text:
    W. B. McKinley et al. v. C. L. Smith, Receiver, et al.

      Corporations—Receiver—Rights of Creditors—Priority—Trust Deed to i'Secure Bonds—Judgments—Fixtures.

    Upon a bill filed by a stockholder to secure the appointment of a receiver and determine the rights of the creditors of a corporation in order of priority, it is held: That certain judgments are entitled to priority, as to the real estate and fixtures, over a trust deed given to secure an issue of bonds which had not been sold; that certain creditors had not accepted bonds in payment of their claims; that the conditions upon which the bonds were to be accepted had failed; that certain of the bonds which were hypothecated are entitled to priority subject only to the prior liens of the judgment; and that, as between the parties, the trust deed will be taken as indicating what are and what are not fixtures.

      [Opinion filed June 25, 1888.]
    Appeal from the Circuit Court of Champaign County] the Hon. C. B. Smith, Judge, presiding.
    Mr. H. W. Beardsley, for appellants.
    Mr. J. L. Ray, for First National Bank and H. H. Harris.
    Mr. J. S. Wolf, for Wm. L. Scott.
   Pleasants, P. J.

The bill herein was filed November 1, 1884, by James B. Scott, a stockholder, against the Champaign Sugar Company, alleging its insolvency and the exposure of its assets to the danger of waste, with particulars justifying the prayer for a receiver, and for the conversion of its means and payment of its creditors, as far as could be made, according to their respective rights. It was taken pro confesso and decree thereon entered, appointing a receiver and referring the cause to a special master to take proofs and report its liabilities in order of priority. Intervening petitions were filed by the creditors, testimony taken and report made as ordered, on which a final decree was rendered. The record is brought here on appeal taken by divers of these creditors, the controversy being upon the order of precedence of their respective claims as fixed by said decree.

The business of the company was the raising of sorghum cane and the manufacture of sugar and syrup therefrom. For that purpose it had rented large tracts of land. In the spring of 1884 it was heavily indebted, among other things, for rent and for labor done with reference to the coming crop, the benefit of which it was liable to lose for want of means to pay what was due and prosecute the work to the harvest. About two-thirds of its indebtedness was in the form of notes held by members of its board of directors, respectively, in their individual capacity, namely, Geo. W. Gere, G. C. Willis, Alexander Strong, Geo. F. Beardsley, M. E. Lapham, H. H. Harris, J. B. Arnold and W. B. McKinley. Harris was cashier of the First Rational Bank of Champaign, and held a note of the company for $5,000, payable to him as cashier, and the claim really belonged to the bank, as the directors well knew. It also held a note for $605.21, as assignee of Robinson and Burt, machinists, who had furnished material and performed labor for the improvement and equipment of the company’s factory. Among the creditors on open account was John G. Clark, to whom the company owed about $3,000 for cane furnished to it in 1883.

The stockholders having declined to make further advances) and all other means resorted to for raising money having failed, the board of directors, on May 28, 188Í, ordered that the president and secretary “ issue fifty bonds of $500 each, payable to the bearer, to be dated May 1, 188Í, due in five years, bearing interest at six per cent. per annum, and that they also execute and acknowledge a trust deed upon the plant and fixtures and personal property of the company, the bonds to be sold at not less than 92 cents on the dollar and the proceeds to be used in the payment of the indebtedness of the company.” It was further provided that the bonds and trust deed should be delivered to a committee of three to be by them delivered to a permanent committee of two, composed of McKinley and Beardsley, who should endeavor to negotiate them. They were prepared and delivered accordingly. J. W. Langley, lately a director and still a small stockholder, being named as grantee in trust in the deed.

On the night of the 29th June, he went east to sell them. There had been some talk among the members of the board, and also by president Gere and by the committee, or one of them, with Clark, about allowing creditors to take these bonds at ninety-two per cent for their claims; and ata meeting of the board on the evening before, a motion was carried “ that those holding notes of the company be permitted to exchange them for bonds at ninety-two per cent, of their face value, and that the committee be instructed to make the exchange.

It is claimed by appellants, and there is evidence tending to show, that at this meeting and after the motion was adopted, Harris, Gere, Willis, Strong and McKinley said they accepted or would accept bonds at that rate for their notes, and told McKinley for what he might sell them on their account; and that Clark also, before then, said to Mr. Gere, and on that night to Beardsley, that he accepted six of these bonds at that rate for his claim, and that McKinley might sell them for what he could get, as low, if need should be, as 80 cents.

It appears, however, that no notes were then surrendered or account receipted, nor were any bonds delivered to or set apart for either of these creditors or for any other; and if these directors then acquired any right, as creditors, to any of these bonds, by virtue of such acceptance, they waived and relinquished it by their action of July 18th following, a hereinafter stated. But a principal question involved is whether Clark thus acquired a right to six of the bonds with the security of the trust deed.

The master found that this arrangement to pay his claim in full with these bonds, if made, was a fraud upon the rights of other creditors, and the Circuit Court approved this finding.

We apprehend this was a mistaken view of the matter. Unquestionably the arrangement mentioned would have been a departure from the original intention, and might have been prejudicial to the interests of other creditors, as contemplated when the bonds and trust deed were ordered to be executed. But it is to be observed that creditors were not parties to the deed nor intended to be. The cestuisque trust were the bondholders. Hone of the bonds had yet been sold. If they had been the proceeds would have belonged to the company. It could have disposed of them in a manner different from that originally intended, if it saw fit. It might have paid Clark m full, without wrong to other creditors thereby postponed or left unpaid. Ho disposition of them would have affected the rights of the bondholders—the only parties having any rights under the deed as against the company. So, until sold, the bonds themselves belonged to the company, and ' for the same reason it could dispose of them in a manner different from that originally intended. It could use them, as it might have used the proceeds, in the payment of a preferred debt or debts. Creditors had.no vested right in the original order for the execution and disposition of these securities.

But we reach the same conclusion upon the question of priority of Clark’s claim, by finding, as we do from all the evidence, that he did not, in fact, acquire a title to any bonds. While it was testified that he said he accepted six of them unconditionally, we think the proof is that though no condition was expressed, it was his intention and the understanding of the board, that upon the assumption of a sale to be made without delay, he would accept the proceeds of six, to be charged to him at 92 cents on the dollar of their face value, and not that he would take the bonds themselves with the risk of failure to sell them. This risk was not referred to in either of the conversations with him about taking bonds—a fact which indicates that no such thing was contemplated, or at least that it was understood he took none. His claim was due. He had been pressing for his money. He had declined president Gere’s pro position to take the company’s note bearing interest at eight per cent., because he needed money so much that he would submit to a considerable sacrifice to get it. He knew the company was embarrassed. It was not probable, therefore, that he would take the risk of holding them five years, with interest at six per cent., for the chance of selling them in Hew York or elsewhere even at 85 cents. The understanding with him was the same as that with the note-holding directors—that the bonds were to be sold without delay, if possible, in which case they would take the proceeds of so many as would pay their respective claims at 92 cents, whatever those proceeds might amount to. Ho bonds were delivered or set apart to either of them, no note was surrendered or credit given by either of them. It was all upon condition that the bonds would be sold for not less than the rate agreed on. The bank held judgment notes for over §6,000. Harris represented it, as cashier. It is not a bank’s or cashier’s way to surrender such claims for five year bonds bearing six per cent, interest if there is doubt about making sale of them. And as Harris did, and intended, so did they all.

McKinley took the bonds to Hew York but failed to effect a sale at any price. A like effort was made in Chicago with a like result. He returned on the 15th or 16th of July, bringing back the bonds and reporting his failure. The arrangement intended for the payment of these note-holding directors and Clark was thus ineffectual, and therefore abandoned, at least, for a time. At a meeting of the board on the evening of the 17tli, it was proposed by the committee to hypothecate sixteen of these bonds at fifty per cent, of their face value, to secure loans for six months to meet their pressing necessities. Harris opposed this proposition, not because the original scheme was not a recognized failure, but because this would not, in his opinion, be dealing honorably with the other creditors. He thereby, in effect, gave notice to the board that th ough a majority vote in its favor might bind him as a member, neither the bank, nor he, as its agent, would be a party to, or bound by it. If they proceeded to adopt it, they would do so subject to his and its right to avail themselves of all lawful means for the security of their claims. The meeting lasted until after midnight and the proposition was then defeated. At another, however, held on the afternoon of the next day, in the -absence of Harris and two other members, the motion was renewed by Beardsley and carried, with the furth er provision "that the bonds remaining in the hands of the committee, after taking out the $8,000; and except such as had been sold, if any had been sold, be held for all of the creditors of the company at July 18th, and that if any sales be made the amount realized on the same be paid fro rata to such creditors.” This would seem to show, and it is admitted, that the directors who held notes were not then claiming, for themselves or against any other, that they had title to any of the bonds and that their notes were thus paid. It shows, further, they did not understand that any had been sold to Mr. Clark and the debt to him thereby paid. Clearly they did not propose to insist that he should be charged with them at 92 cents. This motion was mide by Beardsley, who testified to Clark’s unconditional acceptance in June, and yet it ivas manifestly intended to let him determine, now that the attempt to make a sale had failed, whether it was or was not intended to be conditional upon the success of that attempt.

