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    Home for Destitute Crippled Children and Robert F. Carr, Trustee, Appellees, v. Paul Chamberlain Boomer et al., Defendants. Appeal of Paul Chamberlain Boomer and Laura Boomer, Appellants.
    Gen. No. 41,252.

      Opinion filed January 22, 1941.
    Harris F. Williams, of Chicago, for appellants; Martin W. Bell, of Chicago, of counsel.
    Cameron, Heath & Burry, of Chicago, for appellees; William Burry, Jr., of- counsel.
   Mr. Justice Burke

delivered the opinion of the court.

On August 27, 1924, Paul Chamberlain Boomer, as grantor, executed and delivered a sealed trust instrument, wherein he named Arthur W. Cutten, George M. Reynolds and Robert F. Carr as trustees. This instrument, in part, reads:

“I hereby transfer, assign and deliver to Arthur W. Cutten, George M. Reynolds and Robert F. Carr, all of said City of Chicago, as Trustees (hereinafter .called the ‘Trustees’), to be held and disposed of by the Trustees under the trusts by this instrument created, the following:
“Certificates representing two thousand (2000) shares, each of Ten Dollars ($10) par value, of the capital stock of Texas Gulf Sulphur Company, a corporation organized under the laws of Texas, and which certificates are more particularly described as follows :
“Twenty (20) certificates numbered C13580 to 13599 (both inclusive) each for one hundred (100) shares, in favor of Jackson Bros. & Co. and endorsed in blank.
“2. The amount of the trust estate to be held by the Trustees under and subject to the terms of this instrument may be increased by me, from time to time, by my adding thereto other securities or property, a list of which shall be attached hereto and signed or initialed by the Trustees, and all such additional securities or other property so delivered to the Trustees and listed shall in all respects be subject to all the terms and conditions of this trust.
“3. The term ‘securities,’ or ‘said securities,’ wherever used in this instrument (unless otherwise indicated by the context) shall be held and construed to mean and embrace any and all of the shares of stock specifically described in paragraph 1 hereof, and'also any and all other bonds, shares of stock and property of every kind and description hereafter added to, exchanged or substituted for any of said specifically described shares of stock, or in any way.received or acquired hereunder by the trustees. . . .
“4. (a) The trustee shall and will, at intervals of not less than three months each, pay over to me, during my life, the net income from said securities.
“(b) Upon my death leaving me surviving my wife, Laura Boomer, the trustees shall and will pay out of said net income to said Laura Boomer during her life, or until she shall remarry, the sum of Five Thousand Dollars ($5000) a year in installments of Twelve Hundred Fifty Dollars ($1250) each, every three months after my death. . . .
“6. If my said wife shall survive me, then upon either her death or remarriage, and if she shall not survive me then upon my death, the whole principal of said trust estate and all accumulated and undistributed net income thereof shall forthwith be distributed and paid by the trustees to the Home for Destitute Crippled Children, a corporation organized under the laws of Illinois, and now operating such a Home at 1653 Park Avenue in said City of Chicago.
“If, at the time provided for said distribution, said Home for Destitute Crippled Children shall not be in existence, or shall have abandoned the operation and maintenance of a Home for destitute crippled children, then and in such event the trustees shall then pay and distribute the whole principal of said trust estate and all accumulated and undistributed net income thereof to Chicago Home for Convalescent Women and Children, a corporation organized under the laws of Illinois, and now operating such Home at 2678 West Washington Boulevard in said City of Chicago. And if said Chicago Home for Convalescent Women and Children shall not then be in existence, or shall have abandoned the operation and maintenance of a home for convalescent women and children, then and in ' such event the trustees shall then pay and distribute the whole principal of said trust estate and all accumulated undistributed net income thereof to such charitable, educational, or scientific institutes or institutions then in said City of Chicago as said trustees may select. . . .
“The Trustees, and any or either thereof, and any successor trustee hereunder, shall have the right to resign at any time. In case of the death, resignation, failure, refusal or inability to act of any of the Trustees, the remaining Trustee or Trustees may, from time to time, fill the vacancy. Any and every such resignation or appointment shall be evidenced by an instrument in writing duly signed and acknowledged (as deeds of real estate are then required by the laws of Illinois to be acknowledged) by the resigning Trustee, in case of resignation, and by the remaining Trustees making the appointment to fill any vacancy, in case of such appointment. Such instruments shall be filed for record in the Recorder’s office of Cook County, Illinois. Any resigning Trustee shall, before such resignation takes effect, give at least one day’s written notice to the remaining Trustees, which notice may be sent by registered mail, postage prepaid, addressed to the then last known postoffice addresses of such remaining Trustees. Any two Trustees shall have full power and may act under this instrument, and their actions as to any and every matter whatsoever shall have and be given precisely the same fjoree and effect as though all the Trustees had joined therein.”

The trust instrument also contained a “spendthrift clause” for the benefit of the grantor and his wife, Laura Boomer. A notary public certified that on August 29, 1924, the grantor appeared before him in person and acknowledged that he signed, sealed and delivered the said instrument as his free and voluntary act for the uses and purposes therein set forth. On September 8, 1924, Arthur W. Cutten, George M. Reynolds and Robert F. Carr signed, sealed and acknowledged the following :

