustain their theory or contention, is that of Clark v. Moore, 64 Ill. 273, in which the decree under review was entered in the circuit court of LaSalle county in 1870. It appears from the opinion (p. 282) that one of the contentions urged for a reversal of the decree was that “the court erred in preferring the lien of the mortgages in that portion of the improvements' which were paid for by Wells (the owner), whilst erecting and completing the building, to the material-men,” and that in the decree the court had found “that the property was worth, before the improvements were made, the sum of $3,500; that appellees and appellants contributed about $14,000 in materials to the building and machinery; and that Wells, the owner, paid about $9,000 for the improvements placed on the property.” In discussing the particular contention and deciding against it, the court, after referring to the pertinent existing statute and citing with approval the holdings in the prior Jevne, Croskey and Howett cases, supra; said (pp. 282, 283, italics purs):

“But where, as in this case, there is a large proportion of the enhanced value of the property produced by the owner paying for labor and material furnished by others than the parties to the suit, the question arises whether the mechanics and material-men shall have it appropriated to the payment of their liens, or shall it be applied to the prior incumbrances, or shall it be treated as a fund in which both may participate pro rata. In such a case, the enhanced value produced by the payment of money by the owner, whilst the work was progressing, should be applied to the satisfaction of the mortgages on the property; and if any portion of the fund thus created shall remain, to be applied to the satisfaction of the liens for labor and materials.”

We have been unable to find that these particular holdings in Clark v. Moore have been followed, discussed or distinguished in any subsequent decision of our Supreme Court. However, it is our opinion that the holdings should not be considered as sustaining complainants’ counsels’ contention, above mentioned. They are based on the fact that the owner, Wells, had paid out large sums of money “for labor and material furnished by others than the parties to the suit.” In the record in the present case we fail to find evidence of the owner of the premises involved making such payments. And while the present record discloses that material men, other than said four lien claimants, waived, released or failed within the necessary time to assert their liens, we are further of the opinion that counsels ’ said contention is contrary to the provisions of section 16 of the present Act and also contrary to numerous decisions in this State, above referred to, construing similar provisions in prior acts.

As to certain British Columbia and Saskatchewan decisions, also cited by complainants’ counsel in support of their contention, we do not think they are persuasive as the statutes upon which they are based are somewhat different from our present statute, and we believe said decisions to be contrary to the current of authority in this State.

Our conclusion is that the circuit court did not err in entering the decree of December 9,1932, as amended, and, accordingly, the same is affirmed.

Affirmed.

Sullivan, P. J., and Scanlan, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Ferdinand W. Peck, Jr., Appellant, v. Harold Beacom, Appellee.
    Gen. No. 36,566.

      Opinion filed November 21, 1933.
    Rehearing denied December 4, 1933.
    Schein & Beckwith, for appellant; Joseph M. Cohen, of counsel.
    Harold A. Smith and Douglas C. Moir, for appellee.
   Mr. Justice Gridley

delivered the opinion of the court.

By this appeal complainant seeks to reverse a decree of the circuit court, entered November 18, 1932, wherein the court sustained defendant’s demurrer to complainant’s amended bill for specific performance of defendant’s contract or agreement, on the ground that complainant had an adequate remedy at law, and, complainant electing to stand by the bill, dismissed the same for want of equity, but “without prejudice to complainant’s right to proceed at law upon the facts charged in said bill.” The salient facts, as alleged in the bill and admitted on the hearing of the demurrer to be true, are in substance as follows:

That the parties are both residents of Chicago, Illinois ; that on February 20,1931, defendant, by his written agreement of that date (copy attached and made a part of the bill) “agreed to purchase from complainant forty (40) stock units, each unit comprising one (1) share of the preferred stock and one-half (%) share of the common stock of the Lake Gas Company, an Ohio corporation, and to pay for the same at the rate of $125 per unit upon his demand, said stock units to be delivered to defendant as soon thereafter as certificates may be issued in his name by said Lake Gas Company”; that complainant has often demanded and now demands of defendant the sum of $5,000, representing the purchase price of said forty stock units, and has often tendered and now tenders to defendant certificates of stock of said Company equal to said forty stock units, but that defendant has refused and still refuses to pay said sum or to accept said forty stock units in disregard of his said agreement; that the Lake Gras Company is an Ohio corporation and “engaged in the business of distributing gas for lighting and heating purposes to various consumers in certain communities in the State of Ohio; ’ ’ that it commenced business operations in December, 1930; that “its tangible assets” consist of a system of gas mains, pipe lines, buildings, meters and other operating equipment; that “its chief assets,” and those which primarily impart value to its stock, “are wholly intangible and uncertain, consisting of valuable but determinate franchises for the distribution of gas granted to it by the State of Ohio,” and similar franchises by various communities in that State, and also “rights of way” granted to it by said State and various counties and communities therein, which said rights of way exist at the will of the grantors, and also “the privilege of selling and distributing gas at rates fixed by the Public Utilities • Commission of Ohio, but subject to be changed at the will of said Commission”; that various other factors “contributing to make said stock highly uncertain and speculative in value,” are “that the company has no exclusive franchises, but it is at present operating in certain communities without franchises and subject in such operations to the will of such communities, and that all of its franchises are of short duration and uncertain as to renewal”; that no dividends have ever been paid on either its preferred or common stock; that said stock “is not and never has been listed on any stock exchange ’ ’; that none of the company’s shares “has ever been sold upon the open market or offered for sale to the public .generally”; that said stock “has never had and does not now have any market value”; that both the common and preferred stock “is closely held and is not obtainable in the open market”; that all of the common and preferred stock, except that which is owned by complainant, “is owned exclusively by the Lake Gas Corporation, an Indiana corporation”; that complainant “has made frequent efforts to sell certain of said preferred and common stock (which he owns in addition to that sold to defendant), but has been utterly unable to do so at any price or in any amount”; that'there have been no recent transfers of either the preferred or common stock; that by virtue of the foregoing the stock “has no fixed or ascertainable market value”; and that complainant has often demanded of defendant that he specifically perform said agreement, but defendant has failed and refused, and still refuses, so to do, etc.

The prayer is that defendant answer the bill, but not under oath/ and that defendant may be compelled by a decree specifically to perform his agreement with complainant, and to pay to complainant “the purchase price for said stock of $5,000, with interest, — complainant being willing and hereby offering to perform the said agreement on his part, and, on being paid said purchase price and interest, to transfer and deliver the proper certificates to defendant,” etc.

Two contentions are made by complainant’s counsel as ground for a reversal of the decree, in substance (1) that the amended bill on its face0 shows that complainant has not an adequate remedy at law, in that the stock in question has no market value and its actual value is difficult of ascertainment, and, hence, in an action at law complainant’s damages, on account of defendant’s refusal to accept and pay for the stock, cannot be measured; and (2) that the remedy in cases of specific performance is mutual, so that either a vendor or a vendee may avail himself of it.

After reviewing the allegations of the amended'bill and numerous authorities, we are of the opinion that there is substantial merit in both of counsels’ contentions, and that the court should have overruled defendant’s demurrer to the bill. In Pomeroy’s Specific Performance of Contracts, 3rd Ed., 1926, page 53, sec. 19, it is said in a note: “The prevailing American rule now is that contracts for the sale of stock that has no recognized market value, or which is not readily procurable except from the defendant, will be specifically enforced.” Among the cases cited by the writer, as sustaining the statement, are the Illinois cases of Hills v. McMunn, 232 Ill. 488, 499; Smurr v. Kamen, 301 Ill. 179, 188; and Cazier v. Mohr, 197 Ill. App. 550, 555. In the Hills case it is said: “It is also contended that the case made by the bill and proofs shows no grounds for the interposition of a court of equity, and that if appellant has any remedy the law will afford adequate relief. The stock of the United States Steel Piling Company is not shown to have had any market value or to have ever been on the market for sale. Whatever value it has is dependent upon the value of the patent owned by the corporation. ’ ’ And after quoting certain statements made in 1 Cook on Corporations, 6th Ed., page 961, sec. 338, the court concludes: “We think the case one for the exercise of equitable jurisdiction and that the court erred in dismissing the bill.” In the Smurr case (301 Ill. 179, 188) it is said: “The right to specific performance of a contract for the sale of corporate stock depends upon the character of the stock. If the shares are readily obtainable in the open market specific performance will not be decreed, but if the shares have no market rating and cannot easily be obtained elsewhere specific performance will be granted.” In an exhaustive note in 50 Lawyers’ Rep. Ann., p. 501 (published in 1901), the writer says: “But where the shares (of stock) are limited and not easily obtainable, or where their value cannot be readily ascertained, the contract will be enforced. The tendency seems to be towards a more liberal allowance of the remedy.” (See, also, note in 22 A. L. R. p. 1038, published in 1923.) While the two Illinois cases, above referred to, are cases where the relief granted was in favor of the vendee of stock, the weight of authority in this country seems to be that relief by directing specific performance of the contract will also be granted in a proper case to the vendor of stock. A well reasoned case on the proposition is Cole v. Cole Realty Co., 169 Mich. 347, where it appears that Cole filed a bill against the company for the specific performance of a contract for the sale of corporate stock; that defendant’s demurrer to the bill was overruled ; and that on appeal from the order the Supreme Court affirmed it and directed that defendant answer the bill. The court said (pp. 351, 352, italics ours):

