text:
    Oscar Heineman Corporation, Appellee, v. Standard Surety & Casualty Company of New York, Appellant.
    Gen. No. 38,923.

      Opinion filed March 24, 1937.
    Rehearing denied April 12, 1937.
    Peregrine & Brtjegger and Hinshaw & Culbertson, all of Chicago, for appellant; Oswell Gr. Treadway, of Chicago, of counsel.
    Bruce E. Brown and Scott, MacLeish & Falk, all of Chicago, for appellee.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from a judgment of the municipal court of Chicago in favor of plaintiff for the sum of $759.55' and costs of suit. It is charged in the statement of claim that plaintiff was required to and did pay out certain moneys for attorney’s fees and costs in two certain proceedings, one instituted against plaintiff here, by Estelle Stafira in the superior court of Cook county, and the other before the Illinois Industrial Commission. The action is predicated upon the theory that defendant breached a policy of insurance entered into by and between the parties here, and that because of such breach, defendant became liable to pay and indemnify plaintiff for and on account of such expenditures. The material portion of the contract which it is alleged plaintiff breached, is as follows :

“Standard Workmen’s Compensation and Employers’ Liability Policy

Standard Surety & Casualty Company op New York

‘ ‘ (Herein called the company)

“Does Hereby Agree with this employer, named and described as such in the Declarations forming a part hereof, as respects personal injuries sustained by employees, including death at any time resulting therefrom as follows: (Italics ours)

“One (a) To pay promptly to any person entitled thereto under the Workmen’s Compensation Law and in the manner therein provided, the entire amount of any sum due, and all installments thereof as they become due,

“(1) To such person because of the obligation for compensation for any such injury imposed upon or accepted by this employer under such of certain statutes, as may be applicable thereto, cited and described in an endorsement attached to this Policy, each of which statutes is herein referred to as the Workmen’s Compensation Law, and

“ (2) For the benefit of such person the proper cost of whatever medical, surgical, nurse or hospital services, medical or surgical apparatus or appliances and medicines, or, in the event of fatal injury, whatever funeral expenses are required by the provisions of such Workmen’s Compensation Law.

“It is agreed that all of the provisions of each Workmen’s Compensation Law covered hereby shall be and remain a part of this contract as fully and completely as if written herein, so far as they apply to Compensation or other benefits for any personal injury or death covered by this Policy, while this Policy shall remain in force. Nothing herein contained shall operate to so extend this policy as to include within its terms any Workmen’s Compensation Law, scheme or plan not cited in an endorsement hereto attached.

“One (b) To Indemnify this employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed wherever such injuries may be sustained within the territorial limits of the United States of America or the Dominion of Canada. In the event of the bankruptcy or insolvency of this employer the company shall not be relieved from the payment of such indemnity hereunder as would have been payable but for such bankruptcy or insolvency. If, because of such bankruptcy or insolvency, an execution against this employer is returned unsatisfied in an action brought by the injured, or by another person claiming by, through or under the injured, then an action may be maintained by the injured, or by such other person claiming by, through or under the injured, against the company under the terms of this policy for the amount of the judgment in said action not exceeding the amount of this Policy. . . .

“Three. To defend, in the name and on behalf of this employer, any suits or other proceedings which may at any time be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation therefor, although such suits, other proceedings, allegations or demands are wholly groundless, false or fraudulent.

“Four. To pay all costs taxed against this employer in any legal proceeding defended by the company, all interest accruing after entry of judgment and all expenses incurred by the company for investigation, negotiation or defense.”

In the complaint filed in the cause in the superior court, it was charged inter alia, that Estelle Stafira was employed by the plaintiff in the manufacture of silks, and that in the course of such work, moisture and other substances contained in the silk macerated the skin of the hands and body of Estelle Stafira, so that it affected her health; that in the work in which she was engaged, she was caused to come in contact with various drugs and substances in harmful quantities and under harmful conditions, so that it was likely to and did, produce illness and disease, especially to the hands, arms and other parts of the body; that all this work was carried on in violation of the Occupational Diseases Act of the State of Illinois, Ill. State Bar Stats. 1935, ch. 48, Ti 185 et seq.; Jones Ill. Stats. Ann. 143.01 et seq.; that such condition was directly caused because the Oscar Heineman Corporation, plaintiff in this cause, neglected to provide gloves, or other proper covering for the hands and arms of Estelle Stafira, and failed to cause her and its other employees to be examined by a competent licensed physician as often as once each calendar month, as required by the Occupational Diseases Act. In this complaint, she also charged that by reason of the exposure to the' silks and the drugs used in the manufacture of silk, she was poisoned and her skin became infected, and she was made sick and diseased by reason thereof, that her earning capacity was permanently impaired, and she asked damages in the sum of $5,000.

Prior to the commencement of the suit against plaintiff, plaintiff received a letter from the woman’s attorney dated February 1, 1934, notifying’ plaintiff of her claim against it, and in which he asked that he, the attorney, be referred to the insurance company insuring plaintiff, in case plaintiff was insured, and inclosing a claim for an attorney’s lien. Upon receipt of this letter by plaintiff and on February 11, 1934, plaintiff wrote to the defendant inclosing a copy of this letter from the woman’s attorney, and calling defendant’s attention to the fact that plaintiff was insured against the claim of Estelle Stafira. On February 15, 1934, plaintiff received a reply from the defendant, acknowledging* the receipt of this letter. Plaintiff thereupon furnished defendant with a history of the employment of Estelle Stafira, which indicated that she had been originally employed by plaintiff in the year 1923, and that she had been treated for erythema on her hands in 1927 and 1928, and that she had been thereupon transferred to another department in plaintiff’s institution. On July 14, 1934, after being served with summons, in the cause, plaintiff forwarded the summons to defendant. Thereafter, and on July 25, 1934, plaintiff received from defendant the following letter:

“We are returning herewith summons which you forwarded to us in the above captioned matter. This was referred to our home office who advised us that as this is a common law action based upon the violation of the provisions of Section 1 of the Occupational Diseases Act, it is not covered under the terms of our policy. For your information there are two methods of procedure under the Occupational Diseases Law of Illinois, set out in Section 15 of the Act.” After receiving the last mentioned letter, plaintiff employed counsel and filed a motion to dismiss the complaint filed by Estelle Stafira in the superior court of Cook county on the ground that from the allegations in the declaration, it was shown that the court had no jurisdiction of the subject matter, but that the injuries complained of were all within the provisions of section 3 of the Workmen’s Compensation Act of the State of Illinois, Ill. State Bar Stats. 1935, ch. 48, 11 202; Jones Ill. Stats. Ann. 143.18. The record shows that the court overruled this motion upon the ground that the matter set forth in the motion should be incorporated in an answer, and that an answer setting forth the matters set forth in the motion heretofore referred to, was thereupon filed by plaintiff’s attorneys. About this time Estelle Stafira filed a claim for the same injury with the Illinois Industrial Commission, in which the same matters, in substance, were set up as were set forth in the complaint filed in the superior court. After a hearing before the industrial commission, this commission made an award to Estelle Stafira of $165, and plaintiff’s counsel thereupon secured an agreement with Estelle Stafira which provided that upon the payment of the award made by the industrial commission, the suit in the superior court would be dismissed. After the entry of the award by the industrial commission, defendant here by its attorneys, unsuccessfully petitioned the commission for a review of the case. After the award of the industrial commission was made, plaintiff herein sent to the defendant corporation a bill for attorney’s fees rendered by its special counsel, Scott, McLeish & Falk, dated April 4, 1935, which is as follows :

“To legal services rendered, Stafira v. Oscar Heine-man Corporation, No. 34 S 9438, Superior Court, Cook County and claim of Estelle Stafira before the Industrial Commission of Illinois, No. 208440, as follows:” Then follows an itemized bill, the total of which is in the amount claimed by plaintiff in this proceeding. This bill was paid by plaintiff on September 3, 1935. In reply, plaintiff here received from defendant the following communication dated April 12, 1935:

“Oscar Heineman Corporation,

2701 Armitage Ave!,

Chicago, Ill.

“File No. 12-C-4549

Assured — Oscar Heineman Corp.

Claimant — Estelle Stafira

‘ ‘ Gentlemen:

“We are in receipt of an itemized bill for legal services rendered by Scott, McLeish & Falk under date of April 4, 1935. This bill is in the sum of $759.55, and covers charges for legal services rendered in the case of Stafira vs. Oscar Heineman Corporation, #345 9438, Superior Court of Cook County, and for legal services rendered in the matter of the claim of Estelle Stafira before the Industrial Commissi on of Illinois, #208440.

