author: Mr. Justice Hebel

text:
    David Jetzinger, Appellee, v. Consumers Sanitary Coffee & Butter Stores, Appellant.
    Gen. No. 35,713.

      Heard in the third division of this court for the first district at the February term, 1932.
    Opinion filed December 21, 1932.
    Henry J. & Charles Aaron, for appellant; Franklin Raber, of counsel.
    H. J. Rosenberg, for appellee; Abraham Miller and Isadore Fishman, of counsel.
   Mr. Justice Hebel

delivered the opinion of the court.

The defendant appeals from a judgment for $125 entered against it in the municipal court of Chicago in a suit by the plaintiff to recover $175 as rent, and $4.40 per month for street lights. The plaintiff claimed that this amount had accrued to him for the month of April, 1931, under a lease entered into on January 7, 1929, between one Peter G-. Maniates, as lessor, and Consumers Sanitary Coffee & Butter Stores, as lessee, for a term of three years, beginning March 1, 1929, and ending February 29, 1932.

The pleadings of the parties were not questioned as to the sufficiency of the statement of claim and affidavit of merits. The case came on for trial before the court, without a jury, resulting in a finding and judgment against the defendant in the sum of $125.

There is no real conflict in the evidence in this case. The evidence is largely of a documentary character. There is a dispute upon the question of attornment by the defendant after the issuance of the master’s deed conveying title to the plaintiff.

The facts in the instant case are that the plaintiff acquired title to the premises by a master’s deed pursuant to a decree of foreclosure of a trust deed dated December 22, 1927, given to secure an indebtedness owing by one Peter Gr. Maniates, who was the owner of the property. The plaintiff was the complainant in that proceeding, and he charged in his bill of complaint that the defendant in the instant case had, or claimed to have, an interest in the premises as a tenant or otherwise, but that such interest was subsequent and subordinate to the prior lien of the trust deed. The defendant here was made a defendant in the foreclosure proceeding and was defaulted for want of appearance and answer and the bill of complaint taken as confessed against the defendant. The decree in the foreclosure proceeding, among other things, finds that the lien of the trust deed foreclosed is prior, superior and paramount to the rights and interests of all the defendants in the premises (including Consumers Sanitary Coffee & Butter Stores), and directs a sale of the premises to satisfy the amount due the complainant. The court in the foreclosure proceeding further finds that in the event of a sale and failure to redeem by some one or more of the defendants, the defendants will be forever barred and foreclosed from all equity of redemption; that upon the execution and delivery of the master’s deed, the grantee be let into possession of the premises; that all the parties to the cause who may be in possession, and any person claiming under them since the commencement of the suit shall, upon the production of the master’s deed and the service of a certified copy of the decree, surrender possession to the grantee.

During the pendency of the foreclosure proceeding Oscar Beederman was appointed receiver to collect the rents from the defendant in the instant case for the occupancy of part of the premises. The last payment by check was made by the defendant, payable to Beederman, to cover the rent for the month of March, 1931, and this payment was made, as it appears from the record, after the master’s deed was issued to the plaintiff. The check was received by Beederman, indorsed by him, and delivered to the plaintiff.

There is evidence to the effect that the plaintiff engaged Oscar Beederman, the same person who was the receiver, to act as agent for the plaintiff company to collect the rent and manage the premises. The defendant’s evidence as to this appointment is that it did not know that the plaintiff was the owner of the premises on March 2, 1931, when the defendant made the check payable to Oscar Beederman, and it had no knowledge that Beederman was not acting as receiver but was acting as agent for the plaintiff at the time of this transaction.

Sometime after this rent transaction, Mr. Buckley, secretary of the defendant, called upon the plaintiff and asked for a reduction of rent and told the plaintiff that the company’s lawyers had advised him that the company would have a right to move, but if the rent was reduced to $125 per month, the company would stay in the premises. This was denied by the • plaintiff, who insisted upon his rights under the lease between Maniates and the defendant; and as a result of this conference the defendant vacated the premises and surrendered possession on March 31, 1931.

The questions to be considered from this record, are:

(1) Is the defendant liable to the plaintiff under the facts in the instant case; and

(2) Was there an attornment to the plaintiff by the defendant by reason of the payment of the March, 1931, rent to the plaintiff after the issuance of the master’s deed.

The generally accepted rule is that a mortgagor in possession after the execution of the mortgage, cannot give a lease to a third person which will have any effect as against the mortgagee, and such a lease does not of itself create the relation of landlord and tenant between the lessee and the mortgagee. There is in such a case no privity of estate or contract between the mortgagee and the lessee of the mortgagor. Greenebaum Sons Bank & Trust Co. v. Kingsbury, 248 Ill. App. 321. The further rule of law, which was adopted by the Supreme Court in the case of Gartside v. Outley, 58 Ill. 210, and which is applicable in the instant case, is that “It is more in harmony with the ' analogies of our law, to hold that it will require a special agreement, to make valid and to effectuate the extension of a lease executed by the mortgagor.”

The lease entered into with Maniates will be considered, by reason of the decree entered in the foreclosure proceeding, as one made subsequent to the execution of the mortgage by Maniates.

From the decree it is evident that there is no privity of contract between the plaintiff and the defendant, and therefore the plaintiff cannot recover rent under the lease executed by the mortgagor Maniates. If, however, the tenant under the Maniates lease had accepted a lease from the plaintiff, or if the defendant by an act had indicated a willingness to hold the premises under the plaintiff’s title as his tenant, there could have been a recovery. Tiffany on Landlord and Tenant, Volume 1, page 417.

There was no new lease executed between the plaintiff and the defendant. Upon this question the only evidence in the record is the payment of the month of March, 1931, rent to one Beederman, hereinbefore mentioned, and that thereafter the defendant, by one of its officers talked with the plaintiff about a new rental, which offer was refused by the plaintiff.

There are certain reciprocal rights between the plaintiff and the defendant, and in this case the defendant offered to lease the premises. The plaintiff, however, had the right to refuse, and did refuse defendant’s offer. The lease between the defendant and the mortgagor Maniates of itself does not create the relation of landlord and tenant between the plaintiff, the mortgagee, and the defendant, the lessee of the mortgagor. This is clear from the decree. The contention of the plaintiff that his rights are fixed by the lease of the mortgagor and that the fact of the payment of March, 1931, rent, above mentioned, is a recognition by the defendant of the existence of this lease. This contention of the plaintiff cannot be maintained by the facts and the law. No conduct on the part of the defendant has continued for a sufficient length of time, such as the payment of rent, or any other act, which could be construed as an affirmance of this lease.

Upon the second point, an attornment by the defendant — if there was a privity of contract with the plaintiff — is not essential to the right of recovery for the rent due. Sec. 14, ch. 80, Landlord and Tenant, Cahill’s Ill. Rev. Stats. 1931, ¶ 14. Barnes v. Northern Trust Co., 169 Ill. 112.

The judgment for $125, entered by the court, is not supported by the record, and is accordingly reversed and the cause remanded.

Reversed and remanded.

Wilsoh, P. J., and Hall, J., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice McSurely

license: Public Domain

text:
    Cora E. Hunter, Appellee, v. Dr. W. P. Winter et al., Appellants.
    Gen. No. 36,154.

      O’Connor, J., dissenting.
    Heard in the first division of this court for the first district at the October term, 1932.
    Opinion filed December 29, 1932.
    Rehearing denied January 13, 1933.
    Arnd, Gavin, Griffin & Hanley, for appellants D. B. Quinlan and Charles Buss; Frederick Arnd and Richard I. Gavin, of counsel.
    William Gillespie, for appellee.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Plaintiff, bringing suit to recover rental of premises alleged to have been used by defendants, had a verdict and judgment for $1,300. Only two of the six defendants, Daniel Quinlan and Charles Russ, were served with summons, and they appeal.

Defendants were associated in business under the name of Dr. Winter Chemical Company, purporting to be a common law trust, under a written agreement made by them in 1918. The question presented for determination is whether the plaintiff must look for her rent solely to the funds of this trust, or may she proceed against the individual trustees on the ground that they are jointly and severally liable for the obligations incurred by the trust.

In 1924, one of the defendants, Dr. W. P. Winter, a trustee, rented two rooms from the plaintiff for the Dr. Winter Chemical Company to be used by it as a laboratory, stating to plaintiff that there were five trustees of the company, naming the defendants Quinlan and Russ as two of them. Rental of $10 a week was agreed upon and a sign, “Dr. Winter Chemical Company,” was placed over the door, and chemicals were manufactured there which were the property of the trust. The rent was paid to and including December, 1924, from which date no rent was paid although the company continued to use the premises as a laboratory until June 15, 1930. This suit is for the rent during this period.

The copy of the declaration of trust of the Dr. Winter Chemical Company introduced in evidence shows that the company was organized for the purpose of manufacturing and selling products manufactured by formulas transferred to it by Dr. Winter. It is in the form commonly known as a “Massachusetts Trust,” in which the trustees limited liability for debts of the trust to the funds and property of the trust and excluded any personal liability of the trustees. This document was filed in the recorder’s office of Cook county in July, 1920. The trust does not purport to he organized under the laws of any State, and in the copy filed the signatures of the trustees are typed, not written. Neither Quinlan nor Buss ever saw this declaration of trust and expressed “doubt as to the existence of such an instrument. Plaintiff had no knowledge as to the existence of this instrument, nor any notice that defendants were claiming to conduct the business as a common law trust.

Quinlan and Buss testified that they used the products of the Dr. Winter Chemical Company • in their business. Quinlan stated that he had been associated with this business since 1918. Buss testified that he became a. trustee in 1924. Plaintiff testified that these defendants called at the laboratory quite often. In 1927 plaintiff called Quinlan on the telephone and inquired as to the rent due for the laboratory,' and was referred by him to Buss, the treasurer of the company. She then called Buss on the telephone who, according to plaintiff, said that they were expecting to sell some stock and that she would receive her money when that was accomplished; that she “need not be afraid, but I would get my money.” Defendants admit the telephone conversations but do not agree with plaintiff as to what was said. On demanding the rent from Dr. Winter she was told that the trustees “would pay every dollar, with interest,” “that they were good men and were responsible for it.”