For these reasons, we think, it was so intended by him and understood by the board.

In the forenoon of the 18th of July, after this discussion and temporary defeat of the plan of hypothecation, and before the proposition was renewed and carried and also before the trust deed was filed for record, Harris took judgment by confession against the company in favor of himself and of the bank, respectively, upon the judgment notes before mentioned. The master regarding all the creditors whose claims accrued before May 28, 1884, as eestuis que trust, treated these judgments as subject td' the lien of the deed, because Harris, and the bank through him, had actual notice of it, but the Circuit Court held them to be the prior liens upon the real estate and fixtures.

For the reasons already given we concur with the court upon this point. If the experiment contemplated by the deed or by any plan for the disposition of the bonds or their proceeds to which Harris had agreed or submitted, had been still pending, good faith would have forbidden the taking of these judgments. But no rights had become vested under the deed. Nobody had taken or was expected to take a bond upon any terms that had been prescribed. The absolute necessity of some further and material modification of those terms or of resorting to some other method for raising means, was fully recognized. Neither the bank nor any other creditor, though advised of what had been proposed and attempted by the board, was bound to wait indefinitely for further experiments, but was at liberty to proceed as if no deed had been made.

No execution having been issued thereon these judgments were not liens upon the personal property described in the deed. Question is made, as to what was personal property and what fixtures. Consisting of machinery used in connection with the building, it is difficult for us to determine, from the evidence in the record describing the several items, how to classify them. We are inclined to think the master’s findings in reference to them,"approved and adopted by the decree, were not correct in some instances—the fanning mill, for example, and perhaps others. But we see no inequity in holding everything as personalty that was declared by the deed to be such, as against the judgments, not because the deed is at all operative as an incumbrance prior to the judgments, but because Harris had thereby recognized those articles and machines as personal property. The intention of the board, thus manifested, to treat them as such, ought certainly to be regarded as a very weighty, if not a controlling, circumstance in fixing their character.

The sixteen bonds having been hypothecated upon the security of the trust deed, in pursuance of the resolution of the, board, the holders of those bonds should have the benefit of that security, subject only to the prior liens of the judgments, that is, should be first paid out of the proceeds of the real estate and fixtures remaining, if any there shall he, after payment of the judgments, and first of all out. of the proceeds of the personal property. They have the first lien upon the latter, and the next after the judgments upon the former.

Except as above indicated to the contrary, the decree of the Circuit Court will be affirmed.

Affirmed in part, reversed in part, and remanded, with directions to modify the decree in accordance with this opinion.


source: Caselaw Access Project

author: Pleasants, J. Pleasants, P. J.

license: Public Domain

text:
    Darwin C. Miner, for use, etc., v. Davidson Reed et al.

      Action on Replevin Bond—Barties—Former Adjudication—Minority of Principal—Suggestion on Record—Practice in Justice Court—Fraud— Judgment—Impeachment Collaterally—Ax>peal—Rehearing—Practice.

    1. In an action on a replevin bond, it is held: That a record showing a judgment for the defendants in a former suit, brought by the plaintiff upon the same bond against the sureties only, was competent to sustain a plea of former adjudication in an action against all the obligors, as it appears from said record that the principal was omitted because a minor; that on appi al from the Justice the suggestion of the minority of the principal on the record was the proper practice; and that a replication to the plea of a former adjudication does not set out such a case of fraud on the part of the defendants as would be sufficient to avoid the judgment in question.
    2. In suits before Justices, and on appeal from their judgments, no written pleadings being required, effect is given to all evidence that would be admissible in a court of record under any proper pleadings;
    3. An objection based upon an alleged variance between the pleadings and proofs, can not be first raised in this court.
    [Opinion filed June 25, 1887.]
    In error to the Circuit Court of Jersey County; the Hon. Gr. W. Herdman, Judge, presiding.
    Mr. Joseph S. Carr, for plaintiff in error.
    Messrs. Hamilton & Slaten, for defendants in error.
   Pleasants, J.

This action was brought on a replevin bond given by defendants in error to Miner, the Constable, who executed the writ in the suit of Heed against Wiggins. The breach assigned was, that though Wiggins had judgment for a return of the property it was not returned, but was eloigned by Heed and converted to his own use. There were several issues joined, but the defense was successfully made below upon the plea of a former adjudication. The court instructed the jury to find for the defendants, refused a new trial and entered judgment upon the verdict so found, on which, plaintiff sued out this writ of error.

From the records, files and evidence introduced under the plea mentioned, it appears that the plaintiff in error had brought suit upon this same bond against the sureties only, Dowdall and Darby, before a Justice of the Peace, in which the Circuit Court, on appeal, at first admitted the bond, hut afterward, upon evidence that certain erasures and interlineations (not properly shown by this record) were made after its execution, withdrew, it, whereupon plaintiff got leave to amend his writ by striking out the words, “Darwin C. Miner, who sues for the use of,” and then offered it as a spoliated bond (whatever may be meant by such an offer), hut it was again excluded by the court and a verdict was returned for the defendants, on which judgment was duly entered.

The plea of former adjudication, with the others, was filed In the case under the title of “Darwin C. Miner, who sues for the use of John Wiggins, v. William L. Dowdall and John C. Darby/3 and averred that “the plaintiff33 heretofore impleaded “the defendants/3 etc., and that the suit was upon the same bond in the declaration mentioned and for no other cause of action whatever.

A demurrer to this plea having been overruled, plaintiff replied, 1, mil tiel record, and 2, a traverse of the alleged identity of the cause of action, on which issues wore joined. Upon the trial of these he objected to the records and files in the former suit, when offered by defendants in connection with oral testimony to the identity of the bond, but the court admitted them.

The ground ¡of objection here urged is alleged variance between the allegations and proofs, both as to parties and cause of action, but this can not avail him because it was not specifically brought to the attention of the court below, according to the rule declared in St. Clair Co. Ben. Soc. v. Fietsam, 97 Ill. 474, 480, and other eases. The general objection," however, does raise what we regard as the only question of importance presented by this record, namely, its competency.

Treating the plea as a good plea of a former judgment, in bar, we are of opinion these records and files were not competent evidence upon the issue on trial. They showed that the suit was brought before a Justice of the Peace and without written pleadings, but that it was against Dowdall and Darby only, on a joint and several bond executed by them and Reed. The pleading, in such a case, being determined by the evidence, it is as if plaintiff had declared on the bond offered, alleging’ its execution by Reed also, but showing no reason why he was not joined as a defendant. The pleading, therefore, did not state a case on which he could lawfully have judgment against the defendants, and the defect was such as could he reached by a motion in arrest, as well as by demurrer, or on error. A plea of non-joinder in abatement was not necessary. Cummings v. People, 50 Ill. 132, and cases there cited.

And since a judgment for the plaintiff could not have been lawfully rendered because of such defect in the pleading, whatever may have been the proof, the judgment for defendants is not a bar to another action upon the same bond with proper parties and allegations. Smalley v. Edry, 19 Ill. 207.

The fact that plaintiff had no legal cause of action against the two sued, and it was so adjudged, would have no tendency to prove that he had none upon the same instrument against one or all three of the obligors. That is all this evidence proved, all that the judgment could prove, and what the court ruled in reference to erasures or interlineations in the bond, or upon other interlocutory questions arising on the trial,.is not res adjudioata. It was therefore error to admit this evidence.

In this view it is unnecessary to pass upon the sufficiency of the third replication to said plea, setting up fraud in procuring the judgment referred to.

For the error indicated the judgment of the Circuit Court herein is reversed and the cause remanded.

Reversed and remanded.

On petition for rehearing.

[Opinion filed June 25, 1887.]

Pleasants, P. J.

Upon petition by defendants in error for rehearing, our attention is called to a fact appearing in the record introduced to sustain the plea of former adjudication, but somehow overlooked, which is decisive against the conclusion we formerly reached.

We held that record incompetent for the reason stated— that it showed a judgment for the defendants in a suit brought by plaintiff in error against Dowdall and Darby only, upon this same bond, which is executed by Keed also, without showing any reason why he was not joined. Such a judgment, without such reason, would be no bar to another action against all the joint obligors.

We adhere to that opinion notwithstanding the argument presented in this petition. Our position was that without anything in the record or other evidence to show that Heed was an infant, it could not be presumed he was, or that plaintiff claimed he was, and therefore omitted him. In other words, the claim would not be presumed to have been broader than the case as presented by him. It is true that in suits before Justices of the Peace, and on appeal from their judgments, no written pleadings being required, effect will be given to all evidence that would be admissible in a court of record under any proper pleadings. But if evidence for the plaintiff is wanting the court could not properly find or adjudge as if it had been presented, nor could any possible pleading on his side supply the defect.

