text:
    County of Cass, Appellee, v. George F. Kuhlman, Appellant.
    Gen. No. 7,926.
    1. Counties — sufficiency of evidence to show one receiving payment for services as overseer of poor was at same time acting as county commissioner. In a suit by a county to recover sums alleged to have been paid to defendant for services as overseer of the poor, such payments having been unlawfully demanded and received while defendant was acting as commissioner of the plaintiff county, evidence held sufficient to show that defendant was acting asi county commissioner at the times alleged.
    2. Counties — sufficiency of evidence to show one acting as county commissioner received proceeds of warrants issued for his claims for services as overseer of poor. In a suit by a county to recover sums alleged to have been paid to defendant for services as overseer of the poor, such payments having been unlawfully demanded. and received while defendant was acting as commissioner of the plaintiff county, evidence held sufficient to show that defendant received the proceeds of certain warrants issued in payment of his claims for such services.
    Appeal by defendant from the Circuit Court of Cass county; the Hon. Guy R. Williams, Judge, presiding. Heard in this court at the October term, 1925.
    Reversed and remanded with directions.
    Opinion filed March 8, 1926.
    W. H. Dieterich, for appellant.
    Walter F. Dodd, for appellee.
   Mr. Presiding Justice Niehaus

delivered the opinion of the court.

Appellee brought suit against appellant to recover the sum of $800 alleged to have been received by him as overseer of the poor while acting as county commissioner of Cass county. A special count and the common counts were filed. The special count charges that defendant was elected county commissioner in November, 1922, qualifying in December of that year and acting as such until April, 1924, when the government of the county was changed to township organization; that defendant, while acting as such county commissioner, unlawfully claimed, demanded and received during each quarter of each year of Ms said term of office from Gass county the sum of $150 as compensation for the performance of the duties of overseer of the poor, receiving in the aggregate the sum of $800. The general issue of nonassumpsit was filed and the cause heard by the court without a jury.

At the trial the evidence was sufficient to establish the two essential elements of plaintiff’s case, viz: (1) That defendant was county commissioner; (2) that while county commissioner, he’ received as overseer of the poor the sum of money demanded of Mm, that sum being allowed by the county board. The court thought the evidence insufficient to prove the entire claim and rendered a judgment for only $450. Defendant appealed assigning the usual errors challenging the sufficiency of the evidence, propriety of the court’s rulings, denial of motion for new trial, and that the judgment is against the law and the evidence. Plaintiff assigns two cross errors: The rendition of a judgment for too small an amount, and rejection of three items of its demand. Were it not deemed necessary to examine the record upon the cross errors, we would rest upon the statement made here, only referring to what we said in deciding a similar case at the present term of County of Cass v. Kloher, 239 Ill. App. 301. We are satisfied with the conclusion there reached as applied to this case so far as the court went. We shall therefore examine the record upon the cross errors only.

The circuit court found the defendant was a county commissioner as alleged in the declaration. In the statement preceding the brief and argument of appellant, counsel say there was no evidence introduced by plaintiff to show that defendant was a county commissioner, and no evidence showing that the signatures on the warrants are the signatures of defendant. Those points are not again touched in the brief or the argument. They are devoted to a discussion of the right of defendant to take the money from the county in the manner in which he took it. This is a tacit admission he did take it. But plaintiff put in evidence records of proceedings of the county board showing it to consist of defendant and two other members. These records were made by the county clerk, the person authorized by law to make them. These records import verity. The declaration averring defendant was a county commissioner, and the status not being specially denied, it was not necessary to prove that fact more specifically.

On the subject of proof of official character, a noted author says: “For the same reason (notoriety of official character), and from the strong presumption arising, from the undisturbed exercise of a public office, that the appointment to it is valid, it is not, in general, necessary to prove the written appointments of public officers. All who are proved to have acted as such are presumed to have been duly appointed to the office, until the contrary. appears; and it is not material how the question arises, whether in a civil or criminal case, nor whether the officer is or is not a party to the record; unless, being plaintiff, he unnecessarily avers his title to the office, or the mode of his appointment; in which case, as has already been shown (section 56) the proof must support the entire allegation.” 1 Greenleaf on Evidence 689 (16th ed. sec. 563g).

It need hardly be said that if such presumptions are indulged in favor of persons' claiming office by appointment, for stronger reason will they be indulged when collaterally involved as to persons claiming to be elective officers and acting as such. The fact must be noted in this connection that defendant did not deny official character. The court patiently allowed time to procure his attendance at the trial after the case was closed, but he could not be found. No one reading the record can doubt he was county commissioner. No contention is made in brief or argument that he was not. His mouth is closed against saying he was not.

The items constituting the claim of $800 for which suit was brought are, in numbers, dates and amounts, as follows: No. 31,836 Dec. 18, 1922, $50; No. 32,308 March 14, 1923, $150; No. 32,773 June 15, 1923, $150; No. 33,097 Sept. 19, 1923, $150 ; No, 33,435 Dec. 24, 1923, $150; No. 33,613 March 19,1924, $150. The court allowed the last three and refused to allow the first three. He was of the opinion the evidence did not establish the fact defendant received the first three. Certain records were introduced, made by the county cleric and the county treasurer. They are important. In view of the confusion presented at the trial of this case, in the introduction of evidence as to action of the county board and the legal effect of the records, we call attention to the law bearing upon that subject.

By section 10, chapter 35, Statutes of Illinois. [Cahill’s St. ch. 35, ¶ 10], among the duties of county clerks they are required: (1) To keep- an accurate record of the proceedings of the county board, file and preserve all bills of account acted upon by the board, and when any account is allowed or disallowed, he shall note that fact thereon, and when a part of any account is allowed he shall note particularly the items allowed. (2) To keep a book in which he shall enter the number, date and amount of each order upon the county treasurer, and the name of the person in whose favor the same is drawn, and when such order is canceled, he shall note the date of cancellation opposite such entry. (3) Before any such order is delivered to the person for whose benefit it is drawn, the county clerk shall present the same to the county treasurer, who- shall personally countersign the same.

By section 5, chapter 36 [Cahill’s St. ch. 36, ¶ 5], the county treasurer is required to keep- books of account of moneys received by him, and of all moneys paid out by him, stating when, to whom and on what account payment is made. By section 7 [Cahill’s St. ch. 36, ¶ 7], he is required to countersign a warrant presented to him, and to enter in a book kept by him for that purpose, the number, date and amount and the name of the person to whom payable, and when paid shall cancel the same and note the fact opposite said entry.

These statutory provisions are referred to for the purpose of showing the authority the records possess considered in the light of the common law. In the first place they are admissible in evidence because required by law to be kept. They are supported by a presumption that they speak the truth. The mere production of them by the officer charged with the duty of keeping them avouches their genuineness and their authenticity. By their production by the custodian the court judicially knows they are required by law to be kept, and knows, also the proper place of their keeping. The ordinary tests of genuineness and authenticity of private documents are not required. This is because they have been made by authorized and accredited agents appointed for the purpose, as well as the publicity of their subject matter. The persons making such -books, entries and registers are in fact the agents of all the individuals comprising the State. Every member of the community may be supposed to be a party to the investigation. They are, therefore, entitled to an extraordinary degree of confidence and not necessary to be attested by the ordinary tests of truth. 1 Greenleaf on Evidence, sections 483, 484. In Niantic Bank v. Dennis, 37 Ill. 381, 386, the court speaking of the presumption said:

“But it is urged that there is no evidence that the bank, or its attorney King, ordered out the execution on which the land was sold. There is no- evidence that they did not, and the presumption is, in the absence of proof, that a clerk issues an execution only under the direction of some person authorized to- control the writ. It would be a misfeasance in office were he to do otherwise. Besides, King bid in the property at the sale, paid up the costs, and at once notified Wood-worth, the president of the bank, what he had done. There can be no doubt then, but what the bank must be held chargeable with causing the execution to issue.”

In the City of Peoria v. Central Nat. Bank, 224 Ill. 43, 65, it is said: “The presumption always is that public authorities do their duty, and it is therefore to be presumed until the contrary is shown that the public official who recorded this plat copied it correctly” (citing Niantic Bank case, supra; Cook v. Chicago, 57 Ill. 268; Spring v. Kane, 86 Ill. 580). See also, Waite v. Green River Special Drain. Dist. Com’rs, 226 Ill. 207, 210; State v. Illinois Cent. R. Co., 246 Ill. 188, 247, and other cases.