“We are transmitting this bill to our Home Office for their appropriate attention without assuming or admitting any liability for the charges made. As you know, the Common Law claim against you was not covered by the terms and provisions of our policy and you were so informed under date of July 24,1934.

“With reference to the defense of the claim before the Industrial Board, our records at this office do not show that you at any time requested us to defend the same after you received the Notice of Application for Adjustment of Claim. After receiving the Notice of Application for Adjustment of Claim, you referred it to your attorneys, Scott, McLeish & Falk, who undertook a defense thereof. Thereafter, a short time before the proceeding on arbitration at the Industrial Commission was reached for trial, your Mr. Cole informed the writer of the pendency of said proceeding on arbitration.

“At this time the appearance of Scott, McLeish & Falk was on file in this proceeding pursuant to the arrangement you had with the latter for the.defense thereof.

“As above indicated, this charge for services of Scott, McLeish & Falk is being submitted to our Home' Office for their appropriate attention, and as soon as we are informed of their attitude, we will communicate with you.

“Very truly yours,

Charles G-. Martin

Adjuster,

Chicago Claims Office.”

There is nothing in the record to indicate that plaintiff ever received any further communication from defendant.

There is no question raised here as to the reasonableness of the charge made by counsel employed by plaintiff for such counsel’s services in the superior court. The position of the defendant is that by the terms of the policy issued by defendant to plaintiff, defendant is not liable because the “disablement” claimed to have been suffered by Estelle Stafira resulted from an occupational disease, that it was not a “personal injury” covered by the policy of insurance, and that a reasonable charge for plaintiff’s special counsel before the industrial commission would be $50. No evidence was offered or received as to this latter contention.

We again call attention to paragraph 3 of the insurance policy, which is to the effect that defendant agreed “to defend, in the name and on behalf of this employer, any suits or other proceedings which may at any time be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation therefor, although such suits, other proceedings, allegations or demands are wholly groundless, false or fraudulent.” (Italics ours.)

In the action brought against plaintiff by Estelle Stafira, it was charged that plaintiff had wilfully and negligently violated certain provisions of the statute, resulting in the woman’s serious and obviously “personal injury,” for which she claimed plaintiff was liable, and for which she asked damages in the sum of $5,000. If this action in the superior court had been allowed to go by default, it might well have been that plaintiff would have had a judgment, in a large sum, entered against it. ‘ ‘ Such injuries, ’ ’ mentioned in section 3 of the contract can only mean “personal injuries” referred to in the first paragraph thereof.

We are of the opinion that under paragraph 3 of this policy, it was the duty of the defendant here to have defended plaintiff, as it had agreed to do, and that by refusing to so defend, it became liable to plaintiff for the expenses and fees paid out by plaintiff which total the amount of the judgment. The judgment is, therefore, affirmed.

Affirmed.

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


source: Caselaw Access Project

author: Mr. Justice Hebel

license: Public Domain

text:
    Royal Indemnity Company, Appellant, v. Johanna M. Gray, Appellee.
    Gen. No. 39,033.
    Opinion filed March 24, 1937.
    Heth & Lister, of Chicago, for appellant.
    D ’Ahcoba, Pflaum & Kohlsaat, of Chicago, for appellee ; D. H. Mahh, of Chicago, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

This is an appeal by the plaintiff from a decree entered by the court dismissing the bill of complaint upon the master in chancery’s report to whom the cause was referred, and upon Ms recommendation that the bill be dismissed for want of equity.

Action was brought by the plaintiff against the defendant based upon its bill of complaint to recover from the defendant as the sole legatee under the last will and testament of Charles W. Gray, deceased, out of the assets received by her from said estate, the amount alleged to be due on an indemnity agreement signed in his lifetime by Charles W. Gray, defendant’s husband, and certain other persons. The action was filed in equity in order to follow assets of Charles W. Gray into the hands of the defendant and to recover from said assets the amount due from Charles W. Gray, upon an obligation under the terms of an indemnity agreement.

No objections were filed to the master’s report other than the objections of the plaintiff filed and considered by the court as exceptions to the application of the law to the facts appearing in evidence.

From the facts as outlined in the master’s report, it appears that the Bed Top Cab Company and the Cleveland Yellow Cab Company, being- engaged in the operation of taxicabs in the city of Cleveland, in order to comply with the provisions of an ordinance, which by its terms provides that any taxicab company operating* 200 or more cabs in the city of Cleveland is required to furnish a surety bond to secure the payment of amounts recovered against the cab company for personal injuries and property damage, made a written application to the plaintiff to execute a bond as surety in the sum of $75,000, guaranteeing payment of final judgments in accordance with the provisions of a city ordinance. Plaintiff executed the bond requested and delivered the same to the commissioner of licenses of the city of Cleveland. The bond runs to the city of Cleveland, and in compliance with the ordinance, is conditioned upon the principals, the cab companies, paying all final judgments recovered against them for injury to one person up to the sum of $5,000, and $10,000 for injury to more than one person and $1,000 property damage in any one accident. The bond provides that “The liability of the surety is limited to the payment of said final judgments, as aforesaid, resulting from the failure of said principal so to do during the period said bond shall remain in full force, but in no event shall the total liability of the surety for such period exceed the penal amount herein stated, the sum of $75,000.” This amount of $75,000 was deposited with the plaintiff to protect it against any liability as surety upon the bond.

To induce the plaintiff to execute the bond, Charles W. Cray, the husband of the defendant, and three others, executed an indemnity agreement with the plaintiff, which is the instrument herein sued on. This indemnity agreement recites that whereas the indemnitors having requested the plaintiff to execute the bond given by the Red Top Cab Co. and the Cleveland Yellow Cab Co. to the city of Cleveland, in the sum of $75,000, in accordance with the provisions of section 2540 of the Municipal Code of the City of Cleveland, of 1924, which ordinance was made a part of said indemnity agreement, the indemnitors agree:

“Second. That we will at all times indemnify and keep indemnified the surety, and hold and save it harmless from and against any and all demands, liabilities and expenses of whatsoever kind or nature, including counsel and attorneys ’ fees, which it shall at any time sustain or incur by reason or in consequence of having executed the said instrument; and that we will pay over, reimburse and make good to the surety, its successors, and assigns, all sums and amounts of money which the surety or its representatives shall pay or cause to be paid or become liable to pay, under its obligation upon said instrument or as charg’es and expenses of whatsoever kind or nature, including counsel and attorneys’ fees, by reason of the execution thereof, or in connection with any litigation, investigation or other matters connected therewith, such payment to be made to the surety as soon as it shall become liable therefor, whether it shall have paid out said sum or any part thereof or not.

“That in.any settlement between us and the surety the vouchers or other proper evidence showing payment by the surety of any loss, damage or expense, shall be prima facie evidence against us of the fact and amount of our liability to the surety, provided that such payment shall have been made by the surety in good faith, believing that it was liable therefor.”

The third paragraph relates to the giving of notice of any action at law or in equity.

“Fourth. The surety may at any time hereafter take such steps as it may deem necessary or proper to obtain its release from any and all liability under the said- instrument, or under any other instrument within the meaning of Section Fifth hereof, and to secure and further indemnify itself against loss, and all damages and expense which the surety may sustain or incur or be put to in obtaining such release, or in further securing itself against loss, shall be borne and paid by us.”

The fifth, sixth and seventh paragraphs relate to matters which are not material to the discussion of the questions involved in this suit.

It also appears from the facts as reported by the master that sometime prior to September 1, 1927, the Cleveland Yellow Cab Company took over, or absorbed, the Red Top Cab Company. On September 7, 1928, the Cleveland Yellow Cab Company went into the hands of a receiver, at which time there was pending against the company a large number of suits and claims for personal injuries and property damage. Thereafter many other such suits were instituted, until there were pending 124 actions against the Cleveland Yellow Cab Company, claiming a total of over a million and a quarter dollars in damages, a list of which suits is set forth in the master’s report. The receiver for the Yellow Cab Company refused to defend any of the suits, and at that time the plaintiff was holding as collateral security $75,000 which had been deposited with it over a period of time by the principals of the bond.

Prior to the appointment of a receiver for the Yellow Cab Company, Nat E. Wheeler, counsel in charge of the bonding claims for the plaintiff, had written to the law firm of Baker, Hostetler & Sidlo of Cleveland, Ohio, seeking the legal opinion of that firm as to whether or not liability of the plaintiff on its bond was limited to $75,000; that is, whether the provisions of the ordinance requiring that the bond contain a provision for a continuing liability notwithstanding any recovery thereon, would be read into the bond and thus make it one of open covenant.

