text:
    Leo Awotin, Appellant, v. Daniel M. Healy, Appellee.
    Gen. No. 39,099.
    Heard in the third division of this court for the first district at the October term, 1936.
    Opinion filed June 30, 1937.
    Rehearing denied July 12, 1937.
    Austin L. Wyman, of Chicago, for appellant; Daniel P. Nagle, of Chicago, of counsel.
    Litsinger, Healy, Reid & Bye, of Chicago, for appellee.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from an order sustaining defendant’s motion to dismiss the complaint filed in the cause. It is recited in the order that the motion was sustained “because plaintiff’s claim was unenforceable under the Statute of Frauds.”

The complaint consists of two counts. ■ The first count, as amended, is as follows: “Plaintiff, from prior to year 1920 to approximately July 15, 1930, was a customer of the Atlas Exchange National Bank of Chicago, a national banking institution. Defendant, Daniel M. Healy, was president of said Atlas Exchange National Bank of Chicago during the same period of time. From time to time, during said period, plaintiff purchased of said Atlas Exchange National Bank of Chicago, divers bonds held by it as part of its own assets, in each case upon receipt of, and reliance upon, the written agreement of said Atlas.Exchange National Bank of Chicago to repurchase said bonds at maturity. On November 1, 1929, plaintiff purchased from said Atlas Exchange National Bank of Chicago, $35,000 Par Value First National Company Collateral Trust Series ‘C’ First Mortgage Beal Estate 5%% G-old Bonds at 98%% per cent of par, and at said time received a written agreement by said bank to repurchase [which agreement is not in issue here], and also, before making said purchase as an inducement to the making of said purchase, was promised by said Daniel M. Healy that he would repurchase said bonds at maturity at par and accrued interest, if the said bank did not repurchase the same, at which time the said Daniel M. Healy was the owner of 783 shares of capital stock of said bank, the entire capitalization of said bank consisting of 2,000 shares of stock, and had working control of said bank-; by virtue of said sale, the bank made divérs profits or commissions, which profits or commis-: sions inured to the direct benefit of the said Daniel M. Healy. Shortly prior to the purchase of said bonds, plaintiff went to another banking institution in Chicago to make a purchase of bonds in denominations not available at said Atlas Exchange National Bank of Chicago, and requested, as a condition to the making of such purchase, an agreement to repurchase. Said bank was also a national bank and its officers informed plaintiff that doubt existed as to the right of a national bank to enter into an agreement of repurchase. Plaintiff informed such officers that the Atlas Exchange National Bank of Chicago was selling bonds to plaintiff on the basis of such an agreement, and such officers referred plaintiff back to said Daniel M. Healy, as president, stating that he was a lawyer and would know what the law was. Plaintiff thereupon told said Daniel M. Healy of the fact of his conversation with said officers of said other bank, and the said Daniel M. Healy then stated to plaintiff: (1) that he had examined the National Banking Law as amended in 1927 and was satisfied that no doubt existed as to the right of a national bank to agree to repurchase securities sold; (2) that he had an opinion from the Comptroller of Currency of the United States to that effect. Said conversation with the said Daniel M. Healy last related, took place in the office of the said Healy at the said Atlas Exchange National Bank of Chicago, at the corner of Halsted and Taylor Streets, in Chicago, at the end of September or the early part of October, 1929. Being thus reassured, plaintiff purchased said bonds, all of said bonds being due and payable by their terms July 15, 1930. On or immediately after July 15, 1930, plaintiff presented said bonds to said Atlas Exchange National Bank of Chicago and to said Daniel M. Healy for repurchase, and was then and there informed by the said Daniel M. Healy: (a) that the maker of said bonds was short of funds but that the bonds would probably be taken care of shortly; (b) that the Atlas Exchange National Bank of- Chicago did not have the funds available with which to repurchase said bonds; (c) that he, said Healy, was liable on said agreement made by him tó repurchase sáid. bonds, but that his assets were largely tied up in said Atlas Exchange National Bank of Chicago, which then, or shortly thereafter, went into liquidation; (d) that he would, within the next three days, submit á list of mortgages of his own to be offered in exchange for said bonds.' At the end of three days, said Daniel M. Healy called up and said he had not been able to furnish said list, but that he would do so within the next two or three days. Hearing nothing further from said Daniel M. Healy, plaintiff caused to be instituted in the courts of Cook County against said Atlas Exchange National Bank of Chicago, which, by various steps, reached the United States Supreme Court, where it was held that said agreement was ultra vires the bank, In. said suit, the said Daniel M. Healy, as liquidator of the Atlas Exchange National Bank of Chicago, signed an affidavit in which he stated within approximately one year after the sale of said bonds to plaintiff, that any such agreement was ultra vires. By stipulation in said proceeding, entered into with the knowledge and consent of said Daniel M. Healy and without prejudice to the claim of the plaintiff, it was provided that said bonds might be sold at eleven cents on the dollar, the then market value, and such sale was effected, • plaintiff realizing the sum of $3,850.00 therefrom. Said bonds, at the time of their purchasé by plaintiff, have since been ascertained by plaintiff to have had a market value substantially less than 98% cents on the dollar. Defendant failed and refused, and still does fail and refuse, to pay the claim of plaintiff in accordance with his promise to repurchase said bonds at maturity. Wherefore, plaintiff asks judgment for the sum of $31,150.00, together with interest from July 15,1930, at the statutory rate.”

The abstract recites that “count 2 repeats all the allegations of the first count, and adds that said Daniel M. Healy was and is a lawyer, versed and skilled in the law;.that plaintiff had no knowledge or information beyond that given by said Healy as to the legality of said contract by the said Atlas Exchange National Bank of Chicago; that the law is and was at the time of said purchase on or about November 1,1929, that a national bank could not sell securities, except without recourse, and said Healy well knew, or should have known, of said law; that he occupied a fiduciary relationship towards the plaintiff in advising the plaintiff as to the law in selling securities under the circumstances alleged; that plaintiff relied on the advice of Healy and on the oral promise and on the written agreement of said bank, in making said purchase, and was thereby induced to buy the bonds upon such false representation by the said Healy as to the law; that the bank was in dire need of cash at the time it sold the bonds to plaintiff; that Healy was a large stockholder in the bank, and because of double liability, as well as because of his original stock investment, was vitally concerned with the success of the bank.”

The motion to dismiss is based upon the ground that the claim is unenforceable under the provisions of the Uniform Sales Act (ch. 121a, sec. 4, Illinois State Bar Stats. 1935, ¶ 7; Jones Ill. Stats. Ann. 121.08), and the Statute of Frauds and Perjuries (ch. 59, sec. 1, Illinois State Bar Stats. 1935, ¶ 1; Jones Ill. Stats. Ann. 55.01.)

Stripped of redundancy, the pertinent allegations in this complaint are that plaintiff purchased certain bonds from the Atlas Exchange National Bank, and “at said time, received a written agreement by said bank to repurchase, and also, before making said purchase, as an inducement to the making of said purchase, was promised by said Daniel M. Healy that he would repurchase the said bonds at maturity at par and accrued interest, if the said bank did not repurchase the same.” Then follows an allegation as to defendant Healy’s large holdings of stock in the bank, and that by virtue of the sale to plaintiff, the bank would make large profits, which would be of direct benefit to Healy, and that Healy had then advised the plaintiff that the bank had the right and power to enter into the agreement with plaintiff to repurchase the bonds, and that Healy gave his opinion to plaintiff as to the power of the bank from his, Healy’s knowledge as a lawyer,, and from an opinion which he had had on the subject from the Comptroller of Currency of the United States, to the effect that the bank had such power. Further, that thereafter and subsequent to July 15, 1930, when the bonds became due and payable, plaintiff presented the bonds to the bank and to Healy for repurchase, and that Healy again promised to repurchase the bonds, and acknowledged his liability to do so, and that thereafter plaintiff brought suit against the bank, based upon his agreement with the bank, and that this agreement was held to be ultra vires and beyond the power of the bank to make, by the Supreme Court of the United States.

The case of Awotin v. Atlas Exchange National Bank is reported in 295 U. S. 209, and in construing the contract between the plaintiff here and the Atlas Exchange National Bank, the Supreme Court said:

“Respondent, [the bank] by agreeing to repurchase the bonds at the same price petitioner had paid for them, plus their accrued interest, undertook to save petitioner harmless from all risk of loss on his purchase, as effectively as if it had indorsed the bonds without restriction or had guaranteed their payment at maturity. ’ ’

Section 1 of chapter 59 of an act to revise the law with relation to frauds and perjuries, (Illinois State Bar Stats. 1935, ¶ 1; Jones Ill. Stats. Ann. 55.01) provides :

‘ ‘ That no action shall be brought . . . whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person, or to charge any person upon any agreement made upon consideration of marriage, or upon any agreement that is not to be performed within the space of one year from the making thereof, unless the promise or agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.”