In the first paragraph of his argument, counsel for appellant says: “In this case there is absolutely no proof of the payment to defendant, George Kuhlman, of his claims numbered 31836, 32308 and 32773; the only proof in the record is that he filed such claims and the Warrant Kegister shows that warrants were issued for the same.” The record abundantly supports the last statement. But it does more. Looking at the transaction as a whole, attention is arrested by the question, why did he take and cash the last three and not the first three ? He began making these claims at the first meeting of the board after he was elected, receiving only $50 for one third of a quarter year’s pay. He did not see fit to appear and contest the vital fact charged against him of having received the money from those warrants. The warrants corresponding to those items could not be found. The record shows a diligent search was made for them. Where were they? Defendant did not account for them and with the records in evidence, he must have received them, or the clerk was guilty of misfeasance and some one guilty of forgery or false personation.

The evidence shows that the county employed an accountant to examine into its financial affairs. He and his assistants examined every available source of information with regard to the county’s finances. They checked the claims allowed by the commissioners and compared them with the different records of warrants which the law required the county clerk and county treasurer to keep. They all corresponded exactly, except that the warrants covering the first three claims, were missing and could not be found. The evidence shows that in the process of the audit they checked the county’s obligations with its funds in the bank. This check disclosed that the funds available, after allowing credit for the amount of these three warrants, exactly balanced the account. It is impossible to conjure a theory that will account for that condition except that the amounts were drawn out by the only means they could honestly under ordinary conditions be drawn out — by county warrants. By the records kept as provided by law, it is shown the claims were allowed and the warrants issued. The fact that they were lost or misplaced is immaterial. They must have been misplaced or lost after payment. Their loss or misplacement is the only account that can be given. But the known vigilance and course of business of banks and the presumed fidelity of public officials supported by the silence of defendant forbids any conclusion except that he got the money. Unless we presume, with nothing on which to base the presumption, that some of the county’s officials cashed and destroyed the first three warrants, we must infer that Kuhlman cashed them. We are of the opinion and so hold that the evidence sustains plaintiff’s contention that Kuhlman got the money on the warrants which the records show were issued in payment of his illegal claims. There is no circumstance discrediting the conclusion.

We find and so hold that the evidence sustains the averments of the declaration and that the county of Cass is entitled to recover the sum of $800 from the defendant. The judgment of the circuit court of Cass county is reversed upon the cross errors assigned, and the cause is remanded to that court with directions to render a judgment for the plaintiff against defendant for the sum of $800 and for costs. Judgment will be entered in this court against appellant for all costs occasioned by this appeal.

Reversed and remcmded with directions.


source: Caselaw Access Project

author: Mr. Justice Shurtleff

license: Public Domain

text:
    The People of the State of Illinois, Defendant in Error, v. George Smith and Martha Brown, Plaintiffs in Error.
    Gen. No. 7,886.
    1. Criminal procedure — power of court to extend time for filing hill of exceptions after expiration of period allowed therefor. After the expiration, of the period allowed by an order of the county court for filing a bill of exceptions the court is without authority to grant an extension of time in which to file such bill.
    2. Criminal procedure — failure to file hill of exceptions in time as ground for striking it from record. Where the record shows that the bill of exceptions was not filed within the time limited by the order of the court authorizing the same, the bill will be stricken from the record.
    3. Criminal procedure — joinder in error as curing defective hill of exceptions or precluding attack thereon. Joinder in error does not validate an invalid bill of exceptions and does not empower a court of review to act thereon, nor does it prevent a defendant in error from challenging the validity of the purported bill of exceptions.
    4. Criminal procedure — when inclusion of evidence in hill of exceptions essential. Where a question raised for review depends upon the evidence, such evidence must be incorporated in the bill of exceptions or the point cannot be considered.
    5. Criminal procedure — conformity of criminal practice to civil in saving questions for review. Exceptions may be taken in criminal cases, and bills of exceptions shall be signed and sealed by the judge and entered of record and error may be assigned thereon by the defendant the same as in civil cases-.
    6. Criminal procedure — time for settlement, signature and sealing of hills of exceptions. Where no statute provides otherwise the settlement and signature of a bill of exceptions must be made before the expiration of the term at which the trial is held or within such time as the court may at that term grant for the purpose.
    7. Criminal procedure — necessity for inclusion of motions and rulings thereon in hill of exceptions. Motions made during the progress of a trial, and the rulings of the court thereon, must be preserved in a bill of exceptions in order that there may be a review thereof. They do not become a part of the record unless made so by the bill of exceptions.

      8. Ckminal procedure — assignment of error as to form of verdict not considered where verdict not set out in record. An assignment that the court erred in entering judgment upon the verdict against joint defendants in a prosecution for violation of the Prohibition Act because the verdict does not specify upon what count or counts the defendants and each of them are found guilty, will not be considered where the verdict is not set out in the abstract, especially where it appears that the jury found both defendants guilty on all four counts of the information.
    Error by defendant to the County Court of Macon county; the Hon. John H. McCot, Judge, presiding. Heard in this court at the October term, 1925.
    Affirmed.
    Opinion filed March 8, 1926.
    W. J. Carey and Lee & Lee, for plaintiffs in error.
    Charles F. Evans, State’s Attorney, A. R. Ivens and Emanual Rosenberg, Assistant State’s Attorneys, for defendant in error.
   Mr. Justice Shurtleff

delivered the opinion of the court.

Plaintiffs in error were convicted at the August term, 1924, of the county court of Macon county of violating the Prohibition Act and duly sentenced. They have brought the record to this court by writ of error for review.

Defendant in error has moved to strike the bill of exceptions appearing in the record on the ground that it was not signed, approved and filed within the time allowed by order of court for such filing. The abstract presented of the common-law record does not comply with the rules of this court and is not even a complete index of the record.

From an examination of the record we find that judgment was entered in this cause on October 11, 1924, during the August term of said court; that on said day the execution of said judgment was stayed for a period of 60 days by order of court and plaintiffs in error were given, by said order, 40 days to prepare and present a bill of exceptions. The August term, 1924, of the county court of Macon county adjourned without day, and the December term of said court opened on December 8, 1924, that being the second Monday of said month. Upon December 9 the second day of the December term, 1924, of said court, and 59 days after the original order for a bill of exceptions had been entered and after the term had expired in which said bill of exceptions had been granted, by an order of court the time within which to present a bill of exceptions was extended for a period of 60 days. The county court of Macon county had no power or jurisdiction to grant an extension of time on December 9, 1924, to present a bill of exceptions.

A bill of exceptions not presented within the time required by the order of the court will be stricken from the record. (Parker v. Village of LaGrange, 167 Ill. 623.)

Joinder in error does not validate an invalid bill of exceptions and does not empower a court of review to act upon an invalid bill of exceptions or to exercise the judicial power where such power is lacking, nor does it prevent a defendant in error from challenging the validity of a purported bill of exceptions. (Haines v. Knowlton Danderine Co., 156 Ill. App. 408, aff’d 248 Ill. 259.)

An indorsement of “O. K.” upon a stenographic report by counsel for defendant in error does not estop the latter from objecting that it was not filed in time. (William J. Lemp Brewing Co. v. Alliance Assur. Co., 192 Ill. App. 300.)

The general law is that when the question raised for review depends upon the evidence, such evidence must be incorporated in the bill of exceptions or the point cannot be considered by the reviewing court. Exceptions may be taken in criminal cases, and bills of exceptions shall be signed and sealed by the judge and entered of record and error may be assigned thereon by the defendant the same as in civil cases. Where no statute provides otherwise the settlement and signature of a bill of exceptions must be made- before expiration of the term at which the trial is held or within such time as the court may at that term grant for the purpose. (People v. Ellsworth, 261 Ill. 275; Hunter W. Finch & Co. v. Zenith Furnace Co., 245 Ill. 586; People v. Strauch, 247 Ill. 220; Wabash, St. L. & P. Ry. Co. v. People, 106 Ill. 652.)