In April, 1929, all of the defendants, including Quinlan and Buss, signed a contract as trustees of the Dr. Winter Chemical Company with C. J. Collander, in which he was given the right to sell the products of the chemical company and also shares of the treasury stock.

Defendants seek to take refuge behind the provisions of the declaration of trust limiting liability, and assert that plaintiff’s claim is either against Dr. Winter personally or against the funds of the trust. We are of the opinion that the rule in this State with reference to such trusts is that while the courts will, so far as possible, give effect to the provisions of the declaration of trust among the members themselves, when they themselves are the only ones interested, and as to third parties who have full knowledge of the character of the trust with which they are dealing, yet where third parties deal with the trust without knowledge of the provisions of the trust agreement, especially those affecting liability, such association must be considered as a partnership. Wahl v. Schmidt, 307 Ill. 331; Hossack v. Ottawa Development Ass’n, 244 Ill. 274; Guthmann v. Adco Dry Storage Battery Co., 232 Ill. App. 327; Kramer & Co. v. Cummings, 225 Ill. App. 26; Crane Co. v. Tierney, 175 Ill. 79; Wadsworth v. Duncan, 164 Ill. 360; Johnson v. Leman, 131 Ill. 609; Hodgson v. Baldwin, 65 Ill. 532; Wrightington on Trusts (2d ed.) 171.

The statutes of this State provide for the creation of organizations in which the persons interested may limit their liability, such as corporations or limited partnerships. The universal rule is that when persons associate together for the purpose of carrying on a business enterprise, such persons are jointly and severally responsible for the debts incurred in the conduct of such business unless such business is organized under the statutes indicated. The courts could not approve of an organization of persons, more or less secret in its nature, which deals with the public and yet seeks to escape individual liability of the members by hiding behind this secret agreement. As far as the public is concerned, such an organization is a mere fiction.

The mere filing of a copy of the declaration of trust or agreement did not constitute constructive notice to the public, as it was .not such a document as the law requires to be filed. Mack v. McIntosh, 181 Ill. 633; St. John v. Conger, 40 Ill. 535.

McClaren v. Dawes Electric Sign & Mfg. Co., 86 Ind. App. 196, involved facts very similar to those under consideration. Referring to the claim that the declaration of trust was under the Massachusetts statute, it was said that even in Massachusetts such associations may be trust organizations or they may be partnerships, depending entirely upon the instruments under which they were created; that there was no law in Indiana authorizing the organization of such an association through which the trustees or shareholders could escape their liability as partners. In Schumann-Heink v. Folsom, 328 Ill. 321, cited by defendants, the plaintiff expressly contracted to release the trustees, as she had full knowledge of the character of the trust. In the instant case plaintiff had no knowledge of the character of the trust and had not contracted to release the trustees from personal liability. In Uihlein v. Budd, 252 Ill. App. 487, this court passed upon the sufficiency of an amended declaration to which a demurrer had been sustained, and held that on the facts alleged the president of the trust did not have authority to sign the promissory notes involved.

Defendants complain of instruction No. 1 given at the request of plaintiff, which was to the effect that if the jury believe that defendants carried on and conducted the business “under the style and name of Dr. Winter Chemical Company, a Common Law Trust,” defendants were jointly liable for obligations incurred in the course of the business. This instruction stated the law applicable to the facts and was proper.

Defendants knowingly permitted their names to be used as trustees, and used the products of the chemical company, which they knew were manufactured at some rented place. Furthermore, the jury properly could accept plaintiff’s testimony that the defendants Quinlan and Buss verbally ratified the arrangement she made with Dr. Winter for the rental of the premises.

Defendants point out that the amount of the verdict is less than the amount which plaintiff claims, hut we do not see that defendants can urge this as grounds for reversal. Plaintiff does not complain.

Upon the facts presented the verdict was proper, and as no errors occurred upon the trial the judgment is affirmed.

Affirmed.

Matchett, J., concurs.

O’Connor, J., dissents.


text:
    William Powers, Appellant, v. Michigan Central Railroad Company, Appellee.
    Gen. No. 36,165.

      Heard in the first division of this court for the first district at the October term, 1932.
    Opinion filed December 29, 1932.
    Rehearing denied and opinion slightly modified January 13, 1933.
    John G. Riordan, for appellant.
    Winston, Strawn & Shaw, for appellee; Silas H. Strawn, Charles J. McFadden, and George B. Christensen, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

On the night of September 3, 1930, plaintiff, a switchman for defendant, was caught and crushed between the freight car on which he was riding and another car standing on a parallel track. He brought suit under the Federal Employers ’ Liability Act, Cahill’s St. ch. 114, ¶ 321 et seq., charging that defendant was using a car of unusual width on the parallel track, which caused the accident; also, that this latter car was defective and leaning from the perpendicular, and that the parallel tracks were unusually close together. Defendant filed a plea of the general issue and also a plea of nonownership.

Upon the trial it developed that plaintiff made certain untrue answers in a questionnaire which defendant required the applicant for employment to sign. At the conclusion of plaintiff’s case, upon defendant’s motion the court peremptorily instructed the jury to find for the defendant, basing this upon the decision in the case of Minneapolis, St. P. & S. S. M. Ry. Co. v. Rock, 279 U. S. 410, and also Ward v. Elgin, J. & E. Ry. Co., 259 Ill. App. 672 (Abst.). In both these cases, and in others to which we may later refer, it was held that the misrepresentations of the applicant for employment amounted to such a deception of the employer as to remove the employee, in case of injury, from the right to maintain an action under the Federal Employers’ Liability Act; that employment obtained through such fraudulent means did not make the plaintiff an employee within the meaning of the act.

Do the admitted misrepresentations in the instant case call for the application of the rule stated in the above cases? The first misrepresentation was with reference to the age of plaintiff. In the application questionnaire he stated that he was born October 27, 1885, when in fact he was born October 27, 1872. The application was made in July, 1924, at which time he was in fact 52 years of age, but according to his application his age was 39 years. He testified that he made this misstatement because the yardmaster told him that defendant had an age limit for employees of 40 years. Another misrepresentation was the concealment of his former employment by the Belt Bailway Company of Chicago. Plaintiff had been a switchman, brakeman and yardman for various railroads for about 40 years, covering practically all his working life. He testified as to minor injuries received during this time, but he had recovered from them. In 1924, while working for the Belt Bailway Company, the bone was chipped in his left kneecap, from which injury he testified he had recovered. He employed an attorney to present his claim against the Belt Bailway for this injury, and it was finally settled by the payment of $3,000. This was the only case he had ever turned over to ah attorney. He stated in his application that he had never had any litigation against any railroad, and justifies this by saying that his claim against the Belt Bailway had been settled out of court and he knew nothing about any suit brought by his attorney. The application also inquired as to where he had been employed for the last five years, and he answered that he had been employed from July, 1920, to 1924, as clerk for the Fitzpatrick Storage and Moving Company. Upon the trial he admitted that he had never worked for this company but had during all this period worked for the Belt Bailway, and that the answer in the application was false. Fitzpatrick of the storage company was a friend and plaintiff asked him to answer the inquiry if the defendant should ask as to his employment with the storage company. Plaintiff admits the misrepresentation as to his employment, but says that he was afraid the defendant company would not hire him because he had turned his claim against the Belt Bailway over to a lawyer. Plaintiff was accepted by defendant as an employee, commenced work in July, 1924, and worked there continuously up to September 3, 1930, the date of the accident.

Plaintiff asserts in this court that in the absence of a special plea defendant may not aver fraud as a defense. We are not in accord with this, in this case. Whether plaintiff was an employee, entitled to the benefit of the Federal Employers’ Liability Act, Ca-hill’s St. ch. 114, ¶ 321 et seq., was properly put in issue by plaintiff’s declaration alleging such employment, and the plea of general issue. Wagner v. Chicago & Alton R. Co., 265 Ill. 245. Furthermore, the case was tried upon the theory that the issue of fraud was properly raised, and no objections were made to the evidence on that subject. Plaintiff acquiesced in this and cannot now be heard to assign error on this point. Geo. J. Cooke Co. v. Burke, 148 Ill. App. 155, and many other cases.

There are many well considered cases holding that a misrepresentation as to age of the applicant for employment is not such a misrepresentation as would deprive the employee of the benefit of the Federal Employers’ Liability Act. In Lupher v. Atchison, T. S &. F. Ry. Co., 81 Kan. 585, the court held that even if there was a false statement of an employee as to age, he does not thereby cease to be an employee. The contract of employment may be procured by false representations, “but having obtained it he begins the performance of service for the benefit of the company and renders it an equivalent for all that he receives from it.” To the same effect is the opinion in Hart v. New York C. & H. R. Co., 205 N. Y. 317, where it was said that the misrepresentation as to age affected the contract of employment in the sense that it made it voidable, “but it did not affect the relation of master and servant with respect to the former’s obligation under the statute respecting the safety of persons serving it.” To the same effect are St. Louis & S. F. R. Co. v. Brantley, 168 Ala. 579; Matlock v. Williamsville, G. & St. L. Ry. Co., 198 Mo. 495; Lake Shore & M. S. Ry. Co. v. Baldwin, 19 Ohio Cir. Ct. 338; Denver & R. G. R. Co. v. Reiter, 47 Colo. 417; McDermott v. Iowa Falls & S. C. Ry. Co. (Ia.), 47 N. W. 1037. The most recent case in point is Minneapolis, St. P. & S. S. M. R. Co. v. Borum, 286 U. S. 447, 52 Sup. Ct. 612, to which we shall again refer.