We supposed that such was the case here, but in this, it appears, we were mistaken. The record offered and admitted shows the following minute entered by the court before the trial: Minority of the principal in the bond sued upon, Davidson Peed, suggested.55 This, we think, was proper practice in such a case (1 Ch. Pl. 43) and made the record competent evidence of a former adjudication.

It thus becomes necessary to pass upon the sufficiency of the third replication to that plea, to which a demurrer was sustained and which is as follows: 6C And the plaintiffs, for further replication to the plea of the defendants by them thirdly above pleaded, say, plaintiffs precludi non, because they say that upon the trial of said cause in said Circuit Court of Jersey County, Illinois, when and wherein the judgment mentioned and set forth in and by said plea was by said court rendered, said defendants well knowing the truth in that behalf and that to maintain their issues therein, the plaintiffs therein and herein would be required to aver and maintain the validity and due and proper execution of the writing obligatory herein sued on, and mentioned and set forth in and by plaintiffs5 declaration herein filed,- with intent to defraud, the then and now plaintiffs did, upon said trial, produce and cause to be sworn and examined therein witnesses who testified that certain erasures and interlineations, then and now appearing upon the face of said writing obligatory, were therein and thereon made after the signing of said writing obligatory, by means of which testimony they, the defendants, then and there upon the said trial, procured an order of said court to be made whereby said writing obligatory was excluded from the consideration of the jury, when in truth and in fact the defendants then and there well knew that such erasures and interlineations so then and now appearing, viz., on the face of said writing obligatory, was not and were not made after the signing of the same by the defendants, but was made and were made theretofore, and the plaintiffs aver that by reason thereof and for none other, said judgment was rendered, and so the plaintiffs say that by means of the premises aforesaid the said defendants did then and there by their fraud, obtain and procure the said judgment to be entered in and by said court, wherefore they pray judgment if,” etc.

If a judgment may be collaterally impeached for fraud of the party in obtaining it, as we incline to think it may, we are of opinion that this replication does not set forth such a case of fraud on the part of the .defendants as would be sufficient to avoid the judgment here in question. It does not aver or imply that the witnesses referred to were corrupt, much less that they were corrupted by the defendants, nor even that the defendants knew, when the witnesses were introduced, just how they would testify. It must be presumed they were honest. They must have testified from personal knowledge, according to their best recollection, and been subjected to the usual and proper tests. It does not appear how the defendants could know or why they should recollect the facts any better, but if they did, and believed they did, and their recollection was different, still they were not bound to contradict these witnesses nor to decline the benefit of their honest testimony.

We think the replication was bad in substance, and perceiving no material error in the record the judgment will be affirmed.

Judgment affirmed


author: Per Curiam.

text:
    St. Louis, Vandalia & Terre Haute Railroad Company v. Nicholas Hurst.

      Railroads—Injuries to Stock—Evidence—Signals—Instructions.

    1. In an action against a railroad company to recover damages for injuries to stock at a highway crossing, it is held; That it was for the plaintiff to show that the defendant caused the injuries complained of, by other evidence than the mere occurrence thereof; and that the law raises no presumption as to the effect of the omission of the usual signals.
    2. It is error to give an instruction having no basis in the evidence.
    [Opinion filed July 2, 1887.]
    Appeal from the Circuit Court of Clark County; the Hon. James F. Hughes, Judge, presiding.
    Messrs. John G. Williams and T. J. Golden, for appellant.
    Messrs. Whitehead & Jones, for appellee.
   Per Curiam.

In the court below, on appeal from a Justice of the Peace, appellee obtained judgment on verdict for 858 against appellant for killing one cow, crippling another and also a hog, belonging to him, by its freight train going east on the morning of July 26, 1885.

He charges that the statutory signals by whistle and bell were not given, and that the train hands ought to have seen the stock in time to stop. The cows approached the track from the north by a lane, and were struck on the crossing. It is not denied that the right of way was clear to the crossing, until the train was too near to be stopped before reaching it.

The engineer and fireman say they did not see them until they were coming up the approach or embankment, 150 or 200 yards from the engine, and that every effort then possible was made to prevent a collision. And it is by no means clear that they ought to have seen them before they came upon the right of way, for, though the description of the locality is not very definite in the testimony, we understand from it that there was iE something of a grove” between the track west of the crossing and the lane, which at that leafy season and with the fence may have prevented it from many points of observation from the train, and they were not bound to be look’ng at every moment, to the lane. But had they seen them coming down the lane, that fact would not have required them, in the exercise of proper care, to stop or slow the train. It would have furnished no reason to suppose the cattle would continue to come on and attempt to cross the track immediately before the train.

In relation to the signals there was the usual conflict of evidence. The train hands were positive they were given, and the plaintiff’s witnesses didn’t hear them. It was for the jury to determine that question. But the trouble with the case is that if they were not given, there is not a particle of evidence in the record, that we can discover, which tends to show that this omission was the cause of the injury. It may have been, and, so far as the proof shows, it may as well not have been; either finding must be the merest guess. Ho intelligent reason can be assigned for anything like confidence in either. Here was a heavy train of twenty-eight cars. When the cows1 emerged from the lane upon the right of way, if not before, they must have heard and seen it, coming to cross the line on which they were going. If the sight and sound of its motion, so near and in such direction, did not arrest or hasten theirs so as to avoid the collision, with what reason can it be said or thought that the whistle sounded a quarter of a mile away, and the continuous ringing of a hell on the engine, added to the racket, would or would not have produced such an effect t We have now come to know, judicially, that cattle on a highway, approaching a railroad crossing, will sometimes be arrested or frightened back by the sight and sound of a coming train, and sometimes will not he by the whistling and ringing in addition. The law raises no presumption as to the effect of the ora ission of these signals. It was not for the defendant to show it did not cause the injury but for the'plaintiff to show affirmatively that it did. The occurrence of the injury does not tend to show it. This rule, requiring such proof apart from the mere injury itself, has been so often declared that we refrain from citations.

In this case, so far as relates to the cows, we think it was not made, and that the instruction given to the jury upon that hypothesis was without foundation in the evidence. The judgment will therefore he reversed and the cause remanded.

Reversed and remanded..


author: Pleasants, P. J.

text:
    John Schweyer v. F. Oberkoetter.

      Practice—Pleading—Error without Prejudice—Intoxicating liquors— Dealer in—Negotiable Instrument—Assignment.
    1. Where a judgment has been set aside and the defendant, under a leave to plead to the merits only, files a good dilatory plea, the sustaining of a demurrer thereto is not such error as will reverse.
    2. A discontinuance after verdict, as to one of two defendants sued jointly, is merely an amendment and does not entitle the other defendant to plead in abatement.
    3. ‘ The assignment of a due bill payable in whisky or wine does not make the assignor a dealer in intoxicating liquors.
    [Opinion filed July 2, 1887.]
    Appeal from the Circuit Court of McLean County the Hon. O. T. Reeves, Judge, presiding.
    Messrs. Kebbick, Lucas & Spencer, for appellant,
    Mr. John T. Lillard, for appellee.
    Appellant claims the discontinuance as to his co-defendant made the cause a new suit as to him alone, the same as if he had been originally sued alone in McLean County and served in Cook County. There are two grave mistakes in his claim: First, it was not a new suit. Ill. Stat. Chap. 10, Sec. 2 and 24, last sentence; Thomas v. Fame Ins. Co., 108 Ill. 91; Teutonia Life Ins. Co. v. Mueller, 77 Ill. 22; Dickson v. C., B. & Q. R. R. Co., 81 Ill. 215; Cogshall v. Becsley, 76 Ill. 445; Haynie v. C. & A. R. R. Co., 9 Ill. App. 105 ; Graham v. Fulford, 73 Ill. 596; U. S. Ins. Co. v. Ludwig, 108 Ill. 514; Black v. Womer, 100 Ill. 328.
    Appellant, regardless of whether the original summons to him, or the manner or place of its service upon him, was regular and proper, or defective, irregular and void, had submitted himself and his cause to the jurisdiction of the court and wras estopped by his own voluntary acts (to use the language of the statute), by “appearing and defending,” not jointly with Welch, but by his own separate and individual pleas and evidence, the merits of his indebtedness to appellee.
    Having entered his appearance and submitted to the jurisdiction of the court below, he is, according to the repeated decisions of our Supreme and Appellate Courts, as effectively bound by its proceedings and judgment as if he had resided in and had been served in McLean County. Herkimer v. Sharp, 5 Ill. App. 620; Bangor Furnace Co. v. Magill, 108 Ill. 656; Mix v. People, 106 Ill. 425; Mineral Pt. R. R. Co. v. Keep, 22 Ill. 9; Dunning v. Dunning, 37 Ill. 306; Mitchell v. Jacobs, 17 Ill. 295; O'Brien v. Haynes, 61 Ill. 494; Swift v. Lee, 65 Ill. 336; Fonville v. Monroe, 74 Ill. 126; Protection Life Ins. Co. v. Palmer, 81 Ill. 88; Lawrence v. Jarvis, 32 Ill. 304; Baldwin v. Murphy, 82 Ill. 485; Hibbard v. Holloway, 13 Ill. App., 101; Martin v. Judd, 60 Ill. 78; Long v. Trabue, 8 Ill. App. 132; Knott v. Pepperdine, 63 Ill. 219.
    The only object of the Federal statutes, requiring dealers in liquor to take out license, is to impose a penalty on the party offending for the purpose of revenue, and not to vitiate a contract of sale, nor to protect the public, nor to promote public policy. Even if the sale was one which was tainted with illegality, the point could only be made against the wrongful vendor and not against the vendee, Oberkoetter. But as the revenue law, which it is claimed was violated, was not to protect the public, nor a police regulation, but for revenue only, it would not affect or vitiate a sale of liquor by an unlicensed seller. Benjamin on Sales, 3d Edition, § 530 et seg. and notes; Larned v. Andrews, 106 Mass. 435; Smith v. Mawhood, 14 Mees. & W. 452; Aiken v. Blaisdell, 41 Vt. 655.
    In no sense did Welch deal or traffic in intoxicating liquors by selling the negotiable note in question to appellee payable in wine or whisky. Our statute, Secs. 3 and 4 of Chap. 98, makes this note a negotiable instrument, though payable in an article of personal property. Being negotiable, the legal effect of the note was that appellant would pay to the payee, Welch, or to Oberkoetter, or to any other person as Welch’s assignee of the note, the wine or whisky therein named. By the act of negotiating and transferring the note Welch sold, not whisky, but the paper or obligation to pay. If Oberkoetter sues Welch he can not, on this note, declare for wine or whisky, but for the money demand named in the note, $175. The suit at bar on this note is not and could not be for the personal property named in the note, but for the 8115 named in the note. In the language of our Supreme Court, “ the sum expressed indicates the true amount of the debt; the other provision is inserted for the benefit of the debtor and relates exclusively to the mode of payment. If he does not avail himself of the privilege of discharging the debt in property the obligation becomes a naked promise to pay the amount in money.” Smith v. Dunlap, 12 Ill. 184; Vanhooser v. Logan, 3 Scam. 389; Bilderback v. Burlingame, 27 Ill. 338; Schnier v. Fay, 12 Kan. 184.
   Pleasants, P. J.