Motions of various kinds made during the progress of the cause and rulings by the court thereon must in .order to be reviewed be preserved by a bill of exceptions. They do not become a part of the record unless made so by the bill of exceptions. (McElwee v. People, 77 Ill. 493; Bedee v. People, 73 Ill. 320.)

Bill of exceptions must be presented to the trial judge for signature during the term at which the cause is disposed of, or within such further time as shall be limited by the court by an order entered during that term. If the court shall be in session at any succeeding term before the expiration of the time granted, the court may, prior to the expiration of the time granted and during such succeeding term, make another order extending the time within which the bill of exceptions may be filed; but if the term at which the cause was disposed of is adjourned and thereafter the period first fixed for filing the bill of exceptions expires without an order providing for an extension of time, the court, subsequent to the expiration of that period, is without jurisdiction to make an order extending the time within which to present the bill of exceptions. (Richter v. Chicago & E. R. Co., 273 Ill. 625; Pieser v. Minkota Milling Co., 222 Ill. 139; People v. Tananevicz, 285 Ill. 376; People v. Powers, 200 Ill. App. 536.)

The county court of Macon county having no jurisdiction over said cause or power to extend the time in which to present a bill of exceptions, the bill of exceptions appearing in the record in this cause is ordered to be stricken from the record.

There was no motion made in the court below to quash the information or the second and third counts thereof, upon which a conviction was had, and no question is raised upon this record as to the sufficiency of the charge or the form of the judgment. Plaintiffs in error, in their eighth assignment of error, say that the court erred in entering judgment against the defendants and each of them, as the verdict does not specify upon what count or counts the defendants and eáeh of them are found guilty. Plaintiffs in error, however,, have not set out the verdict in the abstract. The word “verdict” is found in the index, and “verdict finding defendants guilty” on page two of the abstract. As a matter of fact there were four counts in the information and the jury by its verdict found both defendants guilty “on all four counts of the information.”

Finding no error in the judgment of the county court of Macon county, that judgment is affirmed.

Affirmed.


text:
    Fred A. Ebinger, Appellant, v. Sidney S. Breese et al., Appellees.
    Gen. No. 7,941.
    1. Corporations — submission of bid by unlicensed foreign corporation as “transaction of business” within Oahill’s St. ch. 82, If 80. Where the proposals upon which a sanitary district invited bids provided that the bid and award should not constitute a contract, but that before a contract was executed the successful bidder must present evidence that it was authorized to do business in the State, the submission of a bid thereon by a foreign corporation not licensed to do business in the State did not, of itself, constitute the transaction of business in tbe State within the meaning of Cahill’s St. ch. 32, If 80.
    2. Corporation's — purpose of prohibition against transaction of business by unlicensed foreign corporation. Cahill’s St. ch. 32, V 80, prohibiting unlicensed foreign corporations to transact business in the State, having been enacted for the protection of persons with whom such corporations undertake to do business, cannot be used as a shield behind which such corporations or their agents may hide when it is sought to enforce performance of their obligations.
    Appeal by plaintiff from the Circuit Court of Sangamon county; the Hon. Elbert S. Smith, Judge, presiding. Heard in this court at the October term, 1925.
    Affirmed.
    Opinion filed March 8, 1926.
    George E. Brannan, Ernest D. MacDougall and Oscar J. Putting, for appellant.
    Barber & Barber, for appellees.
   Mr. Justice Shurtleff

delivered the opinion of the court.

The only question raised in this case is the right of a foreign corporation, not authorized to transact business in this State, to submit a bid for public work. Appellee, a sanitary district in this State, in due and legal form advertised that it would receive bids on May 15,1925, for the construction of certain intercepting sewers. By the advertisement, the board of trustees of said sanitary district reserved “the right to reject any and all bids, waive or not waive any informality in the bids received, and to accept any bid or division,” etc. Each bidder was required to submit with its proposal a certified check for $7,000 covering Division A, as a guarantee that “if a proposal is accepted a contract will be entered into and its performance properly secured.”

The printed advertisement, instructions to and requirements of bidders, referred to in the advertisement, provided:

“In the event that any corporation, organized and doing’ business under the laws of any foreign state, is the successful bidder, such corporation shall present evidence before a contract for said work is executed, that it is authorized to do business in the State of Illinois. ’ ’

The instructions to bidders also required that the bidder to whom the contract should be awarded, “shall, within ten days after receiving notice of such award, execute a contract with said Sanitary District for the full and complete performance of all work ■specified therein, and shall also execute a bond for the faithful performance of said contract in the sum of the total amount of the contract, with surety company or surety companies as bondsmen whose financial standing is satisfactory to the board of trustees of said District.”

There were fourteen bidders for Division A of the work — eight of whom were foreign corporations — the lowest bid being that of Hanson & Willadsen Company, a Nebraska corporation, in the amount of $272,-242.50, being $12,000 less than any other bidder and $26,000 lower than any resident bidder.

After making an investigation as to the responsibility of the several bidders, the board of trustees of appellee sanitary district on May 27, 1925, voted that the bid of Hanson & Willadsen Company of Omaha, Nebraska, “be accepted subject to all provisions of the plans and specifications and requirements of bidding and instructions to bidders and notice to contractors.”

On June 4, 1925, the Hanson and Willadsen Company received notice of the award to it of said work. Six days thereafter, on June 10, 1925, said Hanson and Willadsen Company procured a license to transact business in the State of Illinois, and on the same day said license was filed for record in the recorder’s office of Sangamon county, Illinois. On June 13, 1925, nine days after receipt of such notice of award, said Hanson and Willadsen Company submitted to the . board of trustees of appellee district proof of its having been licensed to transact business in this State, and, on the same day, June 13, 1925, a formal written contract covering the work in question was executed by said Hanson and Willadsen Company and appellee sanitary district, and its performance secured by a bond executed by Union Surety Company, a corporation duly authorized to execute bonds in the State of Illinois.

Appellant, a taxpayer in said district, filed his bill in equity against the sanitary district and its trustees, to enjoin it and them from proceeding under said contract on the ground that it was void under the statute. Section 80, chapter 32, Illinois Revised Statutes [Cahill’s St. ch. 32, ¶ 80] provides that before any foreign corporation of the character involved in the case at bar “transacts any business” in this State it shall procure from the secretary of state a certificate of authority therefor.

Answer and replication were filed. There was a hearing upon the bill, proofs taken and the bill was dismissed for want of equity and appellant has brought the record to this court by appeal, for review.

Appellant contends that the publication of the plans and specifications, and the submission of the bid by the corporation, constituted a contract violating the statute and was, therefore, void. It is further contended that the acts performed constituted a “transaction of business” in this State and that, if the corporation was not permitted to enter into a contract to do such work in the State of Illinois, it was not authorized to submit a bid and therefore the bid was illegal and should not have been received. We can not agree with appellant’s contention. The submission of a bid is only a preliminary step looking to the transaction of business, and not the. transaction of business in violation of the statute. 14A Corpus Juris, p. 1279, sec. 3986.

The plans and specifications provided that the bid and award should not constitute a contract, but that the successful bidder should present evidence before a contract for said work should be executed that it is authorized to do business in this State. The rule is, in such cases, that no contract in law is made until the formal written contract is executed. Baltimore & Ohio S. W. R. Co. v. People, 195 Ill. 423; Scott v. Fowler, 227 Ill. 108.

The statute prohibiting foreign corporations from doing business in this State without a license is for the protection of those with whom such corporations undertake to do business, and is not a shield behind which such corporations or their agents or abettors can hide when it is sought to enforce the performance of their obligations. The foreign corporation is estopped from urging as a defense its own violation of the law. Hence the sanitary district may, at its option, enforce the contract against the foreign corporation in the absence of any license being taken out.

This court has held in Place v. Tri-State Inv. Co., 212 App. 529:

“Appellant now insists that the Tri-State Investment Company is not authorized to do business in this State and that therefore the contract sued on is void. The law prohibiting foreign corporations from doing business in this State, except under certain circumstances and conditions, was intended as a weapon of defense in the hands and for the protection of those with whom such corporations undertake to do business, and not as a shield behind which such corporations or their agents or abettors can hide, when it is sought to enforce the performance of their obligations. McCarthy v. Alphons Custodis Chimney Const. Co., 219 Ill. 616.” And this holding was based upon Joseph T. Ryerson & Son v. Shaw, 277 Ill. 530, and Ross v. New South Farm & Home Co., 191 Ill. App. 353. The transaction in itself is not immoral or unlawful and the parties are not mutually estopped from claiming under the contract, if a contract has been entered into. In other words, such a transaction is not void at the suit of appellant, but may be voidable at the option of appellee.