The principal case relied upon by defendant as sustaining its position is Minneapolis, St. P. & S. S. M. Ry. Co. v. Rock, 279 U. S. 410 (above cited) which reversed this Appellate Court, opinion in 247 Ill. App. 600. The decision of the Supreme Court in the Bock case was followed by a division of this court in Ward v. Elgin, J. & E. Ry. Co., 259 Ill. App. 672 (Abst.). The Bock case involved an unusual state of facts. Joe Boclc had applied for employment and after a physical examination was rejected as suffering from serious ailments ; he then applied for a position under the name of John Bock, which second application was not in his handwriting nor signed by him'; he procured a substitute to represent himself as John Bock to take the physical examination; the substitute passed the examination but Joe Bock took the position. He was subsequently injured and brought suit under the Federal Employers’ Liability Act. The United States Supreme Court characterized him as an “impostor” who deceived the railroad as to his identity, and that therefore he “was not of right its -employee within the meaning of the Act”; that his continuing employment was “in the nature of a cheat” and that “the misrepresentation and injury may not be regarded as unrelated contemporary facts.” We read the opinion in this case as based upon the fact that the railroad had denied plaintiff employment, but he had fraudulently obtained employment by posing and pretending that he was an applicant who had been accepted. In the instant case plaintiff used his own proper name and made out and signed in his own handwriting the application for. ■ employment; he was accepted and Was .never rejected; he did not change his name or apply for employment under an assumed name, and did not have a third person impersonate him before defendant’s medical examiner.

The Ward case (cited above) in this court cannot readily be distinguished from the case under' consideration. We think the opinion in that case extended the effect of the Rock case further than we should go. We are supported in this view by the more recent case of Minneapolis, St. P. & S. S. M. R. Co. v. Borum, 286 U. S. 447, 52 Sup. Ct. 612. The writer of the opinion in the Borum case wrote the opinion in the Rock case. In the Borum case the plaintiff in his application for employment falsely stated that he was 38 years old when he was in fact 49 years old; he understood that the road had a rule against accepting men over 45 years of age for work in its train service. The court held that the railroad company could not have regarded the difference between the applicant’s actual age and that stated in his application as having any material bearing upon the physical condition it required; that the employee’s physical condition was not shown to be such as to make his employment inconsistent with the railroad’s reasonable rules for selecting fit employees. The opinion points out the difference between that case and the Rock case and held that the facts found in the former case were not sufficient to bring it within the rule applied in the Rock case.

As to the misrepresentation as to his employment by the Belt Railroad, plaintiff says he did not conceal this employment on account of the injury received but because he feared that defendant would refuse to employ him if it learned that plaintiff had employed a lawyer to prosecute his claim against the Belt Company. Defendant argues that because of this misrepresentation the contractual relationship of employer and employee was never created between the parties. We cannot see that the concealment of the fact that plaintiff had employed a lawyer to prosecute a claim against a former employer could have had any connection with or relation to plaintiff’s future duties or the injuries he received. There is no evidence that there was any attempt to deceive defendant’s medical examiner as to the injury to the knee. While plaintiff may have apprehended that a truthful disclosure of a former claim through an attorney might have prevented his employment by defendant, yet there is no evidence that it would have done so. It might be remarked that the justice of plaintiff’s claim against the Belt Railroad is indicated by the settlement out of court.

In addition to the cases above cited are other decisions involving the question of former employment. In Louisville & N. R. Co. v. Lewis, 218 Ky. 197, 291 S. W. 401, the applicant misrepresented his employment for a prior period and concealed the fact that he had commenced a suit against a former railroad employer. The court, after considering a number of cases supporting the railroad defendant’s view, held that the false statement of the applicant as to his former employment did not bar recovery for injuries not sustained in such former employment. In Payne v. Daugherty, 283 Fed. 353, it was again asserted that an employer may be held liable to an employee, notwithstanding the false inducement to the contract of employment. In Baker v. Beattie (Tex. Civ. App.), 222 S. W. 658, the plaintiff had untruthfully stated in his application for employment as switchman that he had never been injured and had never had a suit against any railroad. It was contended that because these statements were false the contract of employment was void, hence the relation of master and servant did not exist. The court held that the contract of employment existed at the time of plaintiff’s injury, and that until the contract had actually been terminated on the ground of the alleged fraudulent statements, the relation of master and servant would legally continue to exist. Galveston, H. & S. A. R. Co. v. Harris, 48 Tex. Civ. App. 434, seems to be precisely in point. There the applicant had falsely stated that he had never had any litigation with any railroad company. It was held that this did not destroy the contract of employment and exempt the employer from liability for negligence toward the employee. See also Kansas City, M. & O. Ry. Co. v. Estes (Tex. Com. App.), 228 S. W. 1087.

Kenny v. Union Ry. Co. of New York City, 152 N. Y. S. 117, and Qualls v. Atchison, T. & S. F. Ry. Co., 112 Cal. App. 7. In the latter case the applicant had falsely stated that he had been working on his brother’s farm, when in fact he was working as a brakeman for another railroad, and explained that he made this misstatement because he feared that if it were known that an applicant for a position with a railroad company had been out on a strike he might not get a job; it was held that this misrepresentation was upon an immaterial matter and did not bar his right to recover.

We have noted the cases in other jurisdictions which follow the decision in the Bock case, but we are not in accord with them. They apparently adopt what seems to us an extreme position, namely, that any fraudulent representation made in an application, whether material or otherwise, would be a good defense to a suit to recover compensation for personal injuries against the railroad.

Defendant asserts that plaintiff assumed the risks incident to the employment. The accident happened at night in the yards of the defendant railroad. The plaintiff was standing on the side ladder of a freight car moving slowly northward, with his body right up against the car on which he was riding, and passing-other cars on the east on a parallel track; there was a clearance between plaintiff and the first car on the parallel track of 6 to 8 inches; the south end of the second car caught him in the back and crushed him against the car on which he was riding. An experienced witness testified that the second car on the parallel track was the widest he had ever seen; that he had never before seen a car on these tracks so wide that it would not clear a man riding past on the adjoining parallel track.

An employee assumes such ordinary and usual risks incident to his employment as are open and with which he is familiar. In the instant case the accident happened at night; plaintiff says it was too dark to observe closely the car on the parallel track, and the evidence tended to show that this car was of an unusual width. We cannot say as a matter of law that plaintiff assumed the risk; this was for the jury to decide. Kanawha & Michigan Ry. Co. v. Kerse, 239 U. S. 576; Brant v. Chicago & Alton R. Co., 294 Ill. 606, and many other cases.

For the reasons indicated we hold that the motion of defendant for a peremptory instruction should have been denied and that the evidence should have been submitted to the jury.

The judgment is therefore reversed and the cause remanded.

Reversed and remanded.

Matchett and O’Connor, JJ., concur.


text:
    Minnie Olga Johnson Schachner, Executrix of the Estate of Maximilian H. Schachner, Deceased, Appellee, v. The Employers’ Liability Assurance Corporation, Ltd., Appellant.
    Gen. No. 36,253.

      Heard in the first division of this court for the first district at the October term, 1932.
    Opinion filed December 29, 1932.
    Church, Haft, Robertson, Crowe & Spence, for appellant; Burt A. Crowe, of counsel.
    Tenney, Harding, Sherman & Rogers, for appellee; S. Ashley Guthrie and George E. Howell, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Plaintiff, as executrix of her husband’s estate, bringing suit on an accident insurance policy issued to him, had a verdict and judgment for $8,231.50. Defendant seeks a reversal.

The assured died January 3, 1930. The policy provided that death must be “solely and independently of all other causes through accidental means. ’ ’ Defendant says that plaintiff did not prove that the assured’s death was through accident.

The assured was 58 years of age, living at 4464 Berkeley avenue, Chicago; he was an interior decorator, antique collector and dealer and expert and lecturer upon objects of art; he was of a sociable disposition and had many friends. On the day he came to his death, he was preparing a lecture to be subsequently given. He had been in the habit for 18 years past of dining at a downtown club this evening of the week. He had suffered no particular financial reverses. When his wife left him at 10:30 o’clock in the morning of this day he was apparently in good health and spirits. She returned to the house at five o’clock in-the evening to drive him downtown for his evening engagement; even before she entered the house she detected the odor of gas and on opening the door found the house permeated with it. Gras had been left burning in the kitchen oven and she went first to the kitchen and turned it off; she did not stop to notice whether the gas in the oven was still lighted or not; apparently it was burning as a parrot and dog nearby were unharmed. The bathroom, on the second floor, was heated by means of a portable gas heater which stood on the floor at the side of the tub, the gas coming through a hose fitted over a gas fixture in the wall and running around the tub and to the heater; it had been thus fastened for several years. When plaintiff entered the bathroom through the unlocked door she found the room filled with gas and she immediately turned it off at the heater; she did not stop to see whether it was burning or not. She found her husband sitting unconscious in the bathtub, the water nearly up to his chest; he held a cake of soap in his hand; his expression was peaceful and smiling. The clothes in which he expected to dress for the evening were laid out on the bed in the adjoining room and his razor and shaving apparatus were also laid out ready, for use. She immediately called a doctor and the police. The physician, Dr. Bamberger, arrived shortly and at the same time the police officers arrived with a pulmotor squad from the fire department. The doctor found a faint heartbeat but this disappeared while he was giving a hypodermic injection. The firemen worked on him with, a pulmotor but were unable to revive him. The coroner’s physician, Dr. Eggert, arrived some three hours later and examined the body; he did not perform an autopsy. Both doctors and the plaintiff testified that the face and body were of a “rosy hue,” the dependent parts a particularly bright pink.

Dr. Eggert testified on the trial as to his wide experience with cases of carbon monoxide poisoning, and gave it as his opinion that the deceased might have come to his death by “carbon monoxide poisoning acute.” He also said that the pink coloration of the body was characteristic of carbon monoxide poisoning.