“Counsel for defendant correctly state that the main question in the case is whether the complainant has an adequate remedy at law, and urge that he has, for the reason that he only seeks to recover a money judgment for a liquidated sum, being the price defendant agreed to pay him for his stock. If the stipulated price for the article bought was the measure of damages in a suit at law for breach of contract, the question would be readily solved as defendant contends. But, according to the allegations in complainant’s bill, the defendant has not performed the contract, has not accepted the stock, and refuses to do so. The stock is, and will remain, complainant’s, unless specific performance is decreed. In a suit at law, his damages would be the difference, at the time of the breach, between the market value of the stock, if it had a market value, or otherwise the actual value, and the price it was contracted he should be paid for it. If it had a market value and could be readily bought and sold, he has an adequate remedy at law. (Citing cases.)

“Though the law of specific performance primarily relates to realty contracts, and, as a general rule, is not applicable where the subject matter is personal property, yet specific performance will be decreed and a contract enforced where the thing, in the nature of personal property, has a sentimental value, is rare, and cannot be obtained elsewhere, or has no market value, or the true value is difficult of ascertainment, or requires an accounting, or other peculiar circumstances of the contract involve conditions where the measure of damage in a court of law will not give full and adequate compensation. This doctrine has been held, by abundant authority, to apply in favor of a vendee of stocks not easily procurable and having no market value. (Citing numerous authorities.)

“Equity less readily entertains the cause of a vendor seeking specific performance than that of a vendee, on the ground that, in many instances, the vendor can more easily compel adequate relief in a court of law; but in cases where the contract is mutually binding it is an accepted rule that if the vendee is entitled to specific performance the vendor should be granted the same relief, for the reason that mutual obligations should give mutual remedies. (Citing authorities.)” See, also, in this connection the cases of Morgan v. Bartlett, 75 W. Va. 293, 296; Kennerly v. Columbia Chemical Corp., 137 Va. 240, 119 S. E. 265, 267; First Nat. Bank of Hastings v. Corporation Securities Co., 128 Minn. 341, 347, 348.

This principle in specific performance cases, that “mutual obligations should give mutual remedies,” is thus stated in 2 Story’s Eq. Juris., 14th Ed., sec. 1004, p. 385: “Where the specific performance of a contract respecting chattels will be decreed upon the application of one party, Courts of Equity will maintain the like suit at the instance of the other party, although the relief sought by him is merely in the nature of a compensation in damages or value; for in all such cases the court acts upon the ground that the remedy, if it exists at all, ought to be mutual and reciprocal, as well for the vendor as for the purchaser.” And in Pomeroy’s Spec. Perf. of Contracts, 3rd Ed., 1926, sec. 165, p. 423 et seq., it is said: “And it is a familiar doctrine that if the right to the specific performance of a contract exists at all, it must be mutual; the remedy must be alike attainable by both parties to the agreement. For this reason the purchaser’s obligation in a contract for the sale of land, although nothing more, perhaps, than a liability to pay a certain sum of money, may always be enforced by a suit in equity on behalf of the vendor, since the purchaser may, in the same manner, obtain the performance of the vendor’s duty to convey. On the same principle a person ivho has agreed to sell things in action — such as certain claims against a bankrupt debtor, or an annuity, or a patent right — may enforce the purchaser’s promise to pay the price by a suit in equity, because the purchaser, on his part, can compel an assignment of the things in action agreed to be sold.”

Counsel for defendant, in their brief and argument here filed, contend that “The ‘mutuality of remedy’ theory does not obtain in Illinois in a case of this character.” We cannot agree with the contention. Under a contract for the sale of land it is well settled by decisions of our Supreme Court that the vendor may have a specific performance of the contract. (Robinson v. Appleton, 124 Ill. 276, 281; Burger v. Potter, 32 Ill. 66, 73; Wright v. Buchanan, 287 Ill. 468, 479.) And in the case of Anderson v. Olsen, 188 Ill. 502, 506 (not involving a contract for the sale of land), it is said: “The doctrine of mutuality in cases of specific performance has been recognized by this court in Lancaster v. Roberts, 144 Ill. 213, and Welty v. Jacobs, 171 id. 624.” This Anderson case, which was decided in 1900, and is one where a vendor of a patent sought by bill to have the vendees required to specifically perform their contract to purchase the patent and pay the contract price, is much relied upon by defendant’s counsel as sustaining the action of the trial court in the present suit. It appears that the superior court overruled the defendant’s demurrer to the bill, that after answer and a hearing the court entered a decree granting the relief prayed for, that on appeal the Appellate Court reversed the decree and directed the dismissal of the bill on the ground that there was a full and adequate remedy at law (90 Ill. App. 189), and that on further appeal the Supreme Court affirmed the judgment of the Appellate Court. In the Supreme Court opinion (p. 506) it is further said: “In the case of a sale of a patent the vendee is not in all cases entitled to specific performance. A court of equity will not decree the specific performance of a contract relating to the sale of personal property at the suit of the vendee, unless there is some element or feature in it to show that the relief at law might not be adequate. ’ ’ We do not think that the final decision in the Anderson case is decisive of the present controversy in favor of defendant, especially in view of the later decisions and holdings in Hills v. McMunn, supra, and Smurr v. Kamen, supra. It appears prima facie from the allegations of the bill in the present case, admitted on the hearing of the demurrer to be true, that there are numerous “elements or features” showing the inadequacy of relief in a suit at law. And in the recent case of Knass v. Madison & Kedzie State Bank, 269 Ill. App. 588, 602, it is said: “It is urged that the remedy at law was complete, but that clearly was not the case. Moreover, the rule that equity will not take jurisdiction where there is a remedy at law is a qualified one. It is so held in Barton v. DeWolf, 108 Ill. 195, on which defendants rely. That rule is intended for the protection of the courts and is not to be used as a shield by litigants.”

Counsel for defendant further contend in substance that because of the provisions of subsection 3.of section 63 of the Uniform Sales Act (Cahill’s St. 1931, ch. 121a, ¶66, p. 2477) a court of equity, notwithstanding the doctrine of mutuality of remedies, cannot take jurisdiction of such a case as is stated in the present bill. In said subsection it is provided as follows: “ (3) Although the property in the goods has not passed, if they cannot readily be resold for a reasonable price, . . . the seller may offer to deliver the goods to the buyer, and, if the buyer refuses to receive them, may notify the buyer that the goods are thereafter held by the seller as bailee for the buyer. Thereafter the seller may treat the goods as the buyer’s and may maintain an action for the price. ’ ’ But we do not find anything in the statute that abridges or limits the jurisdiction of a court of equity to grant specific performance of the contract in a proper case. And in Brandenburg v. Buda Co., 299 Ill. 133, 139, it is said: “In McNab v. Heald, 41 Ill. 326, we distinctly held that where jurisdiction is vested in a court of equity and a like jurisdiction is conferred by statute on a court of law, the presumption is that it was designed to be concurrent and not exclusive unless the court of equity is prohibited or limited in its exercise by the language of the act, and that such a legal remedy does not preclude a court of equity from assuming jurisdiction and affording relief.”

For the reasons indicated the decree of the circuit court of November 18, 1932, is reversed, and the cause is remanded with directions to overrule defendant’s demurrer to complainant’s bill and to allow defendant to answer said bill, if he so desires, and for further proceedings in accordance with equity.