Judgment below was for plaintiff, appellee, on verdict for $175. The record presents no question affecting the merits, but several technical points of practice only.

Appellant, a liquor dealer residing in Chicago, delivered to Jeremiah Welch, of McEean County, his due bill, as follows:

“Chicago, Sept. 26, 1885.
“Due Jeremiah Welch $175, to be taken out in whisky or wine, at any time. John Sohweybb.”

Welch assigned it to appellee with the following agreement indorsed: “In assigning this note to F. Oberkoetter, I hereby agree to be holden as, and assume the liability of, a surety or joint maker of the above note.”

Appellee sued them as joint makers in assumpsit, upon a special count averring demand and refusal of the wine or whisky and the common counts, in the Circuit Court of McLean County. Process was personally served upon each of the defendants—Welch in McLean County and appellant in Cook. Both were defaulted for want of appearance and judgment thereon rendered against them. At the same term appellant afterward appeared by counsel and asked to have the • default and judgment as to him set aside and for leave to plead, which was granted upon condition that he plead to the merits only. Thereupon he filed four pleas: 1. General issue; 2. Hot jointly liable with Welch ; 3. Failure of consideration; 4. That Welch had no license to deal in intoxicating liquors.

Demurrer was sustained to the second and fourth, and issues were joined on the first and third, which the jury found for the plaintiff. Defendant Schweyer entered his motion for a new trial. On plaintiff’s motion the default and judgment taken against Welch was set aside and the suit discontinued as to him. Thereupon the defendant Schweyer in person moved the court for leave to plead in abatement that he was not a resident of nor served with process in McLean County, which was refused. The motion for a new trial was then also overruled and judgment entered upon the verdict against him.

He assigns for error that the court sustained the demurrers to his second and fourth pleas and denied his motion for leave to plead in abatement after verdict.

We see no vice in the second plea which would expose it to a demurrer. But under the circumstances appellant had no right to file it. It was in violation of the terms on which his default was set aside, for, though not technically in abatement, it was dilatory and not to the merits. The more correct practice, therefore, would have been to strike it from the files, bnt since the effect was the same the action taken by the court to produce it, though in strictness error, will not reverse the judgment. It did no harm to appellant; besides, the joint liability was not insisted on. The judgment was taken against him alone.

We think the fourth plea was had. The assignment of the note by Welch was in no proper sense a dealing by him in intoxicating liquors. He had the right to receive payment in them, and the right to transfer that right evidenced by a negotiable instrument to his creditor.

Leave to plead in abatement asked after verdict upon issues nor pleas in bar, was rightly denied. Such a practice is wholly unknown, and the only ground on which the right was here claimed is that the discontinuance, as to Welch, after verdict made a new suit, in which there had been no verdict cn plea. We hold it was an amendment only, expressly provided for by section 24 of the Practice Act, and that its allowance was proper and of itself, as proof, conclusively established the identity of the action.

Judgment affirmed.


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    Town of Salt Creek v. Commissioners of Highways.

      Highways—Commissioners—Penalty for Neglect of Duty—See. 89, Boad and Bridge Act.

    Commissioners of Highways are invested with some discretion as to the time when to require the removal of an obstruction in a highway. They will be liable for the statutory penalty only for a wilful neglect of duty.
    [Opinion filed July 2, 1887.]
    Appeal from the Circuit Court of Mason County; the Hon. Cyrus Epler, Judge, presiding.

      Mr. I. R. Brown, for appellant.
    Mr. T. N. Mehan, for appellees.
   Pleasants, P. J.

This action was commenced before a Justice of the Peace and appealed to the Circuit Court, where a verdict was found and judgment entered thereon for de- ' fondants, appellees. It was brought to recover a penalty for alleged neglect to perform a duty enjoined by the Road and Bridge Law.

Sec. 89 of that act, (Starr and Curtis’ Statutes, Yol. II, p. 2163) declares that, “if the Commissioners of Highways shall refuse or neglect to perform any of the duties enjoined on them by this act, they shall severally forfeit not less than $10, nor more than $50, and may be proceeded against severally or jointly for the recovery of such forfeiture before any Justice of the Peace in the proper county having jurisdiction.” Sec. 67 of the same act is in the same terms except that it omits the words, “ of Highways,”after “ Commissioners,” contains the word “wilfully” before “neglect,” and the words, “in the name of the town,” after “ proceeded against.” ■

Sec. 71 prescribes penalties for obstructing a highway, among other ways, by leaving the cuttings of hedges thereon for more than ten days “ and in case of placing any obstruction on the highway an additional sum of not exceeding $3 per day for every day he shall suffer such obstruction to remain after he has been ordered to remove the same by any of the Commissioners.”

It further provides that the Commissioners, after having given reasonable notice to the person obstructing, of such obstructions, may remove the same and recover the necessary costs of such removal from the party obstructing, to be collected before any Justice of the Peace having jurisdiction.

Along the west line of a public highway for half a mile, on land of William Allen, in the town of Salt Creek, was an old hedge, twenty or twenty-five feet high, which the Commissioners in May, 1885, ordered him to cut down. He did so, felling it into the highway and thus obstructing the west part, being about half of it. In June they directed the path-master to notify him to remove it. He saw the Commissioners in relation to it, and represented to them that on account of the pressure of his business it would be a serious hardship to be compelled to remove it then. It was green and heavy, and its removal would require considerable time and labor. The Commissioners had no means in hand with which to do it themselves.' It was not really obstructing travel on the highway, which had always been wholly on the east part outside of the fallen hedge.

"Under these circumstances they told him he might leave it for a time, unless some complaint of it should be made, and this withdrawal of the notice and the failure to renew it constitutes the neglect for which the suit was brought. He did leave it until November or December following, no complaint being made, and then removed it. In March, 1886, this action was brought, in the name of the town, but really by a party whom the Commissioners had recently prosecuted for refusing to comply with their order to him to cut down a hedge.

Upon these facts it is not strange that the jury refused to find such a neglect of duty as should subject these Commissioners to a forfeiture. We think they were invested with some discretion as to, the time when the removal of this fallen hedge by Allen should be insisted on, to be exercised in view of the hardship to him as well as the interest of the public, since they were not in condition, for want of money, to remove it themselves, and having such discretion they would be liable only for wilful neglect of duty. Eyman v. The People, 1 Gilm. 4. If these complainants felt aggrieved, why did they not proceed against Allen for leaving the cuttings on the highway more than ten days? Or, if not disposed to prosecute for the penalty themselves, under Sec. 71, why did they notenter complaint to one of the Commissioners, and so impose upon them the imperative duty to proceed at once to investigate, and, if good cause appeared, to prosecute, under Sec. 74?