Dr. McNally testified that he had been the chief chemist of the Chicago Health Department, had been teaching toxicology at Bush Medical College for many years and had written a number of articles on poisons and their detection. He testified in detail as to the characteristics and symptoms of carbon monoxide poisoning; that this poisoning was the only cause of death which would leave a distinct pinkish color to the body; he gave this opinion, based upon thousands of cases he had seen; also, that a man who had died from heart lesion, food poisoning or stroke of apoplexy would not show the symptoms which were exhibited in this case. Carbon monoxide is an ingredient of illuminating gas used in Chicago at this date.

We do not think it necessary to pass upon the point made by plaintiff, that defendant’s affidavit did not raise any question as to the cause of death, for the evidence amply shows that the assured died by poisoning from carbon monoxide from the accidental escape of gas from the heater.

Criticism is made of the hypothetical questions put to the doctors. While there may have been some technical errors, yet in face of undisputed testimony as to the cause of death, such errors, if any, are harmless. The same thing is also true of the answers of the medical witnesses. Dr. McNally during his testimony stated positively that the assured had died from carbon monoxide contained in the illuminating gas. This might not have conformed to the rule laid down in Kimbrough v. Chicago City Ry. Co., 272 Ill. 71, but under the circumstances it was immaterial whether he testified that the gas did cause the death or might have caused it. City of Chicago v. Didier, 227 Ill. 571; Chicago Union Traction Co. v. Roberts, 229 Ill. 481; Heineke v. Chicago Rys. Co., 279 Ill. 210. We do not agree with defendant’s contention that the testimony of the medical witnesses was based upon conjectural grounds. Both of the doctors were men of wide experience in this class of cases and their opinion was based upon observation and experience.

The policy provides that “in the event of accidental death immediate notice thereof must be given to the corporation,” and that “failure to give notice within the time provided in this policy shall not invalidate any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible.” Plaintiff did not know of the existence of the policy until after her husband’s funeral, which was on January 6. On about the 8th she examined the papers in his safety deposit box and found the policy there. January 13, formal written notice of the death and claim on the policy was sent to defendant. The general rule is that where the existence of a policy is unknown to the beneficiary and notice is forwarded by him as soon as he .discovers it, this is a sufficient compliance with the provision requiring immediate notice of the injury or death. 1 Corpus Juris, 476; Employers’ Liability Assur. Corp.,v. Dean, 44 F. (2d) 524. The word “immediate” in such a provision should not be construed in a literal sense; it means notice within a reasonable time under the circumstances. Contrall v. Great American Casualty Co., 256 Ill. App. 47; Niagara Fire Ins. Co. v. Scammon, 100 Ill. 644; Rich v. Hartford Accident & Indemnity Co., 208 Ill. App. 506; Sun Accident Ass’n v. Olson, 59 Ill. App. 217.

Furthermore, defendant’s insurance adjuster, Mr. Figel, testified that he was notified on January 6, the day of the funeral, that the assured had died January 3 in a bathtub.

The policy provides that the company shall have ‘ the right and opportunity to make an autopsy in case of death where it is not forbidden by law.” .The funeral was. January 6, three days after the assured’s death; in accordance with his oral request and also as requested in his will, his body was cremated either on the day of the funeral or the day following. The provision in the policy gives the defendant the right to make an autopsy; plaintiff was under no obligation to initiate it. Employers’ Liability Assur. Corp. v. Dean, 44 F. (2d) 524. She was required only to consent to an autopsy provided a request for it was seasonably made and it is within her power to grant the request.

A similar question was involved in Contrail v. Great American Casualty Co., 256 Ill. App. 47, where the insurance company had a telephone notice of the death on the day of the funeral but received no written notice until sometime thereafter, and made no demand for an autopsy until two weeks after the burial. The court held that such provisions are recognized by-the courts with certain limitations; that a demand must be made within a reasonable time and that this demand must be made and the autopsy performed prior to interment. See also United States Fidelity & Guaranty Co. v. Hood, 124 Miss. 548; Aetna Life Ins. Co. v. Robinson (Tex. Civ. App.), 262 S. W. 118; Gath v. Travelers’ Ins. Co. of Hartford, Conn., 113 Ohio St. 369. In Clay v. Aetna Life Ins. Co., 53 F. (2d) 689, cited by defendant, the beneficiary refused to permit an autopsy although the request was made in ample time.

Figel, defendant’s agent, was notified of the assured’s death by accident on the day of the funeral and that the body was to be cremated after the funeral ; after receiving this message he looked up the policy files and found that defendant carried insurance on the deceased; he made no investigation on the day of the funeral arid did not communicate with plaintiff; he had a representative present at the coroner’s inquest, which was held January 8. The jury could properly conclude that if there was any fault in failing to exercise its right to perform an autopsy, the fault was defendant’s and not plaintiff’s. American Employers’ Liability Ins. Co. v. Barr, 68 Fed. 873.

Criticism is made of certain language of plaintiff’s counsel in argument to the jury, but there was no serious error in this respect.

The court properly refused defendant’s offered instruction No. 11. This was amply covered by given instruction No. 5. Furthermore, the refused instruction told the jury “that the plaintiff is in law presumed to have known, understood, and to have had full notice of each and all of the terms and conditions expressed in the policy,” and was therefore legally bound by them. Plaintiff did not know of the existence of the policy until January 8. She could not be presumed to know the terms and conditions of an instrument of whose very existence she was ignorant.

Defendant’s proffered instruction No. 12 was properly refused. It in effect directed a verdict for the defendant provided the body of the assured was cremated before a claim was made upon the defendant for payment of the policy. This is clearly not the law.

As the jury was amply justified in finding that the assured came to his death through accidental carbon monoxide gas poisoning, and as there were no substantial errors upon the trial, the judgment is affirmed.

Affirmed.

Matchett and O’Connor, JJ., concur.


text:
    Cairo Meal & Cake Company, Appellant, v. Estate of H. H. Brigham, Deceased, Appellee.
    Gen. No. 36,262.

      Heard in the first division of this court for the first district at the October term, 1932.
    Opinion filed December 29, 1932.
    John F. Voigt, for appellant.
    Chapman & Cutler, for appellee; Charles M. Thomson, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Plaintiff filed its claim for $1,342 in the probate court; this was disallowed; it appealed to the circuit court and there amended its claim and asked that the cause be transferred to the chancery side of the court, which motion was denied. Plaintiff elected to stand by its motion, and, refusing to proceed further, the court entered an .order dismissing the appeal. Plaintiff asserts in this court that it was entitled to have the cause transferred to the chancery court.

Plaintiff’s claim filed in the probate court alleged that it had sold to H. II. Brigham, doing business under the trade name of Midwest Commercial Company, a quantity of cottonseed meal, but that he refused to accept it, compelling plaintiff to sell at the best price obtainable, with resulting damages of $1,342; also that the Midwest Commercial Company was owned and operated by H. PI. Brigham and by the Midwest Trading and Securities Corporation.

When the cause was reached for hearing in the circuit court plaintiff filed an amended claim instanter. The amended claim alleged the same matters as in the original claim, but in addition asserted that the deceased, H. II. Brigham, was a director in the Midwest Trading and Securities Corporation and that as such director he had assented to the indebtedness to plaintiff, knowing that the aggregate of the debts of said corporation was in excess of the amount of its capital stock, and that therefore, under the provisions of the statute he was personally liable for the amount of the plaintiff’s claim. Section 23, chapter 32 (Cahill’s Illinois St. ch. 32, ¶ 23). This provides in substance that directors of corporations shall jointly and severally be liable for the debts and contracts of the corporation where they assent to an indebtedness in excess of the amount of the capital of the corporation, to the amount of such excess. We have heretofore held that the sole remedy of a creditor wishing to proceed under this statute was in equity. Albert Pick & Co. v. Warshauer, 244 Ill. App. 56.

The trial in the circuit court on appeal from the probate court is a trial de novo, and while the circuit court has power to permit the claimant to file an amended claim (Estate of Johnson v. Kilpatrick, 250 Ill. App. 416), yet such amended claim may not raise a new cause of action not presented to or passed upon by the probate court. Elder v. Whittemore, 51 Ill. App. 662; Millard v. Harris, 119 Ill. 185. If this were not so, a claimant might file in the probate court a baseless claim and then on appeal try, in the circuit court, issues and claims not presented to the probate court, the only court in which, under the statute, claims against decedents must be filed. Section 60, chapter 3, Cahill’s St. ch. 3, ¶ 61. The statute cannot thus be evaded.

Plaintiff’s position seems to involve an inconsistency. Its claim in the probate court was based on the alleged liability of H. H. Brigham, personally, for his breach of contract. In the circuit court it bases its claim upon an alleged director’s statutory liability for the debts of a corporation which was not a party to the contract claimed to have been breached. A director’s liability can only be invoked for assenting to excess debts of the corporation which incurred them.

Defendant says that any right of action against H. II. Brigham, as an assenting director for debts of a corporation, did not survive his death. Such a liability did not exist at common law and is purely statutory. There are no provisions in the statute providing that the right of action shall survive. In a number of cases involving statutory penalties it has been held that the right of action did not survive. Dempster v. Lansingh, 166 Ill. App. 261; Olson v. Scully, 296 Ill. 418; Wilcox v. Bierd, 330 Ill. 571; Glos v. Glos, 341 Ill. 447. In Diversey v. Smith, 103 Ill. 378, the court had under consideration a question analogous to the one before us. There a creditor of a corporation sought to enforce a stockholder’s statutory liability against one of the stockholders. He failed in the superior court and appealed to the Appellate Court, and during the pendency of that appeal the defendant stockholder died. This was called to the attention of the Appellate Court with a motion that the appeal be dismissed on the ground that the cause of action did not survive the defendant’s death. This motion was allowed and plaintiff appealed to the Supreme Court. It was there said: “If the action is for a statutory penalty, it does not survive the death of the testator, and the writ was properly dismissed.” The opinion then proceeds at some length to consider whether or not the claim is an action on a contract or for a statutory penalty, and concludes that the liability is statutory and that the action did not survive, and that the Appellate Court properly dismissed the appeal.