Some question is raised on the record because it was suggested by the court that it be admitted that proof was made that the corporation had made a contract for lime, cement and lumber, with a Springfield firm, before said corporation was licensed to do business in the State of Illinois. No such proof was submitted and if it had been in the opinion of this court it could not effect a reversal of the decree of the lower court.

Finding no error in the record, the decree of the circuit court of Sangamon county should be and is affirmed.

Affirmed.


author: Mr. Presiding Justice Thomson

text:
    Courtenay Barber, Appellant, v. General Automotive Corporation, Appellee.
    Gen. No. 30,843.
    1. Negotiable instruments — admissibility of evidence as to equities between original parties, in action by assignee bolding note as collateral. In an action upon a corporate note held by plaintiff as security collateral to an indebtedness of the payees to plaintiff, it was error to exclude testimony that at a meeting of the defendant’s directors whereat the resolution authorizing the making of the note was adopted, the payees stated that they wished the note given to assure performance by the corporation of its undertaking to discharge a certain presently due obligation of the payees incurred on the corporation’s behalf, and that they would not negotiate the note so given but would return it to the corporation upon the performance of its undertaking.
    2. Negotiable instruments — weight of evidence as to equities between original parties, in action by assignee holding note as collateral. In an action upon a corporate note held by plaintiff as security collateral to an indebtedness of the payees to plaintiff, testimony of an officer of defendant, the maker, that at the time the note was given the payees were heavily indebted to defendant, which was in consequence in imminent danger of failure, and that the note was given to induce the payees to procure funds for the relief of defendant by placing a mortgage upon property held by them, with the understanding that the payees would not negotiate such note but would hold it as security for the performance of defendant’s agreement to pay such mortgage debt when it became due, held' not “so ridiculous that it deserves no credence whatever,” the necessities of the defendant serving to explain any possible want of prudence in its undertaking.
    3. Negotiable Instruments- — status of one holding notes as collateral, after payment of secured debt, under agreement authorizing continued holding and application of payments to meet specified contingent obligations. Where after the payees of corporate notes had assigned them to plaintiff as security collateral to their own notes to plaintiff, the plaintiff agreed to surrender the secured notes to payees as part of the consideration for the transfer by payees of certain property to -plaintiff, and in anticipation of the performance of such agreement the parties further agreed that plaintiff should' retain such corporate notes and credit any payments by the maker thereon against certain contingent obligations of the payees to plaintiff, plaintiff did not, after the surrender of the secured notes as aforesaid, hold such corporate notes as security for the contingent obligations mentioned, there being no proof that any of such liabilities had become absolute, but the effect of such further agreement was to constitute plaintiff the agent of the payees for application of any payments upon the corporate notes in accordance with such agreement.
    4. Negotiable instruments — defenses available against one holding notes as agent of payees for application of payments. One who holds notes, by virtue of an agreement with -the payees thereof, as their agent for the application of payments thereon in accordance with the terms of such agreement, holds them subject to the same defenses available in a suit brought by the- payees themselves.
    5. Negotiable instruments — defenses available against one holding note as collateral security. One who has taken a note as collateral security for a debt which remains unpaid, holds it free from any equities between the original parties of which he has no notice, but only to the extent of the secured indebtedness.
    6. Negotiable instruments — defenses available against one Holding note as collateral security. One who has taken a note as collateral security for a debt holds it subject to any equities between the original parties of which he has notice.
    7. Negotiable instruments — defenses available against one Holding note as collateral security after payment of secured debt. One who has taken a note as collateral security for a debt holds such note, after the payment of the debt thereby secured, subject to all the equities existing between the original parties to the instrument, whether he has notice thereof or not.
    8. Negotiable instruments — sufficiency of evidence to support judgment for maker of notes in action by Holder after payment of debt of payees secured tHereby. Where in an action upon notes assigned by the payees to plaintiff as security for the payment of their notes to him, the evidence showed that such secured notes had been paid, but there was no evidence in support of allegations of the existence of equities between the original parties to the collateral notes, it was error to give judgment for the defendant maker.
    9. Appeal and error — propriety of striking brief improperly raising new issues wHere case determined on otHer matters properly raised. The fact that a brief violates the rules of the Appellate Court by raising points not suggested below will not be deemed a ground for striking the brief where the same contains other matters, and the case is determined on review without reference to the. points so raised.
    Appeal by plaintiff from the Municipal Court of Chicago; the Hon. Arnold Heap, Judge, presiding. Heard in the third division of this court for the first district at the October term, 1925.
    Reversed and cause remanded.
    Opinion filed March 10, 1926.
    Rehearing denied April 12, 1926.
    Paul O’Donnell, for appellant.
    McElroy & Huddleston, for appellee; Zane, Morse & Norman, of counsel.
   Mr. Presiding Justice Thomson

delivered the opinion of the court.

By this appeal the plaintiff seeks to reverse a judgment of the municipal court of Chicago, finding the issues for the defendant aad that the plaintiff take nothing by his suit and for costs to be paid by the plaintiff to the defendant. "When the case was originally reached for trial the defendant did not appear and the plaintiff presented his evidence before a jury and the jury found the issues in his favor, and fixed his damages at the sum of $6,881.80, and judgment in his favor was entered for that amount. Within 30 days the defendant appeared and submitted a motion to vacate the judgment and the court opened up the judgment and gave the defendant leave to appear and defend, the judgment to stand as security. That judgment was vacated when the judgment appealed from was entered. After the original judgment had been opened, the demand for a jury trial, which had been submitted, was withdrawn and the issues between the parties were submitted to the trial court without a jury.

The plaintiff brought this action on the third of a series of three notes held by him. All of these notes were dated February 5, 1924. The note involved in the case at bar was due February 1, 1925, and was drawn to the order of “Harvey S. and Chas. A. Pardee,” and indorsed by those two payees in blank. The other two notes, in this series of three, are the ones involved in cases Glen. Nos. 30,279 and 30,413, in which we are this day filing opinions.

In the case at bar the plaintiff was called to the witness stand by the defendant under section 33 of the Municipal Court Act [Cahill’s St. ch. 37, TT421], and he testified that he received the notes sued upon from the Pardees, on August 28, 1924, as collateral to an indebtedness of approximately $12,000 which they owed him for money he had advanced in payment of premiums they owed on certain life insurance policies, this indebtedness of the Pardees, being covered by their promissory notes which the plaintiff also held. He further testified that after he received the note sued upon, as collateral to the notes of the Pardees, the latter notes were returned to the Pardees in connection with their conveyance to him, by warranty deed, of certain property they owned in Highland Park, and that when he received this deed from them, and returned their notes to them, he also undertook to pay them a certain amount in cash. The defendant also called as a witness one Kingsley, an officer of the defendant corporation, and he testified to having a conversation with the plaintiff on August 23, or 24, 1924, referring primarily to the first of the three notes we have mentioned, which the plaintiff also held and which was due on August 1, 1924, explaining to Barber that the defendant was in very bad financial condition “owing to the fact that the company had been mishandled and serious mistakes had been made and a lot of money had been drawn out by the Pardees * * *. I told him the Pardees owed the company a large sum of money which they had taken out, overdrawn.” This witness then gave the substance of that conversation with the plaintiff, which was to the effect that with the money the Pardees had improperly withdrawn from the defendant company they had purchased their Highland Park property; that later the Pardees had put a mortgage of $25,000 on their property, the proceeds of which they had placed to the credit of the defendant company, and that the defendant had agreed to pay the mortgage notes given in connection with that loan, as they fell due, and in connection with that transaction the defendant company had given the Pardees these promissory notes sued upon by the plaintiff in cases Gren. Nos. 30,279, 30,413 and the case at bar, it being agreed by the Pardees that they would not negotiate those notes, but that contrary to their agreement they had negotiated them by indorsing them in blank and turning them over to the plaintiff as collateral security for notes of the Pardees, given to the plaintiff in connection with an indebtedness on their part to him, as a result of his paying certain of their life insurance premiums. Kingsley further testified that the plaintiff asked him about the condition of the Highland Park property and that he told him there were certain mortgages against it; that the property stood in the name of the Pardees, and that some of the company’s principal stockholders thought that the Pardees should turn the property over to the company, inasmuch as they had bought it with money they had taken out of the company’s treasury and had, in fact, practically wrecked the company in so doing, and had been obliged to borrow $25,000 on a second mortgage on the property and turn the proceeds of it over to the company to keep it from failing. He further testified that the plaintiff asked him whether the company intended paying the note he then held, being the first of the series and the one sued upon in case Hen. No. 30,279, and he told him they did, but that they did not intend paying the remainder of them; and that he further told the plaintiff that the company intended to- pay the money due on the mortgage to the mortgage company that had made the loan, so as to preserve the property for the company; that he told the plaintiff that the Pardees were indebted to the defendant company to the extent of over $100,000, for withdrawals they had made from the defendant company’s treasury, charging such withdrawals to themselves as overdrafts. Certain evidence which was sought to be presented by this witness was ruled out on objection of the plaintiff, whereupon counsel for the defendant made an offer to show that at a meeting of the board of directors of the defendant company a resolution was adopted authorizing the execution of the notes from the defendant company to the Pardees, the latter being present at that meeting and stating that they desired these notes, covering the amount of the money they had received on their Highland Park property, so that they would be sure that the company would pay these second mortgage notes as they became due; and that they further stated that they would hold the notes to be given them by the defendant company and not negotiate nor dispose of them; and that as the second mortgage notes were taken up by the company, they (the Pardees) would return the notes to be placed in their hands by the defendant corporation. In our opinion that evidence was competent and should have been admitted.