Reversed and remanded with directions.

Sullivan, P. J., and Scanlan, J., concur.


text:
    Chicago City Bank and Trust Company, Appellant, v. Walgreen Company, Appellee.
    Gen. No. 36,684.
    Opinion filed November 21, 1933.
    Rehearing denied December 4, 1933.
    Rathje, Wesemann, Hinckley & Barnard, for appellant ; Francis E. Hinckley and James L. Coleman, of counsel.
    Markheim & Allie, for appellee; A. R. Miller and H. M. Oberndorf, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

On December 29, 1932, plaintiff, as assignee of the lessors of a written lease to defendant of certain premises, commenced an action against it to recover the sum of $400, claimed to be due as rent for the month of December, 1932. On February 2, 1933, there was a trial without a jury, resulting in the court finding the issues in defendant’s favor and entering a judgment against plaintiff for costs. The present appeal followed.

In plaintiff’s statement of claim it is alleged that on February 4, 1930, Grace M. Kern and Mathias E. Owens, as lessors, leased to defendant, as lessee, the corner store of the building and premises located at the northwest corner of 79th street and Essex avenue, Chicago, to be occupied as a drug store, etc., for a term of 15 years commencing on April 1, 1930; that for the period ending March 1, 1940, the rent reserved was $400 a month and thereafter $450 a month; that on November 22, 1932, the lessors, by written assignment, assigned and transferred to plaintiff, as trustee, their entire interest in and to the lease and the.rent reserved thereby; that defendant has defaulted in the payment of the rent due on December 1, 1932; and that there is now due to plaintiff from defendant the sum of $400. In the affidavit accompanying the statement of claim it is stated in part that plaintiff, as trustee, “is the assignee and equitable and. bona fide owner” of the claim; that it acquired title to the claim by virtue of the assignment; and that it “was delivered to plaintiff in consideration of the obligation owing by said lessors to plaintiff, as trustee, under a trust deed conveying the said premises and the rents and profits thereof as security for the payment of a loan.”

In defendant’s affidavit of merits, after admitting the execution of the lease and its taking possession thereunder, it is alleged that Kern and Owens, on May 1, 1927, prior to the date of the lease, executed their promissory notes and gave their trust deed as security therefor to the plaintiff, as trustee, whereby they conveyed “all their right, title and interest in and to the premises subsequently demised to this defendant, ’ ’ and that the lease to defendant “is junior, subordinate and subject to said trust deed”; that on November 22, 1932, plaintiff, as trustee under said trust deed, entered into and took possession of the premises conveyed to it as such trustee, and is still in possession of said premises; that said entry “under the paramount title derived under said trust deed . . . terminated said lease by operation of law on November 22, 1932, and constituted an eviction by operation of law of said Kern and Owens, lessors in said lease, and likewise an eviction of this defendant”; that defendant has at no time attorned to or entered into any agreement with plaintiff for the payment of rent for the premises in question; that defendant “is only liable to plaintiff, in its capacity as trustee under said senior mortgage for the reasonable value for the use and occupation of the demised premises for the time which same has been occupied by it since the said entry of plaintiff as such trustee”; and that defendant “is not indebted to plaintiff in any sum of money for rent under said written lease, or in any manner as set out in the statement of claim. ’ ’

On the trial plaintiff introduced the lease in evidence without objection and showed that defendant was still in possession of the demised premises (the drug store); that it had at no time been evicted therefrom or disturbed in its possession; but that it had defaulted in the payment of the sum of $400 for the rent due for the month of December, 1932. The lease is on a printed form with a typewritten rider attached, dated February 4,1930, and the term and rent reserved is as stated in plaintiff’s statement of claim. On the back of the lease, under a heading “Assignment by Lessor” and in a filled out printed form, is the following written assignment: “In consideration of $1 to the undersigned in hand paid, and of other good and valuable considerations, the undersigned, the lessor described in the within instrument, hereby transfers, assigns and sets over to Chicago City Bank & Trust Co., as Trustee, . . . his entire interest in and to the within lease and the rent thereby reserved. ’ ’ The assignment is dated November 22, 1932, and is signed and sealed' by ‘ ‘Mathias E. Owens, by Gf. M. Kern” and by1 ‘ Grace M. Kern. ’ ’ Immediately below is the further signature “Mathias E. Owens,” and it was disclosed upon the trial that this further signature was placed thereon during the trial on February 2,1933. In the 18th paragraph of the lease it is provided that “in the event the interest on any incumbrance against the property, of which the demised premises form a part and to which incumbrance this Lease is subordinate, shall not have been paid at- the time the same becomes due and payable, the Lessee is hereby authorized, but not obligated, to pay same and charge the amount so paid against the rents accruing under this Lease, . . . ; and in the event the Lessor shall not have paid the principal of said encumbrance. or mortgage when the same becomes due, . . . then in that event the Lessee shall have the right to purchase said incumbrance and deal with the same as its own property. ’ ’ In the 19th paragraph it is provided that “within ten days after the execution of this Lease, Lessor agrees to furnish to Lessee a letter of ownership from a reputable title or abstract company showing title to the leased premises in Lessor in fee and also showing all incumbrances against the property of which the demised premises are a part, . . . ; in the event of Lessor’s failure to comply with the foregoing, or in the event that Lessee shall consider said letter unsatisfactory, or that the property is excessively encumbered, Lessee shall have the option of declaring this Lease null and void, unless such excessive encumbrance or defect in title shall be corrected within thirty days.” And plaintiff on the trial introduced evidence showing that within four days after the date of the execution of the lease the lessors had complied with this provision of the lease, as acknowledged in writing by the lessee (defendant). In the 20th paragraph of the lease it is provided that all covenants, promises and agreements therein contained “shall be binding upon, apply and inure to the benefit of the heirs, executors, administrators, assigns or successors respectively of Lessor and Lessee”; and in the 22nd paragraph that the words “Lessor” and “Lessee,” wherever used in the lease, though expressed in the singular number, shall nevertheless be taken to apply to one or more persons, etc.

On defendant’s behalf Edward J. Grasey, assistant cashier of plaintiff and who had previously testified for it, was called as a witness and he gave further testimony. Defendant also introduced in evidence four documents or writings, viz., (1) the original trust deed of May 1, 1927, wherein, as security for their indebtedness of $125,000, the then owners (Kern and Owens) of the building and premises (of which the drug store is a-part) conveyed and warranted to. plaintiff, as trustee, the building and premises “together with rents, issues and profits thereof”; (2) a document, dated November 22, 1932, signed by Kern and Owens and delivered to plaintiff, as trustee; (3) a letter, dated November 22, 1932, signed by Grasey, as plaintiff’s assistant cashier, addressed to Grlatt & Price (real estate managers) and giving to them certain authority as to the building and premises, and which letter is marked “Accepted” by them; and (4) a letter, dated December 2, 1932, addressed to plaintiff and written by defendant’s attorneys, Markheim and Allie. It appears that in November, 1932, default had been made by the owners, Kern and Owens, in the payment of certain interest coupon notes and certain principal notes due on November 1, 1932; that a committee representing the holders of said notes and other notes had filed in the superior court of Cook county a bill to foreclose the’trust deed, and the appointment of a receiver was imminent; and that negotiations were had, resulting in said owners, as lessors in the lease to defendant of the drug store, on November 22,. 1932, executing said • assignment of the lease to plaintiff, as trustee, and also on the same day executing and delivering to it a written document which, after setting forth the then existing condition of affairs, reads in part as follows:

“Ann Whereas, the undersigned are desirous that ho receiver be appointed for said premises, and are willing that the Chicago City Bank & Trust Co., as trustee in said trust deed, take possession of the premises (i. é., said building of which said drug store is a part) and collect the rents, issues and profits in lieu of the appointment of a receiver.

“Now, Therefore, in consideration of the sum of one dollar . . . and other good and valuable considerations, the undersigned, being the owners of the legal title to said premises, do hereby surrender possession of said premises ... to the Chicago City Bank & Trust Co., as trustee under said trust deed,

“It is further covenanted and agreed by the undersigned that the Chicago City Bank & Trust Co., as trustee, from this day henceforth, while the above entitled bill to foreclose is pending, or after, it is dismissed, or if a decree is entered in .the above entitled cause during the entire statutory period of redemption, may collect all of the rents, issues and profits thereof in its own corporate capacity and as trustee, or that it may employ agents, or an agent, or an agency corporation, to collect the rents, issues and profits of said premises, and that out of the rents so collected it may pay such agent or agents . . . and costs and expenses thereof, and all taxes and special assessments levied against said premises, and that it may pay out of said rents the cost of maintaining said premises in good and tena'ntable condition, including decorating, repairs, coal, light and any and all expenses of said premises.”