The provision of the ordinance in question is as follows:

“Sec. 2540. Surety Bond or Liability Insurance. It shall be unlawful to operate a public hack or other vehicle kept for hire as defined in this sub-division, or permit such to be operated, nor shall any license be issued hereunder until and unless the applicant for a license hereunder deposits with the commissioner of assessments and licenses:

“(A) A bond of the applicant with a solvent and responsible surety company, authorized under the laws of the state of Ohio, as surety thereof, acceptable to and approved by the said commissioner and the director of law, said bond conditioned that the applicant will pay all final judgments recovered against such applicant for injury to one person up to the sum of $5,000 and $10,000 for injury to more than one person and $1,000 property damage in any one accident during the operation of the public hack of the applicant; . . . for more than 200 public hacks a bond of $75,000; and said bond shall contain a further provision obligating the said surety company to give 10 days written notice before cancellation of the said bond to the said commissioner, the said license to expire on the lapse or termination of said bond; or

"...

“(C) Such bond or policy of insurance shall contain a provision for a continuing liability thereunder to the full amount thereof, notwithstanding any recovery thereon. If at any time in the judgment of the said commissioner such bond or policy is not sufficient for any cause the said commissioner may require the owner of each public hack to replace such bond or policy with another approved by said commissioner and the director of law.”

On September 7,1927, the firm replied to the request of counsel in charge of the bonding claims for the plaintiff, and after citing and commenting on numerous decisions, concluded the letter by stating that it was the opinion of these attorneys that as long as the bond remained in force the bonding- company’s liability would be governed by the code section, which we have quoted above, and not by the attempted limitation of the bonding- company to $75,000, and being governed by the code of the city of Cleveland, the liability on this bond amounted to a continuing one.

For some years prior to the receivership, the firm of Rocker & Schwartz had defended personal injury and property damage suits for the Cleveland Yellow Cab Company and appeared as attorneys of record in the suits which were pending against the Yellow Cab Company at the time the receiver was appointed.

It appears from the report of the master that Mr. Schwartz, of the firm of Rocker & Schwartz, was informed by the receiver of the company that the receiver would not pay any fees for handling any of the pending claims, and that Mr. Schwartz advised the Royal Indemnity Company that unless some arrangements were made to pay him he was going to withdraw from further defense of the cases. Whereupon, the firm of Rocker & Schwartz was employed by the Royal Indemnity Company to handle these claims and suits; that these attorneys submitted bills for legal services rendered, to the Royal Indemnity Company for $1,291, and received plaintiff’s draft for that amount. Thereafter, this firm received $1,000 for defending and disposing of all the remaining cases of the Cleveland Yellow Cab Company, and the bill was paid to this firm by the plaintiff.

In order to dispose of the liability of the plaintiff upon this bond, there was a conference between the executive officers of the plaintiff company and the members of the firm of Baker, Hostetler & Sidlo, and as a result of this conference the firm of Baker, Hostetler & Sidlo was employed by the plaintiff and advised with the law director of the city of Cleveland as to the advisability of instituting a suit by the city of Cleveland, making the two cab companies, the Royal Indemnity Company, and all known and unknown claimants, including minors, parties defendant; to compel the Royal Indemnity Company to deposit the $75,000 held by it with the clerk of the court for the benefit of all claimants; to require all claimants to assert their claims in that proceeding; to publish for all unknown claimants, to bar all future claims unless asserted within a day to be fixed by the court.

The procedure, as above outlined, was suggested to the law director of the city of Cleveland, to which he agreed. A complaint pursuant to these suggestions was prepared by the firm of Baker, Hostetler and Sidlo and filed by the city of Cleveland on January 29, 1929, in which the Cleveland Yellow Cab Company, the Bed Top Cab Company, the Boyal Indemnity Company, and all known and ■ unknown claimants were made parties defendant.

In the litigation instituted on January 29, 1929, on motion of the city of Cleveland, the Boyal Indemnity Company was ordered to deposit on or before April 10, 1929, the sum of $75,000 with the clerk of the court and upon deposit of the same “the Boyal Indemnity Company is relieved and discharged from any and all further liability as a surety created by of arising out of the bond heretofore given to the City of Cleveland by the Cleveland Yellow Cab Company and the Bed Top Cab Company as principals, and Boyal Indemnity Company, as surety.,” This amount was deposited by the plaintiff with the clerk of the court in compliance with the order entered by the court, and the Boyal Indemnity Company was released from any and all liability.

On the 14th day of October, 1930, a final decree was entered in the pending litigation, from which it appears that all claims were settled and final judgments were entered in all of the pending cases; that the clerk had in his possession the sum of $79,143.60, which was made up of the $75,000 deposited by the Boyal Indemnity Company and the accumulated interest thereon, and used to pay the several amounts decreed by the court to be paid;

Subsequent to the entry of this decree, the firm of Baker, Hostetler and Sidlo submitted a bill for legal services rendered for the Boyal Indemnity Company in the proceedings outlined in this opinion extending from November 2, 1928 to October 30, 1930. For services rendered and money expended by this firm there was due them $10,274.27, which amount was after-wards reduced to $7,500 plus disbursements, and on May 19, 1931, the plaintiff paid the bill in the amount of $7,774.27.

The action now pending is on the indemnity agreement to collect from the assets left by Charles W. Gray, deceased, one of the indemnitors, the sum of $10,065.27, made up of $2,291 paid to Bocker & Schwartz and $7,774.27 paid to Baker, Hostetler & Sidlo.

The defendant is the widow and sole legatee of the deceased indemnitor who died December 25, 1927. His ' will was admitted to probate January 31, 1928; the time allowed by law for filing claims against his estate expired January 31, 1929, and his estate was closed April 15, 1929. The defendant as sole legatee received in excess of $25,000 from the estate and the present action seeks to follow said legacy upon the theory of Union Trust Co. v. Shoemaker, 258 Ill. 564, the claim of plaintiff having ripened subsequent to the time for filing claims and the distribution of assets in the probate proceeding pending in the probate court of Cook county, Illinois.

The question of whether under the indemnity bond the defendant can be held liable for the amount paid by the plaintiff for attorneys’ fees for services rendered in the defense of suits against the cab company, alleged to be due from the company for personal injuries and property damage, and also for the amount paid for attorneys’ fees by the plaintiff for services rendered in the proceeding wherein the plaintiff was released from further liability upon his bond, must be determined from the terms of the indemnity agreement itself. The agreement by its terms clearly establishes that it was a mutual agreement and provides that the indemnitors shall pay all money for which the surety shall be liable under its obligation upon the bond. This contract was prepared by the plaintiff, and under the well settled rule of law, will be strongly interpreted against the plaintiff where there is a question of doubt. It is to be borne in mind that the plaintiff was released from all liability under the terms of the decree entered in the court of common pleas of Cuyahoga county, Ohio, in a suit of the city of Cleveland against the Cleveland Yellow Cab Company, filed on October 14, 1930.

The plaintiff contends that the indemnitors are liable for all sums paid by the plaintiff over and above the $75,000 deposited with the plaintiff for its protection. The contract provides by its first paragraph that upon the payment of the yearly premiums “the surety shall be and continue liable upon the said instrument (the bond), and until the surety shall have been fully discharged and released from any and all liability.” Therefore, by plaintiff’s own admission, the decree fully discharged the plaintiff from further liability, and of course if the contract were based upon a good and valuable consideration, plaintiff’s action would be warranted. This contract, however, is modified when we take into consideration that the plaintiff signed an indemnity bond which was filed with the city officials of the city of Cleveland, Ohio, and assumed certain liability under the provisions of section 2540 of the Municipal Code of the city of Cleveland of 1924, as amended on October 6, 1924. This ordinance is applicable when we consider the plaintiff had knowledge of its provisions when it executed the bond. By the bond it sought to limit its liability to the amount of $75,000 deposited with the surety. In the litigation filed in the Common Pleas Court of Cuyahoga County, Ohio, the Royal Indemnity Company deposited with the clerk of the court this amount, with accumulated interest and thereby was released from all further liability. In the instant case, it is unreasonable because of the acceptance of the deposit of the money by the plaintiff, to expect the defendant to pay the expense of the litigation, which, according to the record, was to be paid by the plaintiff.

The bond itself, which was prepared by the plaintiff, will preclude plaintiff’s recovery. By its provisions the plaintiff limits its liability to $75,000, which is in violation of section 2540, as amended, of the ordinance which governs. The plaintiff admits that the conditions of the bond violated the provisions of the ordinance, and now seeks to recover from the defendant for the expense it was required to pay, and to be absolved from its violation of the ordinance in question.