Counsel for the plaintiff argues in his brief that the foregoing testimony of the witness Kingsley “is so ridiculous that it deserves no credence whatsoever,” and in this connection he asks why, under the circumstances given by this witness, “should the company issue any notes at all * * *. The fact that the company issued unconditional promises gives the lie to Mr. Kingsley in this regard.” The testimony of this witness does not seem as unreasonable to us as counsel regards it. If the Pardees had improperly withdrawn upwards of $100,000 from the defendant company and with that money purchased the Highland Park property, and if this withdrawal put the defendant company in a precarious financial condition, so that it was about to fail, it would be quite natural for its officers to turn to the Pardees for assistance and inasmuch as the latter were in no position to turn back any of the money they had withdrawn, it would be expected that the officers of the company would insist that they borrow money, and put up their Highland Park property as security — in other words, put a second mortgage on that property. The testimony of Kingsley is to the effect that this was done in order to save the defendant from financial failure. It might well be that in order to accomplish that result the defendant would even be willing to agree with the Pardees that they would take up these mortgage notes as they fell due, if they were convinced that the Pardees could not do so themselves. And it is by no means incredible that if the Pardees insisted, in order to insure them that this would be done, that the defendant give them its notes to match the mortgage notes, the company might be in such financial straits as to comply and give the Pardees such notes, upon their promise not to negotiate them and to return them as fast as the company took up the second mortgage notes. In other words, in order to save itself from financial failure, imminent at the moment, the defendant company might be glad to take the proceeds of the $25,000 mortgage notes and thus tide itself over, and agree to pay them when they came due later; and give their notes to the Pardees as a pledge to insure their doing so. It may be thought that this was an unwise thing for the defendant company to do, but, as already stated, we are of the opinion that it may not reasonably be said that the testimony to the effect that they did do it “is so ridiculous that it deserves no credence whatsoever.”

In connection with its proof the defendant offered a memorandum of agreement between the plaintiff and the Pardees, in which the plaintiff agreed to purchase their Highland Park property for $58,500, subject to two second mortgages, the latter of which was the one which had been placed on the property by the Pardees in order to turn over the $25,000 to the defendant company. The amount which the plaintiff agreed to pay the Pardees for this property, in this memorandum, this amount representing the equity in the property, was $28,125, and the agreement provided that $12,000 of that amount was to be paid by the plaintiff to the Pardees “by the surrender and cancellation of notes of the sellers (the Pardees) now held .by the purchaser (the plaintiff). ’ ’ These notes were the ones on which the Pardees had given the plaintiff the note of the defendant, here sued upon, as collateral. This memorandum of agreement was dated September 30, 1924.

The defendant also offered in evidence another agreement between the Pardees and the plaintiff, reciting that whereas the plaintiff held the notes of the defendant, drawn to the order of the Pardees, as collateral to secure the payment of certain notes of the Pardees to him, the latter amounting to $12,000, and “whereas the parties (the Pardees and the plaintiff) hereto, are about to enter into a contract covering the sale of certain premises in Highland Park” (being the document last above referred to) therefore, it was agreed that if that contract of purchase and sale was entered into and title conveyed to the plaintiff, it was understood and agreed that any amounts paid by the defendant on its notes held by the plaintiff “will be credited against and to rentals accruing to” the plaintiff from the property to be so conveyed, “and any amounts received from said notes in excess of said rentals * * * may be credited, at the option of” the plaintiff, against $58,500, at which price the Pardees “have the option of purchase of said real estate during the period of said lease,” and whereas the Pardees had certain insurance premiums coming due in January, 1925, it was further agreed that the plaintiff was to “have the right to apply any moneys received on account of the notes of” the defendant to the payment of those life insurance premiums. This agreement contained a further paragraph, which had a line drawn through it, providing that if the Pardees did not exercise their option to repurchase the Highland Park property the plaintiff should pay them the amount of money received from the defendant on those notes which the plaintiff held as collateral to the notes of the Pardees, less cost of cancellation and rental of the Highland Park property due from the Pardees to the plaintiff, and the life insurance premiums referred to in the agreement.

The defendant also introduced in evidence another agreement between the plaintiff and the Pardees, reciting that whereas those parties had entered into an agreement providing for the sale of the Highland Park property, from the Pardees to the plaintiff, therefore, the plaintiff leased the said premises to the Pardees from October 1,1924, to September 30,1925, at a rental of $500 per month. And further, in this document the plaintiff agreed that he would sell the Highland Park property to the Pardees or their nominee, provided such option to buy was exercised by the Pardees on or before September 30, 1925, this sale to be at the price of $58,500, plus any rent unpaid at the time of the said purchase.

The defendant further introduced in evidence a warranty deed from the Pardees to the plaintiff, conveying their Highland Park property. All the foregoing documents were received in evidence.

The plaintiff then took the witness stand in rebuttal and admitted that he had a conversation with Kingsley about August 23 or 24, 1924; but his version of that conversation was different from that given by Kingsley, so far as it concerned the notes of the defendant sued upon by the plaintiff in the case at bar and the other cases above referred to. The plaintiff’s testimony was that he asked Kingsley if the notes the defendant had given the Pardees would be paid when' they fell due, and that Kingsley said they would, and that the plaintiff asked Kingsley whether these notes would be good collateral for the plaintiff to secure from the Pardees to secure their indebtedness to him, and that Kingsley said they would be. The plaintiff denied that Kingsley told him the Pardees were indebted to the defendant company, and he denied that Kingsley told him: that the note in suit would not be paid if the plaintiff took it-from the Pardees as collateral security. The plaintiff then testified that he secured the note here sued upon, as well as the note sued upon in case Gien. No. 30,413, a few days after that conversation with Kingsley.

By reference to the opinion we are filing this day in case Gen. No. 30,413, it will be seen that this testimony of the plaintiff was in some respects materially different from that given by him on the trial of that case, and on the cross-examination of the plaintiff in the case at bar, his attention was called to that testimony given in the prior case, and he was asked whether or not be did not make certain answers, read to him from the record in that case, and he said he did not remember.

Following the testimony of the plaintiff, in rebuttal, Kingsley was again called to the stand by the defendant and' denied the statements attributed to him by the plaintiff in his testimony in connection with the conversation had between these parties on August 23 or 24.