“The undersigned, Arthur W. Cutten, George M. Reynolds and Robert F. Carr, being the Trustees designated in the above and foregoing instrument, do hereby consent to said instrument and accept the trusts therein and thereby created, and agree to perform and' discharge the same in accordance with and subject to all the terms, conditions and provisions of said instrument, and we hereby acknowledge receipt from said Paul Chamberlain Boomer of the certificates for two thousand shares of the capital stock of Texas Gulf Sulphur Company specifically described in said instrument. Witness our hands and seals at Chicago, Illinois, this 8 day of Sept. 1924.” On January 25, 1938, the Home for Destitute Crippled Children, a corporation, and Robert F. Carr, a trustee, filed a complaint in equity, naming Paul Chamberlain Boomer, his wife and others as defendants, alleging, upon information and belief, that prior to June 15, 1936, the corpus of the trust (established by the instrument dated August 27, 1924) consisted of the following: 5,232 shares Texas Gulf Sulphur Company, 500 shares the Diamond Match Company, preferred, 400 shares the Diamond Match Company, common, 200 shares Chicago, Rock Island & Pacific Railway Company, 7 per cent preferred, 200 shares Illinois Central Railroad Company, common, 100 shares Southern Railway Company, preferred, and 6 shares Southern Railway Company, common; that said shares were evidenced by certificates issued in the name of Boomer and by him indorsed in blank, said certificates being located in.a certain safe-deposit box in the vaults of the Harris Safe Deposit Company, and that access to said box was available to Cutten and Boomer jointly; that on or about June 15, 1936, Cutten and Boomer removed the said certificates from said box; that on June 24, 1936, Cutten died and thereupon Carr became the sole remaining trustee; that on June 25, 1936, Carr obtained admission to the box and found it empty; that the stock certificates were not found among the assets of Cutten’s estate; that, on information and belief, Boomer “has said certificates in his possession today, or has control thereof. Boomer has been requested to produce said certificates and to turn them over to Carr, sole remaining trustee, but Boomer has refused to do so”; that Carr as sole remaining trustee has the sole right to the possession and custody of the certificates. The complaint prayed that the court require Boomer to deliver to Carr, as trustee, the stock certificates constituting the corpus of the trust, duly indorsed in such manner so as to enable Carr to obtain the transfer of the stock represented by the said certificates, and that Boomer account for all dividends received by him since September 8, 1924; that the court issue a preliminary injunction restraining Boomer from transferring any of the certificates, and from disposing or converting to his own use any dividends theretofore received by him, or which he should thereafter receive, and for such other and further relief as equity might require. The Boomers filed a motion to dismiss the complaint for want of equity on the ground that it did not state any equitable cause of action, that it contained no allegation that the alleged trust property therein described had ever been delivered to or was ever in the possession of the alleged trustees, that the complaint was defective in that it appeared therefrom that plaintiff had been guilty of laches, and that it further appeared that the plaintiffs didn’t have any interest in the alleged trust property, or that the plaintiffs had any right to bring the suit. The court entered an order sustaining the motion to dismiss and granted leave to plaintiffs to file an amended complaint. On March 21, 1938, plaintiffs filed their amended and supplemental complaint, in paragraph 3 of which they alleged that the trust agreement had been signed by Boomer on August 27, 1924, and by the trustees on September 8, 1924, and that on said last mentioned date executed copies thereof were delivered by Boomer to the trustees, and an executed copy thereof delivered by the trustees to Boomer; that “said agreement thereupon became effective and has remained and is now in full force and effect. Certificates representing 2,000 shares of the capital stock of Texas Gulf Sulphur Company, one of the defendants herein, which at that time represented the entire corpus of said trust, were delivered by Boomer, endorsed in blank, to said Cutten, Reynolds and plaintiff Carr, as trustees. The trust described in the said agreement was thereby fully established and created and said 2,000 shares of stock of Texas Gulf Sulphur Company became the property of said Cut-ten, Reynolds and Carr, as trustees, and were thereafter held in their possession and under their control. ’ ’ In paragraph 4 the plaintiffs allege that for some years after the creation of the trust certificates of stock representing the corpus of the trust and being-certificates for said 2,000 shares of stock of Texas Gulf Sulphur Company, or for other shares of stock representing said shares or the reinvestments of the proceeds of said shares, or some of them, were held in the physical possession of George M. Reynolds, one of the trustees, as agent for said trustees, in the vaults of the Continental Illinois National Bank and Trust Company of Chicago, or of its predecessor, and that at or about the time of the retirement and removal of Reynolds to California, said certificates were turned over to Cutten to be held in his custody as agent for the trustees, and were in fact so held by Cutten until June 15,1936, and for some time prior were kept by Cutten, as trustee, and as agent for the other trustees, in a safe deposit box in the vaults of the Harris Safe Deposit Company in Chicago, “access to which was available only to Cutten, one of the trustees, and Boomer, the life beneficiary, jointly.” The amended and supplemental complaint also alleged that late in the year 1935, or early in the year 1936, Boomer called upon Carr find stated that he, Boomer, desired certain modifications in the terms of the trust agreement; that he had discussed the modifications with Cutten, who was then very ill, and that Cutten had agreed to said modifications ; that Boomer stated that he wished to obtain the agreement to said modifications of Carr, as trustee, and of the Home; that Reynolds, one of the original trustees, had theretofore executed and delivered to Cuíten an. instrument purported to be his resignation as trustee; that the effect of the modifications requested by Boomer was to increase the interest in the income of the trust, after the death of Boomer, of Laura Boomer, and to give an interest to Maude Boomer Cut-ten, the wife of Arthur W. Cuíten and sister of' Boomer; that thereupon Carr conferred with Cuíten, who confirmed Boomer’s statement to Cuíten as to the latter’s approval of the proposed modifications; that Carr thereupon presented the matter to the board of directors of the Home; that the board approved the proposal and by resolution authorized Carr, as vice president of the Home, and William Burry, Jr., as president, to negotiate with Boomer as to the exact terms of. the modifications and to carry into effect such modifications as they might agree on with Boomer; that thereafter conferences were had between Boomer, Carr and Burry, and from time to time tentative agreements were reached on the terms of the modifications of the trust; that documents were drafted and signed, embracing the terms of the agreement; that Boomer then made further demands; that these demands were met; that Boomer nevertheless failed to turn over the stock certificates; that it then became apparent to Carr that Boomer was not acting in good faith. The complaint and amended and supplemental complaint were verified by Robert F. Carr. The answer filed by the Boomers denies all of the allegations as to delivery of the certificates. It stated that the trust instrument was drawn by Cuíten’s attorneys. In paragraph 5 of a reply, plaintiffs “admit that the trust instrument was drawn by Cuíten’s attorneys, and allege that the reason for this was that Cuíten, trading in the name of Boomer, had made the money represented by the said 2000 shares of Texas Gulf Sulphur stock and that Cuíten proposed to give this stock to Boomer in order to provide him with an income for life, but only on condition that Boomer execute and deliver the said trust agreement and complete the creation of the trust thereunder, all of which was done as in the amended and supplemental complaint herein alleged.” The cause was referred to a master in chancery, who recommended that the court order the defendant, Paul Chamberlain Boomer, to deliver over to plaintiff Robert F. Carr, or to plaintiff Carr and Ms cotrustees, the stock certificates heretofore described, duly indorsed in such manner as to enable the trustee or trustees to obtain the transfer of the shares of stock represented by such certificates, and that Boomer account for the dividends received upon the stock constituting the corpus of the trust since September 8, 1924. Objections were filed by both parties, after which the master filed a supplemental report. The objections of defendants were allowed to stand as exceptions. The chancellor overruled the exceptions and entered a decree substantially in the form recommended by the master. This appeal followed.

The theory of plaintiffs is that the “execution and delivery of the trust instrument, in and of itself, without the delivery of the certificates as therein mentioned by the donor to the designated trustees, was sufficient to pass the title to the shares of stock to the trustees and was all that was needed to consummate the creation of the trust, and that transfer of possession of the certificates as muniments of title could be compelled later if necessary whether or not there was any consideration; and further that, even if the foregoing were not the law, and if delivery were necessary, there was delivery of the certificates at the time of delivery of the trust agreement, in that the certificates were in a brokerage account over which Cutten, one of the trustees, had control, and further that there was physical delivery of certificates for the diversified securities in 1934 and 1936; that the plaintiffs have not been guilty of laches as charged by Boomer, and that the plaintiffs have the right to bring the action. It is no part of plaintiffs’ theory that Cutten was the owner of the securities at the time of the creation of the trust. Cutten had made the money used for the purchase of the stock by trading in a brokerage account in the name of Boomer. He was the creator of the fund and turned it over to Boomer, his brother-in-law, with the understanding that this trust would be created. This last fact, though not essential to plaintiffs’ case, is interesting for two reasons: first, it shows that Cutten had possession of the certificates at the time the trust was created, because he controlled the account in which they lay; and second, it negatives the contention of Boomer that plaintiffs are attempting to take away his property against his will.” The theory of the Boomer defense is that the “execution of the trust instrument, alone, was not sufficient, and that delivery of the securities was absolutely essential to the consummation of the trust, and that the securities were never delivered at any time, either in 1924 or on any later date; and also that the plaintiffs have been guilty of laches and that Carr, as alleged sole surviving trustee, had no right to bring the action. The further contention of the defense is that plaintiffs’ ‘theory’ that Cutten was the owner of the securities and the real donor is not based upon any proper pleadings and is not supported by any competent evidence whatever. The defense claims further that there is no competent evidence in the record to support the decree as entered in favor of the plaintiffs.”