Plaintiff refers to section 123 of chapter 3, Cahill’s St, ch. 3, ¶ 125, in which are enumerated the actions which survive. Among these are “actions against . officers for misfeasance, malfeasance or nonfeasance of themselves or their deputies.” Manifestly this means public officers, and has no application to the instant case.

The judgment of the circuit court, in denying plaintiff’s motion, was proper and it is affirmed.

Affirmed.

Matchett and O’Connor, JJ., concur.


text:
    Charles C. Henderson, Appellee, v. Louis J. Victor and Mary Caro, Appellants.
    Gen. No. 36,312.
    Heard in the first division of this court for the first district at the October term, 1932.
    Opinion filed December 29, 1932.

      Lee D. Mathias, for appellants.
    Cecil C. Erickson, for appellee.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Defendants appeal from a decree iii which the chancellor found that complainant was entitled to possession of a certain note for $4,000, the trust deed securing it, a title insurance policy and a fire insurance policy, and enjoined defendants from disposing of them.

The title to the instruments is the controverted point. Complainant owned and had possession of them in June, 1931; subsequently they came into possession of the defendants. Complainant asserts that defendants did not take the papers in good faith but in fact took them as consideration for compounding a felony.

Juné 18, 1931, B. B. Cavello approached complainant, saying that he had a purchaser for these mortgage papers, and complainant delivered them to him with an agreement that if not sold within 10 days they should be returned to complainant.

Some months prior to this, Mary Caro, defendant, had given Cavello $2,120 with which he was to pay off a mortgage on property owned by her. He did not do this but appropriated the money to his own use, and she had instituted criminal proceedings against him. Upon receiving the papers in question from complainant, Cavello called upon Louis J. Victor, the attorney for Mary Caro, and told him that he owed Mrs. Caro $2,120 for money she had given him for the purpose of paying off a mortgage on her home, but which he failed to do. Cavello offered to give his note for this amount, and as collateral security would deposit with them a $4,000 mortgage note with accompanying documents; these were the note and papers he had received from complainant. This proposition was accepted and executed, Mr. Victor representing Mrs. Caro as her attorney. Neither of them knew that the documents they had received as collateral belonged to complainant. At this time the indictment charging Cavello with embezzlement of the money of Mary Caro was still pending. Mr. Victor signed and gave him a receipt which recited that the collateral was to be held by Mrs. Caro until Cavello had paid the mortgage on her home and the same had been released, and that “The collateral deposited as security to said note to be returned upon the payment of the balance, and provided further that the said Mary Caro shall not prosecute the said Eocco Cavello in the case now pending in the Criminal court of Cook county, Illinois.”

In July Cavello told complainant that he was going to sell the note and papers to a Mr. Victor, and an appointment was made for complainant and Cavello to see Victor the next morning. Cavello failing to appear, complainant called on Mr. Victor and the entire circumstances were then exposed. Complainant claimed that the papers belonged to him; Mr. Victor asserted that he was holding the papers on behalf of his client, Mary Caro, and that' they were taken by her in good faith.

Mr. Victor, testified that when Cavello offered to compromise Mrs. Caro’s claim he told him that he did not wish to sign the receipt as Cavello might say that he, Victor, was compounding a felony; that he wanted it distinctly understood that he was not doing anything of the sort; that he would ask the State’s attorney’s consent to strike off the case, and that otherwise he would not do anything about the prosecution; that what he meant by the receipt was that if the State’s attorney would inform the judge that a restitution had been made, he would not stand in the way of the case being stricken off,

Notwithstanding this explanation by Mr. Victor, the chancellor was * amply justified in holding that the agreement not to prosecute Cavello was part of the consideration for the delivery of the papers. Cavello was a lawyer, as was Mr. Victor. They both must have understood the clear provision of the receipt that one of the conditions of the compromise was that the prosecution of the criminal charge should be ended.

The rule is, that while it is not illegal merely to compromise civil injuries resulting from a criminal act, yet where there is included in the compromise some promise or agreement, express or implied, that the prosecution of the criminal case shall be suppressed, the agreement to compromise is illegal and contrary to public policy. Oconto Nat. Bank v. Weber, 240 Ill. App. 222, and cases there cited. In the case of Tramblay v. Hyde Park State Bank, 336 Ill. 80, it was held “ if the owner of the property makes an agreement not to prosecute the criminal if restitution is made that makes the agreement unlawful, and a paper executed, whether a deed or note, under such agreement is not enforcible,” citing cases. We also so held in Toplis & Harding, Inc. v. Kempf, 265 Ill. App. 602 (Abst.), filed in this court February 29, 1932, where some of the cases are analyzed. In Ford v. Cratty, 52 Ill. 313, the chief case cited by defendants, it does not appear from the opinion that there was any promise made not to prosecute the defendant as part of the consideration for the note given by him. The reviewing court was considering the refusal of the trial court to permit a witness to testify that Ford would not have given the note had he not been threatened with the criminal prosecution. It was held that this testimony was immaterial as the evidence showed the note was given, not as a reward for not prosecuting, but in payment of a debt due, and “that . . . it is not like a note given simply to prevent the prosecution for a misdemeanor or felony. That would be a different question.” Other cases cited by defendants can be distinguished.

Under the circumstances of the instant case there can be little if any doubt that Cavello gave the defendants the note and trust deed, with the other papers, in consideration that he would not be prosecuted. It amounted to compounding a felony. Therefore the entire transaction is void.

The chancellor rightly found that complainant was entitled to the documents, and the decree is affirmed.

Affirmed.

Matchett and O’Connor, JJ., concur.


author: Mr. Justice Matchett

text:
    Daniel W. Gurnett et al., Trading as Gurnett & Company, Appellants, v. The Mutual Life Insurance Company of New York et al., Appellees.
    Gen. No. 36,042.

      Heard in the first division of this court for the first district at the June term, 1932.
    Opinion filed December 29, 1932.
    Taylor, Miller, Busch & Boyden, for appellants; John S. Miller, James J. Magner, Bernard K. Shapiro and William Klevs, of counsel.
    Walter W. Ross, Richard S. Tuthill and Robert D. Ross, Guardian ad Litem, for appellees; Winston, Strawn & Shaw, John C. Slade and George T. Evans, of counsel for The Mutual Life Insurance Company of New York. Poppenhusen, Johnston, Thompson & Cole, of counsel for The Penn Mutual Life Insurance Company.
   Mr. Justice Matchett

delivered the opinion of the court.

On December 2, 1930, Knowlton L. Ames entered into an agreement in writing with the Central Trust Co., predecessor of Central Republic Bank & Trust Co., which expressed the intention of creating a trust of the proceeds of a large number of insurance policies written on his life. An amendment to the writing was executed April 2, 1931, and a second amendment on June 25, 1931.

December 23, 1931, Ames died leaving a last will and testament which named his son, John D. Ames, and the Central Republic Bank & Trust Co. executors. The will was filed for record in the probate court of Cook county, and his estate is now being probated in that court.

Complainants, who aver that they are contract creditors of Knowlton L. Ames to an amount in excess of $300,000, filed their amended and supplemental bill in behalf of themselves and other creditors similarly situated and in behalf of the defendants, who, it is alleged, are disqualified by interest. They made defendants thereto the Central Republic Bank & Trust Co. as trustee under the alleged trust agreement, the executors' of the estate, the legatees, the heirs at law and next of kin of the deceased and certain insurance companies which issued policies on the life of Knowlton L. Ames.

The prayer of the bill was that the trust agreement of December 2, 1930, with amendments thereto, might be decreed to be void; that the insurance companies be restrained from paying the proceeds of the policies according to the directions of the alleged void trust agreement, and that the trustee should be declared to hold the proceeds of these policies as a resulting trust in favor of the estate, and directed to pay the same to the executors.

Defendants moved to dismiss the amended and supplemental bill on five grounds specifically set up in a written motion, which according to established practice was treated as a general and special demurrer. Grimes v. Grimes, 143 Ill. 550; Leonard v. Arnold, 244 Ill. 429; MacGuidwin v. South Park Com’rs, 333 Ill. 58; Rosenzweig v. Roitman, 266 Ill. App. 124.

After full consideration the court found that a valid and legal trust had been created, and complainants excepting and electing to stand by their amended and supplemental bill, the same was dismissed for want of equity. That decree complainants seek to reverse.

The material averments of the amended and supplemental bill (which for the purpose of this opinion must be regarded as true) are as follows: The executors estimate the value of the estate of Knowlton L. Ames to be $50,000. Claims against the estate for more than $800,000 have been filed, and it is said the estate is hopelessly insolvent.

There is no allegation, however, that any fraudulent purpose entered into the agreement for the creation of the alleged trust. Insurance companies during the life of Ames issued policies on his life for a total amount of more than a million dollars. A list and description of these policies and amendments to the agreement are attached to the bill and made a part thereof.

Many of these insurance policies were at first issued payable to the executors, administrators or assigns of Knowlton L. Ames. December 2, 1930, Knowlton L. Ames, while he was, as the bill alleges, insolvent, caused many of the policies to be made payable to the predecessor of the defendant trustee as beneficiary, and since the death of Ames the proceeds of a number of these policies were paid to said trustee prior to the filing of the bill.

The policies issued by the defendants, Mutual Life Insurance Company of New York and Penn Mutual Life Insurance Company, are by their terms payable to defendant trustee upon the purported trusts. Complainants allege on information that the policies have never been assigned to the trustee.

Defendants, however, contend that the facts alleged in the bill amount in law to an assignment.