The contract must be based upon a good consideration and such as would justify the enforcement of its terms by the plaintiff. The general rule of law governing the enforcement of a contract, express or implied, is that by its terms it must not violate a statute or a city ordinance. This rule of law is well recognized, and it will not be necessary to cite authorities upon the question. It is to be noted from the provisions of the ordinance itself that “it shall be unlawful to operate a public hack or other vehicle kept for hire . . . until and unless the applicant for a license hereunder deposits with the commissioner of assessments and licenses ’ ’ a bond in accordance with the provisions of the ordinance.-

The plaintiff, however, strenuously contends that under the declared law and public policy of the State of Ohio, the provisions of the ordinance pursuant to which the bond was given would be held to be a part of the bond, and the attempted limitation of liability invalid. This contention, we believe, is worthy of consideration in the litigation now before us. If the bond prepared by the plaintiff is invalid because of failure to incorporate the provisions of the ordinance in question, then of course there was failure of consideration for the execution of the indemnity agreement, and as a result, as stated in this opinion, the plaintiff could not maintain its action.

We have considered the matters which have been called to our attention and others which we consider important, and are of the opinion that the plaintiff is not entitled to recover. Therefore, the decree of the court based upon the master’s report, is not erroneous but is in conformity with the rules of law applicable to the case, and is affirmed.

Decree affirmed.

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


text:
    Elizabeth Moss, Appellee, Federal Life Insurance Company, Appellant.
    Gen. No. 38,629.
    Opinion filed March 24, 1937.
    Eckert & Peterson, of Chicago, for appellant; Tom Deeming, of Chicago, of counsel.
    Dillard B. Baker, of Chicago, for appellee.
   Mr. Justice Hebel

delivered the opinion of the court.

This was an action brought by the plaintiff to recover upon a contract of life insurance. The case was tried and a verdict was returned by the jury for the plaintiff in the sum of $2,320, and upon this verdict the court entered judgment.

On December 9, 1936, this court filed its opinion in the above entitled cause, and subsequently a petition by the plaintiff for a rehearing was allowed.

On January 18, 1937, the plaintiff filed a motion to dismiss defendant’s appeal on the ground that the defendant on September 25, 1935, moved this court for leave to file the record late, or to dismiss its appeal docketed in this court as No. 38,566. This appeal was taken by notice of appeal and proof of service filed in the trial court on July 6, 1935.

It further appears that on October 14, 1935, this court by order duly entered, denied defendant’s motion for leave to file a record late and thereupon dismissed the appeal.

Subsequently, on November 15, 1935, this court granted the defendant leave to appeal in said cause, which was docketed in this court as No. 38,629, and the plaintiff in this case suggests that when the original appeal was dismissed the suit was ended, and this court had no further jurisdiction of the case. In support of this position the plaintiff cites the case of People ex rel. Bender v. Davis, 365 Ill. 389, December, 1936, Doc. No. 23,662, wherein the court says:

“The right to appeal is absolute if exercised within ninety days from the rendition of the judgment, decree or determination of the trial court. Thereafter, and within the year, the appellant must show by affidavit that his appeal has merit and that the delay was not due to his culpable negligence. But if an appellant files notice of appeal in the trial court within ninety days he has taken his appeal. . . . He has had the appeal the legislature intended him to have. . . . There is nothing in the act authorizing a court of review to grant permission to an appellant to file its notice of appeal in the reviewing court after it had availed itself of the right, within ninety days, to file such notice of appeal in the trial court. When the original appeal was dismissed the suit was ended.”

In the consideration of the question before us, the opinion above quoted from applies in the instant case.

In the first case, which was docketed in this court No. 38,566, the defendant had filed its notice of appeal and proof of service in the trial court on July 6, 1935, and by reason of the filing of this notice and the dismissal order entered by this court, the original appeal was ended, and this court thereafter was without jurisdiction to grant the defendant leave to appeal in the case now pending within the time fixed by the statute, and for want of jurisdiction the order granting defendant leave to appeal is vacated and set aside and the petition of the defendant filed herein for leave to appeal is denied.

Appeal denied.

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


text:
    Uptown State Bank, Appellee, v. United States Fidelity and Guaranty Company, Appellant.
    Gen. No. 38,866.
    Opinion filed March 24, 1937.
    Rehearing denied April 12, 1937.
    Robertson, Crowe & Spence, of Chicago, for appellant; Eugene P. Kealy, of Chicago, of counsel.
    Ernest A. Eiilund, of Chicago, for appellee; Frederick J. Bertram and John N. Thornburn, all of Chicago, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

The defendant appeals from a judgment against it for the sum of $5,136.25 in favor of the plaintiff, based upon- a suit by the plaintiff against the defendant upon an insurance policy, designated as a securities blanket bond, to recover a loss sustained by the plaintiff and alleged to be within the conditions and provisions of the policy. The case was heard by the court without a jury and resulted in a finding’ and judgment against the defendant.

At the trial the defendant offered no evidence other than to introduce two letters, which appear in the record.

Plaintiff alleges that it is a banking corporation organized under the laws of the State of Illinois, and that the defendant is a fidelity and guaranty corporation doing business under the laws of this State; that on June 15, 1930, in consideration of a premium, the defendant issued and delivered its securities blanket bond, so-called, in writing to the plaintiff in the sum of $10,000.

Defendant’s answer to this complaint denies each and all of the allegations, except to admit the execution and delivery of the policy, and avers that in a certain action wherein the National Bank of the Republic was the plaintiff and the Uptown State Bank was defendant, the Appellate Court on the 5th day of February, A. D. 1934, affirmed the judgment of the trial court for the plaintiff and held that the Uptown State Bank, plaintiff in this action, was not a holder in due course of the Bethlehem Steel Company bonds, which are the subject of the suit here upon the policy.

The bond in question was offered in evidence by the plaintiff, which is in part as follows:

“In consideration of an agreed premium, the United States Fidelity and Guaranty Company, a corporation of the State of Maryland, with its home office in the City of Baltimore (hereinafter referred to as Company), hereby undertakes and agrees to indemnify and hold harmless Uptown State Bank of Chicago, Illinois (hereinafter referred to as Insured), in the amount or amounts specified in sub-section 2 of Section A, from and against direct losses sustained by the insured by reason of having, during the term hereof, in the ordinary course of business, in good faith, without notice or knowledge, and at or through any of the offices covered hereunder:

“A. Purchased for value for the insured’s own account or as broker or agent for the account of another, or in any fiduciary capacity, or taken as or applied as collateral and as a condition precedent to any liability assumed by the insured or to any loan made or credit extended by the insured for the insured’s own account or for the account of another, or in any fiduciary capacity, or to any renewal thereof, or taken or applied in substitution for any such collateral, any securities specifically insured in sub-section 2 of Section A;

“(a) Which shall have been forged, counterfeited, raised or otherwise altered, or lost or stolen;

‘ ‘ (b) Which shall have been purchased or taken or applied as aforesaid, under forged, raised or otherwise altered, or lost or stolen, transfers, assignments, bill of sale, power of attorney, guarantees, endorsements or other instruments, certificates or documents required by the insured as a pre-requisite to such purchasing, taking or applying.”

The facts having a material bearing upon the liability of the defendant are, that the plaintiff on June 30, 1930, during the term of the securities bond issued by the defendant, received certain Bethlehem Steel bonds of the face value of $5,000, as collateral upon the note of George L. Farry, a customer of more than ten years standing; that the money loaned upon the note was paid to George L. Farry, by the bank by delivering to him a cashier’s check, which was subsequently indorsed by Mr. Farry and deposited in the account of Fidelity Motors Company, of which Farry was a stockholder, and which was a corporate entity separate and distinct from that of George L. Farry; that the bonds were taken by an officer of the bank in good faith and without any notice or knowledge on the part of the bank that such bonds were, in fact, stolen bonds.

There is evidence in the record that the bank had no knowledge that the bonds had been stolen until July 2, 1930, three days after the money had been paid to the borrower, George L. Farry, and he, in turn, had indorsed the bank’s check, which was deposited in the corporation’s account in this bank. Upon learning that the bonds were purported to have been stolen, the plaintiff in this action gave immediate notice of this fact to the defendant.