It further appears that on the same day (November 22, 1932), G-asey’s said letter was written and delivered to Grlatt & Price, the real estate managers who prior thereto had been managing the building and premises for the owners, Kern and Owens. In the letter, after stating that plaintiff holds “a surrender of possession” of the building and premises by said owners, that the property “consists of 10 stores and 24 apartments,” and that plaintiff is authorized to collect all rents and to appoint an agent or agents for that purpose and also to manage the building, etc., it is further stated:

“We herewith authorize and appoint you to" act as our agent for these premises, and to make collections of any and all rents, . . . and to do such other tilings in and about the premises as is customary for an agent to do, with the understanding, however, that this appointment is solely on a month to month basis, . . . It is further understood . . . that no expenses are to be incurred or contracts entered into without our consent first had thereto, with the exception of agent’s commission, janitor’s salary, water, light, and miscellaneous nominal emergencies. . . . Please indicate your acceptance of this agency on the terms set forth, by signing and returning to us the carbon copy of this letter enclosed herewith.”

It further appears that Grlatt & Price immediately accepted the agency and proceeded to manage the ■building under plaintiff’s direction, and collected rents from tenants, paid necessary expenses, etc., and were doing this work on December 29, 1932, when.the present suit was brought. • Defendant, however, refused to pay to said agents or to plaintiff the monthly rent ($400) due on December 1, 1932, although it remained in possession of the drug store, continuing its business. Sometime during December, 1932, and prior to the commencement of the present suit, defendant’s attorneys ’ letter was delivered to plaintiff. It is dated December 2, 1932, is addressed to plaintiff and is as follows (italics ours):

“We have been consulted by Walgreen Co. relative to their occupancy of the store (stating its location) which is part of the building which you have heretofore taken possession of as trustee under trust deed dated May 1, 1927. Since you have taken possession of these premises under a mortgage superior in rank to the lease under which our client entered into possession of the premises, the lease is no longer in effect and, therefore, our client should pay only the reasonable value of the use and occupation of the premises. We shall be pleased to meet with you or your counsel at a convenient time to fix and determine what this amount should be. We have suggested to our client that until the correct amount is determined future payments should be withheld.”

In urging a reversal of the judgment appealed from and the entry of a judgment in this court in plaintiff’s favor for the amount of $400 for the December, 1932, rent under the lease, plaintiff’s counsel contend in substance (1) that because of the written assignment of November 22, 1932, of the lease by the original lessors (Kern and Owens) to plaintiff, followed by its accepting the same and acting thereunder, plaintiff as such assignee has the same remedy for the recovery of any rent due under the lease as the original lessors might have had if said assignment had not been made (citing sec. 14 Landlord & Tenant Act, Cahill’s St. ch. 80, ¶ 14; Howland v. White, 48 Ill. App. 236, 243; Barnes v. Northern Trust Co., 169 Ill. 112, 116; Forbes v. Star Paper Box Co., 221 Ill. App. 156, 159; Barr v. Florentine Alabaster Co., 174 Ill. App. 256, 258); and (2) that because defendant originally became the lessee of the drug store with full knowledge of the existence of the trust deed upon the entire premises and remained in possession of the drug store throughout December, 1932, and thereafter, without any interference by plaintiff, there was no constructive eviction of defendant by operation of law or otherwise, as alleged in its affidavit of merits, and for the reason that it is well settled in this State that there can be no constructive eviction without a surrender of possession. (Citing Keating v. Springer, 146 Ill. 481, 495; Leiferman v. Osten, 167 Ill. 93, 99; Giddings v. Williams, 336 Ill. 482, 487; Automobile Supply Co. v. Scene-in-Action Corp., 340 Ill. 196, 201.) The main contention of counsel for defendant is that, because plaintiff on November 22, 1932, took possession, of the entire building and premises under the trust deed, such taking of possession “terminated the junior or subsequent lease to the defendant.” (Citing among other cases, Gartside v. Outley, 58 Ill. 210, 214, 215; Greenebaum Sons Bank & Trust Co. v. Kingsbury, 248 Ill. App. 321, 331, 333; Jetzinger v. Consumers Sanitary Coffee & Butter Stores, 268 Ill. App. 482, 485, 486.) After considering the evidence, the statute and the authorities cited by plaintiff’s counsel, we are of the opinion that there is substantial merit in plaintiff’s counsels’ contentions, and, also that defendant’s counsels’ contention is not warranted under the undisputed facts.' As we view the evidence it sufficiently appears, especially when consideration is given to the Kern and Owens written assignment of the lease to plaintiff and the latter’s acceptance thereof under the then existing conditions, that plaintiff, as trustee for the holders of the mortgage notes, elected to consider the lease to defendant in full force and effect, and to recognize defendant as its tenant. (See Gartside v. Outley, 58 Ill. 210, 214.) It did nothing to disturb defendant as tenant in the possession of the drugstore, and it took immediate steps to cause the accruing rents to be collected from defendant and the other tenants in the building.

Defendant’s counsel further contend in substance that, even if it be considered that the lease to defendant was not terminated by plaintiff’s entry into the building and premises, still plaintiff cannot recover in the present suit because it was prematurely brought, in that it does not appear that the original lessors’ assignment of the lease was signed by both of them prior to the beginning of the suit. In our opinion the contention is without substantial merit. It appears from the back of the lease and from the evidence that the assignment was signed by “Grace M. Kern” and by “Mathias E. Owens by G. M. Kern” on November 22, 1932. While it does not appear from the evidence that Owens gave Kern any power of attorney to sign his name to the assignment, it does appear that Owens’ personal signature to the assignment was placed thereon on February 2, 1933, the day of trial. We regard that act of Owens as a sufficient ratification by him of Kern’s act in signing- the assignment, for him and in his name, as of November 22, 1932.

Our conclusion is that the judgment of February 2, 1933, appealed from, should be reversed because of error of law, and, the facts being undisputed, that a judgment should he entered in this court for $400 in favor of plaintiff and against the defendant, Walgreen Co., and it is so ordered.

Reversed and judgment here against defendant for $400.

Sullivan, P. J., and Scanlan, J., concur.


author: Mr. Justice Scanlan

text:
    The People of the State of Illinois ex rel. Oscar Nelson, Auditor of Public Accounts, v. Citizens Trust and Savings Bank et al. Erwin J. Zuehls, Receiver, Appellant. Henry Horner, as Judge of the Probate Court of Cook County, Intervening Petitioner, Appellee.
    Gen. No. 36,411.

      Opinion filed November 21, 1933.
    Edward J. Hess, for appellant.
    Arthur C. Bachrach, Hyland J. Paullin and Oscar S. Caplan, for appellee.
   Mr. Justice Scanlan

delivered the opinion of the court.

There was filed, in the above case, the intervening petition of Henry Horner, as judge of the probate court of Cook county, on behalf of Joseph 0. Sommers, a minor. After the receiver had answered, the matter was submitted to the chancellor upon agreed facts. From an order decreeing that the claim of Henry Horner, as judge of the probate court of Cook county, Illinois, for and on behalf of Joseph C. Sommers, a minor, in the sum of $738.35, be allowed as a preferred claim, entitled to priority over all general depositors and all general creditors of the Citizens Trust and Savings Bank, and that the receiver pay over to Straus National Bank and Trust Company of Chicago the said sum, to be held by it in trust for the benefit of the minor and subject to the order of the probate court, the receiver.has appealed.