Complainants aver that Knowlton L. Ames reserved to himself by the terms of the trust agreement the right to receive the cash surrender value of the policies, to use the borrowing value of the same and to receive and retain all dividends which might be declared upon them; that after defendant trustee was named beneficiary Knowlton Ames borrowed money on these policies and that he at all times during his life reserved the right to change the beneficiary and terminate the trust; that the purported trust does not conform to the legal requirements for a testamentary disposition of property inter vivos, in that there was no transfer by the trustor, Knowlton L. Ames, to the purported trustee of any interest in the policies during his lifetime; that the purported trust was therefore void and the proceeds of the policies should be delivered to the executors.

The contention of complainants is that since Ames, the trustor; reserved to himself the right to change the beneficiary, which by the terms of the policies he could lawfully do, the interest of the trustee in these policies was a mere expectancy and in no sense property such as would give a court of chancery a subject matter to which its jurisdiction might attach.

It is not denied that a life insurance policy is property and that it may constitute the res of a valid trust, as was held by- the courts of England in Fortesque v. Barnett, 2 Mylne & Keene 36, and by the courts of Illinois in Otis v. Beckwith, 49 Ill. 121, and the many cases which follow that decision.

Complainants have cited a large number of cases such as Mayer v. Illinois Life Ins. Co., 211 Ill. App. 285; Columbian Circle v. Mudra, 220 Ill. App. 231, affirmed 298 Ill. 599; Slocum v. Metropolitan Life Ins. Co., 245 Mass. 565, 139 N. E. 816; Quist v. Western & Southern Life Ins. Co., 219 Mich. 406, 189 N. W. 49, and Hopkins v. Northwestern Life Assur. Co., 99 Fed. 199, all of which in substance hold that a beneficiary ivhose contingent right is subject to an absolute right of revocation by the insured has a mere expectancy, Avhich is not more than the right of a supposed heir to a living person; that such beneficiary takes no vested interest but only an inchoate possibility which in no sense rises to the dignity of property.

It is urged.that such beneficiary has nothing that can be assigned (Carpenter v. Knapp, 101 Ia. 712, 70 N. W. 764; Mutual Benefit Life Ins. Co. v. Swett, 222 Fed. 200), nothing that Avill pass by operation of law to the trustee in bankruptcy (In re Hogan, 194 Fed. 846), nothing that is devisable or descendible (In re Hammer, 102 Misc. 193, 169 N. Y. S. 684; Supreme Council American Legion of Honor v. Gehrenbeck, 124 Cal. 43, 56 Pac. 640; Richmond v. Johnson, 28 Minn. 447, 10 N. W. 596) and no right of action for anticipatory breach (Knights Templar and Masons’ Life Indemnity Co. v. Gravett, 49 Ill. App. 252; Slocum v. Northwestern Mut. Life Ins. Co., 135 Wis. 288, 115 N. W. 796; Mutual Relief Ass’n v. Ray, 173 Ark. 9, 292 S. W. 396; Delaney v. Delaney, 175 Ill. 187; Ptacek v. Pisa, 231 Ill.522).

Complainants point out that the courts of Illinois have carefully distinguished the rights of such beneficiary from the property rights of the insured himself in Martin v. Stubbings, 126 Ill. 387, and Equitable Life Ins. Co. v. Mitchell, 248 Ill. App. 401. Complainants say that if the insured in this case had not reserved the right in himself to change the beneficiary, a vested interest Avould have passed to the trustee Avhich would have been sufficient to support a trust; that an assignment of the policies to the trustee would have created a sufficient interest to support the trust; but they say that KnoAvlton L. Ames did not convey to the trustee any such vested interest; that he reserved the right to change the beneficiary, the right to assign the policies, the right to obtain the cash surrender value thereof, the right to borrow thereon and the right to receive all dividends thereon; that the interest of the trustee during the lifetime of Ames could not have been alienated by it; that it had no property right which the law would have protected; that it could not have sued any of the insurance companies for an anticipatory breach of contract; that it took nothing .upon which it could act as trustee. It is riot denied that Ames intended to create a valid insurance trust, but it is said that he did not comply with the legal requirements necessary to effectuate his intentions.

It is not denied by defendants that a res (property) is indispensable to the existence of a valid trust. The doctrine was precisely stated in Cruwys v. Colman, 9 Ves. 323, where the master of the rolls, Sir W. G-rant, said: “Three circumstances must occur: Sufficient words to raise it, a definite subject, and a certain and ascertained object.” Or as stated in Gough v. Satterlee, 52 N. Y. S. 492:

“A subject or corpus of a trust estate is absolutely essential, not merely-to the validity of a trust, but to its existence. Courts will supply a trustee; in England, at times, under the cy pres power, they will select beneficiaries; but in no country will they furnish a trust estate.” The decisions of the courts of Illinois are consistent with these cases. Marble v. Marble, 304 Ill. 229.

In Perry on Trusts, vol. 1, section 68, the author describes the properties which may become the subject matter of a trust as follows:

“At common law no possibility, right, title nor chose' in action could be granted or assigned to strangers. But in equity the rule is different, and choses in action, expectancies, contingent interests, and even possibilities may be assigned, and a valid trust created in them. Equitable reversionary interests stand upon the same ground. Property not owned by the assignor at the time, and not even in esse, may be assigned in equity; and a valid trust may be created in a naked power or authority.”

Complainants say that the author does not cite a case in support of the section, and that the statement is inconsistent with other sections. They quote 26 Ruling Case Law, par. 6, p. 1171:

. . . “There is good authority for the rule that an insured cannot impress a trust on his interest in a life benefit insurance certificate, and the reason given for this is that he has no interest in the fund, but possesses a power of appointment merely.”

Defendants also cite cases to the effect that the reservation of the power of the trustor to revoke a trust does not invalidate the trust: Kelly v. Parker, 181 Ill. 49; Mayer v. Tucker, 102 N. J. Eq. 524, 141 Atl. 799; People v. Northern Trust Co., 289 Ill. 475; In re Dolan’s Estate, 279 Pa. 582, 124 Atl. 176. However, the right of the trustor to retain the power of revocation is not, as we understand it,.questioned by complainants. "

Many cases cited by defendants are distinguishable upon the facts, as Hirsh v. Auer, 146 N. Y. 13, 40 N. E. 397; Lashley v. Lashley, 212 Ala. 255, 102 So. 229 ; Christensen v. Christensen, 14 F. (2d) 475, and Ambrose v. United States, 15 F. (2d) 52; each of which concerns a beneficiary who had received the proceeds of an insurance policy and the cestui que trust, for whose benefit the supposed trust had been brought into existence. Under such state of facts, irrespective of other questions, equity would raise, if necessary, a trust ex maleficio as against the supposed trustee. Coyne v. Supreme Conclave, I. O. H., 106 Md. 54, 66 Atl. 704.

Defendants insist that though the right of the insured to change the beneficiary is a property right, it is a right which is in some cases qualified, and this view is supported by some of the cases. In Freund v. Freund, 218 Ill. 189, it was, held that where the right to change the beneficiary was reserved, the change could be effectuated only by compliance on' the part of the insured with the statute under which the insurance company was organized. In that case our Supreme Court followed the decisions of the courts of New York, where the contract of insurance was entered into. In Indiana Nat. Life Ins. Co. v. McGinnis, 180 Ind. 9, 101 N. E. 289, it was held that a change of beneficiary in order to be effectual must be made in compliance with the provisions of the policy. In Anderson v. Broad Street Nat. Bank, 90 N. J. Eq. 78, 105 Atl. 599, iii a controversy between the beneficiaries named in certain insurance policies and an assignee of the insured, the vice chancellor in substance said that each of the interests was subject to assignment; that neither could assign anything except that which would come to that one; and he continued:

“After a careful examination of the authorities, I am of the opinion that whether the interest be regarded as vested and defeasible, contingent, a mere expectancy, or whatever the characterization may be, if the policy stipulates the course by which the beneficiary’s interest is to be nullified, he cannot be deprived of his right unless the prescribed mode for its destruction is followed, and that the assignment in this case by the assured had not that effect. The judgment in the Sullivan case rests as securely on this as it does on the ground that, the assignment by Mrs. Cahill appertained only to her title. The latest authority upon this phase of the law of insurance, brought to my attention, is Johnson v. New York Life Insurance Co., L. R. A. 1916 A 868. The cases are gathered in the opinion and the editor’s note.”

Complainants say that this case is squarely opposed to the views of the courts of this State and cite Equitable Life Ins. Co. v. Mitchell, 248 Ill. App. 401, which, however, is distinguishable in that so far as the record shows the power of the assured to change the beneficiary was there absolute and unqualified.

The decision of the New Jersey court is not inconsistent with Jarvis v. Binkley, 206 Ill. 541, where our Supreme Court said:

“This court has repeatedly held that contingent interests and expectancies, although not assignable in law, may be transferred, so as to be binding in equity, by a contract made in good faith and for a valuable consideration. (Crum v. Sawyer, 132 Ill. 443; Hudnall v. Ham, 183 id. 486.) And the same general doctrine has been applied to specific cases, where the beneficiary has assigned the contingent interest in a certificate of insurance. Pomeroy v. Manhattan Life Ins. Co., 40 Ill. 398; Supreme Council Royal Arcanum v. Tracy, 169 id. 123.”

Defendants cite Johnston v. Scott, 137 N. Y. S. 243, and Lauterbach v. New York Investment Co., 117 N. Y. S. 152 — cases which discuss life insurance trusts without deciding the question here. They also cite Frick v. Lewellyn, 298 Fed. 803, and other cases which construe statutes which provide for taxation of rights of succession to property.