There is evidence by the witness Edward M. Warner, the president of the bank, that he telephoned Mr. Broderick, the superintendent of claims of the defendant compány, immediately after receiving notice of the fact that the bonds were stolen, and told him that the bank was depending upon his company for guidance in the matter. The defendant thereupon sent two men to the bank from its office, one of whom was Mr. Broderick, and all information and records in the possession of the bank were put at the disposal of the defendant’s representatives. They were given information that the money was paid by cashier’s check to George L. Farry, who, having no account at the bank, deposited it in the corporation account of the Fidelity Motors Company.

There is also evidence that Mr. Warner stated to the defendant’s representatives that the bank was at a loss to know whether it had a right to take the entire fund from the corporation account, and that he was depending upon the guidance of the United States Fidelity and Guaranty Company inasmuch as he did not feel at the time that the bank should hire or should go to the expense of hiring an additional lawyer when the defendant was insuring the bank against losses of this kind. Mr. Broderick advised Mr. Warner at the time that the bank had no right to take the funds out of the corporation’s account, and Mr. Broderick informed Mr. Warner that he would write him or cause to be written to him directions as to what the bank was to write to Mr. Farry, demanding payment of his loan.

Subsequently, on July 19, 1930, the bank received a letter from the United States Fidelity and Guaranty Company, inclosing a draft of a letter to be written on the bank’s stationery to Mr. George L. Farry, and requesting to be advised as to the reply received to the communication. The letter inclosed, which the defendant requested the bank to write to Mr. Farry, directed Farry’s attention to the note and securities given, and advised him that the bank had learned that the bonds were stolen, and that, therefore, in accordance with the provisions of the note, the bank declared the whole note payable immediately and demanded payment. Under the date of July 23, 1930, the plaintiff sent the suggested letter to Mr. Farry, and reported to the defendant that it had written and sent the letter as requested by the defendant. Following the defendant’s instructions, Mr. Warner, president of the plaintiff bank, on July 25,1930, wrote to the defendant inclosing a letter from Bernard W. Vinissky, an attorney, received in answer to the bank’s demand letter to Farry. Also inclosed to th'e defendant was a copy of the bank’s reply to Vinissky, suggesting that he take the matter up with Mr. Broderick at the United States Fidelity and Guaranty Company.

On June 23, 1931, the Uptown State Bank received a letter from the attorneys for the National Bank of the Republic, owner of the stolen bonds, demanding the surrender of the bonds or the payment of the value thereof. Pursuant to telephone instructions from the defendant insurance company, plaintiff forwarded this letter to the defendant for reply and the following letter was written by the defendant to the attorneys for the National Bank of the Republic.

“July 2nd, 1931.

“Your letter of June 23rd, 1931, addressed to the Uptown State Bank in reference to certain bonds of the Bethlehem Steel Company, has been referred to us for attention. We are advised that the bonds in question were called for payment several months ago and have been duly presented and paid.

“The Uptown State Bank acquired these bonds in the usual course of business, for value and without any notice or knowledge of any alleged defect in the title thereof, and under the law, the bank is the legal holder in due course of said bonds.

“Under the circumstances, the bank does not recognize the alleged claim of your client to the bonds in question.

Very truly yours,

Counsel.”

Following this letter of refusal written by the United States Fidelity & Guaranty Company, the National Bank of the Republic brought suit against the Uptown State Bank for .the value of the bonds. In the defense of this case the attorneys for the United States Fidelity and Guaranty Company appeared for the Uptown State Bank. When judgment was rendered in this case against the Uptown State Bank, and appealed, counsel for the insurance company appeared in this case on behalf of the Uptown State Bank.

Thereafter, when the judgment in favor of the National Bank of the Republic against the Uptown State Bank was affirmed by the Appellate Court of Illinois, 273 Ill. App. 401, and petition for leave to appeal to the Supreme Court was denied, the insurance company refused to pay the judgment, and thereupon the plaintiff paid the sum of $5,136 in satisfaction of the judgment and costs rendered in favor of the National Bank of the Republic in said proceedings and demanded that the defendant reimburse plaintiff for its loss. This was refused and the plaintiff thereupon instituted the present litigation, to recover its loss upon the bond.

The defendant admits that its liability is based upon the provisions of the bond; that it agreed to indemnify the plaintiff ‘ ‘ from and aguinst direct losses sustained by the insured by reason of having ... in the ordinary course of business, in good faith, without notice or knowledge, taken as or applied as collateral ... to any loan made by the insured . . . any securities which shall have been lost or stolen,” and contends that ch. 98, If 72, sec. 52 of the Negotiable Instruments Law (Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 89.072) is controlling upon the question that a holder in due course is defined to be a holder who has taken the instrument under the following conditions :

“1. That the instrument is complete and regular upon its face.

“2. That he became the holder of it before it was overdue and without notice that it had been previously dishonored if such is the fact.

“3. That he took it in good faith and for value.

“4. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.” Therefore, in applying these words, the defendant’s argument is that the statute requires that the insured must acquire the securities as a holder in due course before the insured is entitled to make any claim for any direct loss resulting from the acquirement of such securities; that taking a negotiable security “in the ordinary course of business, in good faith, without notice or knowledge” in the ordinary sense in which those terms are used and applied, means taking a negotiable instrument as a holder, in due course.

Plaintiff’s reply to this contention is that the issue in the case at bar is whether or not in the language of the indemnity bond the Uptown State Bank has taken as collateral upon any loan made by it the bonds (1) “during the term of the insurance policy,” (2) “in the ordinary course of business,” (3) “in good faith,” (4) “without notice or knowledge,” and (5) “at or through any of the offices covered” thereunder.

The loss in this case occurred during the term of the insurance and the plaintiff received the stolen bonds in the ordinary course of business. It received the bonds in good faith, and the only question remaining, and which is in dispute, is whether the bank, after it had knowledge that the bonds were stolen, did commit any negligent act by its agent which resulted in the loss sustained by the plaintiff.

The fact is that the defendant had knowledge, which it received from the plaintiff, that the bonds in question were stolen and the plaintiff wanted advice regarding the disposition of the funds on deposit with the plaintiff in the account of the Fidelity Motors Company, which were received from George L. Farry. The defendant conferred with the plaintiff and prepared letters for the plaintiff’s signature, which were mailed to the parties in interest.

The evidence does show that the defendant’s agent, Mr. Broderick, advised with the officers of the plaintiff bank in regard to charging the Fidelity Motors Company account with the amount on deposit in this account, which had been loaned to Farry by the bank. The charge was made by the bank against the account of the Fidelity Motors Company, but was finally released.

The defendant points to the evidence of the cashier, Ernest Dose, that Mr. Broderick never advised these officers of the bank just what the plaintiff should do under the circumstances. However, upon an examination of the abstract it appears that in a conversation between these men, Mr. Broderick said “he thought we had good title to the bonds, that we had accepted them without any knowledge to obstruct title, and they were bearer bonds. Mr. Broderick confirmed my (Dose’s) belief that it was his (Farry’s) company’s money and we had no right to touch it to apply on Mr. Farry’s personal obligation.”

Evidence was offered by the plaintiff’s witness, Edward M. Warner, its president, and Ernest Dose, cashier, and was passed upon by the court, together with the admission of the defendant that on the day the bank received the bonds it did not know that they were stolen, and the facts in the record support the judgment entered in the cause for the plaintiff.

The theory of the defendant is that the plaintiff having knowledge of a defect in the title of the bonds, it sustained a loss by its negligent act in paying out the money on deposit in the Fidelity Motors Company account and must bear such loss. However, the fact that the letter was prepared by the defendant and mailed by the plaintiff to Mr. Farry at defendant’s request, and also the evidence of the witnesses support the conclusion of the trial court of defendant’s liability. The appearance by the defendant’s agent in handling the controversy, not alone between the parties, but also in court, would indicate that the plaintiff was interested in being protected by the bond of the defendant, a contract issued by the defendant and accepted by the plaintiff, and also in being assured that it was doing the proper thing in making payment of the amounts drawn upon the Fidelity Motor Company account.

The defendant relies in a large measure upon the opinion of the Appellate Court in the case of the National Bank of the Republic v. Uptown State Bank, 273 Ill. App. 401, which held that the defendant in that case was not a bona fide holder in due course under the authorities cited in the opinion.

The rules of law applied by this court in that case are controlling, but do not apply in the instant case for the reasons stated in this opinion.

The facts detailed in this opinion as occurring between the plaintiff and the defendant after it had-knowledge that the Bethlehem bonds were stolen, do not indicate that the plaintiff was guilty by its agent of such a negligent act as to bring about the loss sustained by the plaintiff, and for which it now seeks to recover under the terms of the bond. The transactions between the plaintiff and the defendant were not material, and had no place in the record in the action between the National Bank of the Republic and the Uptown State Bank.