At the conclusion of this testimony the trial court found the issues for the defendant and entered judgment accordingly, which judgment the plaintiff seeks to reverse by this appeal. The remarks made by the trial court in giving his decision appear in the record. The court referred to the opposite versions of the conversation had between the plaintiff and Kingsley on the 23rd or 24th of August, this having to do with, the issue of whether or not the plaintiff had notice, before receiving the note here sued upon, that certain equities existed in connection with that note, as between the defendant and the Pardees, but the court did not proceed to decide the case on that issue, but turned to the question of whether the principal indebtedness from the Pardees to the plaintiff, and represented by their notes to him, had been paid by them, the court referring in that connection to the case of Gammon v. Huse, 9 Ill. App. 557 [aff’d 100 Ill. 234], which case we have referred to in the opinion filed in case Gen. No. 30,279. The court then referred to the documents which the defendant had introduced in evidence, namely, the warranty deed conveying the Highland Park property from the Pardees to the plaintiff, and the various agreements between those parties in connection with that transaction, and held that in his opinion those documents showed that the notes of the Pardees, held by the plaintiff, had been liquidated, and, therefore, that the plaintiff could not recover.

The plaintiff makes the further contention that even if it be held that the $12,000 notes of the Pardees, which he surrendered at the time they conveyed the Highland Park property to him, were liquidated, the agreements which he entered into with the Pardees at the time of that conveyance, whereby he leased the property to the Pardees for a year at a rental of $6,000 or $500 a month, and wherein the Pardees agreed that he might continue to hold the notes of the defendant, which they (the Pardees) had delivered to him as collateral, and wherein the plaintiff agreed to credit against the Highland Park property rental, which the Pardees agreed to pay, any amounts paid by the defendant to the plaintiff on its notes, and wherein the plaintiff also reserved the right to credit any amount so paid by the defendant to the plaintiff on its notes, over and above the amount of such rentals, to certain payments the Pardees would be called upon to make in 1925 for certain insurance premiums, and also against a purchase price of $58,500, at which the plaintiff agreed to resell the Highland Park property to the Pardees — nevertheless these agreements left him (the plaintiff) in possession of the defendant’s notes as collateral to secure the payment of these further obligations of the Pardees for the rental of the Highland Park property; for the insurance premiums and for the price at which they had an option to rebuy the property. In our opinion this contention is untenable.

At the time the parties entered into their agreement wherein the Pardees agreed that any payments made by the defendant on its notes which were in the possession of the plaintiff, could be credited by the plaintiff against the rent referred to, and the insurance premiums and the purchase price at which the Pardees were to have an option to repurchase the Highland Park property, none of those obligations were due. In fact they were not even in existence at that time, for that agreement recited that the parties to it “were about to enter into a contract” covering the sale of the Highland Park property, from the Pardees to the plaintiff, and of course, the lease back to the Pardees from the plaintiff could not be entered into' until the warranty deed had been delivered and, therefore, the Pardees did not even enter into- an obligation to pay this rent, or acquire the option to repurchase the property, until after the parties had entered into this agreement, under which the plaintiff now claims he acquired a continuing right to hold these notes of the defendant, among them the one in suit in the case at bar, as collateral security for these other debts. Moreover, it does not appear whether any rent ever accrued under the lease, or whether the Pardees ever exercised the option to repurchase the Highland Park property or attempted to, nor does it appear whether the insurance premiums that were to fall due in January, 1925, ever fell due. So far as this record shows, the policies on which these premiums were to fall due may have been canceled. In our opinion the most that that contract of September 30, 1924, between the plaintiff and the Pardees, accomplished was to constitute the plaintiff the agent of the Pardees, to apply such payments as the defendant might make on its notes to the plaintiff, in the manner designated in that agreement. In that situation the notes would be subject to the same defenses as against the plaintiff as they would be in a suit brought by the Pardees. In our opinion there is much in the record to support the contention of the defendant that this action, as well as those brought on the other notes, was an attempt to collect the amount of the notes sued upon from the defendant, without having to encounter the equities that the defendant would clearly have been in a position to set up in case the notes were sued upon by the real owners, the Pardees.

One who has taken a note as collateral security for a debt which remains unpaid holds it free from any equities existing between the original parties of which he had no- notice, but only to the extent of the original indebtedness. He would, of course, hold it subject to any equities of which he had notice. But where the debt on which the collateral note was taken as security has been paid, the question of whether the holder had notice of any equities- existing between the original parties to the collateral note becomes- entirely immaterial, for in such case the holder retains the collateral note subject to all the equities existing between the original parties, whether he has notice of them or not.

Such being the law, several possible issues of fact are involved in all three of these cases. First, have the notes- of the Pardees, held by Barber, been paid? In our opinion the trial court, in the case at bar, properly found that they had been. But it would not necessarily follow, as the trial court held, that Barber could not recover against the defendant on the note here sued upon. The original notes of the Pardees, held by Barber, having been paid, the question of whether he took these collateral notes on which he is now suing, with notice of any equities between the original parties, is not material. He holds the collateral notes subject to any such equities as exist between the defendant and the Pardees, whether he had notice of them or not. But the issue of fact still to be determined is, do such equities, in fact, exist? If they do not the plaintiff may recover against the maker of the collateral note, for, as this court pointed out in the Gammon case, if, as between the original parties on the collateral note-, the maker is liable to pay it, it is wholly immaterial to him whether judgment is had against him in favor of one who has been holding the note as collateral security, or any other lawful holder, as the judgment would be a bar to a second suit. But if such equities do exist, then the collateral note — the indebtedness, to which the collateral attached, having been paid — is subject to them in this case. The only evidence submitted by the defendant in the case at bar was the testimony of Kingsley to the effect that he told Barber that such equities did exist. No evidence was submitted to the effect that they did in fact exist nor what they consisted of, if they did exist. That issue must be determined.

As in the other two cases involved, a motion was made by the plaintiff to strike the reply brief by the defendant, which motion was. reserved to the hearing. That motion is now denied. It is true that this consolidated brief raises points for the first time, and, to that extent, the brief violates the rules of this court, but there is other matter contained in the brief, and, furthermore, we are not deciding the case on the points thus sought to be raised, and, therefore, the action taken on this motion is as stated.

For the reasons we have given the judgment of the municipal court is reversed and the cause is remanded to that court for further proceedings not inconsistent with the views expressed in this opinion.

Judgment reversed and cause remanded.

Taylor and O’Oohhor, JJ., concur.


author: Mr. Justice O’Connor

text:
    Edward W. Wood, Plaintiff in Error, v. August A. Meyer et al., Defendants in Error.
    Gen. No. 29,921.
    1. Corporations — evidence admissible in action to recover purchase price of securities issued in violation of Blue Shy Law. In an action to recover purchase price of securities as issued in violation of Illinois Securities Law, participation certificates or receipts issued to plaintiff were improperly excluded in evidence, having been tendered in conjunction with trust agreement upon which they were based.
    2. Corporations — certificates issued under trust agreement providing for formation of limited partnership as Glass “D” securities under Blue Shy Law. Participation certificates.or receipts issued pursuant to a trust agreement providing that funds received in exchange therefor shall be paid over to the trustees, who are authorized to use the same to acquire and operate oil leases, and to “organize a limited partnership with themselves as general partners and all beneficiaries as limited partners,” fall within the definition of Class “D” securities in Cahill’s St. ch. 32, If 256, subd. 4.
    3. Evidence — judicial notice as to existence of Illinois corporation. The Appellate Court cannot take judicial notice of the existence of an Illinois corporation.
    4. Corporations — certificates issued under trust agreement for formation of limited partnership as Glass “A” securities under Blue Shy Law where corporation subsequently formed. Participation certificates or receipts issued pursuant to a trust agreement under which the trustees are authorized to “organize a limited partnership with themselves as general partners and all beneficiaries as limited partners,” are not Class “A” securities within the meaning of Cahill’s St. ch. 32, 1257, subd. 11, although the trustees in fact incorporated under the laws of the State.

      5. Corporations — right of holder of Glass “J>” securities issued without compliance with Blue Shy Law to recover consideration notwithstanding partnership relation with issuers thereof. The holder of participation certificates or receipts issued pursuant to a trust agreement under which the trustees were authorized to organize a limited partnership with themselves as general partners' and the beneficiaries as limited partners was not precluded from maintaining an action to recover the consideration paid therefor because issued without complying with the requirements of the Illinois Securities Act, notwithstanding the partnership relation, in view of Cahill’s St. ch. 32, f 255, defining “issuer” of securities so as to include partnerships.