The appellant was appointed receiver of the bank when it suspended business on August 4, 1930. It was organized April 1, 1899, under the name of South Side State Savings Bank, and received a certificate of authority from the State of Illinois “to commence business as a bank or banking association under the provisions of said Act (General Banking Act of Illinois) for the purpose of discount and deposit and to buy and sell exchange and to do a general banking business except the issuing of bills to circulate as money and the power to loan money on personal or real security1 and to accept and execute trusts.” In 1905 its name was changed to Citizens Trust and Savings Bank. Prior to October, 1921, Edward R. Sommers was appointed, by the probate court of Cook county, administrator of the estate of Fay Sommers, deceased, and on February 23, 1923, he presented to the court his final account and applied for authority to deposit the distributive share of Joseph C. Sommers, a minor, in the sum of $779.91, in the name of the minor, with Citizens Trust and Savings Bank, until the minor attained the age of 21 years, the deposit to be held subject to the order of the court. On the same date the court entered an order approving the report and granting leave to the administrator to make the deposit in accordance with the application, and, also on the same day, the administrator so deposited the said sum and at the same time advised and informed the bank “that said money was being deposited pursuant to said order of the Probate court entered in the matter of the estate of Fay Sommers, deceased,” then pending in said court; that the deposit was to be subject to the order of said court in the matter of the said estate and was being made by the administrator in contemplation of and for the purpose of securing his discharge as administrator, and that upon his making a report to the court that the deposit had been made in the bank pursuant to said order he would be discharged by said court as administrator. Thereupon the bank accepted the deposit and immediately caused to be entered upon its books and records the statement that said deposit was made and said account was “subject to the order of the Probate court of Cook county,” and at the same time it issued a pass book to “Joseph C. Sommers, a minor,” upon which appeared the words “Savings Department,” “Savings Account,” and “3% interest paid on savings deposits.” The bank thereafter allowed interest on the deposit at the rate of three per cent per annum and credited the interest to the savings account, semiannually, and when it suspended business there was $972.46 to the credit of the account. On May 14, 1924, the probate court entered the following order:

“Bank book showing deposit of minor’s share with Citizens Trust and Savings Bank in accordance with order of Court heretofore exhibited in open court.

“Admr. disc. ct. costs paid.

“(Signed) Henry Horner,

“Probate Judge of Cook County.”

The parties stipulated “that no proof is necessary . . . with respect to tracing of said deposit, or any part thereof, into the hands of the Receiver and that Receiver . . . will not . . . make any point or contention that there has not been adequate and sufficient proof of tracing; . . . that by reason of the fact that the Administrator has been discharged, Henry Horner, as Judge of the Probate Court of Cook County, was and is the proper person to file said Petition. . . ; that Joseph C. Sommers was thirteen years old in June, 1932. . . .” Certain other facts, which we do not deem it necessary to state, were also stipulated. The chancellor found, from the facts stipulated, that the money deposited by the administrator in the bank was a trust fund and so remained thereafter, and that it did not and does not constitute a general deposit and is not now subject to the claims of general depositors or other general creditors of the bank.

The appellant contends that “the deposit was a general and not a special one,” and that the chancellor erred in holding, under the stipulated facts, that the deposit constituted a trust fund and was not subject to the claims of general depositors or general creditors of the bank.

The appellee contends that “the statute required the deposit, under the facts found in the order appealed from, to be made only with a trust company; a trust company can lawfully accept only ‘trusts’ and is expressly forbidden by statute to do a banking business; ‘receiving general deposits’ is doing a banking business; hence, the intention of the legislature, as expressed by statute, was to make certain that deposits (of the kind described in the Order appealed from) would be made as ‘trusts’ and not as general deposits. The statute expressly declares that it shall be unlawful for any corporation authorized to accept and execute trusts (whether organized under the General Banking Act or under the General Incorporation Act), to accept a deposit (of the kind described"in the Order appealed from) unless such company has first complied with both Section 6 and Section 8 of an act entitled: ‘An act to provide for and regulate the administration of trusts by trust companies. ’ The Citizens Trust and Savings Bank accepted said deposit without complying with either Section 6 or Section 8 of said act and hence the acceptance of said deposit was unlawful and constituted a trust and not a general deposit. Where a corporation organized as a bank under the General Banking Act (without any power whatsoever to accept or execute trusts) accepts a deposit of the character described in the Order appealed from, the law will read into the contract of deposit the provisions of Section'2 of the Trust Companies Act which expressly requires a deposit of such, character to be made with a trust company as a trust; and such bank will be deemed, under the law, to have accepted such deposit as a trust and not as a general deposit. Under the facts found by the Order appealed from, the Citizens Trust and Savings Bank is estopped to deny (a) that it is a ‘trust’ company, and (b) that the deposit was accepted as a trust. Apart from any statute, the said deposit was a trust and not a general deposit in view of all of the facts found by the Order appealed from, of which the bank had actual knowledge.”

In his reply brief the appellant argues that as the bank was organized under the banking laws of this state “it is, therefore, not a trust company. It is not incorporated under the General Corporation Laws of the State for the purpose of accepting and executing-trusts. It is a banking corporation organized to conduct a banking business, with incidental powers to accept and execute trusts, — not under the Trust Company Act, but under the Banking Act. The fact that it had these certain incidental powers does not change its character from a bank. The powers granted by its charter of discount and deposit, definitely make it a bank. . . . Thus, being a bank, Citizens Trust and Savings Bank is controlled entirely by the laws of the State pertaining- to banks, and not trust companies.” In the reply brief, the appellant also contends that if, under the facts of this case, the Trust Companies Act applies to the bank, it is unconstitutional because it violates Section 5 of Article XI of the State Constitution, which provides:

“No Act of the General Assembly authorizing or creating corporations or associations with banking-powers, whether of issue, deposit or discount, nor amendments thereto, shall go into effect or in any manner be in force unless the same shall be submitted to a vote of the people at the general election next sueceeding the passage of the same, and be approved by a majority of all the votes cast at such election for or against such law. ’ ’

In support of this last contention appellant states that “the so-called Trust Company Act has not been approved by such a referendum. It was approved on June 15, 1887, in force July 1, 1887, and no general election occurred intermediate those dates.” By bringing this case to this court, the appellant waived all questions as to the constitutionality of the act. (See Armour & Co. v. Industrial Board, 275 Ill. 328, 335.) In the intervening petition the appellee avers that the Trust Companies Act applies to the deposit, and the appellant, in his answer, “denies that Citizens Trust and Savings Bank was a trust company, as defined by the Act of June 15, 1887, in force July 1, 1887, of the Revised Statutes, but was from its incorporation, carrying on a banking business exclusively. ’ ’ Notwithstanding this state of the pleadings, the appellant did not raise, in the trial court, the question of the constitutionality of the act. He knew when he brought the case , to this court that the appellee would rely here, as in the lower court, upon the act. The unwarranted position of appellant appears to be that because it is the appellee who is insisting, in this court, that the Trust Companies Act applies to the deposit, the appellant has the right to here raise the instant question. We may add, that even after the appellant raised the question he failed to move to have the cause transferred to the Supreme Court, thereby electing to remain in this court. Had we the power to pass upon the constitutionality of the act we would find no difficulty in holding against appellant’s contention. Section 5 of Article XI of the "Constitution requires to be submitted to the people only those acts of the general assembly which (a) authorize or create corporations or associations with banking powers, and (b) acts of the assembly which amend statutes described in (a). The Trust Companies Act applies to banks only as they operate as trust companies, or, to put it in another way, when they function as trust companies, but it does not regulate them in respect to their general banking business. This important act was enacted in 1887 and its constitutionality has never been questioned. In Meister v. Carbaugh, 310 Ill. 486, 488, the court said:

“We have often said that ‘when a statute has long been treated as constitutional and important rights have become established thereunder, the courts may thereafter refuse to consider its constitutionality.’ ” The reply brief indicates clearly that appellant now realizes the importance of the Trust Companies Act in the determination of this appeal. The material parts of that act are as follows [Cahill’s St. ch. 32. H 1 et seq.] :

“Trust Companies.

“An Act to provide for and regulate the administration of trusts by trust companies. Approved June 15, 1887. In force July 1, 1887.

< <

“Sec. 2. . . . Any court having appointed and having jurisdiction of any receiver, executor, administrator, conservator, guardian, assignee or other trustee, upon the application of such officer or trustee, or upon the application of any person having an interest in the estate administered by such officer or trustee, after such notice to the other parties in interest as the court may direct, and after a hearing upon such application, may order such officer or trustee to deposit any moneys then in his hands, or which may come into his hands thereafter, and until the further order of said court, with any such corporation, and upon deposit of such money, and its receipt and acceptance by such corporation, the said officer or trustee shall be discharged from further care or responsibility therefor. Such deposits shall be paid out only upon the orders of said court. . . . (Italics ours.)