But comment is unnecessary. The statement of the case, we think, justifies the verdict, and no such error is perceived in the rulings of the court as would warrant a reversal.

Judgment affirmed.


author: Conger, P. J.

text:
    H. C. Agnew et al. v. A. J. Brall.

      Municipal Corporations—Settlement of Judgment—Estoppel—Injunction.

    Upon appeal from a decree enjoining the collection of a judgment in favor of a municipal corporation, this court declines to review its decision on a former appeal.
    [Opinion filed July 14, 1887.]
    In error to the Circuit Court of McDonough County; the Hon. C. J. Schofield, Judge, presiding.
    Messrs. George D. Tunnicliff, L. Y. Sherman and H. C. Agnew, for plaintiffs in error.
    Messrs. Neece & Blazer, for defendant in error.
   Conger, P. J.

This case was before this court, and is reported in 15 Ill. App. 122. The case was reversed and remanded, and the decree of the Circuit Court having been rendered in conformity with the views of this court, it is again brought here for review.

It is insisted by appellants that they “have been very careful in drawing the amended answer and making the proofs upon the subject of “appeal,” “settlement,” and “proposition” of defendant in error to the Council, in order to remove entirely from this case the finding or statements of this court upon these subjects when the ease was here before.

¥e think, however, it is substantially the same case now, as then. Both the original and amended answers set forth and rely upon the petition for relief presented by appellee to the Council, and the action of the Council thereon. The original answer, as well as the amended one, states that the order of the Council was not made for the purpose of settling any matter with appellee in reference to the suit, nor to prevent an appeal, but that the only object the Council had in view in passing the order in question, was for the purpose of releasing appellee as a favor to appellee and as an act of clemency on the part of the Council.

The additional averments of the amended answer and the testimony of the members of the Council as to their motives in passing the order in question does not change the substantial features of the case.

Were we to enter into a consideration of the points in issue, it would be no more than a review of the former decision of this court, and this we can not do. They are in this court, res jndicata, Moshier v. Horton, 100 Ill. 63; Ogle v. Turpin, 8 Ill. App. 453; Keiser v. Cox, 16 Ill. App. 63L. The decree of the Circuit Court will be affirmed.

Decree affirmed.


author: Moran, P. J.

text:
    First District—October Term, 1887.
    James and Catherine Dempsey v. J. C. Bowen.

      Attachment—Fraudulent Conveyances to Hinder and. Delay Creditors —Dominion of Owner—Fraudulent Intent—Evidence — Conflict of— Instructions.

    1. The owner of property is not deprived of dominion over it by indebtedness, or even by insolvency. He may exchange, pledge or sell it and apply the proceeds, in his discretion, to his debts, his purchases or maintenance, even though he thereby places it beyond the reach of creditors, unless it is done with the fraudulent intent to hinder and delay creditors.
    2. The question of fraudulent intent is always one of fact to be established by extrinsic proof, and fraud is not to be presumed when, under the evidence, the transaction may be fairly reconciled with honesty, nor merely because the attaching creditors have been hindered and delayed in the collection of their debts.
    8. In the case presented, it is held: That the evidence being conflicting the instructions should have been accurate; and that an instruction, as to what constitutes a fraudulent conveyance, was erroneous,
    [Opinion filed November 23, 1887.]
    Appeal from the County Court of Cook County; the Hon. Richard Prendergast, Judge, presiding.

      Mr. John M. Jemison, for appellants.
    Messrs. Edwin B. King and F. W. Becker, for appellee.
   Moran, P. J.

This was- an attachment brought by appellee against appellants on account for goods alleged to have been sold to them on their joint credit. The ground of attachment stated was that appellants had, within two years, fraudulently conveyed or assigned their effects so as to hinder and delay their creditors. There was a plea by Catherine Dempsey denying joint liability, and a plea by both defendants traversing the allegations in the attachment affidavit. There was evidence tending to show that a bill of sale of certain horses and wagons was made by appellant, James Dempsey, to one O’FTeill, shortly before the levy of the attachment writ, and that when the writ was levied, O’Keill claimed the property under the bill of sale.

It was claimed by appellee, and he introduced some evidence tending to show, that said bill of sale was executed fraudulently and for the purpose and with the intent of hindering and delaying creditors, while appellant, James Dempsey, ■ testified that the sale was bona fide and made for the purpose of getting money to pay, in part to appellee on his debt and in part to another creditor who held a prior mortgage on the property.

There being this conflict of evidence on the attachment issue, the court, at the instance of the appellee, gave to the jury the following instruction :

“ To convey or dispose of one’s property so as to place the same beyond the reach of creditors, is, in law, a fraudulent conveyance or disposition of the property.”

This instruction was clearly erroneous, and under the evidence manifestly misleading. The owner of property is not deprived of dominion over it by indebtedness or even by insolvency. He may exchange his property for other property, or sell it and apply the proceeds, in discretion, to his debts, his purchases or maintenance. He has the right to manage, control, mortgage or pledge it, and while such sale or pledge may place the property beyond the reach of creditors, unless it is done with the fraudulent intent of hindering and delaying creditors, the transaction can not be successfully questioned by them.

When a debtor sells his property to pay a debt, or to purchase the necessaries of life for himself, such disposal of his property will not sustain an attachment for fraudulently disposing of it to hinder and delay creditors.

The fraudulent intent in such case is always a question of fact to be established by extrinsic proof, and fraud is not to be presumed when under the evidence the transaction may be fairly reconciled with honesty.

“ The creditor can not resort to a summary seizure of the debtor’s property upon mesne process from the fact alone that the debtor has, within two years, sold his property, or any part of it, or has secured some other creditor by mortgaging or pledging it, even though the attaching creditor should thereby he hindered or delayed in the collection of his debt.” Shove v. Farwell, 9 Ill. App. 256; Estes v. Fry, 22 Mo. App. 30.

FTo other instruction was given which cured the error in giving the one above set out, and even if another instruction stated the law correctly, in such a case as this, where it is at least doubtful on which side the preponderance of evidence is, we would be compelled to reverse for the giving of an instruction so injurious in its tendency. The judgment will be reversed and the cause remanded. •

Reversed cmd remanded.


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    Albert L. Sercomb v. Charles Catlin.

      Practice—Appeal and Error—Contempt Proceedings—Order—Whether Final.

    An order finding a party guilty of contempt of court, and directing him to dismiss a suit of a corporation of which he is an agent, or show cause why he should not be punished for failing to comply with t.he order, is merely interlocutory and not final for purposes of review on appeal or error.
    [Opinion filed January 11, 1888.]
    In error to the Superior Court of Cook County; the Hon. Egbert Jamison, Judge, presiding.
    On April 14, 1887, an order was entered by the Superior Court in the case of Ada S. Havens et al. v. Caleb Clapp and Thomas Davies, appointing defendant in error receiver of the estate and property, real and personal, things in action, etc., of the said Clapp & Davies, and on the same day, pursuant to the order appointing the receiver, said Clapp & Davies executed a deed of transfer of all their property and effects to said defendant in error as receiver.
    On May 31, 1887, defendant in error filed his petition in the Superior Court, setting out his appointment as receiver, that he had duly notified one Hewton, of Washington, D. C., of his appointment as such receiver, immediately upon the making of such appointment by the court; that prior to his said appointment said Clapp & Davies had consigned to said Mewton certain jewelry and silverware, to be disposed of by him for their benefit, the amount of which was over $300, and that no part of said goods had been paid for or returned to said Clapp & Davies, or to petitioner as receiver; that the Meriden Britannia Company, a corporation organized under the laws of Connecticut, has a branch office in the City of Chicago, and that the manager of said company is one Albert L. Sercomb, and that said Sercomb had full knowledge of the appointment of petitioner as receiver, but that, notwithstanding such knowledge, said Sercomb, on the 18th day of May, sued out, on behalf of the said Meriden Britannia Company, an attachment in the Supreme Court of the District of Columbia, which attachment is for an indebtedness alleged to be due said company from Caleb Clapp and Thomas Davies; that said Sercomb, as manager of said company, caused the property to which petitioner is entitled as receiver, and which is in the possession or custody of said Hewton, to be attached. Petitioner prays for an order on said Sercomb, as manager of said Meriden Britannia Company, to show cause why he should not be attached for contempt of the court in interfering with the receiver and the property of" which he is entitled as an officer of the court.
    Plaintiff in error demurred to the petition, and the demurrer was overruled by the court, and plaintiff in error electing to stand by his demurrer, the court entered an order that the petition stand as confessed, and further “ ordered and adjudged that the said Albert L. Sercomb is guilty of a wilful contempt of this court in interfering with the said receiver, and the property and effects, to the possession of which said receiver is and was entitled at the time of said interference, and that the said Sercomb do purge himself of such contempt on or before ten o’clock a. m. of Friday, June the 24th, A. D. 1887, by discontinuing and dismissing the certain attachment suit instituted by the said Albert L. Sercomb on or about the ISth day of May, 1887, as manager for and on behalf of the Meriden Britannia Company, in the Supreme Court of the District of Columbia against said Caleb Clapp and Thomas Davies, and which attachment suit is more particularly referred to in said petition by said receiver herein-before mentioned, and is the interference with said receiver, and the property and effects, to the possession of which said receiver is entitled, hereinbefore referred to. And it is further ordered and adjudged that the said Albert L. Sercomb present to this court, on or before ten o’clock a. m. of Friday, June the 24th, 1887, proof of the fact that he has complied with this order and dismissed said attachment suit; and in default of the said Sercomb complying with the said order and dismissing said attachment suit, it is further ordered and adjudged, that he show cause by ten o’clock A. h. on Saturday, the 25th day of June, 1887, why he should not be punished for having failed to purge himself of said contempt by dismissing said attachment proceedings as aforesaid.”
    The case in the Supreme Court of the District of Columbia was “ The Meriden Britannia Company v. Clapp & Davies.” From said order an appeal was prayed which was denied by the court, and thereupon said Sercomb caused a writ of error to be issued from this court, and the same was by order of the court made a supersedeas.