One of the first, and what appears to be a leading case on the question of the liability of a third person under an oral contract to pay the debt of another, is that of Eddy v. Roberts, 17 Ill. 505. In that case, one Williams had been engaged in cutting wood, and had employed hands for that purpose, and had made arrangements with plaintiffs to pay his hands out of plaintiffs ’ store, and had obtained credit with plaintiffs for goods, stating that “the debt would be good, for the wood would be theirs till they got their pay. ’ ’ Subsequently, the defendant in the case, who had bought out Williams, requested the plaintiffs to let the hands have goods on his defendant’s account, and that plaintiffs refused to do so unless the debt of Williams was paid, and that thereupon defendant promised that if he would deliver the goods, as requested, on his, defendant’s, account, that defendant would pay for the same, together with the debt of Williams, and that plaintiffs thereupon did accordingly allow these hands to have goods on defendant’s account. The defense there, as here, was that the defendant Avas not liable because the agreement to pay was not in writing, and the Supreme Court said:

“The statute of frauds and perjuries declares, ‘that no action shall be brought whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person, unless the promise or agreement, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereto by him lawfully authorized.’ This is substantially like the English statute upon the same subject, and similar provisions exist, it is believed, in all of the United States. The plain object of the statute is to require higher and more certain evidence to charge a party, where he does not receive the substantial benefit of the transaction, and where another is primarily liable to pay the debt or discharge the duty; and thereby to afford greater security against the setting up of fraudulent demands, where the party sought to be charged is another than the real debtor, and whose debt or duty, on performance of the alleged contract by such third person, would be discharged. The decisions on this branch of the statute, both in England and the United States, are numerous, and, to a considerable extent, apparently contradictory, insomuch that any attempt to review and reconcile them would be a hopeless undertaking. It cannot be denied that courts in many instances, to prevent the successful interposition of the statute against apparently meritorious'claims, and in the particular case to avoid a seeming wrong, have departed from the plain letter and spirit of the statute. Hard cases are said to make bad precedents, and, in our judgment, it is not only better in the general operation, but the imperative duty of the courts to hold, in all cases, to the statute as it reads, avoiding all nice, complicated or shadowy distinctions. By such a course the law is rendered more certain and uniform in its administration; and principles, instead of mere cases, become the foundation of judicial decisions. The main question for inquiry under the statute is, whether the promise is an original and independent one, or whether it is subsidiary, collateral to, and dependent upon, the debt or liability of another?
‘ ‘ If another is primary, or principal debtor, and the relations of debtor and creditor remain unchanged, both as to the right and the remedy, and no trust is created by the transaction out of which the promise arises, such promise is in its nature collateral and not original. If the debt be paid, or duty performed, by him who is primarily liable, the incident, or collateral promise, is of no force for any purpose; there is nothing remaining upon which it can operate. Tested by these rules the contract alleged in the third count is void, if not in writing. The debt of Williams existed at the time of making the promise; Williams continued liable to the same extent as if the promise had not been made; the relations of debtor and creditor were in no manner changed; no remedy, pledge, or security was relinquished; and no trust devolved upon the defendant to execute, by reason of the transaction. Chapin v. Lapham, 20 Pick. 467; Russell v. Bulk, 11 Verm. 166; Tileston v. Nettleton, 6 Pick. 509; Nelson v. Boynton, 3 Met. 396; Cahill v. Bigelow, 18 Pick. 369; Stone v. Symmes, ibid. 467; Durham v. Anledge, 1 Strob. 5; Carville v. Crane, 5 Hill, 483; Jackson v. Rayner, 12 John. 291; Simpson v. Patton, 4 John. 422; Barker v. Bucklin, 2 Denio 45; Loomis v. Newhall, 15 Pick. 159.” We have quoted this opinion at some length because it is so frequently cited in subsequent Illinois cases, sometimes with approval and at other times as questionable.

In Resseter v. Waterman, 151 Ill. 169, the court said:

“It may be said to be the settled rule, that where the agreement is original and independent, it is not within the statute; if collateral, it is. (Eddy v. Roberts, 17 Ill. 505; Geary v. O’Neil, 73 id. 593; Hartley v. Varner, 88 id. 561.) And the agreement may be regarded as original, and not within the statute, although it directly involves the interests of or concerns a third party, or may relate to an act, or the performance thereof, by one not a party to the contract, (supra; and cases cited.) ...
“In order that the promise can be held to be within the statute, it is essential that there be a binding and subsisting obligation or liability to the promisee, to which the promise is collateral. In other words, ‘that the party for whom the promise has been made must be liable to the party to whom it is made. ’ (3 Pars, on Contr., * 21, note p; Hargreaves v. Parsons, 13 M. & W. 561; 50 Exch. Rep.; Eastwood v. Kenyon, 11 A. & E. 438; Westfall v. Parsons, 16 Barb. 645; Preble v. Baldwin, 6 Cush. 549; Pratt v. Humphrey, 22 Conn. 317; Alger v. Scoville, 1 Gray, 391; Baker v. Bucklin, 2 Denio, 45; Perkins v. Littlefield, 5 Allen, 370; Thighe v. Morrison, 116 N. Y. 263, and cases cited.) ”

Another case upon which plaintiff seems to rely is that of Lusk v. Throop, 189 Ill. 127. In that case, the defendant promised and agreed to pay for certain goods which, at the time of the promise, had not been delivered to the person to whom they were afterwards supplied. In its opinion, the court quoted at length from Resseter v. Waterman, supra, and held that under the facts, the promise was original and not collateral, and that the action was not barred by the statute because the promise was not in writing. Plaintiff takes the position, however, that under the authority of Resseter v. Waterman, supra, unless there is a binding and subsisting obligation or liability on the part of the bank, to which Healy’s promise was collateral, that Healy’s promise did not come within the terms of the statute of frauds, and need not be in writing and signed by him, in order that recovery might be had against him. Plaintiff bases his theory in this regard upon the fact that the Supreme Court of the United States held that the contract between the plaintiff and the bank was ultra vires, and beyond the power of the bank to enter into, and that, therefore, Healy’s contract became an original and not a collateral agreement. Plaintiff also alleges that, by the facts set forth in the complaint, it is shown that a fiduciary relationship existed between plaintiff and Healy, which created a primary and not a collateral obligation on Healy’s part.

In McNeil v. Bulkley, 269 Ill. App. 1, plaintiff brought an action for damages based upon a claim of fraud and deceit on the part of the defendant in the sale of certain bonds to plaintiff. The bonds were issued by the “Avoca Drainage District, Parish of St. Mary, State of Louisiana,” and it was charged that the defendant falsely and fraudulently represented to the plaintiff that the bonds were valuable, that they were well secured, and that if the drainage district for any reason defaulted in the payment of interest or principal, the State of Louisiana was behind the bonds, and was obligated to pay the taxes on the land just the same as the private owner was required to do, that the bonds were an obligation of the State of Louisiana, and that they, the defendants, had the opinion of a lawyer, designated as a judge, to that effect. It is also alleged and proved in this case that defendants had issued a circular, in which they stated that “The legal details in connection with these bonds have been under the supervision of Judge R. E. Milling . . . of New Orleans, have been tested and approved in the Supreme Court of Louisiana, and their legality has also been passed on by Messrs. Wood & Oakley of Chicago.” It was held that plaintiff could not recover in an action based on these allegations, and the court said, as to the statements made, that they “were mere expressions of opinion on questions of law. And it is well settled that ‘ordinarily one is not liable for false representations respecting a mere question of law.’ (Dillman v. Nadlehoffer, 119 Ill. 567, 577; Fish v. Cleland, 33 Ill. 238, 243; Upton v. Tribilcock, 91 U. S. 45, 50.)” In the instant case, it is charged that the defendant, a lawyer, had given the plaintiff an opinion to the effect that he, defendant, believed that the Atlas Exchange National Bank, a national bank, had the right to enter into the contract with the defendant, which it did enter into, and that he, defendant, had an opinion from the Comptroller of Currency of the United States to that effect. It is not charged in the complaint that Healy told an untruth when he said he had such an opinion from the Comptroller of Currency of the United States, and there is no claim that there was any deception practiced in that regard. On the authority of McNeil v. Bulkley, supra, and the cases there cited, we are of the opinion that upon the facts set forth in the bill of complaint, plaintiff cannot predicate a charge of fraud and deceit. We are further of the opinion that upon the showing made, the alleged promise of Healy was collateral to the contract entered into with the bank, and that the fact that this contract was subsequently held to be ultra vires and beyond the power of the bank to make, does not alter this situation.

The judgment of the superior court of Cook county is affirmed.

Affirmed.