Other questions are called to our attention in this case, but in view of the fact that we have decided the question of liability of the defendant to the plaintiff, it will not be necessary to consider them.

The judgment entered by the trial court is therefore affirmed.

Judgment affirmed.

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


text:
    Illinois Anti-Vivisection Society and George D. Patterson, Appellants, v. City of Chicago et al., Appellees.
    Gen. No. 38,899.
    Opinion filed March 24, 1937.
    Rehearing denied April 12, 1937.
    Stephen T. Bonan, of Chicago, for appellants; Edward B. Newmans, of Chicago, of counsel.

      Barnet Hodes, Corporation Counsel, Shannon, Mor- , rill & Johnson and Bayley Merrick, Webster & Gregory, all of Chicago, for appellees; George P. Merrick and Casper Nathan, Assistant Corporation Counsel, and Angus Boy Shannon, of Chicago, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

This appeal is by the plaintiffs from an order entered in the circuit court of Cook county dismissing the amended bill of complaint on motion of the defendants. The action was founded on a bill in equity filed on January 29, 1932, by the plaintiffs against the city of Chicago, defendant, praying for the issuance of an injunction restraining the city of Chicago from disposing of dogs in the custody of the poundmaster in charge of the Municipal Animal Shelter, to various institutions of learning, hospitals or their allied institutes, pursuant to the provisions of section 2 of an ordinance passed by the city council of the city of Chicago on December 1, 1931, and to which bill of complaint a demurrer was filed. Thereafter on December 2, 1932, the University of Chicago, Northwestern University, Chicago Medical School, University of Illinois, Michael Beese Hospital and Loyola University jointly filed on intervening petition praying leave to intervene and to be made parties defendant, which petition was granted, and they now appear as defendants in the proceeding.

On February 1, 1933, an amended bill of complaint was filed, whicli in substance alleges that the plaintiff, Illinois Anti-Vivisection Society, is a corporation, not organized for profit, chartered by the State of Illinois, which is devoted to the abolition of vivisection and the enforcement of acts and ordinances relating to cruelty to animals; that the plaintiff George D. Patterson is a citizen of the city of Chicago, a taxpayer and an officer of said society; that on July 20, 1931, the city council of Chicago, by virtue of the authority granted by the State of Illinois, under the Cities and Villages Act, ch. 24, if 65, subsection 80, Illinois State Bar Stats. 1935; Jones Ill. Stats. Ann. 21.144, passed an ordinance which provides that the poundmaster shall be appointed by the commissioner of police according to law. He shall be charged with the duty of enforcing the ordinance of the city of Chicago relating to cruelty to animals, and when it becomes necessary to do so, destroy any animal impounded in pursuance of the ordinance of the city, and when he does so, he shall observe all proper care to destroy such animal humanely on the premises of the Municipal Animal Shelter.

The complaint further states that on December 1, 1931, the city council passed an amended ordinance providing for the appointment by the .commissioner of police of a poundmaster, who shall be a resident of Chicago and under the direction of the commissioner of police; that the poundmaster shall be in charge of the Municipal Animal Shelter, and shall have charge of the care of all animal activities of the department of police as provided for by ordinance, and that he shall, when it becomes necessary, destroy humanely, or otherwise dispose of, any animal impounded in pursuance of the ordinance of Chicago, and that part of the ordinance which is the basis of the controversy in this case is as follows:

“Whenever any reputable institutions of learning, hospitals, or their allied institutes in the City of Chicago shall make application to the Commissioner of Health for permission to use humanely unclaimed impounded animals for the good of mankind and the increase of knowledge relating to the cause, prevention, control and care of disease, the Commissioner of Health, on being satisfied that the said animals are to be so used, shall request the Commissioner of Police to surrender said animals as applied for by the said institutions of learning, hospitals or their allied institutes, and thereupon it shall be the duty' of the Commissioner of Police to cause said animals to be surrendered by the Poundmaster to said institutes of learning, hospitals or their allied institutes for said uses.”

The bill further represents that the Revised Chicago Code of 1931, eh. 110 provides for the disposition of dogs by the poundmaster as follows:

“Section 3962 ... if such (unlicensed) dogs are not redeemed within three days after being impounded, such dogs shall be destroyed by the poundmaster.

“Section 3963 ... if at the expiration of five days such (licensed) dogs shall not be redeemed — -the pound-master or person in charge of the pound in which such dog is confined shall destroy such dog. ’ ’

The bill further represents that it is provided by Section 3932 that “ . . . The Mayor and Commissioner of Health shall advertise for bids for the removal of dead animals from the streets and public grounds of the City ...” and it is further represented that the amended ordinance of December 1, 1931, is in conflict with the section of the Revised Code above set forth and contradictory thereto; that these sections do not, by implication, wording or reference, in said ordinance repeal the previous regulations of the Revised Code.

It is also alleged that unclaimed animals in the custody of the poundmaster are public property, having an intrinsic value both while alive and when dead, and that any disposal of them is a gift of public property to private persons and institutions without warrant or authority of law; that the ordinance does not give all citizens the same right to obtain the dogs; that it is arbitrary in its provisions in that it vests in the commissioner of health of the city of Chicago the right to decide what shall constitute humane treatment and what is for the good of mankind and what increases knowledge and what are reputable institutions of learning.

It is further charged in the bill of complaint that the amended ordinance is illegal and unconstitutional, and that by reason thereof the city loses a great amount of revenue that otherwise would accrue to it; that George D. Patterson, one of. the plaintiffs, as a taxpayer and citizen, complains of the unlawful diversion of public property, and charges that his property is subject to greater taxes than he would have to pay if such dogs were disposed of for a consideration to the city; that they are public property, and as a taxpayer he is entitled to any benefit that might accrue to the city by the proper disposition of their bodies for financial remuneration, and that unless the city be enjoined from enforcing the said amended ordinance such losses would continue to the detriment of the city and this plaintiff as a taxpayer; that dogs at the rate of 1,000 a month were being delivered pursuant to the provisions of said ordinance free of charge to institutions of learning, hospitals, and their allied institutions, notwithstanding there were other individuals ready, able, willing and desirous of purchasing said dogs, but were deprived of the right so to do under the terms of the amended ordinance.

Therefore, the plaintiffs pray that delivery of animals from the Municipal Animal Shelter without remuneration be enjoined and that all of the defendants be enjoined from continuing the illegal acts complained of.

Thereafter on May 21,1934, the defendants, and each of them, filed a motion to dismiss the amended bill of complaint, upon the grounds therein specified, and a hearing was had on said motion by the court. On February 3, 1936, a decree was entered directing that the amended bill of complaint be dismissed.

The question in this case is whether the adoption of the ordinance was beyond the power conferred upon the council by statute, and whether the council had or did not have authority to donate property or revenues of the city as provided for in the ordinance.

The authority granted to the city council by the State appears in ch. 24, If 65 (80), Cities, Towns and Villages, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 21.144, which reads as follows:

“Animals running at large — Taxing dogs.] §80. To regulate, restrain, and prohibit the running at large of horses, cattle, swine, sheep, goats, geese and dogs • and to impose a tax on dogs.”

It is earnestly contended by the plaintiffs that from this power granted to the city, no authority is vested in the council to donate these animals to anyone or to delegate its authority with reference to the disposition thereof, and they cite the case of Washingtonian Home v. City of Chicago, 157 Ill. 414. Upon this question there can be no serious dispute, and it must be agreed that the city cannot by any power conferred upon it donate through its officers any revenues of the city, but such revenues can only be paid out or appropriated by the city council or its officers in the manner and for the purposes authorized by law.

The ordinance involved in the case here on appeal is questioned on the ground that it was beyond the power granted by statute to the city council of Chicago, ch. 24, ]f 65 (80), Ill. State Bar Stats. 1935; Jones Stats. Ann. 21.144. Upon an appeal of this character only such jurisdiction may be exercised by this court as is provided for by statutory provisions upon like questions.

The jurisdiction of Appellate and Supreme Courts is provided for in the Practice Act, ch. 110, ]f 203, sec. 75, subd. (1), Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 104.075, in these words:

“ (1) Appeals shall be taken directly to the Supreme Court in all cases in which a franchise or freehold or the validity of a statute or a construction of the constitution is involved, and in cases in which the validity of a municipal ordinance is involved and in which the trial judge shall certify that in his opinion the public interest so requires, and in all cases relating to revenue, or in which the State is interested as a party or otherwise. ’ ’

The Supreme Court in passing upon what would be within the jurisdiction of this court, in the case entitled, City of Chicago v. Openheim, 229 Ill. 313, said:

“If the controversy related only to the power of the city, under the statute, to pass the ordinance, or to the question whether the ordinance is invalid as being an unreasonable and oppressive exercise of that power, this court would have no jurisdiction to entertain these writs of error. "Where, however, an ordinance attempts to interfere with a constitutional right and that is the question determined by the trial court, an appeal direct to or a writ of error from this court will lie for the purpose of reviewing said judgment. (Wood v. City of Chicago, 205 Ill. 70.)”