      6. Corporations — classification under Blue Shy Law of securities issued prior to formation of corporation where commissions paid for procuring subscription. Cahill’s St. ch. 32, f 257, subd. 11, is inapplicable to participation certificates issued pursuant to a trust agreement authorizing the trustees to form a limited partnership with themselves general partners and the beneficiaries as limited partners, even if the trustees did in fact form a corporation, where the evidence shows that commissions were paid for procuring contributions in exchange for such certificates.
    7. Corporations — sufficiency of evidence to support recovery for issuance of securities without compliance with Blue Shy Law. Evidence in an action to recover the consideration paid for securities issued without compliance with the requirements of the Illinois Securities Law held sufficient to make out a prima facie case for plaintiff.
    Error by plaintiff to the Superior Court of Cook county; the Hon. Emanuel Eller, Judge, presiding. Heard in the third division of this court for the first district at the March term, 1925.
    Reversed and remanded.
    Opinion filed March 10, 1926.
    Leesman & Roemer for plaintiff in error.
    Netherton & Netherton, for August A. Meyer, defendant in error.
    Albert R. Gates and William J. Lacey, for certain defendants in error.
   Mr. Justice O’Connor

deliver ed the opinion of the court.

Plaintiff brought an action of assumpsit against the defendants to recover the amount he had paid to them for certain securities, which he claimed were designated Class “D” securities under the provisions of the Illinois Securities Law [Cahill’s St. ch. 32, ¶ 254 et seq.], for the reason that the defendants failed to file certain documents in the office of the secretary of state, as required by the provisions of that act. Substantially all of the evidence offered by plaintiff whs, upon objection, excluded, and at the close of plaintiff’s ease there was a directed verdict in favor of the defendants.

The evidence offered by plaintiff tended to show that during the winter of 1920 he became acquainted with the defendant Meyer, at the latter’s restaurant which was located across the street from plaintiff’s office; that Meyer induced him to buy some stock in an oil company in Texas that was thereafter to be organized; that on May 11, 1920, plaintiff purchased 60 shares of stock in the proposed company, paying the defendant, Meyer, $300 and afterwards bn September 30, 1920, he purchased 40 more shares, paying $300 therefor; that when plaintiff made these two payments, he was given what is designated as a trustee certificate for 60 shares of stock in the proposed corporation to be known as the Earltex Oil Company, which certificate further stated that the capital stock of the corporation was to be $200,000, the par value of the shares to be $5. It certified that plaintiff had subscribed for the sixty shares of stock of the oil company “a corporation proposed to be formed under the laws of the State of Illinois,” and that the plaintiff “upon the completion of such corporation” would be entitled, upon surrender of the certificate, to 60 shares of the capital stock of the corporation.

It further appears that plaintiff had another conversation with the defendant, Meyer, in reference to the oil business, in the summer of 1920, and that plaintiff probably saw Meyer once or twice afterwards during that year; that on April 5,1921, plaintiff attended a meeting, at which there were about 50' to 75 people present, including all the defendants, and that Meyer took charge of the meeting and made a report as to what had been done in connection with the oil company; that the report was to the effect that they had spent all the money in drilling, but had struck no oil, and he asked all those present to go into another proposition to drill in fields where it was known that oil would be found; that he requested all those present to buy stock in the new company which hé wanted to organize; that all of the defendants took part in the meeting and requested everybody to take stock in the new concern; that at that time plaintiff told Meyer he would take $200 worth. It further appears that the meeting was then adjourned until April 9; that plaintiff attended the meeting on that date, but there were not quite so many people present, but all of the defendants were there. The defendant, Meyer, again took charge of the meeting and read the names of the trustees whq were to take charge of the new company. This was the first information plaintiff had that there were to be trustees. The defendants’ names were all mentioned as those who were to be trustees. Meyer there stated that the organization plan was new and as soon as applications and certificates were printed, they would be furnished to, those who promised to take stock; that a number of the other defendants talked at that meeting, advocating that investment be made in the proposed concern; that at that meeting, plaintiff gave the defendant, Austin, his check for $100, in accordance with his agreement made at the previous meeting — the check was made out to Austin, trustee; that plaintiff, a few days later, attended another meeting in response to an 'announcement; that at that meeting some of the defendants presented printed applications and certificates and passed them around for the purpose of securing the signatures of those who had promised to take the stock; that plaintiff, pursuant to solicitations by the defendants, paid them by his checks, during the year 1921, the following: May 24, $200; August 10, $800 and September 17, $1,000, making a total of $2,000 which he sought to recover. The offered evidence further tended to show that when the plaintiff agreed to make the several investments, there was presented to him and he signed at the request of the defendant, Austin, the following document:

(Picture of an Oil Well)

“Earltex Petroleum Co.,

“No. 523 Proposed $200.00

“Dated at Chicago, Illinois, April 20, 1921.

“Whereas, August A. Meyer, John P. Orvis, Allan J. Coleman, Eugene A. Lyon, Justin K. Orvis, Louis Yehon and James A. Billings, have been named as Trustees and have accepted the trust herein;

“Therefore, contributions are made to, and authority is given said trustees to acquire' and dispose of, in their names as trustees, or otherwise, property and leases and drill thereon for oil, and acquire equipment, prospect, develop and exploit the same, and later as attorneys in fact, for all beneficiaries, organize a limited partnership with themselves as general partners and all beneficiaries as limited partners, under the name of Earltex Petroleum Co., and convey thereto all property held in trust, and deliver to the beneficiaries receipts in proportion to the several contributions. The trustees shaE accept from time to time contributions to the total of $100,000.00, exclusive of the contributions of August A. Meyer, Trustee of the Earltex OE Co., and may accept additional contributions so the total does not exceed $200,000.00, by first giving fifteen days’ notice in writing to each beneficiary at their addresses furnished the trustees, to contribute such amount thereof, as they may desire, reserving the right in case of over contribution to pro rate same.

“The trustees, may expend necessary funds for the purposes hereof and shall function in all things including the acquirement and conveyance of personal and real property by all or any number of trustees, less than the whole, and shaH make such rules for the conduct of the said business as they may deem advisable.

“Contribution is made as follows:

“E. N. Wood (Seal) 1156 Monadnock Blk. $200.00
Name Address Amount
“Accepted: August A. Meyer,
John P. Austin,
Allan J. Coleman,
Eugene A. Lyon,
Justin K. Orvis,
Louis Vehon and J ames A. Billings,
Trustees,
by................
Trustee.
417 So. Dearborn St., Chicago, Illinois. ”-

(Reverse side)

“I, .............., a notary public in and for said county and state, do hereby certify that........., personally known to me to be the same person who subscribed to- the instrument on the reverse hereof, appeared before me this day in person, and acknowledged that........he signed, sealed and delivered the said instrument as h... free and voluntary act for the uses and purposes therein set forth.

‘ ‘ Given under my hand and notarial seal this...... day of........, A. D. 1921.

Notary Public.”

The evidence offered by the plaintiff further tended (to show that shortly thereafter he was given the following certificate:

(Picture of an Oil Well)
No. 523 $200.00
“Earltex Petroleum Co. Proposed.
$200,000.00 $200,000.00
“Benefits as Per Amounts Contributed.

“This certifies, That E. N. Wood has contributed the sum of $200.00 in cash, m property, to Trustees in pursuance of and in accordance with the provisions, terms and conditions of an original trust agreement dated April 20, 1921, made with and by the Trustees named below, signed by this contributor and filed with John P. Austin, Trustee, 417 South Dearborn Street, Chicago, Illinois, which is made apart hereof, wherein the undersigned trustees propose to form a company to be called the Earltex Petroleum Co. and convey thereto all leaseholds, oil and other properties and interests, held and acquired by them as such and in which the contributor herein is entitled to benefits and profits in equal proportion to the amount contributed.

“Issued this 24th day of May, 1921.
August A. Meyer,
John P. Austin,
Allan J. Coleman,
Eugene A. Lyon,
Justin K. Orvis,
Louis Vehon and James A. Billings,
Trustees,
by John P. Austin,
^Trustee.”

(Reverse side):

“Certificate of Contribution to Trustees.
Amount Contributed For Proposed Earltex Petroleum Co.
Issued to E. N. Wood Dated May 24, 1921.