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


source: Caselaw Access Project

author: Mr. Justice Hall

license: Public Domain

text:
    The People of the State of Illinois ex rel. Warner Construction Company, Appellant, v. Chicago Park District, Appellee.
    Gen. No. 39,147.
    Heard in the third division of this court for the first district at the October term, 1936.
    Opinion filed June 30, 1937.
    Chester E. Cleveland, of Chicago, for appellant.
    Charles Center Case, of Chicago, for appellee; Philip A. Lozowick and Martin Gr. Loeff, both of Chicago, of counsel.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from an order of the superior court of Coolc county, dismissing a petition for a writ of mandamus, in part, as follows (abstract) :

“ (1) Petitioner, Warner Construction Company, is a corporation under the laws of Illinois, with its principal office and place of business in Chicago.
“ (2) That the defendant, Chicago Park District, is a municipal corporation under the laws of the State of Illinois, haying the rights, powers and duties as shown by the statutes in such case made and provided.
“ (3) That the Commissioners of Lincoln Park was formerly a municipal corporation under the laws of the State of Illinois.
“ (4) That on April 29,1933, petitioner recovered a judgment in the Superior Court of Cook County against the Commissioners of Lincoln Park for $42,030.12; that the Commissioners of Lincoln Park appealed from said judgment to the Appellate Court and on December 19, 1934, said Appellate Court entered its order as follows:
“That it had examined the record of the Superior Court and found nothing therein erroneous, vicious, or defective, except that the judgment of the Superior Court failed to include the sum of $1,000 admitted by defendant to be due plaintiff, and that in the record there was no error except as aforesaid.
‘ ‘ Therefore, it was considered by the court that the judgment be amended by changing and increasing the amount thereof to $43,030.12, and so amended said judgment was affirmed and should stand in full force and effect for said sum of $43,030.12.
‘ ‘ That upon the allegations and proofs in the record, the court found the issues in favor of appellee and against appellant, and that appellee ought to have and recover .from appellant its damages by it sustained by reason of the premises.
“The court being fully advised did assess the damages in favor of the appellee and against appellant in the sum of $43,030.12.
“Therefore, it was considered by the court that appellee, Warner Construction Company, have and recover from the Commissioners of Lincoln Park its damages of $43,030.12 in form as aforesaid by the court assessed in lieu of said judgment of said Superior Court of Cook County, together with its costs to be taxed.”

The petition recites that defendant refuses to pay interest on the amount of the judgment in the superior court to the date of the judgment in the Appellate Court, its position being that it is only required to pay interest on the Appellate Court judgment from the date of its rendition. This is its only defense.

In the suit instituted by the Warner Construction Company against the Commissioners of Lincoln Park, as stated in the petition, a judgment was entered in the superior court, upon the verdict of a jury, for $42,030.12. Thereafter, an appeal was taken to this court, and after a review of the record, this court concluded that plaintiff was entitled to recover $1,000 more than the amount of the judgment entered in the superior court, and entered judgment here for $43,030.12, as shown by the petition and our record. The judgment of the superior court was entered on April 29, 1933, for $42,030.13, and on this judgment, under the statute, plaintiff is entitled to recover the amount of five per cent interest from the date of its entry to December 19,1934, the date of the judgment entered here, and interest at the same rate on $43,030.12 from December 19, 1934, until the judgment of this court is paid. The prayer of the petition is that defendant be compelled to pay the amount due plaintiff under the law.

In the former opinion, this court said: (278 Ill. App. 42)

“The plaintiff indicated by cross error that it regarded the amount of the judgment as being erroneously entered, and in part we have agreed with this contention, and upon this suggestion entered judgment in this court for the amount stated in the opinion. It follows, this being the judgment entered interest will be computed from the date of the.judgment entered in this court.
“For the reasons stated in this opinion, the judgment will be affirmed in part as to the sum of $42,030.12, and amended so as to include the $1,000 admitted by the defendant to be due the plaintiff, and therefore judgment will be rendered here for the sum of $43,030.12. ’ ’

The record indicates that the trial court stated, in effect, that he found it impossible to construe the opinion of this court. The language of the opinion is perfectly clear, and there is nothing in it to construe. The judgment of the superior court was affirmed. One thousand dollars was added to it, and judgment was entered here for the total. It is, therefore, ordered that the judgment of the superior court dismissing the petition, be reversed, that the cause be remanded, and that the court enter an order conforming to this opinion.

Reversed, and remanded with directions.

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


text:
    In re Estate of Carl H. Weil, Deceased. Morris Paper Mills, Appellee, v. Rena Weil, Executrix under Last Will and Testament of Carl H. Weil, Deceased, Appellant.
    Gen. No. 39,038.
    Heard in the third division of this court for the first district at the October term, 1936.
    Opinion filed June 30, 1937.
    Lederer, Livingston, Kahn, Adler & Adsit, of Chicago, for appellant; Sigmond Livingston, of counsel.

      Taylor, Miller, Busch & Boyden, of Chicago, for appellee; Prestos Boyden, Cassius M. Doty and Charles R. Sprowl, all of Chicago, of counsel.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from a judgment of the circuit court of Cook county, allowing the claim of Morris Paper Mills against the estate of Carl H. Weil for the sum of $24,281.13. The judgment is dated June 24, 1935. The claim was originally filed in the probate court, where it was allowed, and the matter was heard in the circuit court on appeal from the probate court. The action is predicated upon the following instrument :

“Chicago, 111. July 11, 1929.
“Morris Paper Mills,
Morris, Illinois.
“Attention: Mr. Foreman N. Leopold.
“My dear Mr. Leopold:
“We understand that you are purchasing from Chas. H. Roach Company of Chicago, an Illinois partnership, the following securities at the price mentioned herein:
$10,000 — City of Chicago Improvement Bonds, issued under warrant # 53658, dated June 7th, 1929, due December 31st, 1931, @ $99.00 plus accrued interest.
$10,000 — City of Chicago Improvement Bonds, issued under warrant # 53658, dated June 7th, 1929, due December 31,1932, @ $99.00 plus accrued interest.
■ “In connection we appreciate the fact that you may at some future date ch.oose to sell all, or any part of above mentioned bonds. If at that time Chas. H. Roach Company will not purchase from you any of the above bonds at price satisfactory to you, then we as individuals do hereby agree that upon sixty days’ notice, given in writing, we will purchase from you any or all of the bonds at the original price paid for same— namely: $99.00 plus accrued interest.
“Yours very truly, “Carl H. Weil, Charles H. Roach.
“Charles H. Roach Co.
By Charles H. Roach.”

It is conceded that the bonds referred to were local improvement bonds, that they were purchased and paid for by the claimant, Morris Paper Mills, and that the instrument referred to was delivered to claimant contemporaneously with the purchase of the bonds. The record indicates that the firm of Charles H. Roach & Company was dissolved in the month of January, 1931; that Charles H. Roach died on June 14, 1933, and Carl H. Weil died November 8, 1933, and that letters testamentary were issued in the estate of Carl H. Weil on December 27,1933. The first $10,000 of city of Chicago improvement bonds mentioned in the instrument, matured December 31, 1931, and the other $10,000 of the bonds so purchased, matured December 31, 1932. It is in evidence, and not disputed, that in the year 1933, the city of Chicago collected on these bonds and paid' over to plaintiff, the sum of $300- in principal and $50 in interest, that this amount is all that the city of Chicago ever collected from the special assessments levied for their payment, and all that claimant ever received thereon.

In the trial in the circuit court, claimant produced a witness named Joseph Weil, a brother of the Carl H. Weil who signed the contract and who is now deceased. Joseph Weil testified that during the lifetime of Carl H. Weil, the witness was in the investment business with him; that in the year 1933, his brother had told him, the witness, that he had a conference with Mr. Leopold of the Morris Paper Mills, and, that Leopold told Carl H. Weil that he, Leopold, wanted to know whether Carl H. Weil would pay some money on account of the bonds in question, and that his brother told him that his reply to Leopold was that he could not afford to pay.

On June 4, 1934, the following letter was sent by the claimant to Rena K. Weil, executrix under the last will and testament of the estate of Carl H. Wei], as Mrs. Carl H. Weil:

“June 4, 1934.
“Mrs. Carl H. Weil,
“We are writing you with regard to a matter of somewhat long standing between our company and Mr. Carl Weil, which matter is of some importance to us, and which we would like very much to have cleaned up if possible.
“Under date of July 11, 1929, our company purchased twenty thousand ($20,000.00) worth of bonds from the Charles R. Roach Company of which Mr. Weil at that time was a partner, and the purchase was made contingent upon a guarantee which Mr. Weil signed, and a photostat copy of which I am attaching hereto.
“In May, 1933, after some correspondence, and ’phone conversations, Mr. Weil attended a meeting in our office, at which time he stated that he recognized fully the liability that existed under this guarantee and that it was his wish that the matter be taken care of promptly, but at that time it was not particularly convenient on account of conditions as they existed in the spring a year ago, and asked that we permit him four or five months longer to make good this guarantee, which we of course consented to do. Unfortunately, the passing of Mr. Weil precluded any action in this connection, and we subsequently had the matter up with Mr. Kuhn. However, before we could get the matter disposed of, Mr. Kuhn was taken sick with the result that as yet nothing has been done in this connection.
“We know definitely that it was the wish of Mr. Carl Weil that this matter be given attention at the earliest possible time, the whole transaction having been in good faith on both sides, and while we dislike to press the matter, still we feel obligated to write you at this time inasmuch as the matter is now nearly two years old, and we feel justified in asking that some action be taken promptly.
“Morris Paper Mills, • Foreman N. Leopold, President. ’ ’

In reply to this letter, the claimant received the fol- . lowing:

“Chicago, Illinois June 6, 1934.
“Mr. Foreman N. Leopold,
Morris Paper Mills
“I have your letter of June 4th, and note the photostatic copy of the contract which' you attached to your letter.
“I am aware of the situation, but due to the fact that both my husband and my father’s estate are still in probate, it is impossible for me to do anything about this matter at the present time.
Eena K. Weil.”

