author: Mr. Justice John J. Sullivan

text:
    Fred W. Holm and Bertha Holm, on Appeal of Fred W. Holm, Appellant, v. County of Cook et al., on Appeal of County of Cook, Appellee.
    Gen. No. 37,964.
    Opinion filed December 30, 1935.
    Coburn, Kearney & Coburn, of Chicago, for appellant; John J. Coburn, of counsel.
    Thomas J. Courtney, State’s Attorney, for appellee; Hayden N. Bell, Jacob Shamberg, William P. Kearney, William T. Crilly and Gerald E. Hornidge, Assistant State’s Attorneys, of counsel.
   Mr. Justice John J. Sullivan

delivered the opinion of the court.

February 3, 1928, plaintiffs, Fred W. Holm and Bertha Holm, brought an action of trespass against defendant, County of Cook, for damages for injuries to their land and the destruction of their crops by sewage from the Oak Forest Infirmary, a public institution owned and maintained by defendant. When it was disclosed that Fred W. Holm was the sole owner of the premises involved, Bertha Holm. was dismissed as a party plaintiff. A verdict against defendant for $1,750 was returned by the jury May 16, 1934. On defendant’s motion the trial court on June 9, 1934, entered judgment for the defendant and against plaintiff notwithstanding the verdict. This appeal followed.

Plaintiff’s declaration alleged substantially that the County of Cook was a municipal corporation, managed and controlled by the county commissioners of Cook County; that for five years next preceding the commencement of this suit plaintiff owned and was possessed of certain land described therein and was entitled to the undisturbed occupation of same, together with all of its rents, profits, crops and emoluments; that the County of Cook maintained a public institution known as -the Oak Forest Infirmary upon a large tract of neighboring land west of his premises, where it had erected necessary buildings and accommodations for the care of its 6,000 inmates; that for all of said five years defendant allowed the noxious, stinking and poisonous sewage in great volume from the buildings and grounds of this institution to flow upon the land of plaintiff; that it flowed upon his farm and destroyed certain of his growing crops; and that in so doing defendant “has trespassed upon plaintiff’s premises, appropriated and damaged the same for a public purpose without the consent of the plaintiff, and without paying any compensation therefor, and contrary to the rights of the plaintiff in the premises, guaranteed by the Constitution of the State of Illinois, which provides that his property should not be taken or damaged for public purposes without just compensation.”

After its demurrer to the declaration had been overruled, defendant filed a plea of the general issue and two special pleas, of which reliance is placed only upon the following:

“And for a further plea in this behalf, the defendant says that the plaintiffs ought not to have their aforesaid action against it, the defendant, because it says that the plaintiffs heretofore impleaded it, the defendant, in the Circuit Court of the said County of Cook, to the April term of the said court, in the year 1915, in a certain plea of trespass on the case ón promises, to the damage of the plaintiffs of $10,000.00, for taking and using the very same land in the declaration mentioned; and such proceedings were thereupon had in that plea, that afterwards on April 10, 1920, by the consideration and judgment of the same court, the plaintiffs recovered against the defendant the sum of $12,500 damages, as well as the costs of the plaintiffs in that behalf, whereof the defendant was convicted, as by the record thereof still remaining in the same court more fully appears; which said judgment still remains in full force. And this defendant is ready to verify by the said record: Wherefore it prays judgment if the plaintiffs ought to have their aforesaid action, etc. ’ ’

The undisputed evidence shows that sewage from the defendant’s infirmary overflowed a portion of plaintiff’s farm, destroying 20 acres of his yearly crop for ■ the five years alleged, with resulting damage to plaintiff of nearly twice the amount of the jury’s verdict.

On the trial of this cause defendant introduced in evidence the pleadings in a prior action between the same parties and the judgment therein against defendant for $12,500, which was averred in its special plea as a bar to this action. The land described in the instant case was included in the description of the land ■involved in plaintiff’s former action against defendant, wherein his declaration filed April 9, 1915, alleged substantially the same facts as to the erection and maintenance, of the Oak Forest Infirmary by the county; that defendant took and used plaintiff’s farm tiling and a right-of-way across his premises for the disposition of the sewage of the infirmary; and that plaintiff’s land and improvements were decreased in value by reason of said taking and using as a matter of public necessity." It is admitted that the judgment for $12,500 in the former action, after it was affirmed by this court and certiorari denied by the Supreme Court, was paid. It was on the basis of this former recovery and satisfaction that the trial court entered the judgment for defendant, notwithstanding the verdict of the jury.

Plaintiff contends that a former recovery in an action of trespass against the county is not a bar to his recovery for a second trespass.

Defendant’s theory is “that, since it is liable in a tort action only when it has taken or damaged land, then when it has taken or damaged land and paid for such appropriation, it thereby acquires an absolute right to continue to dominate the land for the same uses and purposes forever afterward.”

Plaintiff urges that “it would be very disastrous and far-reaching if it were the law that a trespasser, by reason of his trespass upon the property of another, obtained a legal right or title or interest in the property of the owner by reason of his wrongful and unlawful act, and the aggrieved owner could not thereafter recover for any subsequent trespass.”

It is sufficient answer to this argument to state that plaintiff predicates and he must predicate the county’s liability entirely and solely on the constitutional provision that, “Private property shall not be taken or damaged for public use without just compensation” (sec. 13, art. 2, Constitution of the State of Illinois) which contemplates only one recovery for all past, present and future damages.