    Messrs. Flower, Remy & Holstein, for plaintiff in error.
    Messrs. Kraus, Mayer & Stein, for defendant in error.
   Moran, P. J.

A motion to dismiss the writ of error on ■the ground that the order of the Superior Court was not a final order was made in apt time and continued to the hearing, and now comes up for decision.

We have reached the conclusion that the motion must be granted. The order, so- far as it directs the dismissal of the attachment suit of the Meriden Britannia Company v. Clap]) & Davies, can not be regarded as disposing of the rights of the parties, for the party who has rights in that suit is in no way a party to the order.

The attachment suit is not the suit of Sercomb, but of the Britannia Company, and the company’s rights can not be said to be affected, or disposed of finally or otherwise, by the oi' der entered in a proceeding to which it was not made a party and which does not purport to bind or direct the corporation in any manner.

That compliance with the order of the court by Sercomb might deprive the company of the attachment lien, is true, but it is also true that as.the record stands it is in the power of the company to prevent the dismissal of the suit, and render the order of the court in that regard futile.

As the object of the proceeding evidently was to affect the interest of the corporation it should have been brought into the contempt proceedings in the court below. The sngge.-tion that a corporation can not be imprisoned for contení pt furnishes no reason for attempting to deal with its property rights or interest in a proceeding where it is not a party, particularly where, as in this case, the corporation is within the jurisdiction for the purpose of service. The law provides means for compelling obedience by corporations as well as by individuals. The court may coerce natural persons in one way and artificial persons in another. But we can not on this appeal consider the rights of the corporation at all, and our judgment on the merits of the order would in no manner conclude the company.

Considering the order as relating to Sercomb and to his rights alone, it amounts to nothing more than a finding that he has been guilty of contempt of the court. There is no final judgment on this finding. He is directed to dismiss the suit of the company or show cause why he should not be punished for failing to do so. He may show ample cause, but if he shall not do so, yet it can not be said that there is any final judgment against him. There is no fine imposed, no imprisonment ordered. The judgment of the court on this contempt is as yet unspoken. The order is purely interlocutory and determines nothing finally as against the plaintiff in error. It is not, therefore, subject to review on error or appeal, and it follows that the writ of error must be dismissed.

Writ dismissed.


text:
    Chicago Stamping Company et al. v. Seth F. Hanchett et al.
    Voluntan/ Assignments—■Preferences—Judgment Notes—Whether Valid ■—Fraud—Burden of Proof .

    1. Fraud, will not be presumed, but must be proved; it will not be inferred where the acts charged as fraudulent can be fairly accounted for consistently with all the evidence as done in good faith and for an honest purpose.
    2. The burden of proof in cases arising out of assignments, is on him who alleges that a preference given to a creditor is fraudulent.
    3. Preferences given by a. debtor before he h ;s formed the determination to make an assignment for the benefit of his creditors, are valid.
    4. A debtor may place certain of his creditors in a position where they may gain a preference by giving them judgment notes, unless he does it in contemplation and as part of a general assignment.

      5. In the case presented, it is held: That the complainants have failed to show that the judgment notes in question were given after the debtor had determined to make an assignment, or that they were given in preparation for, or as part of, an assignment in contemplation by him, or which he might thereafter be compelled to make.
    [Opinion filed January 11, 1888.]
    Appeal from the Circuit Court of Cook County; the Hon. Murray F. Tuley, Judge, presiding.
    Messrs. Frederick Ullman, R. S. Thompson, Tenney, Bashford & Tenney and McClellan & Cummins, for appellants.
    Messrs. H. T. & L. Helm, for appellees.
   Moran, P. J.

The bill in this case was filed by appellants, who are creditors of one Merrick A. Richardson, to have three certain judgments entered by confession set aside as being attempted preferences given in an assignment for the benefit of creditors. Richardson made an assignment October 5, 1885. On the same day and a short time before the filing of the assignment in the County Court, the judgments here attacked were entered and a levy made under executions issued thereon upon the property of said Richardson. One of said judgments was in favor of appellee Beldam for the sum of §13,578.67; one in favor of appellee Warren L. Aborn, for §7,581.60, and one in favor of appellee Everett A. Aborn for §2.559.57.

The master, to whom the case was duly preferred, reported that the said judgments were not preferences given so as to constitute part of the assignment; that they were valid as against the assignee and the complainants, and that appellees were entitled to the lien of their executions which was prior to the execution of the assignment.

The case was heard on exceptions to the master’s report and the exceptions were overruled and a decree entered, ordering the proceeds of the sale of the property of Richardson (which sale had been made by a receiver under an order of the court entered pending the final hearing of the case) to be paid over and applied pro rata on the executions of appellees, the amount of the proceeds not equaling the aggregate of appellees’ judgments.

From that decree this appeal is prosecuted and it is strenuously contended that the judgment notes were given under circumstances that clearly show an intention on the part of ¡Richardson to assign his property for the benefit of his creditors, but to so dispose of it as to create a preference in favor of appellees. That the giving of the notes and the making of the assignments were, in fact, but parts of the one act of assigning his property, and that the judgments entered on the notes are void as constituting preferences in the assignment, under the rule as laid down in the case of Preston v. Spaulding, 120 Ill. 208.

The evidence, which is voluminous, establishes the following facts: Richardson was a hardware dealer in the City of Chicago, the two -Aborns were his nephews and were in his employ as clerks or salesmen, in his said business, and Beldam was a friend who had loaned him money on his note. On October 1, 1885, the agent of Sidney Shepard & Company, who were creditors of Richardson, came to his store and, stating to him that there were bad rumors on the street as to his (Richardson’s) condition, insisted that the amount of a bill due his firm should be paid at once. Richardson did not have the money at hand and was persuaded to assign to said Sidney Shepard & Company sufficient of the accounts standing on his books against customers to pay their debt. After having done so Richardson became alarmed as to the effect such act would have upon his other creditors and, after a consultation with his attorney, he went to appellee Beldam to see if he could not borrow some more money from him to purchase the accounts which he had transferred to Shepard & Company. Beldam agreed to let him know that evening. In the evening the two Aborns, Beldam and Richardson met at Richardson’s store.

In a conversation between Beldam and the Aborns it was ascertained that Richardson’s indebtedness was larger than was theretofore supposed by them, and they, being alarmed for their claims, agreed between themselves to stick together and endeavor to get security from Richardson.

They each held notes against Richardson but none of said notes were due, and they argued with him that his situation was dangerous, and argued tlm; he 'ought to take up the notes which they held, and give them demand notes for the amount of their respective claims.

After offering some objections, Richardson consented to do this, and the amount due to each of the Aborns, in part for borrowed money and in part for salary, was figured up and the old notes which they held were given up and demand notes taken by them. Beldam, not having his notes with him, did not then get his demand note, though it was agreed that he was to have one, as all three were to be served alike-

Then a discussion arose as to security. Richardson insisted that he was all right, that he had more than enough money coming in to pay his bills as they matured, and undertook to satisfy them from his books that such wras the fact. They asked him for a bill of sale or a chattel mortgage on the hardware stock, but he said he could not do that as it would come out in Bradstreet’s reports and would be known to the trade. They said they would not put the bill of sale on record, they only wanted security and they would not make him trouble, but he declined.

They urged him to turn over book accounts to them as he had done to Sidney Shepard, but he refused. One of the Aborns then threatened to attach the stock, and then ensued further discussion about security. Richardson went to see his lawyer to see what could be done, and while he was absent Beldam suggested that they obtain the signature of Richardson’s wife, who was the owner of real estate, to the demand note, and this was thought well of by the two Aborns, and upon Richardson’s return to the store was proposed to him and he assented to the plan, but still insisted that he was in a safe condition and could pay them in full in sixty days. It was agreed that he should get his wife’s signature to the notes, and that he would send a note so secured to Beldam the next morning if his wife would sign. The parties then separated, the two Aborns going home with Richardson with whom they lived.