Thereafter, and on June 13, 1934, plaintiff sent and defendant received the following:

‘ ‘ Chicago, Illinois, June 13, 1934.
“Mrs. Eena K. Weil,
Executrix, Estate of Carl H. Weil, 1725 East 55th Street, Chicago, Illinois.
“Dear Madam:
“Under date of July 11,1929, Carl H. Weil, of whose estate you are executrix, and Charles H. Eoach, entered into an agreement and contract with the undersigned, Morris Paper Mills,'regarding the purchase and sale of certain municipal bonds as therein provided. A copy of said agreement and contract is enclosed herewith.
“Morris Paper Mills hereby gives you notice, in writing, of its desire to have said bonds purchased as provided in said agreement and contract, and respectively requests and demands that you, as executrix of the estate of Carl H. Weil, .purchase said bonds at the price and upon the terms set forth in said agreement and contract, on or before sixty (60) days after the giving of this written notice.
‘ ‘ The bonds described in said agreement and contract are held by the undersigned, and the undersigned is ready, willing and able to deliver the same to you upon payment by you of the purchase price stated in said agreement and contract, and hereby tenders said bonds to you, delivery thereof to be simultaneous with the payment of the purchase price.
“The condition set forth in said agreement and contract that said bonds be first offered to Charles H. Roach & Co. and that said firm shall refuse to purchase the same is avoided by the fact that said firm has been dissolved.
‘ ‘ This letter is being sent to you by registered mail. A similar letter is being sent simultaneously to Mrs. Lillian J. Roach, administratrix of the estate of Charles H. Roach.
“Tours very truly,
“Morris Paper Mills,
By Foreman N. Leopold, President. ’ ’

We here call particular attention to the following portion of a letter written by Carl H. Weil and Charles H. Roach to the plaintiff on July 11, 1929, upon which this action is predicated:

“In connection we appreciate the fact that you may at some future date choose to sell all, or any part of the above mentioned bonds. If at that time Charles H. Roach Company will not purchase from you any of the above bonds at price satisfactory to you, then we as individuals do hereby agree that upon sixty days’ notice, given in writing, we will purchase from you any or all of the above bonds at the original price paid for same- — namely: $99.00 plus accrued interest.
“Yours very truly,
Carl H. Weil, Charles H. Roach,
“Charles H. Roach & Go.
By Charles H. Roach.”

Defendant’s theory is that the instrument dated July 11, 1929, from Carl H. Weil and Charles H. Roach to the claimant company was merely an option in favor of the claimant, giving it the right to demand that Carl H. Weil and Charles H. Roach should purchase the bonds at the price designated in the instrument upon the terms there stated; that since the option contained no time limit for the exercise thereof, this omission might be supplied by the court and a reasonable time for the exercise thereof be fixed; that since plaintiff did not elect to exercise the option at or about the time of the maturity of the bonds, nor at or about the time of the default in interest payments thereon, nor during the lifetime of Carl H. Weil or Charles H. Roach, that notice to the defendant here was not an exercise of -the option within a reasonable time, and was, therefore, not effective. Defendant also contends that no waiver of the condition that plaintiff exercise its option within a reasonable time was either alleged in the claim filed, nor proven on the- trial of the cause, that if plaintiff is entitled to recover at all, that the proper measure of the recovery is not the purchase price of the bonds and interest from their maturity, but merely the difference between the fair market price of the bonds and the contract price, and that if recovery be had, it must be under section 64 of the Uniform Sales Act, Ill. State Bar Stats. 1935, ch. 121a, ¶ 67; Jones Ill. Stats. Ann. 121.68, and that no evidence was offered as to whether the money for the payment of the bonds was available in the city treasury during the years 1934 and 1935, and that it was incumbent upon plaintiff to avail itself if such funds were on hand during these years in the city treasury of the city of Chicago for this purpose; also, that estates of deceased persons should not be burdened with the purchase of defaulted bonds, where the claimant, if he has any rights, can be made whole by establishing his damage, and that this claim can in no event be maintained in the probate court, but that if there is any liability it must be established in a suit at law against the executrix.

In Morris Paper Mills v. Gatzert (abstract opinion), 276 Ill. App. 595, it was shown that on January 27, 1928, this same plaintiff purchased from the Gatzert Company, which was engaged in the business of selling stocks and bonds, certain other municipal bonds and municipal securities. Also, that in that case, and simultaneously with the purchase of the bonds and securities, the defendants therein, Gatzert and Spiegel, in order to induce the plaintiff to purchase the bonds and securities, and in consideration of the purchase of the same, executed a written agreement to repurchase the bonds and securities. In that case, as in this case, and in almost the identical language, the Gatzert Company agreed in a writing dated January 27, 1928, that “if at any time the Gatzert Company will not purchase from you [meaning plaintiff] any of the above bonds at prices satisfactory to you, then we, as individuals, do hereby agree that, upon sixty days’ notice in writing, wé will purchase from you any or all of the above bonds, upon the following basis: (Here follows the prices at which the defendant in that case agreed to repurchase the bonds.) ” In the complaint filed in that case, it was alleged that shortly before January 25, 1932, plaintiff had requested the Gatzert Company to repurchase the bonds.at the price named. A motion to dismiss the plaintiff’s claim was filed, and alleged, in substance, that the facts stated in the statement of claim were not sufficient in law to give plaintiff the right to recover, and that the alleged agreement imposed no legal obligation upon the defendant to purchase the securities, but that the agreement was a mere independent voluntary offer on the part of the defendant to purchase the securities mentioned, that it was not supported by a legal consideration, and that the contract was unilateral. In that case, in holding that the plaintiffs had the right to recover, we cited the case of Kincaid v. Overshiner, 171 Ill. App. 37, wherein this court said:

“On September 15, 1905, defendants were promoting and selling stock of the Petersburg Telephone Company; Lee Kincaid purchased, at the solicitation of defendants, forty shares of the stock and paid the treasurer of the corporation $1,000, that being the par value of the forty shares.
“In order to induce Kincaid to buy this stock, the defendants signed the following agreement:
“ ‘We, the undersigned, agree to purchase from Lee Kincaid at any time he should desire to sell to them his stock in the Petersburg Telephone Company, subscribed by him this day, at the price at which he pays for same, namely, $1,000 for forty shares.
“ ‘Dated, this 15th day of September, 1905.
“ ‘E. B. Overshiner, John S. Hurie, Henry S. Colby.’
“In the fore part of 1909, Kincaid became indebted to the Illinois National Bank of Springfield, beneficiary, plaintiff, and pledged this stock to it as security for that indebtedness. In May, 1910, Kincaid filed his petition in bankruptcy, and George E. Keys was appointed trustee of his estate.
“The evidence is conflicting as to whether Kincaid made a demand upon defendants to comply with their agreement to purchase this stock before it was pledged as security, but we do not consider that question as material.
“On September 9, 1910, the following notice was mailed to. defendants and duly received by them:
“ ‘Springfield, 111. Sept. 9, 1910.
“ ‘Messrs. E. B. Overshiner, Jno. S. Hurie and Henry H. Colby:
“ ‘Gentlemen: — On September 15, 1905, you signed a written agreement, agreeing to purchase from Lee Kincaid, at any time he should so desire, the forty (40) shares of the capital stock of the Petersburg Telephone Company at the price which he paid for the same in reliance upon your agreement, namely, one thousand ($1,000) dollars.
“ ‘The undersigned, and each of them, have elected to sell said stock to you and to have you purchase the same at said price. You may obtain the stock by calling upon the undersigned, George E. Keys, Trustee, upon payment of the said purchase price of one thousand ($1,000) dollars.
“ ‘The undersigned, and each of them, will execute and deliver to you any and all transfers and assignments that may be necessary and proper to fully vest the title of stock in you.
“ ‘Kindly let this have your immediate attention, and oblige,
“ ‘Yours respectfully, Lee Kincaid, George E. Keys, Trustee of the Estate of Lee Kincaid, Bankrupt.
Illinois National Bank, By H. M. Merriam, Cashier.
‘ ‘ ‘ Said bank holds said stock as collateral. ’ ’ ’