“For and in Consideration of good and valuable consideration paid to the undersigned, I do hereby sell and assign all my right and title in and to the within Certificate, and in and to the agreement therein referred to, and the benefits of every kind to me represented thereby.

“Dated this ........day of........192...
Contributor.
“In presence of: 99

The offered evidence further tended to show that when plaintiff agreed to subscribe for the $800 and $1,000 of stock he signed similar documents and received a certificate similar to those just quoted. The evidence further* shows that the defendant, Meyer, had been coming to plaintiff’s office very frequently and spending considerable time there. It was admitted on the trial that the requirements of the Illinois Securities Act (Blue Sky Law) had not been complied with and a certificate of the secretary of state to that effect was offered in evidence. Plaintiff also offered to show that after he paid the $1,000 above mentioned, there was a meeting of the trustees at which the defendant, Orvis, announced that the defendant, Meyer, had taken title to the real estate upon which the company had a lease, which lease Meyer gave to the company, charging more than he had paid for the property; that at a meeting of the trustees the defendant, Orvis, stated that the revenue stamps on the deeds, by which Meyer got title to the real estate, indicated a consideration of $4,500 and that the lease on the real estate to the company showed a consideration of $20,000; that at a meeting of the trustees held in December, 1921, a resolution was passed by them authorizing the giving of a 30 per cent commission for the sale of shares. Other evidence was offered to show commissions had been paid to persons who had procured persons to invest in the concern. All of the evidence, upon objection by the defendants, was excluded. Thereupon the court directed a verdict in favor of the defendants.

The defendants contend that the exhibits which we have quoted above were properly rejected because it appears that the certificate or receipt issued by the defendants to plaintiff was based on a trust agreement, which trust agreement was not offered in evidence, and therefore, the intention of the parties could not be determined in the absence of the trust agreement, the receipt or certificate being incomplete without the trust agreement. We think this is not borne out by the record, for it appears that the certificate or receipt given by the defendants to plaintiff as well as a trust agreement were offered in evidence. The receipt certifies that plaintiff has contributed a certain sum in cash to the trustees “in pursuance of and in accordance with the provisions, terms and conditions of an original trust agreement dated April 20,1921, made with and by the Trustees named below, signed by this contributor and filed with J ohn P. Austin, Trustee, 417 South Dear-born Street, Chicago, Illinois, which is made a part hereof.” The companion document offered in evidence by the plaintiff, and which he was required to sign, is dated April 20,1921, and bears the same number as the certificate “523.” The certificate states that this document is signed by the contributor, namely, the plaintiff, and plaintiff testified that he did sign the document and that it was given to the defendant, Austin, whose address is No. 417 South Dearborn Street. That address appears upon both documents. The certificate further states that the document signed by Woods “is made a part hereof.” A reading of the two documents renders it clear that the trust agreement mentioned in the certificate is the document which Wood swears he signed and offered in evidence.

The trust agreement provides that contributions are to be made to the trustees and they are given authority to- make leases and to drill for oil and do all acts as attorneys in fact for the beneficiaries. The trustees are also authorized to “organize a limited partnership1 with themselves as general partners and all beneficiaries as limited partners, under the name of Earltex Petroleum Co.” From this it appears that the defendants were authorized by the subscribers or beneficiaries not to form a corporation as the defendants contend, but “to organize a limited partnership with themselves (defendants) as general partners and all beneficiaries as limited partners” for the procuring of necessary property and equipment and the drilling for oil.

Section 2 of the Blue Sky Law, ch. 32, ¶ 255, Cahill’s 1925 Statutes, defines the word “securities” to include “stock, treasury stock, bonds, debentures, investment contracts, notes, evidences of indebtedness, participation certificates, certificates of shares or interest, preorganization certificates and preorganization subscriptions, certificate evidencing shares of or interest in trust estates or associations, profit sharing agreements or certificates; * * * the capital or any property or assets of the issuer thereof, and any oil, gas or mining lease, and interests,” etc. Paragraph 2 [Cahill’s St. ch. 32, ¶ 255, subd. 2] of that section provides : “The word ‘issuer’ shall include every person and every company, trust, partnership or association incorporated or unincorporated heretofore or hereafter formed which proposes to issue, which shall have issued or which shall hereafter i"sue any security,” By paragraph 4 [Cahill’s St. ch. 32, ¶ 255, subd. 4] of the same section, it is provided: “The term ‘sale’ * * * shall include every disposition, or attempt to dispose, of a security or interest in a security for value. * * * The term ‘sell’ means any act by which a sale is made and the term ‘sale’ * * * shall include a subscription, an option of sale, a solicitation of sale,” etc. Paragraph 5 [Cahill’s St. ch. 32, ¶ 255, subd. 5] defines the terms dealer or broker to be “every person and every company, firm, trust, partnership or association, incorporated or unincorporated.” Paragraph 4 of section 3 [Cahill’s St. ch. 32, ¶ 256, subd. 4] of that act provides: “Securities based on prospective income, which shall be known as securities in Class ‘D.’ ” Upon a consideration of the evidence offered, we think it clear that the securities in question came within the definition of Class “D” securities, because it is certain that whatever income might be derived from them was entirely speculative or prospective. But the defendants contend that the certificates or receipts given to plaintiff are Class “A” securities within the meaning of paragraph 11 of section 4 of the Illinois Securities Act [Cahill’s St. ch. 32, ¶ 257, subd. 11] and are not Class “D” securities. Paragraph 11, is as follows:! “Being subscriptions for or sales of shares of the capital stock of a corporation prior to the incorporation thereof under the laws of the State of Illinois, when no expense is incurred, or no commission, compensation or remuneration is paid or given for or in connection with the sale or disposition of such securities. ’ ’ In support of their contention they say that the certificates or receipts offered in evidence were subscriptions for shares of the capital stock of a proposed corporation which was to be known as the Earltex Petroleum Company, and that as a matter of fact, such company was incorporated in Illinois June 7, 1922, and 'although there is no proof of this fact in the record they say that this court will take judicial notice of an Illinois corporation. We think we cannot take such judicial notice. Moreover, it is plain that the subscriptions did not come within paragraph 11 above quoted, because the trust agreement signed by plaintiff expressly authorized the deendants to- organize not a corporation but “a limited partnership with themselves as general partners and all the beneficiaries as limited partners, under the name of Earltex Petroleum Co.” And if the defendants, as a matter of fact, did afterwards incorporate under the laws of the State of Illinois, it was not in accordance with the terms of the authority given them, but contrary thereto. But the defendants further contend that if it should be held that the certificates or receipts offered in evidence did not fall within the provisions of paragraph 11, then the moneys contributed by the plaintiff became partnership- funds and are governed by the laws pertaining to partnerships and that plaintiff therefore became a member of a partnership and under the law cannot maintain a suit against his partners. We think this argument is unsound, because the law pertaining to partnership in general is inapplicable under the facts in this case, because the Illinois Securities Act in section 2, supra, expressly provides that the “issuer” of securities as mentioned in the act, shall include partnerships. Moreover, paragraph 11 of section 4, above quoted, is further inapplicable, because by that paragraph subscriptions for shares of capital stock of a corporation to be thereafter formed, come within the act provided no commission or compensation is paid in' connection with the disposition of the shares of the proposed corporation. The offered evidence tended to show that in the instant case commissions were paid.

It being conceded that the defendants did not comply with the provisions of the Illinois Securities Act by filing certain documents in the office of the secretary of state, authorizing them to dispose of the securities in question, plaintiff by tendering back the securities, was by virtue of the provisions of section 37 [Cahill’s St. ch. 32, ¶ 290] of that act entitled to recover the money he had paid. That section provides that every sale made in violation of the provision of the act shall be void at the election of the purchaser, and the seller of the securities and the officers and directors thereof and every solicitor, agent and broker for such seller, who did any act or in any way furthered such sale, shall be jointly and severally Hable in, an action at law or in equity upon tender to the seller or in court of the securities sold to the purchaser for the amount paid. We think the court erred in rejecting the offered evidence and that plaintiff made out a prima facie case.

It, therefore, follows that the judgment of the superior court of Cook county is reversed and the cause is remanded for further proceedings in accordance with the views herein expressed.

Reversed and remanded.

Thomson, P. J., and Taylor, J., concur.