Plaintiff’s argument as above set forth would possess merit and force if his former suit and the instant action were against, a private individual or corporation and for damages caused by a temporary nuisance. However, his former action not only was brought under the above constitutional provision, but he alleged permanent injury in that defendant did “take and use the said farm tiling of this plaintiff and the right-of-way across the plaintiff’s premises for the disposition of the said sewage into the ditch of the said Calumet Drainage District, for a public purpose, and wrongfully, without making any just compensation to the plaintiff”; that said sewage “has so sealed and filled the pores in the said tiling, that the same is wholly destroyed for the use for which it was intended, namely, of absorbing the moisture in the soil of plaintiff’s lands, and that the various chemicals and moisture in said sewage, has leaked into and leaks through the soil of the plaintiff so as to saturate the same and render the same unfit for the purpose of cultivation, and incapable of producing vegetation.” That this court in its opinion affirming the $12,500 judgment in the' former case (Holm v. County of Cook, 213 Ill. App. 1) considered the injuries alleged to have been sustained by plaintiff as permanent is apparent from the following language of the court on pp. 4 and 5:

“It will be seen, from an examination of the declaration, that when defendant constructed the said Oak Forest Infirmary, it contemplated that all sewerage was to be conducted from its lands into the Calumet Drainage District Ditch, by means of plaintiff’s said tiling system, which was in fact done. Such action was tantamount to an appropriation not only of plaintiff’s lands for this purpose, but also the tiling system which plaintiff had laid for purposes entirely foreign to the one to which defendant put it. "While it is true, as argued by defendant, that the servient estate must yield to the dominant one in carrying off surface waters, etc., yet such right cannot be enlarged to permit the defendants herein to unlawfully appropriate plaintiff’s said tiling system for the purpose of conducting the entire sewerage of the institution in question through plaintiff’s lands. In our opinion, plaintiff’s declaration sets up a state of facts from which it appears that his said property has been both taken and damaged for public use without compensation.”

In the recent case of Roe v. County of Cook, 358 Ill. 568, in passing upon the right to sue the county for taking or damaging private property for public use without just compensation, quoting from Illinois Power & Light Corp. v. Talbott, 321 Ill. 538, the court said at pp. 572, 573:

“ ‘The constitution, in prohibiting the taking or damaging of private property for public use without just compensation, recognizes the right of the owner of property damaged by a public work to recover the amount of such damages. This right may be asserted by the owner as a plaintiff in an action at law where none of his property is actually taken, or as a defendant to an eminent domain proceeding for the condemnation of property actually taken. (County of Mercer v. Wolff, 237 Ill. 74.) In either case the right to damages is the same, and its basis is the constitutional prohibition mentioned. ’ ’ ’

In the Roe case the question was also raised as to the effect of the judgment on the county’s future right to use the property damaged and the court said at p. 575:

“While the judgment may be somewhat excessive, we are powerless to afford any relief under the record. Its payment will secure the public right to continue to use the premises, as it will be considered as full compensation for all present and future damages and bar any subsequent action for the same cause. Chicago & Eastern Illinois Railroad Co. v. Loeb, 118 Ill. 203; Miller v. Sanitary District, 242 id. 321.”

In holding that only one proceeding for the recovery of damages was contemplated under the constitutional provision heretofore referred to, the following language was used by the court in Chicago & E. I. R. Co. v. Loeb, 118 Ill. 203, 212-214:

“For the class of injuries here sued for, — injuries necessarily resulting from the operation of a railroad, — there was no remedy, as we understand, previous to the constitution of 1870. The constitution of 1848 provided only that private property should not be taken for public use without just compensation. The provision for the first time was incorporated in the constitution of 1870, that ‘private property shall not be taken or damaged, for public use, without just compensation. Such compensation, when not made by the State, shall be ascertained by a jury, as shall be prescribed by law.’ Before the adoption of the latter constitution, where there was land taken for public use, there was provision for compensation. But where there was other disconnected land not touched by the improvement, but damaged, merely, as complained of in this case, no compensation was provided. To meet this want, the clause of the constitution restrictive of the exercise of the power of eminent domain, provides that private property shall not be taken or damaged for public use without just compensation.

“We think it to be within the true intent and meaning of this provision as to damage, that there should be but one proceeding for recovery of damage, in which there should be recovery for the entire damage, past, present and future; that it should be similarly regarded, in this respect, as the provision in regard to the taking of property, where there is but one proceeding, and an assessment of compensation and damages once for all. The two provisions are coupled together, and are both in restriction of the exercise of the power of eminent domain. In respect to the awarding of compensation for the taking of private property for public use, Mills, in his work on Eminent Domain, sec. 216, says: ‘The appraisement embraces all past, present and future damages which the improvement may thereafter reasonably produce. ’ Had the railroad track in this case been laid over a portion of one of these lots, then, in the condemnation proceeding for the taking of such portion, compensation would have been assessed for the value of the portion thus taken, and for the damage to the residue of the lot not taken. Such assessment would have embraced all future damage. As well here, in this case of no taking of land, might all the damages, past and future, from the operation of the railroad, be assessed, as they might be to the remainder in such supposed case of the taking of a part of a piece of land. If there might be successive recoveries, from time to time, of the constantly recurring damages, then, as was said in the Grabill case, ‘a similar recovery might be had at every term of the court, and in this shape the plaintiff might recover ten-fold the value of the property. ’ We do not think that this constitutional provision intended any such result,— that the just compensation given for the damaging of land might be greater than that for the taking of the land. ...