“Sec. 4. Such company shall pay interest upon all moneys held by it by virtue of this Act, at such rate as may be agreed upon at the time of its acceptance of any such appointment, or as shall be provided by the order of the court. (Italics ours.)

“Sec. 6. Each company in all cities and towns of 100,000 inhabitants or more, before accepting any such appointment of deposit, shall deposit with the Auditor of Public Accounts the sum of $200,000, . . . (Here follow provisions requiring this sum to be deposited in the form of certain securities described therein and other details not here material.)

“Sec. 8. It shall not be lawful for any such company to accept any trust or deposit as hereinbefore provided, after the passage of this Act, without first procuring from the Auditor of Public Accounts a certificate of authority stating that such company has complied with the requirements of this Act in respect to such deposit.” (Italics ours.)

It is stipulated that the deposit was made by the administrator under section 2 of the act in order that he might secure his discharge as administrator, and that the bank had full knowledge that the money was being deposited with it pursuant to the order of the probate court entered in the matter of the estate of Fay Sommers, deceased, that the money was being deposited subject to the order of said court, that the deposit was made by the administrator for the purpose of securing his discharge as such administrator, and that when the administrator made a report to the court that the deposit had been made in the bank, pursuant to the order of the court, he would be discharged by the probate court as such administrator.

On February 23,1923, the administrator had reached a point in the administration of the estate where but one thing prevented his discharge: he had moneys in his hands representing the distributive share of a minor who was then less than four years of age. Under such circumstances an administrator may, if the court deems it proper, secure' his discharge by pursuing the procedure required by section 2, and if he follows that procedure and is discharged by the court, his surety is automatically discharged.

In People v. Brady, 271 Ill. 100, 110, the court said:

“Banking corporations may qualify under the Trust act to accept and execute trusts, and corporations may be organized under the general Incorporation act for that purpose.”

Section 2 required the deposit in the instant case to be made with “any such corporation.” These words, in our judgment, mean a corporation organized under the General Corporation act for the purpose of accepting and executing trusts, or “any corporation now or hereafter authorized by law to accept or execute trusts,” (sec. 1) and banks are the only other kind of corporation which are so authorized. Section 8 provides: “It shall not be lawful for any such company to accept any trust or deposit as hereinbefore providedj . . . without first procuring from the Auditor of Public Accounts a certificate of authority stating that such company has complied with the requirements of this Act in respect to such deposit.” The words “or deposit as hereinbefore provided,” and also the words “such deposit,” used in section 8, clearly relate to the term “deposit” in section 2. The Citizens Trust and Savings Bank was authorized by its charter “to accept and execute trusts,” but appellant concedes that it had not complied with sections 6 and 8 at the time it accepted the deposit. Section 6 requires “each company, . . . before accepting any such appointment of deposit,” to “deposit with the Auditor of Public Accounts the sum of $200,000” in securities of the kind and type specified, in the section. The words “such appointment of deposit” relate to the “deposit” required by section 2. In our opinion, the deposit intended by section 2 must be made with a corporation organized under the general incorporation act for the purpose of accepting and executing trusts, or a bank which has in its charter a provision authorizing it to accept and execute trusts and which has qualified under the provisions of sections 6 and 8 of the Trust Companies Act. To adopt the appellant’s interpretation of section 2 would be to run counter to the plain purpose of the act, which is to protect deposits made by trustees under it, not to endanger them. The importance and breadth of section 2 may be readily seen from the fact that it applies to “any receiver, executor, administrator, conservator, guardian, assignee or other trustee ’ ’; — in other words, it applies only to fiduciaries, who occupy a position of peculiar confidence toward others. As applied to this case, we cannot believe that the legislature intended that the administrator and his bondsman might be discharged and the moneys of the minor subjected to the risks which attach to general deposits of a bank. On February 23, 1923, on motion of the administrator, a guardianship estate could have been opened in the probate court, a guardian appointed, a bond given, and an order entered permitting the administrator to turn over the moneys in his hand to such guardian, and by following this procedure the administrator could have secured his discharge. Section 2 intends that such a procedure may be avoided when, in the judgment of the probate court, it seems unnecessary; but it also intends that one trustee must take the place of another. Under the statute creating them, trust companies have the power only “to accept and execute trusts, ’ ’ and they are expressly forbidden by the statute from engaging in a banking business. When a bank which is qualified as a trust company under the Trust Companies Act accepts a deposit which it knows is made under section 2, then, as a matter of law, such bank accepts the deposit as a trust company and not as a bank. Within the intent and purpose of the Trust Companies Act a corporation organized under the general incorporation act for the purpose of accepting and executing trusts, and a bank authorized by law to accept a deposit under section 2, are both trust companies.

The appellant contends that the Citizens Trust and Savings Bank was organized as a bank and never qualified as a trust company, and that therefore the provisions of the Trust Companies Act have no application to the deposit. The bank had knowledge of the character of the deposit and the purposes for which it was made, and is chargeable with knowledge of the statute governing the deposit, and, as it had not qualified under the act, the receipt of the deposit under such circumstances was unlawful. Where a deposit itself is unlawful it constitutes a trust and not a general deposit, and upon the insolvency of the bank a preferred claim will be allowed. (See People v. Farmers State Bank, 338 Ill. 134, 137.) Many cases to the same effect might be cited, but the appellant concedes, apparently, that “where the deposit itself was unlawful” a trust arises and may be recovered as a preferred claim upon the insolvency of the bank. Furthermore, as appellee ably contends, the appellant is estopped to deny “(a) that it (the bank) is a trust company, and (b) that the deposit was accepted as a trust,” and appellee specially calls attention to the fact that the word “Trust” has appeared as part of the name of the bank since September 16, 1905, that its charter authorized it to accept and execute trusts, that under the law it was chargeable with knowledge of the provisions of section 2, and that it, with full knowledge of the nature and purpose of the deposit, accepted it. We agree that the appellant should be estopped, in the present case, from denying that the bank is a trust company or that it received the deposit as a trust.

The appellee has strenuously argued a number of other contentions in support of his position that the decree must be affirmed, but we do not deem it necessary to refer to them.

The appellant .finally argues that, notwithstanding the fact that the bank knew the source of the funds and that the administrator was making the deposit under section 2 of the act, nevertheless, it appears that the administrator deposited the moneys in the savings department of the bank and the bank agreed to pay interest on the ‘ deposit, and that these circumstances, together with the further fact that the administrator exhibited the pass book to the probate court, clearly indicate that the bank had the right to use the funds in. its general banking business, and the relationship of debtor and creditor was thereby created. We find no merit in this contention. Neither the bank nor the administrator had the power to defeat the purposes of the statute. Section 2 governs the nature of the deposit that shall be made by a trustee seeking a discharge, and when, as in this case, a bank has full knowledge of the nature and purpose of a deposit offered by a trustee, and accepts it, it cannot, by bookkeeping methods or otherwise, cause the deposit to become a general one, even though the trustee, through ignorance, indifference, or connivance, makes no objection to the method employed by the bank in the' transaction. To hold otherwise would be to allow banks to defeat the law. If the bank had not qualified under the Trust Companies Act, as appellant now asserts, it was its duty, under the law, to refuse the deposit, and its acceptance, as we ' have heretofore stated, constituted an unlawful act.

After a careful consideration of the questions involved in the instant appeal we have reached the conclusion that the decree of the superior court of Cook county should be affirmed, and it is accordingly so ordered.

Affirmed.

Sullivan, P. J., and Gridley, J., concur.


text:
    Chicago Title and Trust Company, Complainant, v. Benjamin Goldman et al., Defendants. Charles M. Albers, as Receiver of Phillip State Bank and Trust Company, Appellant. Raymond Hayes, Successor Receiver, and Chicago Title and Trust Company, Appellees.
    Gen. No. 36,585.
    Opinion filed November 21, 1933.

      Crowe, Gorman & Savage, for appellant; W. W. Patterson, of counsel.
    William H. Kailes and Sanders, Childs, Bobb & Wescott, for appellees; William A. Bradford, of counsel.
   Mr. Justice Scanlan

delivered the opinion of the court.