Before considering the propositions of law involved, it is appropriate that we summarize the facts. After a careful reading of the abstract and the exhibits, we are satisfied that the findings of fact as made by the master and the chancellor are supported by the record. For some years prior to 1924 and thereafter, Arthur W. Cutten was a well-known and successful trader in the grain and securities markets in Chicago. . He was also a director and officer of the Home for Destitute Crippled Children, an Illinois charitable corporation, which was then and now is engaged in conducting a hospital for crippled children in Chicago. Cutten’s wife, Maude B. Cutten, was a sister of Boomer. In 1924 Robert F. Carr was president of the Home and was then and still is a member of its board of directors. Cutten, in addition to his own market activities, was in the habit of opening trading accounts in the names of friends and relations for the purpose of helping them out by making money for them. In about the month of August, 1924, Cutten told Carr he had made some money trading in an account for Boomer, and that he wished to have it put in trust for Boomer for life, with some provision for his wife after his death, and ultimately to go to the Home for Destitute Crippled Children. He asked Carr if he would act as cotrustee with himself and George M. Reynolds, then president of the Continental Bank of Chicago and also a director of the Home. Carr agreed to act. Shortly thereafter the trust agreement embodying these provisions was signed, sealed and delivered by Boomer as donor, and was accepted by Cutten, Reynolds and Carr, as trustees. By the terms of the trust agreement Boomer transferred to the trustees 2,000 shares of stock of the Texas Gulf Sulphur Company, the words of assignment being, “I hereby transfer, assign and deliver . . . .” The trust agreement identifies the certificates and states that they stand in the name of Jackson Brothers, the broker with whom the account was carried. The account had been opened by Cutten and he had complete control over it. There was no manual delivery of the certificates to the trustees at the time, but they were within the control of Cutten. Cutten stated to Carr and Reynolds that he would take care of the trust. It was contemplated that Carr would take no active part in its administration unless called upon to do so. Carr termed himself a “stand-by” trustee. All the certificates remained in the hands of the broker until a year or two later, when at Cutten’s direction, part of the shares were sold and the proceeds reinvested in other stocks, which now form a portion of the corpus of the trust, as listed in the decree. At about the same time, Texas Gulf Sulphur Company split its stock, and four shares were issued for each one previously held. The result was that the original 2,000 shares came to be represented by 5,232 shares of Texas Gulf Sulphur Company and the other stocks above referred to. The certificates continued to lie in the .broker’s hands, in street name, dividends being paid over to Boomer. In 1933 or 1934 Jackson Brothers closed their office in Chicago and requested that Boomer take delivery of the certificates, he being the nominal owner of the account, which he did with the knowledge and consent of Cutten. New certificates were issued at that time in Boomer’s name. Immediately upon receipt of the certificates Boomer indorsed them in blank. About six months thereafter a joint safe-deposit box was rented at the Harris Safe Deposit Company in the name of “Paul C. Boomer Trust.” The lease card was signed “Arthur W. Cutten, trustee,” and “Paul C. Boomer, acting trustee” in the handwriting of Cutten and Boomer respectively. The receipt for keys, etc., was signed “Paul C. Boomer Trust by Arthur W. Cutten, trustee” (in Cutten’s handwriting;) and “Paul C. Boomer, acting for Geo. Reynold” (in Boomer’s handwriting). On July 10, 1934, the certificates were placed in this box and remained there until March 31, 1936, when Boomer, with Cutten’s secretary as Cut-ten’s deputy, both acting under Cutten’s directions, went to the box, removed the securities and handed them over to Cutten, who was then confined to his residence by what turned out to be his last illness. Meanwhile, about the end of 1935 Boomer approached Carr with the request that he agree, and that he obtain the agreement of the Home, to certain modifications of the trust. This was the first time Carr had heard of the matter since 1924, except perhaps for casual references in conversations with Cutten. Boomer first requested that the trust be transferred to a trustee outside of the State of Illinois to avoid personal property tax, and later that a provision be made for the invasion of principal, if necessary, to assure $5,000 per year income to Mrs. Boomer after his death, that provision be made for participation by Mrs. Cutten, after Boomer’s death, in any income above that sum (Cutten having suffered severe financial reverses) and still later that he, Boomer, be appointed co trustee in place of Reynolds, who had sent in his resignation as trustee. Carr, after ascertaining that Cutten wished the proposed changes made, agreed to them all except the appointment of Boomer as trustee, and arranged for Boomer to submit them in person to the board of directors of the Home, which likewise approved them. When Boomer first approached Carr, Carr asked him where the certificates were and Boomer told him they were in the joint box at the Harris Trust vaults. Cutten was seriously ill, and Carr wished, before agreeing to any changes or taking any further part in the matter, to see the certificates and make sure of their safety. He also suggested this to Cutten, who, thinking he would recover, asked the inspection be postponed until he was able to take care of it himself. Cutten died on June 24, 1936. Thereafter, Carr discovered that the box at the Harris Trust had been surrendered. Carr attended when it was opened by the vault officers and it was found to be empty. Carr then asked where the certificates were. Boomer told him he had taken them to Cutten before his death and did not know what had become of them. He told a number of stories in response to inquiries by Carr at different times thereafter. Their general purport was that he did not have the certificates and did not know where they were, but thought he could get possession of them as soon as he had been appointed a trustee of the trust. Carr finally agreed to appoint Boomer cotrustee and executed and placed in escrow an appointment to be delivered against production of the certificates. Nothing came of this. Later Boomer caused an agreement to be prepared modifying the terms of the trust and this was signed by all of the parties in interest, but by Carr and the Home only on the condition that it should not be delivered to Boomer until the certificates were made available. Because considerable time had passed, Carr made it a condition that the certificates must be produced by November 15, 1937. They were not produced by that date, and nothing further having been done, Carr and the Home filed their complaint in January, 1938. Boomer, when called for cross-examination under section 60 of the Practice Act, sought to evade questions as to the whereabouts of the certificates. Being required to give a definite answer, he stated that they were in the house of a friend in Toronto, Canada, and that he did not remember the address of the house or the name of the friend. At the next hearing on further cross-examination, he testified that the certificates were then in his possession in Chicago and that they had been there when he gave his testimony at the previous hearing and that such testimony had been false. He stated that he had possession of the certificates at all times. He admitted that in response to Carr’s questions he had told Carr anything he thought would satisfy him regardless of the truth. At no time prior to the commencement of this suit did Boomer deny the existence of the trust. On the contrary, he 'made various statements, oral and written, admitting its existence. The first claim made by him that no trust existed appeared when he filed his motion to dismiss the complaint. The facts found by the decree are established by the testimony of Carr and Boomer. Carr testified to various admissions made to him by Boomer. The master found that “from the demeanor of the defendant, Paul Chamberlain Boomer, on the stand and his utter disregard for the sanctity of an oath, he is not to be believed and his testimony is disregarded, except where it is corroborated by other testimony.” A perusal of the transcript of the testimony convinces us that the master was entirely justified in making this finding. Boomer testified falsely as to a material matter, namely, the whereabouts of the certificates. His testimony on other matters was also unworthy of belief. The testimony of Carr rings true and is supported by the other facts and circumstances in evidence. Boomer testified that when Carr was trying to find the certificates he told him (Carr) anything he thought would satisfy Carr and stop his search for the trust property, regardless of the truth. Boomer also told an improbable story about some mysterious stranger who telephoned to him about the certificates, saying they would be delivered to Boomer when he (Boomer) had got what he wanted and been appointed cotrustee. When he was interrogated about this story, he said it was 1 ‘ partly true and partly not.” He told Carr that while at some summer resort an unknown man had approached him and told him not to worry about the certificates, and then disappeared. Clearly, the characterization of Boomer by the master as a man “not to be believed” is supported by the record. Carr was allowed to testify over the objections of the defense to certain conversations with Cutten and with Reynolds outside of the presence of Boomer. We agree with the master and the chancellor that these conversations were admissible as part of the res gestae.

Turning to a consideration of the law, our attention is directed to plaintiffs’ statement that their case is double-barreled; that it rests upon two general propositions — First, that the execution and delivery of the trust agreement were effective in law immediately to create a trust, which has ever since existed, without physical delivery of any stock certificates, and Second, that if this were not the law, and assuming for the sake of argument that delivery in such a case is necessary, the evidence clearly shows that the certificates were delivered to the trustees. Defendants resist these contentions. On the subject of delivery, the defendants say that the alleged trust was never consummated for the reason that the certificates of stock, described in the instrument as constituting the corpus of the trust, were not delivered by Boomer, the donor, to the trustees designated in the instrument; that it is essential to a donation inter vivos that the gift be absolute and irrevocable, that the giver part with all present and future dominion over the property given, that the gift go into effect at once and not at some future time, that there be a delivery of the thing given to the donee, that there be such a change of possession as to put it out of the power of the giver to repossess himself of the thing given, and that where the delivery is to a trustee for the benefit of others, the circumstances should show a full relinquishment over the property to the trustee for the purposes of the trust. Plaintiffs reply to this contention by saying that shares of stock may be transferred, in trust or otherwise, by the execution and delivery of an instrument containing present words of assignment, with intent to pass the title, without delivery of the certificates representing the shares and without consideration, and any such transfer is valid and binding as between the parties. Both parties support their points with numerous authorities. We have read these authorities. The respective opinions are, of course, written with a view to the facts involved. If we attempted to analyze and differentiate the different cases cited, this opinion would be expanded to a volume. Boomer signed and delivered the trust instrument and he testified that he intended to create a trust when he did so. On many occasions thereafter he recognized the existence of the trust. The rights of creditors or of bona fide assignees of the certificates are not involved. The question is solely between Boomer and the trustees. We are convinced that a present unequivocal assignment of shares of stock in a corporation with intention to pass the title will accomplish the transfer of the title to the shares to the assignee as between the parties without delivery of any stock certificate. In Leedham v. Leedham, 218 Iowa 767, 254 N. W. 61, the court said:

“A certificate of stock is not the stock itself, but merely written evidence of the ownership thereof and the rights and liabilities resulting from such ownership. It is merely the paper representative of an incorporeal right, and stands on a footing similar to that of other muniments of title. 14 C. J. p. 478, section 698. As between the parties, real shares of stock in a corporation may be transferred by a written assignment thereof, without delivery of such certificates representing the stock.” A share of stock in a corporation is an interest in the property of the corporation. It is an intangible, incorporeal property right which belongs to the stockholder, and if a person owns a share of stock he is no less entitled to the enjoyment of his rights in respect thereof, including the rights' to collect dividends, to vote the share, and to transfer the share, simply because he does not have in his possession a certificate issued by the corporation evidencing his ownership. The share of stock is the property, the certificate a mere evidence or muniment of title. We are convinced that the execution and delivery of the trust instrument containing words of present assignment, with intent to pass the title, without delivery of the certificates representing the shares and without consideration, is valid and binding as between the parties. (Harris v. Harris, 222 Ill. App. 164; Allen v. Williams, 212 Ill. App. 114.)