“ . . . the action for damage may be regarded as in the nature of one kind of condemnation proceeding.”

In the case of Miller v. Sanitary District, 242 Ill. 321, where the landowner sued to recover damages resulting from the overflowing of a large area of his land by water brought into the Desplaines River by the main channel of the sanitary district, and where the district contended that the judgment against it should include an order that upon its payment it should have and own the title in fee simple to the submerged land involved, the court obviously was compelled to reject this contention, but held at p. 326:

“No doubt the payment of this judgment will justify the sanitary district in continuing to flow these lands without any danger of being harassed with other suits for damages. In such cases the recovery is held to be in full compensation for all present and future damages and one recovery will bar any subsequent action for the same cause. (Chicago & Eastern Illinois Railroad Co. v. Loeb, 118 Ill. 203.) The sanitary district therefore will acquire, by the payment of this judgment, the right to continue to flow the surface of these premises without making further compensation.”

The county’s liability for damaging private property for public use exists only under the constitution and there can be only one recovery as has been shown. Since plaintiff has already recovered in his former action for the appropriation of the land involved in the instant case for the conduct of the sewage from the infirmary across and through it, he is barred from another recovery for the continued use of the land for the same purpose.

In the former suit plaintiff’s declaration treated the nuisance as permanent and both parties to the proceeding, as well as this court in its opinion in that case, considered the county’s conduct and action in causing the sewage to flow over and through plaintiff’s land as a quasi-condemnation or permanent taking and appropriation of such an interest in his land as gave defendant the right to continue to use it as an outlet for its sewage, following the natural drainage of the land and as a matter of public necessity. Plaintiff received $12,500 for the use of his premises for this purpose by the county, and, in our opinion, is precluded under-the law from recovering any further damages in this regard.

. For the reasons indicated the judgment of the circuit court is affirmed.

Judgment affirmed.

Soanlan, P. J., and Friend, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Owatonna Metal Products Company, Appellee, v. H. D. Hudson Manufacturing Company, Appellant.
    Gen. No. 37,975.
    Opinion filed December 30, 1935.
    Rehearing denied and opinion slightly modified January 21, 1936.
    Arthur A. Basse, of Chicago, for appellant.
    Marcus L. Silver, of Chicago, for appellee.
   Mr. Justice John J. Sullivan

delivered the opinion of the court.

This appeal seeks to reverse a judgment for $2,194.14 entered against defendant, H. D. Hudson Manufacturing Company, in a contract action brought by plaintiff for the recovery of the par value of two certificates and attached dividend coupons issued by defendant. The suit was originally brought by the King Ventilator Company, but subsequently leave was granted to amend by substituting the Owatonna Metal Products Company as party plaintiff.

Plaintiff’s statement of claim alleged substantially that it was the owner of 20 shares of $100 par value preferred stock of defendant, a Minnesota corporation, represented by two certificates, Nos. 2010 and 2011; that, according to the terms of said certificates, the par value of the preferred stock became due and payable to the owner thereof when all dividend coupons attached thereto had fallen due and been paid; that the last coupon on certificate No. 2010 became due May 1, 1932, and the final coupon on certificate No. 2011 became due May .1, 1933, but that said coupons were not paid; that there was also a coupon due May 1, 1932, on certificate No. 2011 which was unpaid and that all such coupons were for $60 each; and that both certificates read as follows:

“Incorporated Under the Laws of the State of Minnesota.

Shares

$100.00 Certificate of Preferred Stock 10

Capital $2,000,000. shares

The Hudson Manufacturing Company Minneapolis, Minn.

“This certifies that Owatonna Metal Products Co. is the owner of Ten Shares of the Preferred Capital Stock of the Hudson Manufacturing Company, transferable only on the books of the corporation in person or by attorney on surrender of this Certificate. Subject to the following conditions:

“This certificate entitles the holder to an annual dividend of 6 per cent upon presentment in succession of the dividend coupons hereto attached.

“This preferred stock shall, at the option of the ; corporation, be subject to redemption on the First day of May, 1932, or if not so redeemed its time of redemp- : tion may be extended on the same terms, from year j to year until all the attached coupons shall have fallen due and been paid.

“The holder of this preferred stock shall have no vote at stockholders’ meetings, and is not entitled to notice of such meetings, and shall not participate in ' the profits of the Corporation beyond the amount herein mentioned as payable according to the terms of the j attached dividend coupons.

“In Witness Whereof the duly authorized officers of the Corporation have hereunto set their hands and names and caused the corporate seal to be affixed this 18th day of October, 1928.

H. D. Hudson,

President,

(Corporate Seal) Carl J. Siebold,

Secretary. ’ ’

The dividend coupon attached to certificate No. 2010 was as follows:

“Pfd. Stock No. 2010 $1000 Dividend Coupon No. 4.

The Hudson Manufacturing Company will pay to Owatonna Metal Products Co. at their office in Minneapolis, Minn., on the 1st day of May, 1932, Sixty-Dollars being one year’s dividend on the above named Preferred Stock Certificate, computed from Jan. 1st to Dec. 31st in each year.

H. H. Hudson,

Pres.-Treas.”

The dividend coupons attached to certificate No. 2011 were in the same form, varying only as to the certificate number and as to the dates of payment and the period for which the dividend was to be paid.