In Morris Paper Mills v. Gatzert, supra, we stated that suit was instituted in the circuit court of Menard county on this agreement, against Overshiner, Hurie and Colby, and that a judgment was entered against them for $1,037.50 and costs of suit, which judgment was affirmed by the Appellate Court, and we further stated that the Appellate Court, in Kincaid v. Overshiner, supra, made the following observation in its opinion as to the defense urged in that case:

“ ‘Defendants contend that the written agreement of September 15, 1905, was without consideration; that it is unilateral; that action thereon is barred by the five year statute of limitations; that the agreement was a personal one to Kincaid, and was not a matter of assignment, and no recovery can be had thereon for the use of any other person; and that before bringing this action it was necessary that the shares of stock be tendered by the plaintiff on demand for payment. Upon all of these contentions, propositions of law were submitted by defendants to the trial court and refused by it.
‘ ‘ ‘Upon the contention that the agreement was without consideration. It was unnecessary that any consideration for the undertaking should pass, or be a benefit to, the defendants; they were officers or directors in the corporation and promoting it, and the promise to purchase this stock by defendants was part of the original undertaking by Kincaid and the consideration therefor was received by and passed to the corporation which defendants were then promoting, and this was sufficient consideration for their agreement to purchase of date September 15.
“ ‘On the contention that the agreement is unilateral and lacks mutuality. If this agreement was the sole transaction between plaintiff and defendants this contention might be well founded, but the original purchase of the stock by Kincaid and the written agreement by defendants were part of one transaction, and even though the written agreement considered alone lacks mutuality, this' will not necessarily defeat an action thereon. Where a unilateral contract has been performed by one party and the consideration for its execution has been received by the other party, the party who has performed may insist on the fulfillment of the contract. Plumb v. Campbell, 129 Ill. 101; Seyferth v. G. & S. R. R. Co., 217 Ill. 487.’
“In Seyferth v. G. & S. R. R. Co., 217. Ill. 483, cited above, a bill was filed in the Circuit Court of Menard County by Seyferth to enjoin the railroad company from going on his land. From the statement of facts made by the Appellate Court of the 4th District, from which an appeal was taken to the Supreme Court, and which statement of facts was adopted by the Supreme Court, it appears that Seyferth, in consideration of $1.00, had delivered to the railroad company a written contract by which Seyferth gave an option to the railroad company to purchase certain land at a price named, and the right of the railroad company to enter upon the land. The instrument was signed by.Seyferth and his wife, but the consideration of $1.00 was not paid. After the execution of the instrument, the $1.00 consideration was subsequently tendered to the complainant Seyferth, who declined to take it. Upon the railroad company attempting to take possession of the land in question, Seyferth filed the bill for injunction named. Upon a hearing, the bill was dismissed, and on appeal to the Appellate Court, the judgment of the Circuit Court was affirmed, and as stated, on appeal to the Supreme Court, the Appellate Court was affirmed. It was insisted by the complainant Seyferth in the court below and in the Appellate and Supreme Court that the instrument executed was unilateral, and that there was no consideration for its execution. In passing upon this question, the Supreme Court said:
“ ‘We might further add that it is now universally held that a written agreement to convey land, at the option of the proposed vendee, within.a given time and at a certain price, if made upon a sufficient consideration, with full knowledge on the part of the person extending the option that he is hound and the other is not, is such a contract, though lacking mutuality, as will be enforced in equity, where the party holding the option signifies his acceptance within the time limited upon the terms as stated; and as is said in Guyer v. Warren, 175 Ill. 328, “where the one holding a buyer’s option makes his election to purchase, and tenders the amount agreed to according to the terms of the contract, it is the duty of the seller to accept the price an,d execute a deed to the purchaser for the property. . . . Such contracts are perfectly valid, and it is now well settled that a court of equity may decree a specific performance of them,” — citing Watts v. Keller, 56 Fed. Rep. 1.’ ”

Defendant insists that the contract here was an option contract, and that this option did not expressly make the same obligatory upon the personal representatives of the obligor after the death of the obligor. The contract provides in terms, as already noted, that if at any future date, plaintiff might choose to sell all or any part of the bonds mentioned, and if at that time, Charles H. Roach & Company would not purchase from plaintiff any of the bonds at a price satisfactory to the plaintiff, then Carl H. Weil and Charles H. Roach, as individuals, would, upon 60 days’ notice given in writing, purchase from the plaintiff any or all of the bonds at the original price, namely: $99 plus accrued interest. Within less than two years after the execution of the contract, the firm of Charles H. Roach & Company was dissolved. As stated, Charles H. Roach died on June 14, 1933, and Carl H. Weil died in the following November. The record indicates that prior to the death of Carl H. Weil, the city of Chicago had defaulted in the payment of the bonds purchased, and that before his death, an effort was made by the plaintiff to secure a settlement with Weil. On December 27, 1933, letters testamentary were issued to the defendant in this proceeding, and the claim against the estate of Carl H. Weil was filed in the probate court on July 15, 1935.

It is insisted by defendant that under section 64 of the Uniform Sales Act, chapter 121a, Illinois State Bar Stats. 1935, ¶ 67; Jones Ill. Stats. Ann. 121.68, entitled, “Remedies of the Seller,” if plaintiff can recover at all, it must be for “the difference between the contract price and the market or current price at the time or times the goods ought to have been accepted,” There is no question involved here as to price, or the acceptance of bonds, and in our opinion, the statute referred to is not involved. As we view the contract between the parties, it indicates clearly that at the time plaintiff purchased these bonds, and as a part of the consideration, Carl H. Weil agreed that if at some future date, plaintiff chose to sell the bonds, and if Charles H. Roach & Company would not purchase the same, that he, Weil, would purchase them and pay the price named, together with accrued interest.

It is also insisted that this- claim cannot be maintained against the estate of Carl H. Weil. In Smith v. Wilmington Coal Mining & Mfg. Co., 83 Ill. 498, one Charles Smith, in his lifetime, had a contract with the Wilmington Coal Mining & Mfg. Company, by which it was agreed that the company would deliver to Smith certain cars of coal during a certain period. It was proven that the company entered upon the contract, and that before its completion, Smith died. On demand being made by the administratrix that the company continue its delivery, the company declined, placing its refusal on the ground that the death of Smith had put an end to the contract, and in holding that this was not a law, the court said:

“It is a misapprehension of the law to suppose the death of one of the contracting parties put an end to the contract. For any breach after, as well as before, the, death of such party, his estate would be liable to respond in damages. It is conceded, the county court could have directed the administratrix to carry out the contract made with decedent. The admission implies the continued existence of a valid contract, and for any breach thereafter, the administratrix might maintain an action. But, in our view of the law, she had that right independently of the statute, taking upon herself all the risk incident to the further execution of the contract. ’ ’

We are of the opinion that the defense made here is without merit, and that the judgment of the circuit court should he, and it is affirmed.

Affirmed.

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


author: Mr. Justice Hebel

text:
    Hynek F. Kaplan et al., Appellees, v. Frank C. Topinka et al., Defendants. Appeal of First American National Bank & Trust Company of Berwyn et al., Appellants.
    Gen. No. 39,135.

      Heard in the third division of this court for the first district at the December term, 1936.
    Opinion filed June 30, 1937.
    Rehearing denied July 12, 1937.
    John B. Bernard, of Chicago, for appellants.
    Lester E. Lee, of Chicago, for appellees.
   Mr. Justice Hebel

delivered the opinion of the court.

This is an appeal by the First American National Bank & Trust Company of Berwyn, a corporation, and the American State Bank of Berwyn, a corporation, and James H. Rawleigh, as receiver of the First American National Bank & Trust Company of Berwyn, a corporation, from a decree entered by the court upon overruling the exceptions to the master’s report.

The court entered a decree wherein it was held that the contract entered into by and between the complainants herein and the defendants on June 2, 1930, be and the same is hereby set aside and held for naught as fraudulent and of no effect; that the promissory notes given by the said complainants to the defendants in payment of Vrzak second mortgage be and the same are set aside as fraudulent and of no effect, and that said defendants, Frank C. Topinka, individually and as president of the American State Bank of Berwyn, a corporation, and also individually and as president of the First American National Bank and Trust Company of Berwyn, a corporation, successor to American State Bank of Berwyn, a corporation; First American National Bank and Trust Company of Berwyn, a corporation, successor to American State Bank of Berwyn, a corporation, and American State Bank of Berwyn, a corporation, or either or any of them, pay to the complainants the sum of $29,796.23.