Defendants also assert that under the provisions of the Uniform Stock Transfer Act (par. 416, sec. 1, ch. 32, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 32.195]) •title to a certificate and to the shares represented thereby can be transferred only: (a) by delivery of the certificate indorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby, or (b) by delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney itself. They also call attention to the provisions of section 10 of the same act (par. 425) which provides that “An attempted transfer of title to a certificate or the shares represented thereby without delivery of the certificate shall have the effect of a promise to transfer and the obligation, if any, imposed by such promise shall be determined by the law governing the formation and performance of contracts.” In the case of In re Estate of Antkowshi, 286 Ill. App. 184, we held that the rights of the parties as between themselves are not affected by the provisions of the Uniform Stock Transfer Act, and that it was not the intention of the legislature to change the rule of law applicable as between the immediate parties to the transaction. In that opinion we quote with approval from vol. 12, sec. 5684 of Fletcher Cyclopedia Corporations, as follows: “According to the weight of authority, a transfer of the stock to the donee on the corporate books is not essential to a valid gift as between the parties, and hence, as between them, the fact that it remains in the name of the donor on the books does not defeat the gift nor affect the title of the donee, nor has the Uniform Stock Transfer Act made any ' change in this rule. But there is some authority to the effect that a transfer on the books is essential to a delivery.” Our view is that the provisions of the Uniform Stock Transfer Act are not applicable to the facts in the instant case. Therefore, we are of the opinion that the signature and delivery of the trust agreement by Boomer operated immediately to create a valid trust of the stock therein specified without delivery of the stock certificates.

Our holding in the preceding paragraph that the execution and delivery of the trust instrument created a valid trust without delivery of the stock certificates, disposes of the case. However, as the defendants may petition the Supreme Court for leave to appeal, we will also state our views on the alternative proposition argued by the parties. Plaintiffs maintain that while no delivery of the certificates was necessary to the creation of the trust, nevertheless, they show that there was such delivery. Defendants, of course, maintain that there was no delivery of the securities either in 1924 or at any other time. We find that the evidence shows that (1) at the time of the execution and delivery of the trust agreement, the certificates were held in the “street name” in a brokerage account over which Cutten had control; (2) the certificates were placed in a joint safety box in 1934 to which access was available only to Cutten, as trustee, and Boomer, as agent for Reynolds, another trustee; and (3) Boomer visited the said safe-deposit box in 1936 with Cutten’s deputy, removed the certificates and turned them over to Cutten. The evidence shows that during the entire period from the execution and delivery of the trust instrument until the filing of the complaint herein, Boomer was under the impression that he had created a complete, perfect and valid trust of the stock in question at the time he executed and delivered the instrument in 1924. During all of this period he never questioned the existence of the trust. In 1937, after the death of Cutten, a “modification agreement” was prepared by Boomer’s attorney. This agreement was executed by all of the parties in interest. It did not, however, go into effect because its execution by plaintiffs was conditioned upon the production of the certificates by Boomer. The preamble of this “modification agreement” recites that Boomer, by the trust agreement “did create and establish a trust in respect of certain securities constituting the trust fund thereby transferred, assigned and delivered to said Trustees,” and the fifth article states that “nothing-in this agreement contained or done pursuant hereto shall be deemed or construed as, or have the effect of revoking the Donor’s gift in trust of the securities of the trust estate made by and under said Trust Agreement dated August .27, 1924, and said Donor hereby expressly disclaims any right, power or authority to revoke said gift, either in whole or in part, as well as any dominion or control over the trust estate created and established by said Trust Agreement.” As this “modification agreement” was signed by Boomer and delivered to plaintiffs about November 1, 1937, as recently as that date he admitted and confirmed the existence and validity of the trust. In his 1936 income tax return he designated the income from these stocks as “income from fiduciaries,” identifying the source as “Paul C. Boomer Trust.” He contends that immediately following the delivery of the trust agreement in 1924, he read the same and that he then realized that the agreement was not entirely in accordance with his wishes; that he desired to have it changed so that on his death his wife could invade the principal, if' necessary, in order for her to secure the full amount of her annuity. He maintains that he immediately informed Cutten and also the brokers who had possession of the stock; that he informed the brokers of the existence of the trust and of his insistence on making the change therein, and that thereafter he took the initiative in endeavoring- to effectuate the change. It is not likely that a brokerage house of the standing of Jackson Brothers would permit Boomer to take possession of the stocks at will after he had disclosed that they were the subject matter of a trust. Following the illness and death of Cutten, Carr became much concerned about the location of the stock certificates. He placed stop orders with the various brokers and corporations. On June 28, 1937, Boomer, seeking the release of 6 shares of Southern Railway common stock, also recognized the trust as being in existence. It is significant that Dr. Boomer appeared before a special meeting of the board of directors of the Home for Destitute Crippled Children at 3 p. m. on May 18, 1936. Carr testified that the chairman of the meeting asked Boomer to make a statement as to his desires in the matter of modifying the trust instrument. Carr stated that the matter of modifying the trust instrument was discussed around the directors’ table and that the feeling was that anything the Cuttens wanted done about the matter should be granted. The minutes of the meeting recited that:

“Mr. Burry explained that the Boomer trust was formed some years ago by Mr. Arthur W. Cutten. Dr. Boomer, a brother of Mrs. Cutten, is the life beneficiary of the trust receiving the entire net income during his life and upon his death five thousand of the income is paid to his widow for life. The balance of the income is accumulated during her life and upon her death the principal and accumulated income become the property of the Home. Mr. Burry asked Dr. Boomer to state what was now desired. Dr. Boomer explained that due to changing conditions and after discussing this trust with Mr. and Mrs. A. W. Cutten, they found it necessary to ask the consideration of this board to the following suggested changes in the trust provisions.
“The trustees as now constituted under this trust, are Mr. Carr, Mr. Reynolds and Mr. Cutten. He explained that they had the resignation of Mr. Reynolds. Due to the tax responsibilities of the trust and its beneficiaries it is suggested that a corporate trustee outside of the State of Illinois, be appointed, one primarily doing business in New York seemed the most desirable. That a further provision be added to the trust that upon the death of Dr. Boomer the first five thousand of net income be paid to his wife for her life ; the second five thousand of income to be paid to Mrs. Cutten, and the balance over and above ten thousand, if any, to be divided equally between them. Upon the death of either the survivor is to receive the first five thousand of income, the balance of income to be divided equally between the said survivor and the Home.
“At this point Dr. Boomer left the meeting.” After Dr. Boomer left the meeting, the minutes state that:
“There was further consideration of the subject matter. Mr. Carr carefully reviewing the circumstances surrounding the formation of this trust at the time as it was he who sat in and discussed the original arrangement with Mr. Cutten and Mr. George Reynolds.
“Mrs. Lobdell expressed the feeling that if this .change in the provisions of the trust was Mr. and Mrs. .Cutten’s wishes, she felt that they should not hesitate to co-operate with them to this extent, any income being used ultimately for the benefit of Mrs. Cutten, as she felt that if Mrs. Cutten did not have need of this income she would without a doubt see that the Home benefited thereby. This feeling on her part is predicated upon the service and benefits which Mr. and Mrs. Cutten have extended to the Home over many years. Those present who were personally acquainted with Mr. and Mrs. Cutten agreed in Mrs. Lobdell’s views.
“At the suggestion of Mr. Hayes, Mrs. Lobdell made a motion that Mr. Carr and Mr. Burry be a committee to contact Mr. Cutten to determine his wishes, and that power be extended to this committee to conclude negotiations for the adjustment of the provisions for this trust. Seconded by Mr. Worcester. Carried.” The minutes of the meeting of May 18, 1936, constitute strong corroboration of the testimony of Mr. Carr. It will be remembered that the trust instrument was drafted by reputable attorneys employed by Mr. Cut-ten. It was signed by Boomer in the office of these attorneys after he had read the same. Boomer is intelligent, well educated and a man of wide experience, and we are of the opinion that at the time he signed the trust instrument he was fully conversant with the terms thereof. If he wanted a change made in the instrument, the logical and natural time for him to make the change would be at the time he was in the attorneys’ offices and before he signed and delivered the instrument. One cannot read the record of this case without being convinced that Cutten was the dominant and moving personality in conceiving and establishing the trust. We agree with the finding of the master and the chancellor that the certificates of stock were actually and physically delivered to the trustees.