Defendant’s final amended affidavit of merits was filed July 23, 1934, and its material allegations pertinent to this appeal are that plaintiff’s certificate represented part of an outstanding issue of preferred shares of stock of defendant corporation, aggregating $333,640, all of the same class and entitled to the same rights and privileges; that in addition to the shares of preferred stock, as above set forth, defendant had outstanding when the instant suit was filed shares of common stock of the aggregate par value of $923,370; that this outstanding preferred and common stock represented the total outstanding capital stock of defendant and that it had no other class or classes of stock; that the rights and privileges of the holders of the preferred stock were fully set forth in the articles of incorporation of defendant; that, in substance, such articles provided that the holders of preferred stock shall receive from the net earnings or surplus of defendant cumulative dividends before the payment of dividends on common stock, and in case of dissolution or liquidation the assets of the corporation, whether capital assets or earnings, shall be distributed to the holders of the preferred stock to the full extent of its par value and unpaid cumulative dividends before any distribution is made to the holders of common stock, that the holders of preferred stock shall have no voting rights or power unless the defendant fails to pay dividends on such preferred stock for a period of three successive years, in which event the holders of the preferred stock shall be entitled to vote, and that the preferred stock may be redeemed at the option of the defendant corporation; that plaintiff’s preferred stock was not issued for any money lent or paid to defendant, but was issued in lieu of and in exchange for shares of preferred stock previously issued and outstanding; that the shares of stock which were previously issued to plaintiff, and for which the shares of preferred stock in question were exchanged, were not issued for any money lent or paid to defendant, but were issued pursuant to a verbal agreement between plaintiff and defendant whereby plaintiff agreed to and did turn over to plaintiff certain merchandise and a going business with the good will of same; that when this agreement was made it was specifically understood that plaintiff was receiving shares of stock and was not receiving notes or certificates of indebtedness; and that plaintiff and defendant at all times treated and considered the relationship between them as that of stockholder and corporation and not that of creditor and debtor.

October 22, 1934, the trial court overruled plaintiff’s motion to strike defendant’s amended affidavit of merits from the files and entered the following order:

“Now comes the plaintiff in this cause, and moves the Court for judgment versus defendant, on pleadings, and the Court being fully advised in the premises sustains said motion.

“This cause coming on for further proceedings herein, it is considered by the Court that the plaintiff have judgment on the pleadings herein, and that the plaintiff have and recover of and from the defendant, Twenty One Hundred Ninety Four and 14/100 Dollars ($2,194.14). ...”

Defendant contends that the certificates in question t represent shares of stock and that they do not contain 1 any agreement on its part to redeem the shares, but i merely give it an option to do so; that the certificates must be considered in connection with the provisions f! of its Articles of Incorporation; that, even if there were an agreement to redeem the shares, the corpora- I ) tion could not be required to redeem them nor to pay { dividends thereon when to do so would impair the [. rights of creditors; and that the redemption of plain- ! tiff’s stock and the payment of dividends thereon I would impair the rights of creditors.

Plaintiff’s theory is that it is a creditor and not a stockholder of the plaintiff corporation because of the peculiar character, form and condition of its certificates and the dividend coupons attached thereto; and that, even though, it is held to be a preferred stockholder and not a creditor, nevertheless the defendant agreed to redeem the certificates which it holds at a definite ascertainable date, and as between the stockholder and the corporation, the latter must redeem unless it is properly alleged and shown that to do so would impair the rights of creditors or that the corporation is prohibited by statute from so redeeming.

- Whether or not the holder of a particular instrument 1 or certificate is to be regarded as a stockholder or cred- ? itor is a question of interpretation and depends upon l the terms of his contract as evidenced by such instrui ment and the corporate charter. (Fletcher Cyclopedia Corporations, Permanent Edition, vol. 11, sec. 5294, p. 718.)

The question as to whether the holder of a certificate s issued by a corporation is a member of such corpora-f tion or whether the certificate is simply evidence of a \ debt due by the corporation to the holder, is one that i depends upon the peculiar facts of each case. (Savannah Real Estate, Loan & Bldg. Co. v. Silverberg, 108 Ga. 281.) The contract which the stockholders inftended to make in issuing the stock in question must be ¡determined from the language of the certificate of (stock itself taken in connection with the Articles of ¡Incorporation. (Spencer v. Smith, 201 Fed. 647.)

The distinctive and peculiar facts upon which plaintiff relies in urging that its certificates should be construed to constitute plaintiff a creditor rather than a stockholder are (1) that one of the certificates contains the provision that “this preferred stock shall at the option of .the corporation be subject to redemption on the first day of May, 1932, or if not so redeemed its time of redemption may be extended on the same terms from year to year until all the attached coupons shall have^fallen due and been paid,” and the other certificate contained the same provision except that it was first subject to redemption May 1, 1933; (2) that attached to each of the certificates were a limited number of dividend coupons, each containing an unqualified promise to pay $60 at a definite date; (3) that the certificates contained the further provision that the holder of same “shall not participate in the profits of the corporation beyond the amounts mentioned as payable according to the terms of the attached dividend coupons ’ ’; (4) that dividends were only to be paid to the holder of the certificates “upon presentation, in succession, of the dividend coupons thereto attached”; and (5) that “the holder of this preferred stock shall have no vote at stockholders ’ meetings. ’ ’ Bather than containing any undertaking or obligation by the defendant to redeem the certificates at a definite date, we think the contrary is true. On plaintiff’s motion to strike defendant’s affidavit of merits for insufficiency all the well pleaded allegations therein were admitted. Its affidavit of merits shows that the shares of stock evidenced by plaintiff’s certificates were a part of the only issue of preferred stock of defendant corporation outstanding. The true character and effect of the instru- I ments upon which plaintiff predicates this action must J be determined in the light of defendant’s articles of incorporation, contained in its affidavit of merits, which set forth the rights, preferences and privileges of ■ holders of its preferred stock. Such articles provide, in substance, that the holders of preferred stock shall receive from the net earnings or surplus of the corporation cumulative dividends at a rate not to exceed seven per cent per year before the payment of dividends to the holders of common stock, and in case of dissolution or liquidation, the assets, whether consisting of capital assets or cumulative earnings, shall be distributed to the holders of the preferred stock to the full extent of the par value of such shares of stock and unpaid cumulative dividends thereon before any distribution is made to the holder's of common stock; that the holders of preferred stock shall have no voting-power unless the corporation fails to pay dividends on the preferred stock for a period of three successive years, in which event such holders of preferred stock shall be entitled to vote; and that the stock may be redeemed at the option of the corporation.