'Richardson consulted his wife that night about signing the notes and she refused, and that fact was communicated to Warren L. Aborn before he went to bed, and he told Richardson, with some show of temper, that he had loaned him nearly all the money he had in the world, and asked if he would rather pay Sidney Shepard and the other fellows and leave him out; Richardson answered that he would pay everything, and said that Ball, his attorney, had said that a chattel mortgage on the stock would be good for nothing if not put on record, but that a way could be fixed to secure them' (meaning the two Aborns and Beldam), if they would keep still. And Aborn replied that he would keep still if they got security.

The next morning the Aborns started out to collect bills so as to get money to pay the Shepard debt so that Richardson’s credit might not be injured by its becoming known that he had signed over accounts.

It was understood between the Aborns and Richardson where they would meet during the day, and in the afternoon Richardson delivered to each of them a judgment note and received from each the demand note which had been given the night before. Richardson also delivered to Beldam a judgment note for the amount due him, and took up the m>te which Beldam held. The Aborns and Beldam met toward evening and discussed the matter of security which they had received, and not understanding it clearly, went together to a lawyer who had done business for Beldam, and after consulting with him concluded to have judgments entered on the notes. It was then Saturday, evening and too late to enter judgment that night, so the papers were prepared and the judgments entered before ten o’clock on Monday morning. On the same day, and about forty minutes after the executions were levied on the stock, Richardson’s assignment was filed in the County Court.

The schedules attached to the assignment were in part written by the Aborns on Friday and Saturday nights and on Sunday afternoon, and were finished by Richardson’s clerk Monday morning after the Sheriff took possession of the stock. The portion of the schedule which was written by the Aborns were the lists of debts or accounts due to Richardson, and tlieyr swear that the portion of them made out on Friday' night were for Richardson’s purpose in attempting to demonstrate to the Aborns and Beldam that he could pull through and overcome his embarrassment, and Richardson testifies that the list was commenced for that purpose and that he continued it on Saturday and Sunday, because Ball told him to get his accounts in shape so he could show what he owed, and what was owing to him.

It is very manifest that appellees were, from the time they first learned of Richardson’s precarious condition, determined to secure their debts, if possible.

The two Aborns were conversant with the business' and appeared to have understood the nature and value of the stock on hand, and the probability of collecting the outstanding debts better than Richardson himself.

All the appellees in interest (Hanchett is a nominal party') were friends of Richardson, had loaned him large amounts of money', and would no doubt have been glad to see him continue his business if he could secure them, but they were alarmed, and regarding themselves as entitled to advantages over other creditors, they determined to obtain such advantages if they' could.

There is nothing wrong in a creditor’s availing himself of a disposition on the part of the debtor to favor him, though he may know that other persons that have the same rights with himself, may he less vigilant or less fortunate. ¡Neither is there anything wrong, as the law now stands, in a debtor’s desiring that one or more of his creditors shall have their pay before others, or in placing them, by means of a judgment jiote or other form of security, in a position where they may gain a preference.

It is only “when he reaches the point where he is ready and determines to yield the dominion of his property, and makes an assignment for the benefit of his creditors under the statute, * * * when a debtor has formed a determination to voluntarily dispose of his whole estate, and has entered upon that determination,” that the law will regard all his acts, having for their object and effect the disposition of his estate, as part of the assignment, and will hold preferences given, as in fraud of the statute regulating voluntary assignments. Preston v. Spaulding, supra.

The act of giving to a creditor a warrant of attorney to confess judgment, shortly before the execution of an assignment and at a time when it may be inferred that the debtor looked forward to the making of an assignment as a possible or even probable result of continued embarrassment in his business or pressure by his creditors, must have a different color and effect, in the view of a court of equity when it is given Iona fide at the creditor’s request persistently and urgently enforced, by whatever argument the creditor may find most effective to secure the desired advantage.

The law favors the diligent creditor, and it can not here he answered, as it was in Preston v. Spaulding, that, the favored position in which the creditors were placed, was the result of no diligence on their part.

The creditors all swear that they had no knowledge that the debtor contemplated making an assignment; that the matter of an' assignment was not spoken of at all, and that what they feared were suits or attachments by some one of the other creditors. It is true that there may be collusion between debtors and favored creditors to defeat the object of the statute, and that the form of such collusion or artifice may he as varied, elusive and impossible of definition, as fraud in general, yet the rule remains that fraud will not be presumed hut must be proved, and that it will not be inferred where the acts charged as fraudulent can be fairly accounted for consistently with all the evidence as done in good faith, and for-an honest purpose. Mey v. Gulliman, 105 Ill. 272.

The fact that the Voluntary Assignment Act is remedial and to be liberally construed to effect the legislative intent, does not change the burden of proof in cases arising out of assignments, and the onus is onhim who alleges that a preference given to a creditor is in fraud of the law, to prove it, and not on the debtor or preferred creditor to show that it was given in good faith. It is forcibly contended that there are circumstances here in evidence which clearly show that Richardson contemplated making an assignment at the time he delivered the judgment notes to the appellee.

Those chiefly relied on are the fact that Richardson declares in his evidence, that he thought these appellees were entitled to preference over his merchandise creditors, and that he wished them to have such preference; that the making of lists of debts due to Richardson was commenced on Friday night, and the making of such lists both of debts and of his creditors, continued on Saturday night and on Sunday, the work being done by the Aborns, and that these lists were afterward attached as schedules to his assignment when it was filed. That Richardson went to the house of Roche, to whom he aftetward assigned, on Sunday night, and asked him to call at Ball's office on Monday morning, and that the assignment was completed and filed so quickly after entry of the judgment, and the levy of the executions, as to show that it was in part prepared before Monday morning.

It was readily admitted that these facts considered by themselves furnished strong ground for suspicion and perhaps, if unexplained, sufficient proof that the preferences were a fraud xxpon the Assignment Act, but when considered in connection with all the evidence in the case, we do not think they justify such a conclusion.

Richardson's admitted desire that appellees should have a preference over his other creditor's is not, as we understand the evidence, an admitted intent to prefer them in the assignment, but a hope that if his creditors shoxild come down on him, as it was feared they might, appellees should get in first and obtain from his property satisfaction of their claims. And we think that his acts in giving the demand notes, and afterward giving the judgment notes, were due in part to their pressure and in part to his own desire that they should be in a position to accomplish that end. As we have before said, this desire was not wrong, and acts done with this motive were not illegal unless done in contemplation of, and as part of, a general assignment. As regards the preparation of lists, he swears that was done by advice of liis counsel, so that he might he able to show how he stood, and the two Aborns swear that they so understood it when they made the lists, and that they did not understand the work as being a preparation for an assignment.

Richardson further testifies that when he called on Roche he said nothing about an assignment, but told him that lie was in trouble and asked him to come to Ball’s office, for the reason that Ball told him that he had better do so, and that he did not intend to make an assignment till,' on Monday morning, he found his store in the possession of the Sheriff, and his lawyer advised him it was the best thing he could do.

Row, as to all these facts, complainants made Richardson their own witness, and, while they might not be bound by his testimony, in the sense that they would not be permitted to contradict him, yet they introduced no other witness that does contradict him, and, if his evidence is to be considered, it must be all considered; and we do not find sufficient in the acts done to satisfy ns that he has sworn falsely as to the time when he determined to make an assignment for the benefit of his creditors.

It may be the just conclusion from all the evidence that lie and his counsel considered that an assignment might become necessary in the happening of certain contingencies, which it was still hoped might not occur, and that steps were taken which were in the line of preparation in the event that an assignment should become necessary. These appellees had threatened him, and he feared the attack of some merchandise creditors, but he hoped by giving the security that appellees would be satisfied to let him go on and help him to meet the demands of others. Security thus given to pressing creditors in the effort to prevent their attack and render an assignment by the debtor unnecessary, can not be construed as preferences given in fraud of the law, because such creditors avail themselves of the benefit of the security, and by immediate action obtain a preference, and at the same time precipitate the condition which, in giving the security, the debtor was in good faith seeking to postpone.

A mere apprehension that he may he compelled to assign is to be distinguished from a determination to assign, and, as we have seen, it is the acts done after he has formed the determination to dispose of his whole estate for the benefit of his creditors, and which are done in execution of that determination, which will be treated as part of the voluntary assignment.

Appellants have, in our opinion, failed to show that the judgment notes in question were given after the debtor had determined to make an assignment, or that they were given in preparation for, or as part of, an assignment in contemplation by him, or which he might thereafter ho compelled to make, and therefore they are not shown to have been preferences, void, as being part of the voluntary assignment executed subsequent to the delivery of them. Preston v. Spaulding, supra, and the opinion of this court in the matter of William S. Goehegan et ah, 23 Ill. App. 157.

The decree of the Circuit Court is correct, and will therefore be affirmed.