Defendants further maintain that the allegations of the amended and supplemental complaint are not supported by the evidence and that the case was presented by plaintiffs and the decree entered on a theory different than that set out in their pleadings. We are satisfied that there is a substantial conformity between the amended and supplemental complaint and the proofs. Defendants further complain that in their reply the plaintiffs departed from the ground taken in their amended and supplemental complaint in that the reply asserted Cutten was the real owner and donor of the stock. We cannot agree with this contention. The reply states that Cutten, trading in the name of Boomer, “had made the money represented by the said 2000 shares of Texas Gulf Sulphur stock and that (’utten proposed to give this stock to Boomer in order to provide him with an income for life, but only on condition that Boomer execute and deliver the said trust agreement and complete the creation of the trust thereunder, all of which was done as in the amended and supplemental complaint herein alleged.” This allegation sets up, in effect, that Cutten was the creator of the fund. The reply does not, however, allege that Cutten was the owner of the securities at the time of the creation of the trust. We are of the opinion that there was no departure in the pleading. In discussing the facts, we stated that the admission of the testimony of Carr as to conversations with Cutten outside of the presence of Boomer was proper under the res gestae rule. Defendants assert that all the testimony as to conversations between Carr and Cutten or any other persons outside of the presence of defendant, is hearsay, and that it was error to admit such testimony. In considering the applicability of this rule to the factual situation before us, we should bear in mind that it is the defendants ’ theory that actual delivery of the certificates was necessary to perfect the trust. The testimony of Carr to which defendants object, is material in passing on this phase of the case. In Wharton on Evidence, vol. 1, p. 227, sec. 259, 3rd ed., in referring to res gestae, it is said:

“Their sole distinguishing feature is they (incidents and circumstances) must be the automatic and necessary incidents of the litigated act; necessary in this sense, that they are part of the immediate preparations for or emanations of such act, . . . .” Defendants also say that there was no occasion for the admission of res gestae evidence as there was nothing ambiguous about the trust instrument. We agree with plaintiffs that defendants are confusing the doctrine of res gestae with the parol evidence rule. It is apparent that plaintiffs are not attempting in any way to alter the terms of the trust instrument or establish that the donor therein was any person other than Boomer. There are numerous cases defining the res gestae rule and its application. Prof. Wigmore, in his classic treatise on evidence, 3rd ed. vol. VI, sec. 1750, advocates leaving the application of the principle of res gestae absolutely to the trial court’s determination. The question of admissibility depends upon the facts of the case and the trial court should be clothed with a reasonable degree of latitude. We are also of the opinion that Cutten’s statements are admissible to establish the reasonableness of Carr’s inactivity during the period from 1924 to 1936.

An additional point advanced by defendants is that the plaintiffs are guilty of laches, and that the claims of plaintiffs are stale beyond repair. They say that many changes took place since September 8,1924, when the trust instrument was signed, and January 25,1938, when this action was begun, and that many of the books of Jackson Brothers had been lost or destroyed, all of the members of the firm of Jackson Brothers, except one, had died, Reynolds had retired and moved to California, Cutten had died in June, 1936, Boomer had retained the stocks and collected dividends thereon without any objection during all of these years, Carr taking no action of any consequence until the first part of 1936, and assert that this sort of conduct on the part of the alleged trustees does not afford a satisfactory background in an action in equity. In our opinion, there is no merit to defendants’ contention that the action is barred by laches. We have heretofore pointed out that Cutten was the dominating personality in the establishment and operation of the trust. The evidence shows that Carr was a “standby” trustee. He did not become active until he learned that Cutten was seriously ill. He then did everything that a man in such circumstances would do. There has been no change in the position of Boomer which would render it inequitable to enforce the claim against him. Boomer, at all times until the filing of the action, recognized the existence of the trust. Carr acted with all due diligence. It must be borne in mind also that the ultimate purpose of the trust was to provide hospital and medical care for destitute crippled children. They are the real ultimate beneficiaries of the trust. We doubt that any inactivity on the part of a trustee could defeat the trust in so far as the ultimate beneficiaries are concerned. Although the Home, the donor and the trustees signed a modification agreement, we seriously doubt that in the absence of a.reserved power such proposed modification could, in law, alter the terms of the trust. This was a charitable trust, and the ultimate beneficiaries, namely destitute crippled children, have rights which should be protected by a court of chancery. Another proposition argued by the defendants is that Carr, under the law and the terms of the trust instrument, had no right and no power to bring the action, as alleged sole surviving trustee. One of the prayers of the complaint is that the court appoint two trustees whose names are therein suggested by plaintiffs. The language of the trust instrument is that “in case of the death, resignation, failure, refusal or inability to act of any trustee, the remaining trustee or trustees may, from time to time, fill the vacancy.” Section 195 of the restatement of the law of trusts declares that “if two or more persons are named as trustees and one or more of them fails to become trustee or dies, resigns, is removed or otherwise ceases to be trustee, the powers conferred upon the trustees can properly be exercised by the remaining trustee or trustees, unless it is otherwise provided by the terms of the trust.” The case of Golder v. Bressler, 105 Ill. 419, is authority for the statement that it is only when the terms of the power creating the trust imperatively require the vacancy to be filled, that the acts of the survivors will be held invalid. It will be observed that there are two plaintiffs. Defendants do not make any contention that the Home for Destitute Crippled Children, one of the plaintiffs, is not a proper party to prosecute the action. The contention that the plaintiffs are not proper parties to prosecute the action is without merit.

Finally, defendants argue that it was improper for the court to reserve jurisdiction for the purpose of entering a subsequent decree fixing the master’s fees and taxing costs and for the purpose of entering a further decree touching and allowing the payment of plaintiffs’ costs and expenses and solicitors’ fees and other fees. While it is the better practice to dispose of all matters in the decree, including the determination and taxing of costs and fees, it is not uncommon to reserve such questions for future determination. The decision as to whether to reserve such matters for future determination rests largely within the discretion of the court. The record before us does not show that in reserving these matters the chancellor abused his discretion.

Because of the views expressed, the decree of the superior court of Cook county should be and it is affirmed.

Decree affirmed.

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


source: Caselaw Access Project

author: Mr. Justice Burke

license: Public Domain

text:
    Samuel L. Pidot and Chauncey E. Waltman, Appellants, v. Zenith Radio Corporation, Appellee.
    Gen. No. 41,274.

      Opinion filed January 22, 1941.
    Rehearing denied February 5, 1941.
    Hirsch E. Soble and Abraham W. Brussell, both of Chicago, for appellants.
    Montgomery, Hart, Pritchard & Herriott, of Chicago, for appellee; Irving Herriott and W. Ward Smith, of Chicago, of counsel.
   Mr. Justice Burke

delivered the opinion of the court.

On December 22,1936, plaintiffs filed their complaint in the circuit court of Cook county and charged the defendant with breaching and violating a “confidence” by wrongfully appropriating original radio cabinet designs prepared by the plaintiffs at the request of defendant and in using the designs in the line of radio sets sold by the defendant, and praying for an accounting, for an injunction restraining the manufacture and sale of the design so wrongfully appropriated, and for an injunction requiring defendant to assign certain patents to the plaintiffs. Upon order of court plaintiffs filed a bill of particulars, which confines the charges of the complaint to the single design attached to the complaint as Exhibit A. (Received in evidence as plaintiffs’ exhibit 2.) The bill of particulars states that Exhibit A “illustrates a novel design created by plaintiffs . . . ; that plaintiffs during the month of November, 1935, disclosed to defendant how the basic features of the design illustrated in plaintiffs’ Exhibit A could be applied to and embodied in radio cabinets; that the design as a whole as illustrated in plaintiffs’ Exhibit A . . . has been wrongfully appropriated by defendant in each of the models of defendant’s radio cabinets, . . . ; that defendant’s radio cabinets, as illustrated in defendant’s catalogue and designated specifically in paragraph 10 of the complaint, embody either an exact or an approximate simulation of plaintiffs’ design as shown in said plaintiffs’ Exhibit A of the combination of rounded corners on the cabinets and rounded edges both at the vertical junctures of the side walls of the cabinets and at the horizontal junctures of the side walls with the top walls of the cabinets, together with a plurality of horizontally extended louvres.” Defendant answered and denied that it appropriated plaintiffs’ design, and on the contrary alleged that the designs of its radio cabinets'allegedly embodying plaintiffs’ design were conceived and developed independently thereof. Defendant also denied that plaintiffs’ design, in so far as it merely combined the particular features set forth in plaintiffs’ bill of particulars, was new or novel. The cause was referred to a master in chancery who found the issues in favor of the defendant and recommended that the complaint-be dismissed for want of equity. Objections to the report were overruled. These objections were ordered to stand as exceptions. The chancellor overruled the exceptions and entered a decree which approved the findings and conclusions of the master and dismissed the complaint for want of equity at plaintiffs’ costs. Plaintiffs prosecute this appeal from the decree and ask for a reversal and for the entry of a decree in their favor.