■ We find no language in plaintiff’s certificates that could possibly lead to an interpretation that they were other than certificates of preferred shares of stock. They contain no evidence of a promise or obligation to pay plaintiff money, but do contain merely an option to redeem, which defendant may or may not exercise. We find nothing- in the terms of the certificates as to the number of dividend coupons or as to their time, method or manner of payment that could possibly alter the character and effect-of the certificates. Regardless of the number of dividend coupons originally attached to the respective certificates, and regardless of any limitation therein as to the number of dividends payable thereon, under the articles of incorporation plaintiff must share in any dividend declared on the preferred stock of the corporation. The limitation in the certificates of the holder’s right to vote is generally held not to affect such instruments ’ character as stock certificates.

In Hazel Atlas Glass Co. v. VanDyk & Reeves, 8 F.(2d) 716, where a preferred stockholder attempted to assert a claim against the corporation as a creditor under circumstances similar to but even stronger than those that exist here, the court said at pp. 719, 720-22:

“We can see nothing in any of these provisions which in any way alters the nature of this preferred stock and makes Van Dyk a creditor of the corporation, and not a stockholder. As he cannot be, by virtue of his ownership of the stock, both stockholder and creditor, but must be one or the other, we think he must be the former, for we cannot see any legal justification for holding that he is the corporation’s creditor.

“One ‘cannot be both creditor, and debtor, by virtue of his ownership of stock. ’ Warren v. King, 108 U. S. 389, 399, 2 S. Ct. 789, 798, 27 L. Ed. 769. He is either the one or the other; and if it is claimed that one who holds ‘preferred’ stock is not a stockholder, but is instead a creditor, the claim must ‘rest on clear and not doubtful language. ’ Warren v. King, supra, page 398, 2 S. Ct. 797. . . .

“In Cook on Corporations (7th Ed.) vol. 1, sec. 271, that distinguished commentator remarks: ‘Formerly it was a matter of doubt and discussion whether or not a preferred stockholder had any rights as a creditor of the company, or was confined to his rights as a stockholder. The law is now clearly settled that a preferred stockholder is not a corporate creditor. ’

- ‘ ‘ The general rule is that a holder of preferred stock, even though the preferred dividend is guaranteed, is not regarded as a creditor of the corporation, and entitled as such to share with the other creditors in the distribution of the assets. He is, like the holders of the common stock, merely a stockholder, but with this difference, that he is entitled to priority of payment out of the assets which remain after all debts are paid; the holders of the common stock sharing in such assets as are left. . . .

“In the instant case the agreement between the corporation and the holder of the stock certificate provided that the holder of such stock should be entitled to ‘cumulative dividends.’ But this agreement that dividends should be ‘cumulative’ has no bearing on the question now before us. For in any case unless a contrary intention appears, dividends on preferred stock are cumulative, and arrearages in one year are payable in subsequent years, when there are sufficient profits, before dividends can be paid on the common •stock.

‘ ‘ The rights which the holder of preferred stock has depend upon his contract with the corporation. The rule is that preferred stockholders are entitled to vote the same as the common stockholders, unless by the terms of its issue the voting power has been expressly withheld. But the fact that Ván Dyk, as the holder of \ the preferred stock, was to have no right to vote it, except in the event that three dividends should remain unpaid, and thereupon should have equal voting rights with the holders of the common stock until all divi- . dends on the preferred stock were paid, is a matter , of no consequence, so far as the legal question herein ■ involved is concerned. It does not change Van Dyk’s status from that of a preferred stockholder into that of a creditor. Shaffer v. McCulloch, 192 F. 801, 804, 113 C. C. A. 535. The surrender by a preferred stoek- . holder of the right to vote does not make him a creditor. Hamlin v. Toledo, St. Louis & Kansas City R. Co., 78 F. 664, 671, 24 C. C. A. 271, 36 L. R. A. 826.

“In Machen on Corporations, vol. 1, sec. 541, it is' stated that preferred shareholders are members of the company, and not creditors, and the author goes on in section 542, to point out some of the circumstances which are insufficient to confer on such shareholders the rights of creditors. He says, among other things:

“ ‘Nor is the fact that the preferred stockholders do not possess the right of voting at shareholders’ meetings sufficient evidence that they should be deemed creditors rather than members of the corporation. Indeed, even if payment of the preferred dividend is guaranteed by the company, the preferred shareholders are entitled to nothing except out of net profits; the guaranty will be construed to apply only to payment out of any funds legally available for dividends. . . . ’ ”

The transactions in and by which the certificates were issued and delivered to plaintiff, as shown by the affidavit of merits, did not result in the creation of a debt. The circumstances of their issue and their purpose, and the articles pursuant to which they were issued, show conclusively that the parties contemplated the issue and delivery to plaintiff of certificates of preferred shares of stock and not certificates of indebtedness.