The case most relied on by complainants is Staples v. Murray, 124 Kan. 730, 262 Pac. 558. It appeared that Bessie C. Staples, a widow, married Clyde Murray on April 6, 1916. She had by a former marriage a son, Harold B. Staples, who at the time of the marriage of his mother to Murray was four and a half years of age. Clyde Murray after his marriage enlisted in the army, representing himself to be a single man, and took out war risk insurance in the sum of $10,000. Lloyd D. Murray, a brother, was named beneficiary in the insurance policy. About that time Lloyd D. wrote to Bessie C. a letter stating in substance that he had been named beneficiary and that Clyde had directed him to use $5,000 of the insurance for the education of her son, Harold B., and that she would act jointly with the writer in performing that duty. Later Mrs. Murray applied for an allotment, whereupon Clyde wrote asking her to desist and saying’ her claim, if pressed, would result in the loss of the insurance, which he said was “equally divided between you and Lloyd.” Lloyd D. also wrote Bessie C. to the same effect, saying that she could depend upon him for a square deal. She dropped her application for an allotment. Before his death, however, Clyde Murray wrote Lloyd D., recalling all his requests made in favor of Harold B., saying that he retracted them absolutely. He afterward died. The trial court held on this state of facts that a trust was not established, and plaintiff Harold B. appealed. The Supreme Court of Kansas said that there were two questions: (1) whether there was a trust, and (2) if so, whether it was subject to revocation. The court answered both questions in the negative. The chief justice, who wrote the opinion of the court, dissented citing 39 Cyc. 34; Northwestern Masonic Aid Ass’n v. Jones, 154 Pa. St. 99; 39 Cyc. 73 ; Coyne v. Supreme Conclave, I. O. H., 106 Md. 54; Kendrick v. Ray, 173 Mass. 305; the note in 14 Anno. Cas. 872; Miles v. Miles, 78 Kan. 382, 96 Pac. 481; Reddy v. Graham, 110 Kan. 753, 205 Pac. 362. Two of the seven judges joined in the dissent of the chief justice. The case is not controlling here since the donor exercised the supposed power to revoke prior to his death.

We have not discussed all the cases which appear in the briefs. The above are most relied on. No one of them is decisive. The question is whether the interest of the trustee in these insurance policies constituted property such as clothed the supposed trust with a body visible to the judicial eye. A consideration of the simple uncontradicted facts may clarify. In the beginning Knowlton L. Ames had possession of these insurance policies. They were payable to his estate. He reserved the power to change the beneficiary. He paid the premiums. These were his policies, his property, and his right of property therein was absolute.

This was the situation on December 2, 1930, when the writing designated a “life insurance trust agreement ’ ’ was executed. That instrument and the amendments thereafter made were under seal. Knowlton L. Ames was described therein as the “Assured.” The Central Trust Co. was described as the “Trustee.” The writing recited that the trustee was an Illinois corporation authorized to accept and execute trusts. It recited that the assured “desires to create a trust of the proceeds of certain insurance policies upon his life,” as described in a schedule attached. It provides that “the Assured hereby deposits said policies with said Trustee. ’ ’ The allegations of. the amended and supplemental bill show that the policies were by the assured deposited with the trustee as agreed. The assured also promised to cause the insurance companies issuing the policies to make the proceeds thereof becoming due by reason of the death of the assured payable to the trustee, or its successor, as beneficiary of the policies and of the proceeds. The assured caused the companies to comply with this agreement. He agreed in the writing to pay the premiums, and he thereafter paid them. The trustee on its part agreed to keep these policies during the lifetime of the assured until the assured should in writing otherwise direct, and upon request in writing by the assured and upon the payment to the trustee of reasonable compensation for services theretofore rendered, the trustee agreed to deliver up the policies. These are the only obligations which under the terms of the writing the trustee undertook to perform during the lifetime of the assured. Upon the death of the assured, the writings provide, the trustee shall assume active duties which are described in detail.

The writings recited in detail the powers reserved to the assured, which are as stated in the amended and supplemental bill and as we have already described. The bare fact that Ames reserved the power to revoke the trust would not invalidate it. The authorities are all to that effect. The power to revoke necessarily implies that the thing to be revoked has already come into existence. Knowlton L. Ames died without exercising his power of revocation. These powers which he reserved were without question “property rights.” He could have taken back that which he had given, but he did not exercise that power.

What was the nature of the right granted to the trustee? What did the trustee take? First, it took possession of the policies. It became a bailee. It had a right to reasonable compensation. It was a bailee for hire with all the legal rights and liabilities which arise out of that relationship. As against a wrongful taker it could have maintained an action of replevin, or as against one who converted the policies it could have maintained an action in trover. Secondly, it took the right to receive the proceeds of the policies. This right, it is true, might be revoked, but even the right of revocation was not absolute. There was a condition precedent named in the writings, namely, that the compensation of the trustee should first be paid. We think, too, that a necessary condition precedent must have been compliance with the rules of law in that regard under the provisions of the statute, if any, of the States in which the insurance policies were issued. What those were is not averred in the amended and supplemental bill.

The right of Ames to revoke was not absolute. The trustee was not a mere beneficiary. It did not in this case take 'a mere expectancy as in the cases cited by complainants. The trustee was a beneficiary named pursuant to the terms of a contract under seal and executed for a valuable consideration, and the contract was in part executed by the trustee, it having entered upon the fulfillment of its promises under the terms of the contract.

The legal title to these policies was somewhere. Where was it? Manifestly, it was either in Knowlton L. Ames or in the trustee. Ames by a writing under seal had divested himself of the title. He had substituted for himself his trustee. • It is true that his action was revocable. He could on the performance of conditions precedent take back the right of possession and the right to receive the proceeds. He could upon compliance with conditions precedent take back and place anywhere he pleased the legal right to receive the proceeds of the policies upon maturity. Until he exercised that power the trustee held, as it seems to us, the legal title to these policies in trust for the parties named in the trust agreement. In other words, the result of the contract between the insurance company and the assured and the contract between the assured and the trustee was to constitute the trustee a donee beneficiary under the law. See Restatement of the Law of Contracts, vol. 1, sec. 133, p. 151.

For the reasons indicated the decree is affirmed.

Affirmed.

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


text:
    Sol H. Kesner, Appellee, v. Barnett Faroll et al., Trading as Faroll Brothers, Appellants.
    Gen. No. 36,066.

      Heard in the first division of this court for the first district at the June term, 1932.
    Opinion filed December 29, 1932.

      Pines, Morse & Stein and Walter Bachrach, for appellants; Walter Bachrach, Alvin E. Stein and Arthur Magid, of counsel.
    Samuels, Costello & Greenberg, for appellee; Edward Wolfe, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

In an action in trover for the conversion of certain stocks defendants pleaded the general issue. On trial by jury there Avas a verdict for plaintiff, on Avhich after motions for a new trial and in arrest and for judgment non obstante veredicto had been overruled, judgment was entered for plaintiff in the sum of $24,535.13. From that judgment defendants have perfected this appeal.

At the close of plaintiff’s eAddence and again at the close of all the evidence, defendants made a motion for a directed verdict in their favor, which was denied, and the principal (and Ave think the controlling) question in the case is whether such instruction should have been given; in other Avords, whether as a matter of laAV defendants were guilty of conversion as charged.

The facts in brief are: Plaintiff Avas the customer of defendants who were stockbrokers. He carried a margin account with them. November 11, 1930, defendants sold securities in their possession belonging to plaintiff of the value of the amount for which judgment was entered, and applied the proceeds of the sale to the satisfaction of the obligations of one Morton Leopold, another customer and friend of plaintiff.

Defendants claim (which plaintiff denies) that plaintiff Avas liable for the Leopold account under the terms of a Avritten guaranty. The evidence shows that plaintiff protested against the proposal of defendants to treat this account of Leopold as if it were his OAvn and wrote letters demanding that the accounts be restored to their former condition. The parties upon the trial produced evidence as to alleged oral conversations concerning the principal matter in issue, and certain letters of plaintiff directed to defendants were admitted in evidence (one of them over a general objection by defendants that it was self-serving).

It is now urged that this ruling of the court was erroneous. The letters were competent for the purpose of showing the demand of plaintiff for the restitution of his property. Morehouse v. Terrill, 111 Ill. App. 460; Western Underwriters Ass’n v. Hankins, 221 Ill. 304. These letters were also parts of mutual correspondence and, although in some respects self-serving, were admissible under the rule announced in Schwarzschild & Sulzberger Co. v. Pfaelzer, 133 Ill. App. 346, and National Importing & Trading Co. v. E. A. Bear & Co., 236 Ill. App. 426, reversed on other points at 324 Ill. 346.

It is also urged that the court erred in giving and refusing certain instructions, but we think it unnecessary to discuss these at length, since upon consideration of the whole record we are of the opinion that substantial justice has been done, and that another trial could not under any circumstances produce a different judgment which would be allowed to stand. Stewart v. Clark, 194 Ill. App. 2; Johnson v. Duke, 247 Ill. App. 372; Ford v. Ford, 257 Ill. 341; Pridmore v. Chicago, R. I. & P. Ry. Co., 275 Ill. 386.

As already stated, we regard the controlling question in the case to be one of law — namely, whether defendants rightfully sold the property of plaintiff to meet the obligations incurred by Leopold. There is on this point practically no issue of fact. Some evidence, it is true, was offered tending to show that the Leopold account was originally opened by plaintiff under the name of Leopold, but the overwhelming preponderance of the evidence shows this is not true; therefore, a verdiet for defendants on that theory could not be allowed to stand.