Taking the words of the Supreme Court as a guide, this court will consider the appeal of the plaintiffs upon the question of whether the ordinance here involved is invalid as being an unreasonable and oppressive exercise of power granted by the State.

The plaintiffs contend that the city ordinance must be uniform and by its provisions must not discriminate between persons or locations, and further that the city council has no authority to donate property or revenues of the city of Chicago.

The defendant in reply to this contention offers this theory and urges that by the ordinance in question the city council delegated its authority to the commissioner of health, an appointed official in a representative capacity to request the commissioner of police of Chicago to surrender the animals, as provided for by the council, for the purpose provided by the ordinance. At this point it is interesting to note that upon the expenditure of moneys of the city, one of the questions raised by the plaintiff as not being within the authority granted the city council, the Supreme Court in the case of Avery v. City of Chicago, 345 Ill. 640, indicated that instead of an income being received by the city of Chicago by reason of a contract providing for the removal of dead animals, the city is now paying to have these dead animals removed.

This court has studied the ordinance which was passed by the city council under authority of ch. 24, 1Í 65 (80) of the Cities, Towns and Villages Act, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 21.144. This act by its provisions permits the city council to pass an ordinance to provide for the appointment of a board of health, and to provide by such ordinance regulations necessary to promote health and the suppression of disease in Chicago, and also by ordinance to provide regulations which will prohibit the running at large of animals designated in the provision of the statute, and also that there may be imposed a tax on dogs. This granting of powers further provides for the necessary authority by ordinance to regulate the police and to prescribe their several duties. The purpose of the ordinance in question is to provide regulations which will promote health and the suppression of disease, so that disease may be studied in its various forms for the benefit of the public, and generally by institutions of learning, hospitals and allied institutions located in Chicago, and in order that the city may make use of abandoned and unclaimed animals which are housed in the Municipal Animal Shelter. That this may be done, the animals are distributed to these institutions of learning for the purposes indicated herein.

While the ordinance provides regulations for the benefit of humanity in the distribution of the abandoned animals, the council by its ordinance does not delegate its powers to the commissioner of health or the commissioner of police. It is but a regulatory and expedient provision for which the ordinance was passed by the city council of the city of Chicago.

The Supreme Court in the case of City of Paxton v. Fitzsimmons, 253 Ill. 355, held that a tax on dogs provided for by an ordinance is a regulation and not a tax for revenue, and that the ordinance was a proper regulation, even though the ordinance itself did not provide for the disposition of the funds so collected.

The question is raised whether the plaintiffs were properly joined in this action. It is conceded that the Illinois Anti-Vivisection Society was not a proper party to be joined as plaintiff in an action of this kind, and that under the Practice Act (ch. 110, if 154, sec. 26, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 104.026) being misjoined it may be dropped by order of court at any stage of the cause before or after judgment, and for that purpose the plaintiffs entered a motion to dismiss the Illinois Anti-Vivisection Society, a corporation as party plaintiff, and that the cause proceed as to the plaintiff George D. Patterson. Accordingly, it will be necessary now to consider whether the plaintiff George D. Patterson, who is a taxpayer, has suffered a special injury by the operation of the ordinance here questioned.

In order to consider this matter properly it will be necessary to determine upon what ground the plaintiff here has been injured by the operation of this ordinance.

Plaintiff in support of his position contends that the mere fact of his being a taxpayer raises the presumption that he has sustained an injury within the meaning of the law, and cites a number of authorities, from which he suggests it is apparent that the phrase “public at large” is intended to define the entire group of citizens, taxpayers and non-taxpayers. An action on their behalf must be brought either by the attorney general or the State’s attorney, but a taxpayer is deemed to have sustained an injury separate and distinct from any that might have been received by a non-taxpayer. In the case upon which the trial court relied, Koehler v. Century of Progress, 354 Ill. 347, Mr. Justice Stone of the Supreme Court said: ‘1 The rule . . . laid down and oft repeated is, that equity will at the suit of a tax-payer enjoin public officers from expending public funds to carry out a contract let in violation of law. Illegal expenditure of public funds may always be said to involve a special injury to the tax-payer not suffered by the public at large.”

The defendants in answer to this contention cite Kerfoot v. People, 51 Ill. App. 409, wherein this court said:

“Nothing appears in the bill to show that the complainant, as a citizen and resident of Cook county, has any interest or right in the premises, or will suffer any injury from the threatened closing of the gates on Sunday, not common to each of the public. It is only where an obstruction of a public right is such that a special injury to one or more persons has been done, that individuals may maintain actions for violation of such right, and in such case the special injury is the gist of the action.”

This proceeding was upon an action wherein certain of the directors of the World’s Columbian Exposition, were adjudged guilty of contempt of court and fined for violation of an injunction secured upon complaint of a stockholder and taxpayer to prevent the closing of the World’s Fair on Sundays.

Then again we have the ease of Koehler v. Century of Progress, 354 Ill. 347, wherein a citizen and taxpayer sought an injunction against the Century of Progress and the South Park Commissioners restraining them from operating the fair on public grounds without the payment of adequate compensation. The Supreme Court in passing upon the right of the plaintiff as a taxpayer to maintain the litigation, said:

“No expenditure of public funds is involved in this case as made by the bill, and unless appellant’s bill shows a special injury not common to the public generally, her suit is filed without right. As we have seen, the bill alleges that the contract should require payment to the South Park Commissioners of a large sum of money, and that, because this was not done, the appellant and other tax-payers similarly situated suffer in the matter of taxation. Though this point seems not to be particularly stressed in the briefs it is clear that such allegations in the bill do not show special injury to appellant.”

Just what special injury has been sustained by this taxpayer does not clearly appear from the allegations of the bill. It is true that no issue is made as to Patterson’s being a taxpayer, still his status as a taxpayer alone does not establish the fact that he sustained a special injury by reason of the illegal acts complained of in the bill.

The allegation appearing in the bill is that this plaintiff complains as a taxpayer and citizen of the unlawful diversion of public property, and charges that thereby his property is subject to greater taxes than he would otherwise have to pay if said dogs were disposed of for a consideration to the city; that they are public property, and as a. taxpayer he is entitled to the benefit that may accrue to the city by the proper disposition of their bodies for financial remuneration. This is a general allegation; it is not specific, and does not indicate that the complainant would suffer a special damage, except that the bill does charge that the complainants have a bona fide bid of 25 cents apiece for the bodies of said dogs. But from this statement alone it does not appear that they offered this bid for the bodies of the animals. In other words, it only means that they have a bid which they may offer.

After full consideration of all the questions that have been called to our attention, we believe the court acted properly in dismissing the amended bill of complaint, for the reason that it does not state a cause of action which would warrant the trial court in granting the relief prayed for by the plaintiffs. Therefore, the decree dismissing the amended bill of complaint is affirmed.

Decree affirmed.

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


text:
    Nora M. Froehler, Appellee, v. North American Life Insurance Company of Chicago, Appellant.
    Gen. No. 38,941.

      Opinion filed March 24, 1937.
    Rehearing denied April 12, 1937.
    Thomas E. Rooney and Arthur C. Rooney, both of Chicago, for appellant; Ferdinand Goss, of Chicago, of counsel.
    Stebbins, McKinley & Price, of Chicago, for appellee; William McKinley and Paul E. Price, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

This is an appeal by the defendant insurance company from a judgment entered in favor of the plaintiff for $11,166.66, in an action commenced by the plaintiff, widow of D. Froehler, as beneficiary, to recover the proceeds of the policy of insurance for $10,000, issued by the North American Life Insurance Company of Chicago. The case was tried before a jury, who returned a verdict and the court entered judgment for the amount from which this appeal is taken.

On April 1, 1932, Thomas D. Froehler, husband of the plaintiff, received a life insurance policy upon his application for $10,000 from the North American Life Insurance Company of Chicago, and the company issued its receipt for $201.60, acknowledging payment of the first annual premium.

The second annual premium was due on April 1, 1933, and was not then paid, nor was it paid within the 30-day grace period. Consequently the policy lapsed on May 1,1933.