If defendant became a debtor to plaintiff it must be because of obligations which defendant corporation • assumed toward plaintiff in the issuance to him of the preferred stock, which made him not a stockholder but / a creditor. There is nothing in plaintiff’s contract / with the defendant or in its certificates which takes this case out of the general rule that one who holds pre-;| ferred stock is a stockholder and not a creditor of the! corporation. (Hazel Atlas Glass Co. v. Van Dyk & Reeves, supra.)

Holding as we do that plaintiff’s certificates did not constitute it a creditor and that they cannot be con- ' strued as containing any definite obligation to redeem the preferred stock which they evidenced, it is unnecessary to consider whether their redemption would impair the rights of creditors and allow plaintiffs an unfair and illegal preference over the other preferred stockholders.

Defendant acquiesced in the trial court’s ruling sustaining plaintiff’s motion that the cause be heard on the pleadings alone and it necessarily follows that the pleadings present the sole basis for our determination of the issues. The last amended affidavit of merits presented a defense that was not only meritorious but that was a complete bar to plaintiff’s recovery. Inasmuch as plaintiff’s claim was predicated solely upon its certificates of preferred stock and the attached dividend coupons, it would serve no good purpose to remand this cause. The judgment of the municipal court is therefore reversed.

Reversed.

Scanlan, P. J., and Friend, J., concur.


text:
    Helen F. Tanner, Appellee, v. The Prudential Insurance Company of America, Appellant.
    Gen. No. 37,985.

      Opinion filed December 30, 1935.
    Hoyne, O’Connor & Rubinkam, of Chicago, for appellant ; Nathaniel Rubinkam and William S. Allen, of Chicago, of counsel.
    Cassels, Potter & Bentley, of Chicago, for appellee ; Ralph F. Potter, Claud D. Raber and E. Douglas Schwantes, all of Chicago, of counsel.
   Mr. Justice John J. Sullivan

delivered the opinion of the court.

This is an appeal from a judgment for $5,625, entered by the superior court on the verdict of a jury against defendant, The Prudential Insurance Company of America, in an action brought by plaintiff, Helen F. Tanner, the beneficiary named in an insurance policy issued by defendant on the life of her husband, Herbert E. Tanner.

Plaintiff’s declaration alleged that October 15, 1930, the defendant issued and delivered to her husband, Herbert E. Tanner, a policy insuring Ms life for $5,000; that the insured died December 25, 1931, while the policy was in full force and effect; and that defendant disclaimed all liability on the policy except for . the return of the premiums paid.

Defendant contends that the policy was issued by it pursuant to insured’s application, in which he represented that his answers to the questions therein were complete and true; that the undisputed evidence discloses that he was guilty of fraud and misrepresentation in his answers to certain questions contained in his application; that, if defendant at the time of in- ' sured’s application had known the true facts concerning his condition of health and his previous treatment by physicians, it wuuld not have issued the policy; and that, because it was induced to issue the policy by reason of insured’s fraud, it cannot be held liable except for the premiums paid, which have been tendered to and refused by plaintiff.

Above Tanner’s signature on that portion of his application for insurance captioned “Declarations Made To The Medical Examiner,” he declared “that all of the statements and answers to the above questions are complete and true and I agree that they shall form a part of the contract of insurance applied for.”

Among the questions and answers referred to were the following:

“6. Have you ever

“(d) Had medical or surgical treatment in a hospital or sanitarium?

“No.

“9. On what dates and for what complaints have you been attended by a physician during the past three years?

“No.”

Plaintiff insists that the above questions, to which the respective answers were made, are ambiguous; that the answers were in fact true responses to the questions asked; that Tanner was justified in believing that his visits to the out-patient clinic of the hospital did not constitute “medical or surgical treatment in a hospital or sanitarium”; that he was justified in believing and considering that being “attended by a physician” meant attended in his home; that he had a right, in view of Dr. Katz’s statement to him in August, 1930, that his eye was normal, to consider his ailment trivial; that he was justified in view of the previous questions in the application as to “serious illness,” “serious injury” and “surgical operation” in believing that the above questions pertained only to matters of a serious nature; that, if there were any inaccuracies in Tanner ’s answers, they were immaterial to the risk; that the answers were not knowingly made with intent to deceive or defraud defendant; and that, in any event, the alleged falsity of Tanner’s answers, his knowledge with respect thereto, his intent to defraud defendant and the materiality of his representations were all questions of fact for the jury.

Dr. John Soukup, the medical examiner for defendant company, testified that he asked Tanner the questions contained in the application and that, after he had written thereon the answers to the respective questions as made to him by insured, Tanner signed the application October 4, 1930.