Plaintiffs’ theories are: First: As a matter of law based on the undisputed evidence on equitable principles governing relations of trust and confidence the defendant is obligated to account to the plaintiffs to prevent unjust enrichment of the defendant at the plaintiffs’ expense by means of a wrongful appropriation by the defendant of a novel and original design of radio cabinet as shown in the record as plaintiffs’ exhibit 2. Second: Considering all the evidence in the record, the clear and manifest weight of the evidence shows that the defendant is obligated to account to the plaintiffs on equitable principles governing relations of trust and confidence to prevent unjust enrichment of the defendant at the plaintiffs’ expense by means of a wrongful appropriation by the defendant of a novel and original design of radio cabinet as shown in the record as plaintiffs’ exhibit 2. Third: That the plaintiffs’ design of radio cabinets as shown by plaintiffs’ exhibit 2 was novel and original. Fourth: That the defendant by taking out patents on its infringement of plaintiffs’ design is precluded or estopped- from claiming that it is not liable for its wrongful appropriation of plaintiffs’ design on the ground that it is not novel or original. Fifth: That the defendant’s wrongful appropriation of plaintiffs’ novel and original design was an infringement of the design of plaintiffs’ exhibit 2. Sixth: That equity will prevent the defendant from taking advantage of •the confidential relationship between defendant and plaintiffs and will not suffer the plaintiffs to be wronged by the defendant without giving plaintiffs a remedy therefor. Seventh: That the plaintiffs are entitled to the specific equitable relief of an accounting and injunction requiring the defendant to convey certain patents to plaintiffs and an injunction restraining it from manufacturing any models based upon misappropriation of plaintiffs’ novel and original design. On the other hand, the defendant contends that “the findings of fact of the Master in Chancery having been approved by the Chancellor, this court should not disturb such findings unless they are manifestly against the weight of the evidence; . . . that it did not appropriate plaintiffs’ design for a radio cabinet, but on the contrary the designs of defendant’s radio cabinets were developed by certain of its employees in simulation of the hood of the Cord automobile independently of plaintiffs’ design and prior to the submission of that design to the defendant; that the features of plaintiffs’ design relied upon by them were not new and original and that neither the plaintiffs nor anyone else can obtain a monopoly of the right to use those features as distinguished from the manner or form in which the same are used in combination; that plaintiffs’ design is not so similar to the designs of defendant’s ‘Zephyr’ line of radio cabinets as to amount to or tend to establish any appropriation by defendant of plaintiffs’ design, and that to the extent that there are any features in common in the broad sense between plaintiffs’ and defendant’s designs that the same arise from the common source of inspiration, namely, the hood of the Cord automobile; that if any accounting should be directed the basis of such accounting should not be that plaintiffs are entitled to that part of defendant’s profits arising from the sale of its ‘Zephyr’ line of radios which the cost of the cabinet in which the radios are housed bears to the cost of the complete radio set, but that any such accounting should be limited to the usual and customary basis upon which designers of radio cabinets are paid, which the evidence shows is one half of one per cent of the cost of the cabinet, or in any event should be governed by the rule laid down in one of the cases most strongly relied upon by plaintiffs, i.e., Booth v. Stutz Motor Car Co., C. C. A. 7th, 1932, 56 F. 2d 962, that such accounting should be limited to that part of the profits from the sales of the ‘Zephyr’ line of radios which may fairly be attributed to the use by defendant of the features of plaintiffs’ design which were not common property.”