From the facts as they appear in the report of the master in chancery, to whom the cause was referred to take evidence and report his conclusions upon the facts as well as the law, on June 2, 1930, Hynek F. Kaplan, one of the complainants, purchased for $28,697.30, a second mortgage. This mortgage, together with the notes, was executed by Frank and Rose Vrzak for $38,000, payable in monthly instalments, and reduced to $34,000 by payment on the principal prior to that date. The mortgage was dated July 19,1928, conveyed property on 21st and Grove avenue, Berwyn, improved with a building containing 40 flats, and was subject to a prior mortgage of approximately $100,000.

It is claimed that at that time James Cech owned the mortgage and was indebted to American State Bank of Berwyn approximately $21,000, and had pledged the mortgage as security for his indebtedness. A short time prior to June 2, 1930, Cech sold complainants a house on Riverside Drive in Berwyn. At the conclusion of that sale, Cech and Kaplan went to American State Bank of Berwyn on June 2,1930, and talked with Topinka, the president of the bank, and Kaplan bought the mortgage, which is the subject of this controversy. Cech testified that before going to the bank he told Kaplan he owned this second mortgage and offered to sell it at a discount of $3,000; that negotiations for the purchase of this mortgage were consummated several days after the first meeting with Topinka, the president of this bank. As a result of the meeting at the bank when Kaplan advised Topinka that Cech had said Kaplan could make $3,000 in the purchase of this mortgage, Topinka stated that $3,000 was not enough and the mortgage was discounted and allowed for $5,474.70. Cech objected to the allowance of such a discount, but finally agreed, for the reason that it was understood from this conversation that it was necessary to sell this mortgage because the bank examiner would not permit the bank to continue to carry it as collateral. Kaplan not having the cash to pay for the mortgage, it was agreed by Topinka, the president of the bank, that he would loan the money to him. Thereupon Kaplan executed two notes, payable to American State Bank of Berwyn, both dated June 2,1930, and due November 1, 1930; one note was for $5,000, and as collateral security for its payment, Kaplan deposited with the bank the Vrzak second mortgage he had just purchased; the other note was for $18,000 and as collateral security for its payment, Kaplan deposited with the bank five mortgages owned by him and his wife, for principal sums aggregating $20,800. At the time this purchase was made, Mary Kaplan, wife of Hynek F. Kaplan, was not present.

When Kaplan executed the notes he gave the bank a check for $1,697.30. The two notes and the check totaled $24,697.30, and were made and delivered in connection with Kaplan’s purchase of the mortgage; the total purchase price was $28,697.30; for the balance Kaplan testified he gave the bank a $4,000 note, making a total of $28,697.30.

There is a conflict in the testimony regarding the number of notes executed by Kaplan. However, on November 12,1930, Kaplan’s indebtedness on the three notes (including the note discounted by Cech) had been reduced to $13,683, by reason of payments by the Vrzaks on their second mortgage, and by the proceeds of sale of two of the mortgages pledged as security for the $18,000 note of Kaplan. On November 12, 1930, Kaplan executed a renewal note to the American State Bank of Berwyn for $13,683, and pledged as security for its payment the Vrzak second mortgage and the three remaining mortgages, originally pledged to secure the $18,000 note. After making* the renewal note and before March 3, 1931, the bank collected three payments on the Vrzak second mortgage, which were credited on Kaplan’s note, and his indebtedness reduced to $12,700. On March 3, 1931, Kaplan executed a renewal note for $12,700, and pledged the same collateral as security for its payment that he pledged for the note of November 12, 1930. The bank subsequently sold the remaining first mortgages, and applied the proceeds on Kaplan’s note, leaving an unpaid balance on his note of $1,859.25 as of November 28,1931.

The controversy in this case is upon the question of whether fraudulent representations were made to Kaplan at the timé he purchased the second mortgage, and because of the relationship between him and Topinka, the president of the American State Bank of Berwyn, he relied on the representations made to him as being true and purchased the second mortgage. From Kaplan’s testimony it appears that when he bought the second mortgage Topinka told him everything was paid up to date. This was denied by Topinka, but he stated that he showed Kaplan the mortgage on which the payments were indorsed, and showed him how the payments were made; told him that the mortgage called for a little larger payment than they were paying, but that was the arrangement with Mr. Cech. On the other hand, from Kaplan’s testimony Topinka showed the mortgage and a card record of payments; that he did not-examine the mortgage; that he just saw “how they mark the payments”; and that the Vrzaks were making payments on the second mortgage every month, but that he was unable to tell how much; that interest and payments were made, and that Kaplan relied upon the representations made by Topinka that there was an income from the building of $2,400 a month. This is denied by Topinka, but from his testimony it appears that he told Kaplan the rent from the building was approximately $24,000 a year.. Kaplan was advised by Topinka regarding the building, where it was located, and Topinka indicated by pointing from the bank building what building they were talking about.

From the record it also appears that Kaplan had had some business experience; had purchased a number of first mortgages, but never any second mortgages; that he knew the mortgage in question was a second mortgage ; also that a first mortgage is prior to a second mortgage.

It further appears from Kaplan’s testimony that Topinka said he guaranteed the mortgage and the bank guarantees the mortgage. This is denied by Topinka.

In November, 1930, Yrzaks were in arrears in their payments and they told Kaplan they would not pay the interest and instalment of principal then due on the first mortgage, unless Kaplan would grant an extension of three years of the second mortgage, which matured July 19,1931. Kaplan demanded $3,000 commission for such an extension and wanted the commission paid in cash. Yrzaks refused to pay that much commission and wanted the commission made a part of the mortgage indebtedness. Negotiations were carried on in regard to the extension and commission to be paid until June or July, 1931, when Kaplan and the Yrzaks appeared to have reached an agreement at the bank for $500 commission for a three-year extension. Mrs. Yrzak later advised Kaplan she would pay out no more money on the building, and it appears from Kaplan’s testimony that he told Topinka he wanted his money back; that Topinka guaranteed the payment of the note; that in reply to this Topinka said he did not have the money.

At the time Kaplan purchased the second mortgage it does not appear that the First American National Bank and Trust Company of Berwyn was in existence. It was organized about December 15, 1930, at which time the American State Bank of Berwyn and other banks consolidated, and the First American National Bank and Trust Company of Berwyn was organized to effect such consolidation. Since this suit was instituted, James H. Kawleigh was appointed receiver of the First American National Bank and Trust Company of Berwyn.

The first point raised by the appellants is that the American State Bank of Berwyn had no power to guarantee the second mortgage or agree to repurchase it from the complainants, and they call our attention to that part of the decree wherein the chancellor found that Topinka stated that the bank guaranteed said second mortgage and that he guaranteed it and would dispose of it when the complainants were in need of money.

The reply of the complainants to this contention is that they are not seeking to recover under a guaranty or an agreement to repurchase; that proof of these statements was made for the purpose of showing the length to which Frank C. Topinka was willing to go in order to foist this second mortgage upon the complainants, and that the statements made by Topinka show clearly a fiduciary relation.

The chancellor in passing upon the master’s report overruled the exceptions and entered a decree containing several findings of fact. In paragraph 7, after entering* a finding on the several facts involved in this litigation, the court found that: “The said Frank C. Topinka further informed complainant that he had known him for many years and that complainant knew that said defendant would not sell him a mortgage that was not a good and safe investment, and that said Bank would not take said mortgage, or loan money upon the same, unless it was good, and the said Topinka further stated that the Bank guaranteed said second mortgage and that he guaranteed it, and that he would dispose of said mortgage when said complainant was in need of money.”

And in paragraph 9, as a part of its finding, the court found: “. . .; that the said Frank C. Topinka at that time assured the complainants that said second mortgage was a good and safe investment and that it was made at the Bank and the Bank guaranteed it and lie guaranteed it; that the payments were being made regularly every month by the said Frank Vrzak and Rose Vrzak, his wife, and everything had been paid to date, and any time they needed money that he would purchase the mortgage back from them.”

The decree further finds that: " The statements and representations made by the said Frank C. Topinka to the said Hynek F. Kaplan, as set forth in findings herein ‘6’ and ‘7’ respectively were false; . . .”

And further that: “The representations and statements made by the said Topinka to the said Hynek F. Kaplan and Mary Kaplan, as set forth in finding 9 of this decree, were false and were known to be false at that time by the said Topinka and were made for the purpose of deceiving said complainants.”

In the discussion of this subject it appears that the court considered the evidence of guaranty made by Topinka guaranteeing the mortgage on behalf of the bank and that this evidence had an important bearing on the conclusion upon these findings of the court that the contract entered into by and between the complainants herein and the defendants, or either of them, on June 2, 1930, be set aside and held for naught as fraudulent and of no effect.

The answer of the American State Bank of Berwyn denies that Frank C. Topinka was authorized to make representations or guarantees on behalf of the defendant to the complainants, and denies that the complainants are entitled to the relief prayed for. Therefore, the issue is as to whether or not the guaranty made by Topinka would be binding upon this defendant and subject the American State Bank of Berwyn and its successor, The First American National Bank and Trust Company of Berwyn to a liability upon this guaranty alleged to have been made by Frank C. Topinka, who was one of the officers of this Bank.