In the circuit court, Chicago Title and Trust Company, as trustee, filed its bill to foreclose a trust deed, and Phillip State Bank and Trust Company (hereinafter called the Bank) was appointed receiver. Subsequently, the Bank failed and Charles H. Albers was appointed receiver by the auditor of public accounts. A few days later, in proceedings brought by the auditor against the Bank in the superior court, Albers was appointed receiver of the Bank and is now acting as such receiver. Still later, Raymond Hayes was appointed “successor receiver” in the foreclosure proceedings in the circuit court. From an order of the circuit court ordering Albers, receiver of the Bank, to pay said “successor receiver” in the foreclosure proceedings $2,566.72, the receiver of the Bank (hereinafter called appellant) has appealed.

Pursuant to an order of the circuit court entered after the Bank had closed, appellant filed, in that court, an account of the Bank as receiver in the foreclosure ease, which showed to the credit of the receivership, $2,445.97, and the order appealed from was entered in a hearing wherein that account came on for approval. No evidence was introduced, the parties stipulating as to the facts. The order entered October 27, 1932, includes findings of fact, and is as follows :

“1. That said Phillip State Bank & Trust Company of Chicago was, prior to June 24, 1932, acting as receiver of the premises described in the bill of complaint herein by order duly entered in these proceedings.

“2. That said Bank suspended business on June 21, 1932, and that Charles H. Albers was appointed by the Superior Court of Cook County to be receiver of the said bank in proceedings filed by the People of the State of Illinois on the relation of Oscar Nelson as auditor of public accounts of the State of Illinois against said bank, being Case No. 561388 pending in said Superior Court; that said Charles H. Albers duly accepted said appointment, qualified, and is now acting as receiver of said bank.

“3. That on June 30, 1932, Raymond Hayes was duly appointed to be successor receiver of the premises described in the bill of complaint herein and that the said Bank has turned over the possession of the premises and all documents belonging to the receivership estate to the said successor receiver and is now filing his final report and account herein;

“4. That the final report and account filed herewith contains a true, accurate and correct account of the moneys actually received and the disbursements actually made by the Bank as shown by its books and records for the period from March 24,1932, to June 24, 1932; that according to said accounting, the Bank as receiver should have the sum of $2,566.72 on hand as a result of the operation of this receivership.

“The Court Further Finds that there remain unpaid, certain bills incurred by the Bank, as receiver, in the total amount of $452.45, as shown by the books and records of the Bank, statement of which bills is attached to the final report and account heretofore filed in this court.

“The Court Further Finds that the money collected by the said Bank in its capacity as receiver was carried in the name of Phillip State Bank &¡ Trust Company, as receiver, in this particular cause, and was deposited by it as receiver in the Bank and carried by it in a trust account in the trust department of the said bank.

“The Court Further Finds that the said Bank was acting as receiver in a large number of cases in the Circuit and Superior Courts of Cook County, and that all moneys collected by it in its capacity as, receiver in these various suits were carried as trust accounts in the Bank in the same form and manner as the account covering the receivership in this particular cause; that at the time of the closing of the Bank, on June 21, 1932, the total amount of funds so deposited, and which should be on hand in the said bank, was $73,453.12.

“The Court Further Finds that the Bank was also acting as trustee, guardian, executor, administrator and in other trust capacities in a large number of estates and that the funds so held by the said bank were' also carried as trust accounts in the trust department of the said bank; that the total amount of all trust claims, according to the books and records of the Bank, is approximately $700,000.

“The Court Further Finds that the moneys held by the Bank in the trust department, either as receiver or in other trust capacity, were intermingled by the said bank with the general funds, and at the time of the closing of the said Bank there was not sufficient money on hand to pay to the various receivership estates, or beneficiaries of trust estates, the amount of money shown to be due them by the books and records of the said bank.

“The Court Further Finds that said bank, at the time of its closing, had on deposit with the auditor of public accounts of the State of Illinois, certain securities said to b.e of a value of $200,000, which securities constitute a guaranty fund for the payment of all trust claims against said petitioner, as provided for in the Trust Companies Act of the State of Illinois.

. “The Court Further Finds that at the time of the closing of the Bank, there was on hand, in the vaults of the said bank, cash in the amount of approximately $20,000.

‘ ‘ The Court Further Finds that the money shown to be due to the receivership estate in this cause as set out in the final report and account heretofore- filed, said moneys being in the amount of $2,566.72, is a prior claim .as against any and all creditors of the Bank and should, by reason thereof, be paid forthwith.

“The Court Further Finds that Charles H. Albers, receiver of the Bank refuses to pay over the said sum of $2,566.72 until such time as he can ascertain the total amount of trust claims and the total amount of money available to pay such claims and until such time as the question of priority of such claims has been determined in the bank receivership proceeding, said proceeding being entitled ‘People of the State of Illinois vs. Phillip State Bank & Trust Company, Superior Court case number 561388.’

“It Is, Therefore, Ordered, Adjudged and Decreed that the statement of receipts and disbursements as shown by the report and account heretofore filed by the said Charles H. Albers as receiver of the Phillip State Bank & Trust Company be, and the same is hereby approved.

“It Is Further Ordered, Adjudged and Decreed that Charles H. Albers, receiver of the Phillip State Bank & Trust Company, pay over the sum of $2,566.72 forthwith to Raymond Hayes, the successor receiver appointed herein. (Italics ours.) . . .”

At the hearing appellant’s position, as appears- from the certificate of evidence, was as follows:

“That as such receiver he is under no personal liability for any part of said balance shown in the final account and report that he had filed herein as receiver of said Phillip State Bank & Trust Company; that said Superior Court, which appointed him as such receiver, has sole jurisdiction to determine what shall be the priority, if any, of the claims filed in such receivership and what shall be the percentage payable thereon, and that such determination has not yet been made; that before/ such determination is made all claimants who filed claims in said cause No. 561388 are entitled to be heard in regard to the allowance or disallowance of such claims, and in what amounts; that distribution according to such determination can be ordered only by said Superior Court; that on the hearing of this final report and account this court is without jurisdiction to make such determination or order any distribution of said assets; that if he should pay out of' the cash on hand in said bank the full balance shown in the final report and account in this estate, it would result in giving this estate preference over the various estates, trusts, and matters above mentioned as to which said Bank acted in a representative capacity; that if it be held that he should make such payment and a similar holding should be made in other estates, trusts or matters in which said Phillip State Bank & Trust Company acted in a representative capacity, and upon the filing in court by said receiver of said Bank of final reports and accounts therein, the result would be that until the exhaustion of said cash and the proceeds derived from said securities deposited with said State Auditor such estates, trusts and matters would be paid in full in which the final reports and accounts are filed first, and then nothing would be left to be paid on, and nothing would be paid on, the remaining estates, trusts or matters; that this estate is entitled to share only pro rata with the other trusts, estates and matters above mentioned in the distribution of the proceeds from the securities deposited with said state auditor to secure trust claims, and that as to the other assets of said Bank this estate is entitled to share only in the same manner and to the same extent that claimants of the same class as this estate are entitled to share.”

In the certificate of evidence, the chancellor gives the following reason for entering the order:

“That the Phillip State Bank & Trust, Company never obtained title to this money; that this money belongs to this court and the Bank, as such receiver, is only an arm of this court; that as such receiver the Bank was under an absolute liability to pay the full amount in this receivership that should be on hand, and that said Charles H. Albers, as receiver of said Bank, is under the same unconditional liability.”

It will be noted that the order of the circuit court orders appellant, receiver of the Bank in the proceedings pending in the superior court, “to pay over the sum of $2,566.72 forthwith to Raymond Hayes, the ‘ successor receiver ’ ” in the foreclosure proceedings in the circuit court. This order was entered more than four months after the superior court, through its receiver, had taken possession of the assets of the Bank, and at a time when the Bank receivership was in due course of administration.