The master found that plaintiffs in the spring of 1935 organized a partnership under the name of Pidot & Waltman to engage in the business of interior designing and industrial styling, including the creation of designs for industrial production. Plaintiffs carried on their business at 549 North Michigan avenue, Chicago. The plaintiff, Samuel L. Pidot, in 1935, at the time of the organization of Pidot & Waltman, was primarily an interior decorator. He had done some industrial designing work to a minor extent, and did not begin designing furniture as a regular occupation until 1935, although in previous years he had styled furniture for clients in his interior decorating business. Waltman had designed furniture commercially prior to the formation of the partnership of Pidot & Waltman, but had only a limited success in the sale of designs for radio cabinets, having placed only a few of such designs on the market prior to the organization of such partnership. From the date of its organization in the spring of 1935 until October, 1935, the partnership of Pidot & Waltman made designs of radio cabinets for the trade but were not successful in selling any of the designs created by them; that in October, 1935, Mark Piper, a salesman of Pidot & Waltman, accompanied by Pidot, called at the offices of defendant in Chicago, which was then and is now engaged in the business of manufacturing and selling radio receiving apparatus; that the purpose of the call was to interest defendant in certain designs for radio cabinets which had been prepared in the offices of plaintiffs; that Piper and Pidot exhibited sketches, which had been prepared in plaintiffs’ offices, to Eugene A. Tracey, vice president and sales manager, and A. W. Freese, works manager of the defendant; that the latter after examining the sketches so exhibited, stated that they were not interested in the sketches submitted; that Pidot requested an opportunity to submit additional sketches, to which Tracey and Freese acceded; that in the last week of November, 1935, Pidot, this time accompanied by his partner Waltman, again called at the offices of defendant in Chicago and submitted additional sketches to Tracey and Freese, who displayed an interest in two of the sketches which were received in evidence as plaintiffs’ exhibits 2 and 3; that the instant suit involves the design embodied in plaintiffs’ exhibit 2, which plaintiffs assert defendant appropriated and used in its Zephyr line of radios. Waltman was inspired to design exhibit 2 when he viewed the hood of the new 1936 Cord automobile at the automobile show in Chicago in November, 1935. At this second conference there was a discussion as to the making of a sample cabinet embodying the design set forth in plaintiffs’ exhibit 2, and it was decided that plaintiffs should discuss the making of such a sample cabinet with the Winnebago Manufacturing Company, which was then and is now engaged in the manufacture of radio cabinets and which was one of the companies manufacturing radio cabinets for sale to defendant; that at the conclusion of the. second conference and in the last week of November, 1935, plaintiffs departed with all of their sketches, including plaintiffs’ exhibit 2, and within the next few days caused a blueprint to be prepared embodying the design sketched in plaintiffs’ exhibit 2; that in the early part of December, 1935, plaintiffs conferred with various employees and officials of the Winnebago Manufacturing Company at its offices in Chicago in regard to the manufacture of a sample cabinet embodying plaintiffs’ design set forth in their exhibit 2, and at this conference exhibited to the officials and employees of the Winnebago Manufacturing Company the sketch of their design and the blueprint embodying the same; that the officials and employees of the Winnebago Manufacturing Company then stated that the cost of producing in substantial quantities cabinets based upon plaintiffs’ design would be approximately $25 a cabinet, and that since the defendant desired cabinets of this type to be produced at a cost not to exceed $8 to $10, the Winnebago Manufacturing Company did not feel that it was practical, nor would they be interested in manufacturing cabinets based on plaintiffs’ design; nor would they consent to the manufacture of a sample cabinet unless they received assurances from the plaintiffs or the defendant that they would be paid the sum of $250 for the production of a sample cabinet; that it was thereupon agreed between the plaintiffs and the Winnebago Company that the sketches and blueprints embodying plaintiffs’ design would be left with the Winnebago Company, which would communicate with the defendant in regard thereto; that a few days thereafter the Winnebago Company communicated with Freese and Tracey and advised them as to these facts; that Freese and Tracey thereupon concluded that they would not be interested in expending the sum necessary for the sample cabinet based upon plaintiffs’ design, nor would they be interested in having such cabinets manufactured for the defendant at a cost of $25 per cabinet and so advised the Winnebago Company, which thereupon delivered to Freese the sketches and blueprints which had been left with the Winnebago Company by the plaintiffs, and that on or about December 19, 1935, these sketches and blueprints were returned by Freese to plaintiffs through the mails, with a letter from Freese in which he stated that the defendant was not interested in the use of the plaintiffs’ design. Pidot and Waltman testified that at the conference between plaintiffs and Tracey and Freese in the last week of November, 1935, plaintiffs stated that if the designs submitted, or any of them, were used by the defendant, plaintiffs would expect to be compensated therefor and that Tracey replied that this was satisfactory, and that if the design embodied in plaintiffs’ exhibit 2 was used by defendant in its line, plaintiffs could anticipate the receipt of a large royalty payment, in view of the fact that this design would be embodied in the popular priced numbers of the defendant’s line. Tracey and Freese, however, denied making this statement and testified that at the time of the first conference with Pidot and Piper in October, 1935, Tracey specifically stated that the compensation to the plaintiffs for such of their designs as might be accepted by defendant would be on the basis of 1 per cent of the cost of the cabinet incorporating the design, which amount would be paid by the manufacturer of the cabinets from whom the defendants purchased the cabinets which might be based on the design, this being the general practice of the defendant in regard to compensating designers whose designs were accepted and incorporated in cabinets manufactured for and used by the defendant in the production and sale of its radios. The evidence shows that since the year 1933, the defendant has not manufactured radio cabinets in its own plant, with the exception of samples and models, but has purchased cabinets from various manufacturers of cabinets who manufacture and sell cabinets to the defendant in accordance with designs and specifications approved by defendant. The master further found that the testimony of Tracey and Freese in regard to the matter of the payment to the plaintiffs in the event their design was accepted, was of “greater credence” than the testimony of plaintiffs on that point, and that the plaintiffs were advised at the time of the submission of the design in question to defendant, that in the event plaintiffs’ design was accepted plaintiffs would have to look for their compensation to the cabinet manufacturer who would be selected to manufacture cabinets incorporating such design, and that the compensation of plaintiffs would be equivalent to 1 per cent of the cost of the cabinet. The master also found that in the summer of 1936 defendant sold radios assembled in radio cabinets manufactured for it by the Steger Manufacturing Company, which cabinets the plaintiffs contend embodied the plaintiffs’ design as set forth in exhibit 2 and the other exhibits received in evidence. The master pointed out that the plaintiffs argued before him, as they do here, that the resemblance between the plaintiffs’ design and the cabinets manufactured by the defendant known as the Zephyr line can only be explained by the fact that the defendant surreptitiously appropriated plaintiffs’ design notwithstanding that the defendant had returned plaintiffs’ design to them with the statement that the defendant was not interested in using such design. The master found that the testimony in behalf of the defendant was to the effect that the design embodied in the Zephyr line of cabinets sold by the defendant in the summer of 1936 and thereafter, which plaintiffs contend incorporated their design, was created by its president, Eugene F. McDonald, Jr., and its assistant factory supervisor, John Stevens, and that the evidence in support of such contention is that Eugene F. McDonald, Jr., testified that in the fall of 1935, he was giving serious consideration to the production of an armchair or end table model radio to be included in defendant’s line; that such model had been attempted previously without success, but that he was convinced this was the logical type of cabinet for radios; that he instructed the officials of his factory to design such armchair or end table model and that four or five designs had been submitted to him which were all unsatisfactory; that in November, 1935, he visited the automobile show in Chicago, saw the Cord automobile and came to the conclusion that the design of the radiator hood thereof would be an appealing design for an armchair radio cabinet; that he spoke with Mr. Cord and Mr. Manning, officials of the company manufacturing the Cord automobile, and requested their permission to incorporate this design in a radio cabinet, and that he was given permission so to do by Cord to whom he promised the first model embodying the Cord design which might be manufactured and sold by defendant; that shortly afterward in the latter part of 1935, he communicated by telephone with his assistant factory manager, John Stevens, and instructed him to build a sample armchair radio cabinet embodying the design of the Cord radiator hood; that Stevens, with the assistance of Robert M. Hall and Axel Lundstrom, employees of defendant, built a sample armchair model radio embodying the design, which model was received in evidence as defendant’s exhibit 18. McDonald further testified that he inspected exhibit 18 after it was constructed and suggested certain changes which Lund-strom and his assistants put into effect in building a subsequent armchair model, a replica of which was received in evidence as plaintiffs’ exhibit 19; that he further instructed that sample table and console models be built embodying the same design as exhibits 18 and 19; that these models were built by Stevens and his assistants and that he (McDonald) finally approved all of these models for inclusion in defendant’s line. McDonald further testified that during all this time he had no knowledge or notice of plaintiffs’ design; that the design of the defendant was based on the design of the Cord automobile, and that the application of the design incorporating the Cord automobile to a radio cabinet was effected by Stevens and his assistants on the instructions of McDonald. The master found that the material portion of McDonald’s testimony is corroborated by the witnesses Stevens, Hall and Ltind-strom; that these witnesses, in substance, testified that, acting under instructions from McDonald, they built defendant’s exhibit 18, which is an armchair model of radio cabinet, and that they incorporated the design of the radiator hood of the Cord automobile in this cabinet; that certain changes were thereupon suggested in the cabinet by McDonald, and that they thereupon built an armchair model incorporating these revisions, and that thereafter, at McDonald’s instruction, they likewise built table and console models of radio cabinets incorporating the design of the radiator hood of the Cord automobile; that plaintiffs’ exhibit 9 was a replica of one of the console models so constructed. Defendant’s witnesses testified that during the time of the building of the models they had no knowledge or notice. of plaintiffs ’ exhibit 2, and that the models built by them incorporated the design of the Cord automobile in all material respects. Lundstrom testified, that under Stevens’s supervision and with the assistance of Hall, he personally built the first armchair model (defendant’s exhibit 18) incorporating the design of the Cord radiator hood, commencing a few days before Thanksgiving 1935, and that he completed the model on the afternoon of the day before Thanksgiving, which was November 27, 1935; that he remembered this day because it was the day preceding his marriage and that he was anxious to complete this specific work so it would not be necessary to work on his wedding day; that he was desirous of completing the job because the request for the cabinet had come from the president of the company who rarely made such requests. Stevens, Hall and Lund-strom also testified that the model of defendant’s exhibit 19 was built approximately two weeks after model exhibit 18, and that the table and console sample models embodying the same design were built by them approximately six or eight weeks later. Continuing, the master found that the cabinets in defendant’s line incorporating the design of the Cord automobile were manufactured for the defendant by the Steger Manufacturing Company, and the cost of the armchair model (defendant’s exhibit 19) was $9.98, and the cost of the console model (defendant’s exhibit 9) was $8.53, less certain discounts, and that a few of the first production models of these radios were delivered to Mr. Cord in accordance with McDonald’s promise; that on April 16,1936, Stevens filed application in the United States Patent Office for a design patent on the several models of radio cabinets incorporating the design of the Cord automobile, and that on June 23, 1936, letters patent for the design of the armchair model, table model and console model were issued to Stevens and assigned by him to defendant, which letters patent were received in evidence as plaintiffs’ exhibits 15, 16 and 17. The master after observing the demeanor of the witnesses and after evaluating all of the evidence, came to the conclusion that the testimony of the witnesses, McDonald, Stevens, Hall and Lund-strom, to the effect that the design for the defendant’s radio cabinets in question was based exclusively upon the design of the Cord automobile hood and independently applied by defendant to radio cabinets, is entitled to credence, and that the material testimony of these witnesses is true; that the coincidence in the submission of plaintiffs’ design to the defendant and the independent origin by the president of defendant company and some of his employees, of defendant’s design can be explained and is explained by the fact that the showing of the Cord automobile at or about the time in question proved to be a common' source of inspiration not only to the plaintiffs and the defendant,, but also to another person who was a witness, namely, Jan Streng, who at the time he was so inspired, was approximately 900 miles away from either the plaintiffs or the defendant. Streng testified that prior to November 16, 1935, he saw the Cord automobile in New York City and made a sketch applying the design of the hood of the Cord automobile to a radio cabinet, which sketch he submitted to several distributors and radio manufacturers, and which sketch was received in evidence' as defendant’s exhibit 16. Streng’s design (defendant’s exhibit 16) is a sketch of a table model radio based on the Cord automobile and containing horizontal extending louvers and rounded edges and corners. The master found that an examination of this sketch and a comparison of it with the other exhibits in the record reveals that Streng’s design more closely resembles the hood of the Cord automobile than either the plaintiffs’ or the defendant’s design, and that the order of resemblance to the Cord automobile of the three designs is: First: Streng’s design. Second: Defendant’s design, and Third: Plaintiffs’ design. The master stated that plaintiffs argue that it was incredible to believe that McDonald, Stevens, Hall and Lundstrom would not have been advised by Freese and Tracey of the submission by the plaintiffs of their design and that it is likewise incredible to believe that Stevens and his assistants would build a sample model of a cabinet as they did in the construction of defendant’s exhibit 18, without Freese and Tracey knowing that the cabinet was being constructed at the time of its construction. The master found that McDonald, Lundstrom, Hall and Stevens had no knowledge of the existence of plaintiffs’ design, and that Freese and Tracey were not advised and did not know of the construction by Stevens and his assistants of defendant’s exhibit 18 until after it was completed; that he came to this conclusion not only because he was satisfied after observing the demeanor of the witnesses that the testimony of Freese, Tracey, McDonald, Stevens, Lund-strom and Hall on this point is entitled to credence, but also because in an organization as large as that of the defendant it is understandable that certain work might be going on without all of the officials having knowledge thereof during its progress. The master also found that the special features of plaintiffs’ design, as stated in the bill of particulars, are the combination of rounded corners on the cabinet and rounded edges both at the vertical junctures of the side walls of the cabinet and the horizontal junctures of the side walls with the top walls of the cabinet, together with a plurality of horizontally extending louvers; that the design of the defendant which plaintiffs contend is substantially similar to plaintiffs’ design is embodied in plaintiffs’ exhibit 9, which is a console model of radio cabinet sold by defendant; defendant’s exhibit 12, which is a photograph of one of defendant’s armchair models; defendant’s exhibit 13, which is a photograph of one of defendant’s table models; defendant’s exhibits 14 and 15 which are photographs of certain of defendant’s console models, and defendant’s exhibit 19 which is one of the armchair models of radio cabinets of the defendant; that there are several points of difference between plaintiffs’ design and defendant’s design which are evident from an examination of the respective exhibits above enumerated; that the first point of difference is that in plaintiffs’ design the contour of the louvers is concave, whereas in the design of the defendant, the contour of the louvers is convex; that the second point of difference is that in plaintiffs’ design the louvers do not project from the main mass of the cabinet, but are set under the cabinet, whereas in the defendant’s design, the louvers project from the main mass of the cabinet; that the third point of difference is that in plaintiffs’ design the louvers conceal the grill cloth or wood construction in back of the louvers, whereas in defendant’s design the louvers do not conceal the grill cloth or wood construction that is in back of the louvers; that the fourth point of difference is that the rounding of the corners in the defendant’s design is more in character with the automobile radiator hood of the Cord automobile, from which the designs of both the plaintiffs and the defendant were adapted, than is the case of plaintiffs ’ design. The master concluded that while there is similarity between plaintiffs’ design and defendant’s design, there are these substantial differences in the two designs. The master, continuing, stated that the complaint alleges that the design of the plaintiffs is a novel and original design, and found that the originality or novelty of their design is an essential element of the plaintiffs’ case; that it is undisputed that the plaintiffs conceived the design which is involved from the radiator hood of of the Cord automobile; that the special features of plaintiffs’ design, namely, the combination of rounded corners on the cabinet and rounded edges both at the vertical junctures of the side walls of the cabinet and the horizontal junctures of the side walls with the top walls of the cabinet, together with a plurality of horizontally extending louvers, are embodied in the radiator hood of the Cord automobile. As to plaintiffs’ contention that the application of these features was original and novel, the master found that rounded edges and corners were used in the manufacture of furniture and radio cabinets prior to the submission by the plaintiffs of their design to the defendant; that there is credible evidence in the record that horizontal bars in the nature of louvers were used in radio cabinets and furniture prior to the submission of plaintiffs’ design to the defendant, and that a radio cabinet combining rounded corners and edges with bars resembling louvers was manufactured by the Sparks-Withington Manufacturing Company (which manufactured the Spartan Radio) prior to the creation of plaintiffs’ design and its submission to the defendant. Photographs of the Spartan Radio combining rounded corners and edges with bars resembling louvers were introduced in evidence as defendant’s exhibits 9, 10 and 11. The master concluded that plaintiffs’ design was not a novel and original design; that it was based on the radiator hood of the Cord automobile; that rounded edges and rounded corners had been used in radio cabinets and furniture prior to the creation of plaintiffs’ design; that horizontal bars resembling louvers had been used in furniture and radio cabinets prior to the creation of plaintiffs’ design and that radio cabinets had been produced prior to the creation of plaintiffs’ design incorporating the features of rounded edges and corners with bars resembling louvers, and that the allegation in the plaintiffs’ complaint that they conceived a new and original design is not sustained by the evidence. Hence, the master found that the defendant did not appropriate plaintiffs’ design, but that the design used by defendant in the radio cabinets in question was based upon the Cord aiitomobile hood, and that the application of the design of the Cord automobile hood to defendant’s radio cabinets was independently conceived by Eugene McDonald, Jr., president of defendant company, and was executed by employees acting under instructions from him; that there are substantial differences in the design submitted by the plaintiffs and the design incorporated into the defendant’s cabinets, and that the design used by defendant more closely resembles the design of the Cord automobile hood than it resembles the plaintiffs’ design, and that plaintiffs’ design, in fact, was not a novel or original design.