Decree affirmed.


author: Bailey, J.

text:
    Ferdinand Siegel and Henry Siegel v. James H. Brooke et al.

      Sales—Implied Warranty of Title—Uefusal to Accept—Letters Patent —Evidence.

    1. In sales of personal property, by one in possession thereof, there is an implied warranty of title in the vendor. If the contract is still executory the vendee may refuse to accept the article sold, unless the vendor makes him a clear title.
    2. Where the article sold is covered by letters patent, held by a third person, the vendee may refuse to accept. Such incumbrance upon the right to use the article sold is such a defect of title as will constitute a breach of the implied warranty of title.
    3. In an action to recover the price of goods which the vendee has refused to accept, evidence tending to show that the goods are covered by letters patent, owned by a third person, is admissible.
    [Opinion filed January 11, 1888.]
    Appeal from the Superior Court of Cook County; the Hon. Kirk Hawes, Judge, presiding.
    Messrs. Flower, Remy Gregory, for appellants.
    It is difficult to see why these facts do not completely answer appellees’ claim. A warranty of title is always implied upon a sale of chattels, either executory or m jyrmsenti. Where the contract is executory there can be no doubt that if the seller tender an article to which he has defective title he does not comply with the contract of sale. The mere fact that he offers to put the purchaser in possession of the subject of the sale is not enough. He must be in a position to confer ownership thereof upon him.
    So, where there is a contract for the sale of realty by which a good title is covenanted to he conveyed, the vendor can not, by tendering a conveyance where his own title is defective, and offering to let the vendee into possession, put himself into a position to recover the purchase price. The appellants were threatened, by parties claiming, undfcr the patents, with proceedings. They might have been enjoined from the sale of these goods, and in the same proceeding, had they sold any, been compelled to answer in treble damages. There can be no doubt that these patents so incumbered the title of appellees to these goods as to make them practically worthless to appellants.
    That there is an implied warranty of an unincumbered title is well settled. Hilliard on Sales, 387; Fawcett v. Osborn, 32 Ill. 411; Morris v. Thompson, 85 Ill. 16.
    Therefore, where articles are sold which infringe a patent, the purchaser may defend an action for the price on this ground. Sanborn v. Jackman, 60 N. H. 569; Story on Sales, Sec. 367 b. It cannot be contended that “a party can enjoy as 1ns own,” goods by the manufacture and sale of which, in the ordinary course of his business, he renders himself liable to heavy penalties, and from the sale of which he may be absolutely enjoined. The contract of sale being executory, the appellants had a right to reject the goods entirely, because their sale was an infringement of the patents offered in evidence. It is thought that this is the law. ¡Neither reason nor authority make against, it. But the ¡New Hampshire case shows that as there was not a clear title made to the goods, the appellants had, in any view, a right to prove the existence of the patents, and that the goods ivere such as to come within the terms of the patents, in reduction of appellees’ damages. This would be strictly recoupment. The court, in this case, excluded that evidence.
    The case just cited is plain authority that the sale of a patented article by one other than the patentee, or his assigns, does not convey a good title.
    Therefore, the appellants had a right to reject the goods sued for, as the contract of sale was executory. Had it been executed they would have had the right to reduce appellees’ recovery by the damages sustained by them on account of this defect in title. In any aspect the evidence excluded should have been received.
    Messrs. Abbott & Bakes, for appellees.
   Bailey, J.

This was an action of assumpsit brought by James Henry Brooke and others against ¡Ferdinand Siegel and another, to recover the price of certain goods sold by the plaintiffs to the defendants. The declaration consisted merely of the common counts, to which the defendants pleaded nonassumpsit. The trial before the court and a jury resulted in a verdict in favor of the plaintiffs for $1,096, and for that sum and costs the plaintiffs had judgment.

The plaintiffs are manufacturers of woolen goods at Huddersfield, England, and the defendants are manufacturers of ladies’ cloaks at Chicago. In April, 1885, an agent of the plaintiffs called on the defendants at their place of business in Chicago, and obtained from them an order for twenty pieces of worsted goods' known as “ stockinets,” said goods to be thereafter manufactured by the plaintiffs and shipped by them in bond to Chicago. It appears that the plaintiffs had filled a previous order for the same kind of goods, and that said goods had been received and paid for by the defendants. The goods in question were manufactured by the plaintiffs and shipped in bond to Chicago, but the defendants, having in the meantime learned that said goods were covered by certain letters patent issued by the United States to one John Kent for a certain improvement in knitted fabrics, and being threatened by the owners of said letters patent with prosecution for an infringement in ease they should receive said goods and use the same, as they had proposed to do, in the manufacture of cloaks, refused to receive the goods, and the same remained at the time of the commencement of this suit in the United States bonded warehouse at Chicago.

It does not appear that the defendants had any actual notice of the existence of said patent at the time they gave the plaintiffs’ agent an order for said goods, and the evidence as to whether the plaintiffs or their agent had notice of its existence is somewhat conflicting, said agent testifying that both he and his principals were at that time entirely ignorant of the patent, while the defendants gave evidence tending to show a subsequent admission by said agent that at the time he Sold said goods he was aware of its existence.

The defendants produced a duly authenticated copy of the letters patent and offered to read the same in evidence, and also offered to prove by evidence aliunde that the goods in question were covered by the patent. All of this evidence was excluded by the court, and the propriety of its exclusion is the principal question presented by this appeal.

The theory upon which the defendants sought to avail themselves of the letters patent as a defense was, that the patent constituted a defect of title in the nature of an incumbrance upon the goods and was therefore a breach of the plaintiffs’ implied warranty of title. It is undoubtedly the general rule that, in sales of personal property by one who is in possession thereof, there is an implied warranty of title in the vendor. Story on Sales, Sec. 266. If the contract of sale is still executory, the vendee may refuse to accept the article sold, unless the vendor makes him a clear title; but where the sale is consummated and the article delivered and accepted, the rule, though not fully settled, would seem to be that the vendee can maintain no action on the Avarranty so long as his title and possession are undisputed. IMdn Sec. 367 b.

As the goods were never received or accepted by the defendants, the validity of the defense excluded by the court depends upon whether the patent constituted qr created a defect in the title thereto. It must be «admitted that the letters patent gave the patentee no right or interest, general or specific, in the goods themselves. It gave him no title by Avhich he could obtain possession of them or in any Avay subject them to his OAvn use. The right secured to him Avas merely the monopoly of his discovery or invention, or, in other words, the exclusive right to make and use the patented article and to sell the same to others to be used. The ¡latent right Avas undoubtedly a right essentially and numerically distinct from the title or ownership of the article manufactured according to the patented device. This distinction is clearly recognized in Patterson v. Kentucky, 97 U. 3. 501, where the court say; “ The right of property in the physical substance, which is the fruit of the discovery, is altogether distinct from the right in the property itself, just as the property in the instruments or plate by Avhich copies of a map are multiplied, is distinct from the copyright of the map itself.3’

But while the patent gave the patentees no right to the goods themselves, it gavre them a right to control or prohibit their use either by the defendants or others to whom they might sell them. The defendants might receive the goods and retain them in their possession, and so long as they did that and nothing more, they Avould, perhaps, be free from interference by the patentees. The instant, hoAvever, they attempted to use them or sell them to others to be used, they would be liable to prosecution by the patentees for an infringement, and might be Avholly restrained from such use or sale.

It will thus be seen that the patent, while in no proper sense an incumbrance upon the goods themselves, was a very serious incumbrance upon their use. It deprived the defendants of the right to avail themselves of the beneficial enjoyment of the goods without subjecting themselves to serious consequences, some of them highly penal, and if they had received and paid for them, they would have been liable at once to be restrained by injunction from applying them to the purposes for which they bought them.

We are of the opinion that such incumbrance upon the right to use the article sold, is such defect of title as will constitute a breach of the implied warranty of title. The only case to which we have been referred, or which we have been able to find, in which this question has been directly presented, is Sanborn v. Jackson, 60 N. H. 569. In that case the plaintiff sold to the defendants, among other things, the machinery, tools, fixtures and furniture in a certain building, and also two machines then in process of construction, and agreed to have said machines finished and put in satisfactory running order at his own expense. In a suit brought to recover a part of the price of the property sold, the defendants offered to prove, among other things, that one of said machines was an infringement upon a patent owned by one Corey. This evidence was excluded, and the court, in holding that it was improperly excluded,.say: “It was an incumbrance on the right to use the machine, constituting a defect in the title, if it was an infringement of Corey’s patent. In the sale of chattels, there is ordinarily an implied warranty of title. The evidence offered by the defendants was competent as tending to show a defective title, and the breach of such implied warranty.” While the Judge delivering the opinion of the court cites no authorities and gives no reasons for his conclusions beyond what we have here quoted, we are inclined to follow the decision as the most reasonable view to take of the subject. We hold, therefore, that the evidence in relation to the letters patent was improperly excluded and that for that reason-the judgment must be reversed and the cause remanded.

Judgment reversed.