Dr. Dewey Katz testified in defendant’s behalf that he specialized in diseases of the eye and was connected with the University of Chicago clinic at the Billings Memorial Hospital; that he first saw Tanner at that clinic January 9,1930, and saw him 16 times thereafter before insured signed the application; that, when he first examined him, his left eye protruded abnormally and he complained of double vision; that the patient’s symptoms indicated the possibility of a tumor, an inflammatory process or a generalized condition such as • toxic goiter; that Tanner was referred to the clinic at the Billings Memorial Hospital by Dr. Boettcher, who had seen him previously; that “the X-rays made of this man’s eye” were essentially negative; that he was one of the attending physicians at the time of Tanner’s death, and, in his opinion, the cause of his death was generalized sareomatosis; that from subsequent events it was his opinion that the cancerous condition started “in the orbit and thereafter went through the bloodstream into various organs in the abdominal cavity”; that it was his opinion that this condition “began approximately the latter part of 1929”; that he operated and removed Tanner’s left eye June 26, 1931, and at that time the eye showed a cancerous condition; that on the occasion of insured’s first visit to the hospital he checked up the amount of protrusion of the left eye, “performed the usual ophthalmological examination or eye examination,” and advised the taking of an X-ray picture; and that insured was given 10 X-ray treatments at the hospital at his direction, three each in the months of January, February and March, and one in August, 1930.'

Dr. Katz testified upon cross-examination that on the occasion of Tanner’s first visit to the clinic the witness did not tell him that there was anything seriously the matter with him; that on one of insured’s visits to the clinic he removed a small part of the tissue behind the eye to examine it and the examination of such tissue did not indicate cancer; that prior to November 1, 1930, the only place that he saw Tanner was in the clinic of the eye department, which was a subdivision of the hospital; that the protrusion of his eyeball subsided following treatment and that there was no protrusion in the summer of 1930; that then his eye was apparently all right and his conclusion was that whatever had caused the trouble had disappeared; and that at that time he told Tanner that “the eye looked perfectly normal and was like a normal eye. ”

Dr. Garwood C. Richardson, called by defendant as an expert witness, testified that there are different types of cancer, some of slow development and others of more rapid development. He was unable to give a definite opinion as to whether or not the cancerous condition that resulted in Tanner’s death might or might not have existed prior to the time that he. made the application for insurance.

Plaintiff offered no medical testimony as to the condition of insured’s health prior to October 4, 1930, when he signed the application upon which the insurance policy was issued to him October 15, 1930. The only testimony offered by her was that of lay witnesses to the effect that Tanner was apparently in good health prior to and at the time he signed the application, and that his reputation for truth and veracity was good.

Tanner died as a result of cancer about 14 months after the policy was issued to him. His left eye was removed approximately six months prior to his death and a cancerous condition of the eye existed at the time of its removal. Although Dr. Katz testified that it was his opinion from subsequent events that the condition that resulted in Tanner’s death “began approximately the latter part of 1929,” there is no evidence in the record that Tanner knew when he signed the application October 4, 1930, that he was suffering from, cancer. It is reasonable to infer from the evidence that he had no such knowledge then inasmuch as Dr. Katz told him in August, 1930, after treating him for approximately seven months, that “the eye looked perfectly normal and was like a normal eye.”

Therefore, for the purpose of determining the issues presented by this appeal it is necessary to consider only the answers to the questions in the application heretofore set forth. The answers to these questions were obviously untrue since the undisputed evidence discloses that Tanner received medical treatment, in-eluding 10 X-ray treatments, at the Billings Memorial Hospital on 17 occasions during the period from January 9, 1930, to August 17, 1930, the treatment on the latter date having been received less than two months prior to October 4, 1930, when he answered the questions and signed the application for the insurance.

An applicant for life insurance is not exempted from the operation of the ordinary rules of common honesty and good faith in his dealings with the company in procuring a policy. (Western & Southern Life Ins. Co. v. Tomasun, 358 Ill. 496.) Even the most unsophisticated person must know that in answering the questions contained in an application for life insurance and submitting the application containing such answers, he is furnishing the data on the basis of which the company will decide whether by issuing a policy it wishes to insure him. (Stipcich v. Metropolitan Life Ins. Co., 277 U. S. 311.)

Tanner declared that he had not received medical treatment in a hospital, when he had received such treatment, and he stated that he had not been attended by a physician for any complaint during the three years immediately preceding his application for insurance, when he had been so attended and treated 17 times by Dr. Katz over a period immediately preceding the date of his application.

Regardless of whether or not Tanner was afflicted with a cancer when he answered the questions and signed the application on October 4, 1930, and, regardless of whether or not he knew that he was so afflicted, the real question presented for our determination is whether Tanner answered truthfully the questions in his application for insurance as to his previous condition of health and medical history or whether he was guilty of misrepresenting material facts in connection with same.

It must be conceded that an insurance company has the right to decide whether it will accept a risk after knowing all the true facts. Defendant was denied the right to examine,the hospital records as to insured’s diseased condition and treatment, as well as his medical history, and it was further denied the right and opportunity to interrogate the physicians who had treated him and with whom he had consulted, because of the concealment by him of his previous condition of health and medical and hospital treatment.

It is idle to urge that the questions were or are ambiguous or that the answers of insured thereto are in any sense true. The language of the questions involved is plain, simple, clear and readily understandable and the answers to same are apparently false. The mere reading of the questions is conclusive of the character of the information sought from the applicant. The contention of plaintiff that Tanner was justified in believing that the questions meant something other than was stated therein in plain language is without merit. That the insured considered his ailments trivial or that plaintiff now considers the questions and answers immaterial can in no sense be controlling.