Defendant concedes that one who wrongfully appropriates a new and novel design or invention disclosed in confidence by another for the purpose of sale must answer to that other in damages and for profits realized therefrom, and that this principle is a necessary requirement of fair dealing and commercial integrity. Defendant insists, however, that in order to recover under this recognized rule plaintiffs must establish (1) an adequate disclosure; (2) a new and novel design; (3) a disclosure in confidence, and (4) the appropriation of the design so disclosed in confidence. Defendant asserts that the burden is on the plaintiffs to establish by a preponderance of the evidence each of these four conditions of recovery. Plaintiffs, on the other hand, maintain that the disclosure by them to Tracey and Freese of their ideas concerning an original radio cabinet design was made on the basis of a confidential or fiduciary relationship ; that equity will protect plaintiffs and prevent defendant from unconscionably profiting by applying the information gained in confidence. - Plaintiffs also urge that since the disclosure to Tracey and Freese was undisputed, if the defendant relied on the defense that McDonald and Stevens had anticipated plaintiffs’ design by independent and separate conception and invention, the burden of proof was on defendant to show such independent anticipation beyond a reasonable doubt. Plaintiffs assert that the undisputed evidence establishes that the defendant failed to sustain its burden of proof of showing anticipation beyond a reasonable doubt. Plaintiffs further argue that the clear and manifest weight of the evidence establishes that Freese, McDonald and Tracey did wrongfully appropriate plaintiffs’ ideas for the benefit of defendant. We have carefully read and viewed the testimony and the exhibits, the arguments presented and the numerous cases cited. Plaintiffs charge the defendant, through its officers and employees, with unlawfully appropriating to its own use a new and novel design. This is a polite way of saying that these officers and employees conspired to steal the design. If the defendant did steal the design, plaintiffs are entitled to recover whatever damages they suffered. On the other hand, if the defendant did not steal the design the plaintiff cannot recover. If the defendant breached the confidence reposed in it by plaintiffs, a court of equity will give relief. The defendant, if guilty, will not be permitted to hide behind any disguise in order to defeat the plaintiffs in their just claims. We agree with the contention of plaintiffs that the basis of recovery is breach of confidence and that it is not necessary for plaintiffs to establish that their design was new and novel as to the entire world. We also agree with the contention of plaintiffs that when they disclosed their design to the defendant a confidential relationship arose. It is apparent that in so far as the parties were concerned, plaintiffs’ design was new and novel. In fact, Mr. McDonald, in directing his subordinates to construct a model radio cabinet based on the hood of the Cord automobile, recognized that he (McDonald) had conceived a new and novel design for radio cabinets. Having viewed the radio cabinets in evidence and compared them with plaintiffs’ drawing (plaintiffs’ exhibit 2) we are of the opinion that there is a marked resemblance between plaintiffs’ drawing and the cabinets. Plaintiffs argue that the master committed a fundamental error in his approach to the problem presented in that he failed to recognize that a fiduciary or confidential relationship existed. We hold that a confidential relationship did exist and in that respect, disagree with the findings of the master. Plaintiffs then argue that the burden of proof is on the defendant to prove its defense of anticipation beyond a reasonable doubt. Plaintiffs cite cases in support of the doctrine that courts of equity will scrutinize with the most jealous vigilance transactions between parties occupying fiduciary relations toward each other, and that the burden of proof is on the fiduciary in such a case to establish the fairness of the transaction. We agree that the burden of proof to show that the radio cabinets in dispute were independently the design of the defendant without being influenced by the plaintiffs ’ design, is on the defendant. However, we are of the opinion that under the circumstances of this case it is only necessary for the defendant to establish its good faith by a preponderance of the evidence. As a matter of practical application in a case of this kind, however, there is little difference between proving its defense of independent and separate conception of the design by a preponderance of the evidence, or beyond a reasonable doubt. Under either rule it would be a question of credibility. The defendant’s witnesses told the truth or they did not tell the truth. The record satisfies us beyond a reasonable doubt that the defendant acted in good faith. We find that McDonald independently conceived the idea of the cabinets in dispute after having viewed the hood of the Cord automobile, and that he, without disclosing his idea to Tracey and Freese, caused the model cabinet to be constructed by Stevens with the assistance of Hall and Lundstrom. We are convinced that the officers and employees of the defendant did not conspire to wrongfully appropriate the design of the plaintiffs. We find that McDonald, without knowledge of plaintiffs’ design and without knowledge that plaintiffs had conceived such a design, independently conceived the design which plaintiffs now contend defendant unlawfully appropriated. The master saw and heard the witnesses. It was his province in the first instance to determine the facts. While the master’s findings of fact do not carry the same weight as the verdict of a jury, nor of a chancellor where the witnesses have testified before him, yet such findings are entitled to due weight on review of the cause. (Pasdach v. Auw, 364 Ill. 491, 496; Brainard v. Brainard, 373 Ill. 459, 461.) The master’s findings, except where we have indicated a contrary view, are amply supported by the record. We are convinced that the action of the chancellor, in dismissing the complaint for want of equity, was proper and in accordance with equitable principles. Therefore, the decree of the circuit court of Cook county should be and it is affirmed.

Decree affirmed.

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