The question of liability of a bank has been passed upon by the Supreme Court in Knass v. Madison & Kedzie State Bank, 354 Ill. 554, wherein the court said:

“Under the established law of this State the defense of ultra vires is available to the old bank when sued on a void agreement. It is said, however, that the complainants performed and executed their part of the agreement, and that it would not be good faith to permit the bank now to refuse. The same, question was raised in Steele v. Fraternal Tribunes, supra (215 Ill. 190), where this court said: ‘A contract of a corporation which is ultra vires in the proper sense of that term — that is to say, outside the object of its creation as defined by the laws of its organization, and therefore beyond the powers conferred upon it by the legislature — is not only voidable but wholly void and of no legal effect. The objection to the contract here is not merely that the corporation ought not to have made it but that it could not lawfully make it. The contract could not be ratified by either party because it could not have been authorized by either. No performance by the parties could give the unlawful contract validity or become the foundation of any right of action upon it.-. . . But when the contract is beyond the powers conferred upon it by existing laws, neither the corporation nor the other party to the contract can be estopped, by asserting to it or by acting upon it, to show that it was prohibited by those laws. ’ ” And then as to the question of notice, the court further quoted from Steele v. Fraternal Tribunes, supra, as follows: “ ‘The powers delegated by the State to corporations are matters of public law, of which no one can plead ignorance. A party dealing with a corporation having limited and delegated powers is chargeable with notice of those powers and their limitations and cannot plead his ignorance of their existence. . . . ’ ” The court in the same opinion after discussing contracts of the character before this court, said: “It seems clear, however, that payment or assumption of or guaranteeing to pay bonds of the character here involved is of the gist of the prohibition of this act applicable in any case where by any such contracted liability the deposits or the trust funds of the bank could become jeopardized or impaired. The act for the protection of bank depositors evidences an intention on the part of the legislature to declare contracts of the character before us void as against the public policy of the State.”

In the case of People ex rel. Barrett v. First State Bank & Trust Co. of Canton, 364 Ill. 294, which was an action brought by a depositor whose claim was based upon two contracts entered into between him and the bank while it was being operated, by which he purchased from the bank certain securities owned by it on the promise of the latter to repurchase the same at a fixed price on his demand, or in any event, not later than January 1, 1935, which contracts were authorized by the directors of the bank, and thereafter the bank was closed under the general moratorium of March 3, 1933, and was not reopened, and a receiver was appointed with whom appellant filed his claim and made demand that he carry out the contracts of the bank to repurchase these securities, the court said:

“That these contracts come directly within section 4 of the act referred to seems clear. This court in Knass v. Madison and Kedzie State Bank, 354 Ill. 554, held such contracts invalid as against public policy and beyond the corporate powers of the bank to perform. . . . Nor is appellant entitled to recover notwithstanding the invalidity of his contract. He purchased the securities, tools; them into his possession and later sold them. The bank’s contract was invalid, and no claim can now arise against depositors based on a void contract. ’ ’

Therefore, it will be seen from the facts as they appear in the record that the chancellor in the instant case took into consideration the guaranties made by Topinka as president of the bank, by which he guaranteed the payment'of these notes by the bank, or to produce the money when Kaplan desired it, and reached the conclusion that a fraud had been perpetrated upon the complainants and they were entitled to recover judgment, not alone against Topinka, one of the defendants, but as against the American State Bank of Berwyn .and its successor, the First National Bank and Trust Company of Berwyn, in the sum of $29,796.23, together with interest at the rate of five per cent per annum from the date of the entry of this decree.

The .court found that the. guaranty agreement made for the banks in question was fraudulent, and therefore the complainants could recover from the defendant banks. The court overlooked the law announced by the Supreme Court in Knass v. Madison and Kedzie State Bank, supra, where the court quoted from Steele v. Fraternal Tribunes, 215 Ill. 190, as follows: “ ‘. . . A party dealing with a corporation having limited and delegated powers is chargeable with notice of those powers and their limitations and cannot' plead his ignorance of their existence. . . . ’ ”

From the announcement made by the Supreme Court, the complainants cannot plead ignorance. By dealing with the bank they are chargeable with notice of limited powers delegated by the State to the bank. Therefore, these complainants could not rely on the guaranty in question, and being-chargeable with knowledge that a guaranty such as was made by Topinka for the bank was beyond the powers granted by law to the bank and wholly void, such guaranty contract cannot be ratified.

It follows from what we have said in this opinion that the decree in this case must be reversed and the cause remanded.

Reversed and remanded.

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


text:
    Florence C. Bulger, Appellant, v. J. Francis Bulger, Appellee.
    Gen. No. 39,185.
    Heard in the third division of this court for the first district at the October term, 1936.
    Opinion filed June 30, 1937.
    Immenhausen & Banovitz, of Chicago, for appellant ; Meyer Balin, of Chicago, of counsel.
    Whitty & McGah, of Chicago, for appellee.
   Mr. Justice Hebel

delivered the opinion of the court.

The plaintiff appeals from a judgment for the defendant in plaintiff’s action on a promissory note executed by the defendant on June 30, 1930, bearing-interest at six per cent per annum after date. The note provides that the plaintiff is authorized in her name to sue for and take all legal steps she may deem proper to recover on said note.

The defense of the defendant to this action was that the right to recover had been previously adjudicated in a certain divorce proceeding had between the plaintiff and the defendant in the circuit court of Cook county, Case No. B-267865. The cause was heard by the court, and the defendant introduced the bill for separate maintenance filed by the plaintiff in the circuit court of Cook county in the case above mentioned, the answer filed thereto by the defendant, the defendant’s cross-bill for divorce, the answer of the plaintiff to the cross-bill, and the decree of divorce entered by the court.

The plaintiff introduced as evidence the transcript of proceedings had on the hearing of the divorce action. The court upon the hearing of the plea of res judicata entered judgment for the defendant.

The promissory note in question does not appear to have been offered in evidence in this case, but owing to the fact that no question has been raised, this court will consider whether this plea of res judicata is sustained by the record.

The decree of divorce was introduced in evidence, and that part of the decree upon the question of res judicata provides:

“. . . that the defendant be given a decree of divorce ; that the bonds of matrimony be dissolved; that the original bill of complaint filed by the plaintiff be dismissed; that the defendant pay to the plaintiff, Florence C. Bulger, the sum of $5,000 in full and complete payment of any and all claims for alimony at the rate of $75.00 per month when the defendant’s income is $200.00 a month or less, and when the defendant’s income is $300.00 a month or more, plaintiff is to receive one-fourth of his income per month, the payments to cease should the defendant be without employment or physically incapacitated; it was further ordered that the defendant refrain from disposing of his membership in the Chicago Board of Trade until said sum of $5,000 was paid, or unless permission was first obtained from the Court to sell the membership; that the plaintiff have all personal property heretofore used by the parties and that each of the parties be barred from any claim to dower or other claims occurring out of the marital relation heretofore existing except as set forth in the decree.”

The plaintiff calls this court’s attention to the statement of the trial court made shortly before the decree of divorce was entered, which is:

“ . . . and the Court has been informed that a proceeding is now pending in the Municipal Court of Chicago in which the plaintiff, Mrs. Bulger, is now suing Mr. Bulger on a note for $68,000. The Court has no opinion either way as to any amount that is due either of the parties by reason of their financial dealings, so I wouldn’t want my decision to be interpreted that I am in any way indicating in any way opinion as to the respective property rights.”

The defendant questions the right of this court to consider this oral announcement of the decision and the grounds upon which the decree is based as controlling. It is true that the parties are bound by the decretal order of record, and not by the oral announcement of the court. The plaintiff here admits that the oral announcement is not controlling, but suggests that this announcement by the court was introduced solely for the purpose of showing that the decree entered in the divorce proceedings was consistent with the oral announcement by the court, and that the decree determines the issues between the parties as to the right of further action upon the' promissory note in question; therefore, the decree is res judicata.

The Supreme Court in the case of Seuss v. Schukat, 358 Ill. 27, upon a like question said: “It is a familiar rule that, unless preserved by statute, an absolute divorce ordinarily terminates all property, rights and interest, not actually vested, of the divorced persons in the property of each other which are dependent upon the marriage, such as dower, curtesy and rights of inheritance under statutes of descent. (Maynard v. Hill, 125 U. S. 190; Barrett v. Failing, Ill id. 523; Jordan v. Clark, 81 Ill. 465; Howey v. Goings, 13 id: 95; Clarke v. Lott, 11 id. 105; Carr v. Carr, 185 Iowa, 1205; Crise v. Smith, 150 Md. 322; Harvard College v. Head, 111 Mass. 209.) Conversely, contractual or property rights of either a husband or. a wife which exist independently of the marriage, such as transfers of property and rights under marriage- settlements and separation agreements survive a divorce and are governed by the principles applicable to similar contractual or property rights. 2 Bishop on Marriage, Divorce and Separation, secs. 1651 — 1659; Young v. Sangster, 322 Mo. 802; Carpenter v. Osborn 102 N. Y. 552; Babcock v. Smith, 22 Pick. (Mass.) 61; Crise v. Smith, supra; Sidney v. Sidney, 3 P. Wms. 269.”