From the statement of facts called to our attention by the defendant there appears to be a provision in the policy as follows:

“Reinstatement — -This policy may be reinstated after default in payment of any premium upon evidence of insurability satisfactory to the company, subject to the payment of past due premiums, with interest at 6 per cent per annum thereon. ...”

It further appears that on May 5,1933, Mr. Froehler executed his application for reinstatement and forwarded the same by mail to the company, together with his check for $53.43 in payment of the first quarterly premium for the second year of the policy. There is some dispute as to whether the receipt was dated May 4, 1933 or May 5, 1933. In the application accompanying this check, Mr. Froehler answered in the affirmative the question as to whether he was in good health.

The provisions in the application for reinstatement are in part as follows:

“I hereby apply for reinstatement of the above mentioned policy which lapsed for non-payment of the premium due April 1, 1933, and which is not now in force except as provided by the non-forfeiture.provisions of the policy. I agree that the declarations and answers herein contained shall be relied upon by the Company as the basis of the reinstatement herein applied for.

“I hereby agree that the reinstatement shall not take effect until this application shall be duly approved by the Company at its Home Office and notice of such approval mailed to me at the address given above, and that any payment in advance on account of the premium shall be binding upon the Company only in accordance with the Company’s receipt made up without alteration on the form detached from this application and that the policy if reinstated shall be non-contestable only after two years from the date of such reinstatement. ’ ’

The receipt for the $53.43, forwarded by Froehler with his application, was made out by the company’s agent, detached from the application and delivered to Froehler. In this receipt it is provided—

“It is understood that this payment is in no way binding upon the said Company except that said Company agrees to return the amount received in case the Company declines to reinstate said policy.

“Note: If notice of approval is not received within thirty days, the amount tendered will be refunded by this Company on request.”

It is also a part of the facts that on May 19, 1933, two weeks after the date of application for reinstatement, the company mailed a letter to Mr. Froehler notifying him that said application was declined because the evidence of insurability was not satisfactory, and inclosed its check for $53.43, in refund of the amount forwarded with said application.

In the original application Mr. Froehler answered in the negative every question as to the existence of any physical ailment, including those as to the existence of any impairment of vision or hearing or diseases of the eye or ear.

In this application for reinstatement dated May 5, 1933, Mr. Froehler answered affirmatively the question: “Are you now in good health?”

It also appears as a part of the facts that Mr. Froehler consulted Dr. Loyal Davis at his home one evening* about a week or two before he went to the hospital. At that time he complained to Dr. Davis of headaches which were associated with vomiting- on one or two occasions, difficulty of vision, and he stated he had suffered a progressive loss of vision for the past two years and that his left eye was then useless.

On May 17,1933, Mr. Froehler went to the Passavant Hospital for observation for brain tumor, and died during the night of the day on which this letter was mailed, May 19, 1933, by which he was notified that said application was declined because the evidence of insurability was not satisfactory.

The defendant contends that the insured was not in good health at the time he executed the application for reinstatement, and the company therefore had the legal right under the terms of the insurance contract to reject the application for insurance. Further, that it is immaterial whether the insured had knowledge of his ill health, and points to the provision of the policy which provides for reinstatement after a default in the payment of any premium upon evidence of insurability satisfactory to the company.

The plaintiff’s reply to this contention is that when the insured in an application for reinstatement makes an affirmative answer to a question contained in the application as to his good health, the answer, if made in good faith without knowledge of any latent or unknown disease, is in full compliance with the terms and conditions of the policy, and the company cannot reject the application because at a later date it is discovered that a latent or unknown condition existed impairing the health of the insured.

The issue is narrowed to (1) was the answer upon the question of the good health made in good faith by the applicant for reinstatement; and (2) can the defendant reject the reinstatement application after default by reason of subsequent discovery of an unknown condition impairing the health of the applicant!

It must be borne in mind that upon a default the insurance policy has lapsed because of such default and remains so until the application for reinstatement has been filed and approved by the company, and until the proposal for reinstatement of insurance is accepted by the defendant company, the minds of the parties to the contract do not meet. Until that is done, the contract of insurance is not in force. Budnik v. Metropolitan Life Ins. Co., 177 Ill. App. 14; New York Life Ins. Co. v. Duff’s Adm’r, 207 Ky. 800, 270 S. W. 51; Burchfield v. Home Benefit Ass’n (Tex. Civ. App.), 73 S. W. (2d) 559; Broughton v. Equitable Life Ass’n Soc. of United States, 71 F. (2d) 821.

The question of good faith of the applicant is involved when he answers that he is in good health in his written request for reinstatement.

The facts are, and it is necessary in a measure to recite some of the facts that appear in the statement herein, the application is dated May 5, 1933; the applicant died on May 19,1933, as the result of an operation for the removal of a tumor on the brain; that prior to the applicant’s death he visited Dr. Loyal Davis a week or two prior to the operation performed by this doctor in the Passavant Hospital in Chicago. At that time he complained to the doctor of headaches, associated with vomiting on one or two occasions, difficulty of vision, and further stated that he had suffered a progressive loss of vision for a period of two years, and at the time of the visit to this doctor his left eye was useless.

It is clear that during the consideration of the application of Mr. Froehler for reinstatement he, Froehler, consulted with Dr. Davis regarding his condition of health, and at the request of his doctor he became a patient in the Passavant Hospital, where an operation for and removal of a brain tumor was had and he died on May 19, 1933.

This proof does show that while Mr. Froehler’s application was being considered he had knowledge that he was not in good health and this fact was not disclosed to the defendant company.

The fact that the jury passed upon the question will not control where the manifest weight of the evidence is contrary to their finding. Of course if the truth had been disclosed pending the application for reinstatement, the company would not have been unreasonable in refusing to reinstate this policy, for the reason that the applicant was not an insurable risk.

Now then, can the company upon further ground take advantage of a subsequent change in the health condition of the insured after the issuance of the policy and a default in premium?

The plaintiff’s position is that the rig'ht of the insured in making application for reinstatement of a lapsed policy is based upon the contractual relation between the parties, and the insured is entitled to enjoy a right guaranteed to him by the statute as well as by his contract of insurance.

This is undoubtedly true as a general proposition, but the real question in this case is: “Did the company bind itself by this contract, when the applicant filed his petition for reinstatement and answered among other questions that he was in good health, to reinstate the insurance policy?” Undoubtedly not, for this insurance contract is subject to the provision of the contract that the applicant is an insurable risk satisfactory to the company. This fact must be decided by the company, and until such action is taken, the company has not assumed the risk, and this is further fortified and controlled by the application for reinstatement, wherein it is provided in this language:

“I hereby agree that the reinstatement shall not take effect until this application shall be duly approved by the Company at its Home Office and notice of such approval mailed to me at the address given above and that any payment in advance on account of the premium shall be binding upon the Company only in accordance with the Company’s receipt made up without alteration on the form detached from this application and that the policy if reinstated shall be non-contestable only after two years from the date of such reinstatement. ’ ’

The plaintiff has called to our attention a number of decisions on like questions, which we have examined, and the question in each case is largely one dependent upon the terms of the insurance contract itself. The case of Crawford v. Lincoln Life Ins. Co., 278 Ill. App. 576, has been called to our attention as having a bearing upon the question of the changed condition of health of the insured after the application has been received and the policy issued. This court has examined the opinion in that case, and as we view the facts, as well as the opinion itself, we are unable to see' where it has any particular bearing upon the question involved in the instant case. It is apparent that the applicant knew of his condition when he visited the doctor and consulted with him regarding his condition of health. This conclusion is supported by the facts referred to in the opinion, and when we consider this progressive loss of sight, there is only one decision we are obliged to make upon the record before this court, and that is that applicant’s condition was such that he was not an insurable risk at the time he made application for reinstatement. West & Southern Life Ins. Co. v. Tomasun, 358 Ill. 496.

Upon the question of delay by the defendant company in approving or rejecting the application, whether it was signed on the 4th or the 5th of May, 1933, it was forwarded to the company and thereafter on the 19th day of the same month was refused by letter mailed to the insured. From all the facts as they appear in the record it does not appear to the court that the action of the insurance company was unreasonable. There is nothing which would indicate an unjustified delay in reaching a conclusion upon the application of the insured.

Other questions have been called to our attention, but in view of our conclusions, it will not be necessary to discuss them.

We believe it will be necessary for this case to he retried, and further comment is not necessary. Such comment as we have made is only for the purpose of passing upon the questions which are before this court upon the record as here presented.

For the reasons stated the judgment of the circuit court is reversed and the cause is remanded.

Reversed and remanded.

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