“A court exercising equity jurisdiction, in appointing a receiver of the property of a corporation, holds and administers the estate, through the receiver as its officer, for the benefit of those whom the court shall ultimately adjudge to be entitled to it. (Evans v. Illinois Surety Co., 298 Ill. 101; Porter v. Sabin, 149 U. S. 473; Thompson v. Phenix Ins. Co., 136 id. 287; Union Bank v. Kansas City Bank, 136 id. 223; Booth v. Clark, 17 How. 322; Peale v. Phipps, 14 id. 369; Wiswall v. Sampson, 14 id. 52.) It is for the court which has taken the assets of an insolvent corporation into its hands for distribution, and for that court alone, to determine who its creditors are and the amounts of their respective claims. (Attorney General v. American Legion of Honor, 196 Mass. 151.) The court which appointed the receiver is the court to decide whether it will itself adjudicate upon claims against the receiver or will allow them to be litigated elsewhere. It may permit suits upon such claims in foreign jurisdictions or reserve their determination to itself. But no suit, unless expressly authorized by statute, can be brought against the receiver without the permission of the court which appointed him. Mulcahey v. Strauss, 151 Ill. 70; Shedd v. Seefeld, 230 id. 118; Porter v. Sabin, supra; Texas and Pacific Railway v. Cox, 145 U. S. 593; Barton v. Barbour, 104 id. 126.” (Evans v. Illinois Surety Co., 319 Ill. 105, 109-10.)

“The law is well settled that where a receiver has been appointed by a court of competent jurisdiction, and has taken possession of property in his capacity as receiver, he has the right to hold such property and dispose of it under the direction of the court, and any unauthorized interference therewith, by taking’ possession of the property or instituting legal proceedings to obtain possession, without the sanction of the court appointing such receiver, is a direct contempt of court, and punishable as such. (Richards v. People, 81 Ill. 551.) ” (St. L., A. & S. R. R. Co. v. Hamilton, 158 Ill. 366, 368.)

“All the authorities sustain the proposition that, when a court of equity acquires jurisdiction of a cause, and appoints a receiver to take charge of the property involved, then no other court of co-ordinate jurisdiction has any power or authority to interfere or meddle with the property in the hands of the receiver, but must leave the court appointing the receiver untrammeled in its administration of the same, as the law directs, regardless of whether the original appointment was or was not erroneous. This rule is essential to the orderly administration of justice, and to prevent unseemly conflicts between courts whose jurisdiction embraces the same subjects and persons, and has no reference to the supremacy of one tribunal over the other, nor to the superiority in rank of the respective claims, in behalf of which the conflicting jurisdictions are invoked.” (23 R. C. L. 66.)

“It is the duty of a court appointing a receiver to protect him in the discharge of his duties and in the control and possession of the property in his custody as such against anyone interfering therewith, whether a party to the receivership proceeding or not, and whether he claims paramount to or under the right which the receiver was appointed to protect. The possession of the receiver is that of the court, and consequently if any person without leave intentionally interferes with such possession, he necessarily commits a contempt of court, and is liable to punishment therefor. It is the duty of the court to protect a receiver’s possession, not only against acts of violence but also against suits at law; and it is immaterial whether this unlawful interference comes in the way of actual violence, or by intimidation and threats.” (23 R. C. L. 64-5.)

“And where a court which has appointed a receiver, who has property in his possession, permits him to be made a party defendant to an action instituted in another court for the purpose of asserting liens or other claims against the property which existed before his appointment, such permission is to be construed as allowing the prosecution of the action merely for the purpose of determining and establishing such liens and can not be held to go to the extent of authorizing the property to be taken from the possession of the receiver and applied by the other court to the satisfaction of the claims if they are established. . . . As still further illustrating the aversion entertained by courts of equity toward any interference with the possession of their receivers, it is held that a receiver is not justified in paying out money in any other manner than upon the order of the court appointing him, and that this court will not sanction a payment made by him, even upon the compulsory process of another court. And when a judgment creditor has attached money in the hands of a receiver, under proceedings instituted in a court of law, and has obtained an order therein for payment of the money attached, which order is obeyed by the receiver, such payment will not be allowed by the court in passing his accounts.” (High on Receivers (4th ed.) 170-1.)

In De Winton v. Mayor of Brecon, 28 Beav. 200, it is stated:

“. . .1 apprehend this is clear, that the Court never allows any person to interfere either with money or property in the hands of its Receiver, without its leave; whether it is done by the consent or submission of the Receiver or by compulsory process against him. The Court is obliged to keep a strict hand over property in the hands of a Receiver, or which by virtue of the order of the Court may come into his hands, in order to preserve entire jurisdiction over the whole matter, and to do that which is just in the cause between the parties. It is always to be remembered, that the Receiver in this case would not have got a penny except by the order of the court enabling him to receive it, and entitling him to give a good discharge to the persons who paid it; and consequently it is strictly money belonging to the Court of Chancery, and the Receiver can only discharge himself by paying it in obedience to the direction and order of that Court. ’ ’

In 23 Am. & Eng. Ency. of Law, 1112, it is stated:

“Another court of co-ordinate jurisdiction has no right to interfere with property in the hands of a receiver already appointed, nor to entertain complaint against such receiver, nor attempt to control or call him to account, or undertake to remove him.”

In the instant case, the possession of the assets of the Bank by appellant, its receiver, is not the possession of the circuit court, but the possession of the superior court. The record in the instant case demonstrates the wisdqm of the rule that determines that the distribution of the Bank’s assets must be .made by the chancellor of the superior court. The Bank acted as receiver “ in a large number of cases in the Circuit and Superior Courts of Cook County,” and it also acted as “trustee, guardian, executor, administrator and in other trust capacities in a large number of estates.” The moneys held by it “in the trust department, either as receiver or in other trust capacity, were intermingled by the said bank with the general funds, and at the time of the closing of the . . . Bank . . . there was not sufficient money on hand to pay to the various receivership estates, or beneficiaries of trust estates, the amount of money shown to be due them by the books and records of the said bank.” The total amount of, funds which the Bank should have had on hand in the receivership matters was $73,453.12, and the “total amount of all trust claims, according to the books and records of the . . . Bank . . ., is approximately $700,000.” The securities deposited by the Bank with the state auditor under the Trust Companies act were, under the act, “for the benefit of the creditors of said company.” Appellant has not the physical possession of these securities, but even if he had, he would be unable, as receiver, to make any use of them without an order of the chancellor of the superior court. Even if it could be assumed, in times like these, that the securities would still realize, upon a sale, their face value, it is certain that the Bank’s assets will be hardly sufficient to pay thirty-three and one-third per cent of the total amount due on trust claims. All of the creditors of the Bank are faced with the tragic situation that there was on hand at the time of the closing of the Bank, approximately only $20,000 in cash. If other chancellors of the circuit and superior courts, who have before them receivership matters in which, the Bank acted as receiver, should enter orders similar to the one now before us, an unwarranted, unseemly, intolerable situation, akin to a scramble for the assets, would be presented. The chancellor of the superior court has the sole right to administer the estate, to determine who are the creditors of the Bank and the amounts of their respective claims, and to hold the assets, through his receiver, for the benefit of those whom he ultimately .adjudges to be entitled thereto, and in the performance of his plain duty in the premises he will not permit his receiver to obey the instant order of the circuit court. Appellant, receiver, can only discharge himself by paying moneys in obedience to the direction and order of the superior court, and the theory of the chancellor of the circuit court, as stated in the reason he gave for entering the order, that the appellant, as receiver of the Bank, was under an “unconditional liability” to pay “the successor receiver” the full amount of the claim, finds, of course, no warrant in the law. If the order in the instant case could be justified, then it would follow that the chancellor of the circuit court, if the amount of the claim against the Bank’s receiver in the foreclosure case warranted it, might enter an order requiring appellant to pay over to the “successor receiver” the full amount that he had in his possession as the Bank’s receiver. The mere statement of such a contention would be a sufficient answer to it.

The proper procedure in the instant case is for the chancellor of the circuit court to order the ‘6 successor receiver” to file a claim in the Bank receivership pro- ■ ceedings in the superior court. In that proceeding, in an orderly, equitable way, all of the creditors of the Bank will have their day in court.

The question involved in this appeal seems to us to be a simple one, and we justify the length of this opinion upon the ground that counsel have informed us that many of the closed banks in Cook county show conditions very similar to those present in the Bank receivership proceeding in the superior court, and that “this is a test case.”

As that part of the order of the circuit court, entered October 27, 1932, approving the report and account of Charles H. Albers, receiver of the Phillip State Bank and Trust Company, is not questioned, it is affirmed; and that part of the order wherein said receiver is ordered to pay over the sum of $2,566.72 forthwith to Baymond Hayes, “the successor receiver,” is reversed.

Order of the circuit court of Go ok county entered October 27,1932, affirmed in part and reversed in part.

Sullivan, P. J., and Gridley, J., concur.