It is to be noted from the opinion, of the Supreme Court that contractual or property rights of either a husband or a wife which exist independently, survive a divorce. The merits of the controversy regarding the right to recover upon the promissory note are not passed upon in the decree. In fact, by the decree each of the parties is barred only from any claim to dower or other claims arising out of the marital relation heretofore existing; claims are not barred that exist independently of the marital relation which are vested! In this case the contract between the parties is evidenced by the promissory note in question, which was in existence and independent of any marital relation, and was vested in the plaintiff before the separate maintenance and divorce action was pending.

In the case of Elliott v. Northern Trust Co., 178 Ill. App. 439, this court in passing upon a question arising out of a bill to compel specific performance of a contract to make a will, wherein the plaintiff sued the executors and heirs of a former husband from whom she had been divorced, said:

“We do not think that the divorce proceedings referred to in the bill in any way militate against appellant’s right to maintain her bill. She is now seeking to enforce the contract to will her the property in question. It is a contract right based upon a money consideration, and not a contract right depending upon the marital relation for its validity, that is lost or extinguished when the marital relation is severed by divorce proceedings.”

These decisions seem to sustain the position of the plaintiff that by the entry of the decree of divorce she was not barred in the action to recover upon the promissory note signed by her husband. The fact is that this contract was entered into independent of the marital relation, and was not the outcome of the marriage between the parties but rather a contract which was entered into independent of that relation and for the recovery of an amount claimed to be due from the husband and for which he signed the promissory note in question.

From the facts as they appear in the record, the rights of the parties were not determined by the court in the entry of the divorce decree. This suit was pending at the time the divorce action was heard, and it is evident from the date of the note that it was given before the institution of the suit for separate maintenance which was first instituted by the wife against her husband and was heard upon the merits of the controversy and a decree of divorce entered by the court upon the cross-bill of the husband. From the conclusions of this decree the parties are only barred from any claim to dower or other claims occurring out of the marital relation heretofore existing except as set forth in the decree. This conclusion of the court sustains the theory that only such matters as exist and arise out of the marital relation are barred.

For the reasons stated the judgment for the defendant entered upon a plea of res judicata is reversed and the cause is remanded to be heard upon the merits of the controversy.

Reversed and remanded.

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


text:
    Ben Mammina, Trading as Ben’s Tri-State Motor Company, Appellant, v. Homeland Insurance Company, Appellee.
    Gen. No. 39,209.
    Heard in the third division of this court for the first district at the October term, 1936.
    Opinion filed June 30, 1937.
    Rehearing denied July 12, 1937.
    William Feldman and Abraham Feldman, both of Chicago, for appellant.
    I. W. Kaufman, of Chicago, for appellee.
   Mr. Justice Hebel

delivered the opinion of the court.

This action by the plaintiff filed in the municipal court of Chicago was based upon a policy of insurance issued by the defendant insuring plaintiff’s truck against loss by fire. The case was tried and heard by the court, without a jury, and resulted in a finding and judgment against the plaintiff, from which judgment the plaintiff appeals.

From the facts it appears that on February 11, 1935, said automobile truck was run into by a locomotive of a Big Four Train, at or near Anderson, Indiana, and the entire truck and the trailer were destroyed by fire resulting from the collision.

It appears from the evidence heard by the court that on the day in question the truck of the plaintiff was driven by one Harold Hayden, who was accompanied by Joseph McCormick as a helper; that in crossing the tracks at the place in question the locomotive of what is designated the Big Four Train, struck the gas tank in the front end of the truck and instantaneously flames burst forth; the driver was burned to death, and the helper was burned in and about divers portions of his body.

There is evidence by the plaintiff that the value of the truck as of February 11, 1935, before the happening of the fire, was in the sum of $2,250.

A stipulation was entered into by the parties that the value of the wreckage after the collision was $100, and by this action the plaintiff seeks to recover the sum of $2,150 after allowing credit for the value of the Avreckage of $100, as stipulated.

The.defendant, in support of its contention, offered evidence upon the question as to what part of this truck Avas destroyed by the force of the collision and what part was destroyed by fire. The evidence of this Avitness was based upon photographs of the wrecked truck taken shortly after the collision and the parts which were still at the place where the wreck occurred.

During the course of the examination of the witness, the defendant sought his opinion of the value of the truck immediately after the collision and before the starting of the fire, on which subject the witness was qualified to testify. To this line of questioning plaintiff’s counsel objected and his objection was sustained by the court, upon the theory that it was for the court to decide whether the damage to plaintiff’s truck was caused by the collision or by fire.

From the contract of insurance the right of recovery for this loss will be determined.

The plaintiff contends that by the terms of this insurance policy, wherein it is provided that the defendant insured the plaintiff against loss “from fire arising from any cause whatsoever and lightning” the defendant is bound. Defendant’s reply to this contention is that while it admits that under the policy of insurance in the instant case, loss by fire is covered, even where the fire is caused by a collision, this fact does not dispose of the question as to what caused plaintiff’s loss.

The defendant calls our attention to the evidence which appears to establish the fact that the plaintiff’s truck collided with the train and subsequently caught fire and burned.

The only evidence in the record introduced on the question of whether the damage was caused by the collision or by the fire is the testimony of defendant’s witness, and defendant again calls our attention to this testimony and urges that from this evidence it is clearly demonstrated that the plaintiff’s truck was completely demolished and destroyed as a result of its collision or impact with the train, and what was burned by the fire that followed was purely wreckage of the truck.

The question here is whether by reason of- the fire which followed the collision the defendant would be liable for the total loss suffered by the plaintiff where the contract of insurance provides for loss “from fire arising from any cause whatsoever and lightning. ’ ’ .

The plaintiff offers the plausible suggestion that it is not unusual, when a truck or automobile is struck by. another instrumentality, for a fire to ensue, and if it were the intention of the insurance company to avoid a loss of this kind, it certainly would have put in an exception in its policy.

From the language used in this policy, where an automobile or motor truck is destroyed by fire, it is only reasonable to construe the contract as meaning that the insurance company assumes the burden of paying for the loss and that the defendant is bound by its policy of insurance.

The defendant’s theory is that where there are two concurrent causes of a loss, and the damage done by each cannot be distinguished, the predominating efficient one must be regarded as the proximate cause of the loss. ■

The plaintiff relies largely on the case of Howard Fire Ins. Co. v. Norwich & New York Transportation Co., 12 Wallace’s Rep. 194 (79 U. S.) where there was a policy of insurance providing against all loss or damage, not exceeding the sum insured, that should happen to the property by fire, other than fire happening by means of any invasion, insurrection, riot, or civil commotion, or of any military or usurped power. It was held in that case that the insurers took the risk of fives caused by lightning, explosions, ■ and collisions. The court said in its opinion:

“It is -true, as argued, that as the insurance in this case was only against fire, the assured must be regarded ms. having'taken the risk óf collision, and it is also true that the Collision caused the fire; but it is well settled ,that when an efficient cáiuse nearest the loss is a-peril'expressly insured against, the insurer is not to be relieved from responsibility by his showing that the property was brought within that peril by a cause not mentioned in the contract.” The court further said in this opinion:
“In the case before us there is no exception of collisions, or fires caused by collisions. It must therefore be understood that the insurers took the risk of all fires not expressly excepted.”

The defendant seeks to qualify the opinion of the court in Insurance Co. v. Transportation Co., supra, by enumerated facts, and quoting from Justice Strong, who delivered the opinion of the court, where he used this language:

“As the influx of the water- was the direct and necessary consequence of the collision, it is argued that the collision was the predominating, and, therefore, the proximate cause of the loss. The argument overlooks the fact, distinctly found, that the damage resulting from the sinking of the vessel was the natural and necessary result of the fire only. . . . Apart from that finding, the other findings, unquestionably of facts, show that neither the collision, nor the presence of water in the steamer’s hold was the predominating efficient cause of her going to the bottom. That result required the agency of the fire. It is found that the water would not have caused the vessel to sink below her promenade deck,- had not some other cause of sinking supervened.”

The court then held that the fire was the efficient predominating cause, as well as nearest in time to the catastrophe. The terms used in the contract in question are not restrictive in any way, and when we consider this occurrence, the language is so broad that the insurance company in insuring the plaintiff to pay loss arising from any cause resulting in the fire, assumed the burden. Therefore, it would seem, without considering any of the other authorities cited, that the court erred in finding and in entering judgment for the defendant.

Judgment reversed and cause remanded.

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