The issue of law, however, is not so free from difficulty, and the facts bearing upon it would seem to be as follows:

Plaintiff opened a stock account with defendants September 13, 1926. The account was subsequently closed but afterward reopened. At the time of opening the account plaintiff signed a written statement in and by which he consented that transactions should be subject to the rules and customs of the exchange; that securities from time to time carried or deposited to protect his account might be loaned or pledged by defendants separately or together with other securities, either for the sum due thereon or for a greater sum, without notice to him; that on all marginal business defendants might close transactions and sell all securities from time to time carried in his account of deposited to protect the same whenever the margin might be deemed insufficient by defendants, all without demand for margin, notice of the closing or of sale either as to time or place. By another writing executed a few days later and which appears in evidence as defendants’ Exhibit 2, plaintiff agreed:

“In respect of all accounts which the undersigned now has, or may hereafter have with you, for the purchase or sale of securities or commodities, or contracts for commodities, it is understood and agreed as follows :
“All securities or commodities, or contracts for commodities, now held or hereafter purchased by you for, or now or hereafter deposited with you by, the Undersigned, are to be held by you as security for the payment of all liabilities of the Undersigned to you, however, and whenever arising, and you are hereby authorized, without further notice to the Undersigned and without regard to whether you have in your possession or subject to your control at the time thereof, other securities, commodities or contracts for commodities of the same kind and amount, in the usual course of business to repledge, rehypothecate (either for the amount due you from the Undersigned, or for a greater sum) and loan the same from time to time separately or together with other securities; and you shall not be required to deliver to the Undersigned the same certificates or securities deposited or received but only certificates or securities of the same kind and amount. ’ ’

Another part of the writing provided in substance that upon failure of plaintiff to comply with any of the provisions, or whenever deemed necessary for the protection of defendants, defendants were authorized and empowered to sell, assign and deliver all or any part of the securities, commodities or contracts for commodities pledged thereunder upon any exchange or market or at any public or private sale, without advertisement or notice.

Morton Oppenheimer, well known to plaintiff, held a position with defendants known as “customer’s man.” He was also well acquainted with Morton Leopold. In addition to this stock account plaintiff also carried with defendants a grain account, and both his stock and grain accounts were at all times kept in good shape and amply protected as to margins. In the year 1929 Leopold also opened a trading account with defendants through Oppenheimer. Apparently plaintiff and Leopold were very close friends. Plaintiff seems to have suggested Leopold to Oppenheimer as a prospective client of defendants. On February 15, 1929, plaintiff wrote defendants, attention of Mr. Mort Oppenheimer:

“Please use any collateral belonging to me that may be necessary to guarantee sufficient margin for the purchase of 100 shares of General Electric of England stock that was purchased in the name of Mort Leopold. ’ ’

Leopold thereafter traded on his own account. At a later date plaintiff, who owed Leopold $1,800, in payment of same transferred a credit of that amount to the account between Leopold and defendants.

In May or June, 1930, Oppenheimer told plaintiff that Leopold’s account was light and that Leopold had told him that he did not have any more collateral. Oppenheimer asked plaintiff if he would guarantee the Leopold account. Plaintiff says that he told Oppenheimer that he would be glad to do so. Defendants then sent a written form of guaranty to plaintiff which he, however, refused to sign. Nevertheless, on June 4, 1930, plaintiff wrote (on a printed form prepared by defendants) and mailed the following letter:

“In accordance with our discussions heretofore held I hereby guarantee the account of Morton Leopold, 5454 South Shore Drive, Chicago, as shown on your 20th statement rendered (June 1,) 1930, indicating’ that May said Leopold is indebted to you in the sum of $43,536.81 and that you are holding against that account the following:
125 shares Columbia Gas—
103 15/1000 shares Simmons Bed—
103 3/200 shares Electric Bond and Share—
100 shares General Electric—
“It is a distinct condition of this guarantee that there are to he no additional trades of any hind, nature or description in this account unless with my knowledge and written consent, and that any purchases or sales hereafter made on this account (shall only be O. K. made by me*) and that I have full authority to sell S. K. and handle and dispose of anything in the account from this date as I may see fit until such time as this guarantee shall be terminated.
“I shall have Mr. Leopold write you a letter confirming this arrangement as far as handling of the account is concerned from this date. ’ ’

So far as the record indicates Leopold did not write a letter as promised.

Defendants contend as a matter of law that upon this uncontradicted evidence they could not be found guilty of conversion; that, to use their own words, “when plaintiff prepared and signéd the written agreement of June 4, 1930, whereby he guaranteed the Leopold account, the debit balance therein became his liability, and the stock in his account stood as security for its payment.” Defendants urge that it is well settled under the authorities that the word “liability” is a term of broader signification than “debt” and includes “contingent responsibility.” A number of authorities such as Home Ins. Co. of New York v. Peoria & Pekin Union Ry. Co., 178 Ill. 64; State v. Sheets, 26 Utah 105, 72 Pac. 334; Cochran v. United States, 157 U. S. 286, and Fidelity & Deposit Co. of Maryland v. Commomvealth Trust Co., 119 N. Y. S. 598, justify this contention.

Defendants therefore conclude that the obligation, whatever it may have been, assumed by plaintiff under the guaranty of June 4, 1930, created a liability which was covered by the provisions of the prior writing. The contention is plausible but not persuasive. Even if we assume that the writings executed at the opening of the account of Kesner with defendants in 1926, which was afterward closed, were given new life and validity when another account was opened, it would by no means follow that the construction of these writings for which defendants contend should be accepted as expressing the intention of the parties. The subject matter of the writings was in essence distinct and different. The first writings concern the obligations which plaintiff assumed as principal. The writing of June 4 concerns a relationship entered into which was that of an accommodation guarantor whose contingent liability was assumed without compensation. A guarantor who assumes such obligation voluntarily and without compensation is a favorite of the law. Gunsul v. American Surety Co. of New York, 308 Ill. 312; Grinnell Realty Co. v. General Casualty & Surety Co., 253 Mich. 16. Such an accommodation guaranty will be liberally construed in plaintiff’s favor. Baker v. Peterson, 300 Ill. 526; Marks v. Knofsky Co., 233 Ill. App. 293; Mathes v. Steivart, 249 Ill. App. 558; Schiff v. Continental Nat. Bank & Trust Co., 255 Ill. App. 333. That the first writings were intended to be limited to the personal obligations of-plaintiff appears from the opening paragraph of defendants ’ Exhibit 2, which has already been recited. That agreement concerned only personal accounts of Kesner with defendants which then or thereafter existed. As to the phrase “all lia-' bilities,” it is. also to° be noticed that these general words follow a particular description and therefore are properly to be construed as limited to such kind of obligation as was particularly described. Chicago Union Traction Co. v. O’Connell, 224 Ill. 428; 13 Corpus Juris 537, par. 501.

Again, the form used for the guaranty of June 4 was a printed form prepared by defendants and will, therefore, in case of ambiguity, be construed against defendants and in favor of plaintiff.

In view, therefore, of the fact that the writings of 1926 by their express terms are limited to the personal obligations of Kesner, in view of the rule of ejusdem generis applicable thereto, and in view of the nature of the obligation assumed by the conditional guaranty of June 4, 1930, which must be strictly construed in plaintiff’s favor, we hold that the phrase “all liabilities, however and whenever arising,” is not applicable to the guaranty of June 4, 1930.

The question to be decided therefore depends alone upon the proper construction of this letter of plaintiff dated June 4, 1930. The uncontradicted evidence shows that after the execution of that guaranty, defendants without the knowledge and consent of plaintiff made a number of sales of the Leopold securities which are described in the guaranty. The guaranty is by its terms upon the express condition that there are to be no “additional trades” of any kind, nature or description without the consent of the guarantor. Defendants say that these were not “additional trades” within the meaning of the guaranty. They say that these were “rather the enforcement of lien rights against the stock in the Leopold account which defendants, as pledgees, possessed in respect of purchase transactions occurring prior to June 4, 1930.” They point out the different relationships of agent, creditor and pledgee which the stockbroker sustains toward his customer as set forth in Markham v. Jaudon, 41 N. Y. 235; Richardson v. Shaw, 209 U. S. 365, and Brewster v. Van Liew, 119 Ill. 554.

No evidence was offered tending to show that the phrase “additional trades” by reason of a custom or otherwise had any well defined, special meaning. The construction for which defendants contend is inconsistent with the context of the writing which specifically states, “and that I have full authority to sell and handle and dispose of anything in the account from this date as I may see fit until such time as this guarantee shall be terminated.”

We therefore hold that these sales which were made without the consent and authority of plaintiff violated the condition upon which the guaranty was made and prevented any obligation on the part of plaintiff to pay the debts of Leopold arising thereunder. There is a suggestion that there is some evidence tending to show that the condition was orally waived, but even if we might regard such a waiver as valid the verdict of the jury precludes us from holding that such waiver was ever made.

It is further averred that the declaration alleged a malicious conversion; that malice was therefore the gist of the action; that there was no evidence tending to show malice and that the motion of defendants in arrest of judgment should have been granted for that reason. Defendants cite Seney v. Knight, 292 Ill. 206; Greener v. Brown, 323 Ill. 221; Brown v. People, 237 Ill. App. 537, and similar cases.

The sale of the stock of one person, a customer, to pay the debts of another customer would seem to be about as clear a case of conversion as could be well imagined. The fact, if it were a fact, that defendants supposed they had a legal right so to do, would hardly change the nature of the transaction. The authorities upon which defendants rely are cases construing the Insolvent Debtors’ Act, Cahill’s St. ch. 72, ¶ 4 et seq., and the distinction between the ordinary use of the word “malice” and its use in that act as set forth in these cases was pointed out in Scanlon v. Whalen, 249 Ill. App. 19, where practically all of these cases are reviewed. Malice in the ordinary legal sense does not necessarily include as an indispensable element ill will or haired. London Guarantee & Accident Co. v. Horn, 206 Ill. 493. Malice is a conscious violation of the lawful right of another to his prejudice. Schonwald v. Ragains, 32 Okla. 223, 122 Pac. 203, 39 L. R. A. (N. S.) 854; Wilson v. Lapham, 196 Ia. 745, 195 N. W. 235. Within this meaning the facts as found by the jury establish malice with persistence therein.

We think the judgment just, and it is affirmed.

Affirmed.

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

      ‘ ‘ * (The words within parentheses are stricken out, and the words in the left-hand margin are in pen and ink handwriting.) ”