Even though we assume that insured was honest in making his answers, counsel for plaintiff’s argument that the judgment should be sustained on that ground can have no force or effect in view of the latest expression of our Supreme Court in Western & Southern Life Ins. Co. v. Tomasun, supra, where the court said at p. 502:

“In an equitable action for the cancellation of an insurance policy upon the ground that misrepresentations had been made as to facts material to the risk, it is not essential that the appellant should have willfully made such misrepresentations knowing them to be false. They will avoid the policy if they are, in fact, false and material to the risk even though made through mistake or in good faith. In United States Fidelity and Guaranty Co. v. First Nat. Bank, 233 Ill. 475, we stated this rule in the following language: The law is well settled, in its application to insurance contracts, that a misrepresentation of a material fact, in reliance upon which a contract of insurance is issued, will avoid the contract, and it is not essential, in equity, that such a misrepresentation should be known to be false. A material misrepresentation whether made intentionally or knowingly or through mistake and in good faith, will avoid the policy.’ The same rule has been applied in many other jurisdictions.”

In Cross v. Prudential Ins. Co. of America, 279 Ill. App. 645 (Abst.), which was an appeal from a judgment rendered in an action at law tried before the court and jury, Justice Wilson in delivering the opinion of court, after quoting the foregoing language from the Tomasun case, said:

“It is a matter of no importance as to whether or not the answers were made with the intention to deceive. The vital question is as to whether the insurance company had a right to rely upon them as true at the time it issued its policy. The questions and answers pertain to material matters and their falsity must have been known to the applicant inasmuch as the application was signed by him and was also made a part of the policy which he subsequently received.”

It is urged by plaintiff that the falsity of Tanner’s answers, his knowledge with respect thereto, his intent to defraud and the materiality of his representations were all questions of fact, which were properly submitted to the jury and resolved in plaintiff’s favor. The difficulty with this position is that the verdict was against the manifest weight of the evidence inasmuch as the undisputed evidence shows conclusively that the answers to the questions were false and concerned material facts. It is only necessary to repeat that the law is well settled in its application to insurance contracts that a misrepresentation of a material fact, in reliance upon which a contract of insurance is issued, will void the contract. (Western & Southern Life Ins. Co. v. Tomasum, supra; United States Fidelity & Guaranty Co. v. First Nat. Bank of Dundee, 233 Ill. 475.)

Plaintiff’s contention that the only error argued by defendant upon this appeal was the alleged denial by the trial court of defendant’s motion to direct a verdict in its favor is without merit. Defendant withdrew its motion made in the trial court to direct a verdict, but under its motion for a new trial, which was denied, it saved for review the question of the insufficiency of the evidence to sustain the judgment below. Most of defendant’s brief was directed to a discussion of this proposition.

We are of the opinion that the answers to the questions propounded, as heretofore set forth, were untrue and that they were answers concerning material facts, which, if known to defendant insurance company, could well have caused it to have refused to issue the policy in question.

In view of the fact that insured by signing his application represented such answers to be true, which were in fact untrue, it would serve no good purpose to remand the cause for a new trial.» The judgment of the superior court is therefore reversed and judgment entered here against defendant for $287.68 on account of premiums paid on the policy from the date of its issuance with interest thereon, a tender of which amount was made by defendant to plaintiff in the trial court and refused.

Reversed and judgment here for plaintiff against defendant for $287.68.

Scanlan, P. <7., and Friend, J., concur.


text:
    Mary Lang Cummer, Appellee, v. William M. Cummer, Appellant.
    Gen. No. 38,018.

      Opinion filed December 30, 1935.
    Rehearing denied January 11, 1936.
    Carpenter, Neltnor & Scolnik, of Chicago, for appellant ; Charles E. Carpenter and John C. Melaniphy, of Chicago, of counsel.
    William C. Q-reatman and Abraham W. Brussell, both of Chicago, for appellee; Abraham W. Brussell, of counsel.
   Mr. Justice John J. Sullivan

delivered the opinion of the court.

Defendant, William M. Cummer, had been residing with his daughter, Lang Cummer, at Nice, France, for about two years prior to October 25, 1929. On that date plaintiff, Mary Lang Cummer, his wife and the mother of Lang Cummer, was granted a divorce from him and $66,000 in settlement of her property rights, the care, custody and control of the child, Lang Cummer, then 13 years of age, being awarded to defendant, the court finding that he “is a fit and proper person to have the care and custody of said child and that, because of defendant’s greater financial ability to maintain and educate her, the best interests of said child would be served” by awarding her custody to her father. The Chicago law firm of Butler, Lamb, Foster & Pope (hereinafter sometimes referred to as the Butler firm) was retained by Squire, Sanders & Dempsey, attorneys at law of Cleveland, Ohio, to represent Cummer, then in Europe, in the divorce proceedings. Cummer’s appearance in the divorce suit was filed by the Butler firm October 22, 1929. On the same day that firm filed an answer admitting the marriage, the birth of the child and its custody by defendant, but denying the allegations of plaintiff’s bill charging desertion. Counsel stipulated that the cause might be heard upon bill and answer as in case of default.

January 24, 1934, plaintiff, without attempting’ to personally notify defendant, then in Europe or Africa, served the then Butler firm with notice of her intention to file a petition for the modification of the decree of ■ October 25,1929, as to the custody of the child and for other relief. She was granted leave to file her petition and thereafter up to and including July 30, 1934, numerous judgments and orders, some of which were for injunctions, were entered by the trial court directed at defendant or his property.

October 9,1934, defendant, upon due notice to plaintiff’s solicitor, was granted leave to file his petition to vacate all the judgments and orders for injunction or otherwise entered since the filing of plaintiff’s petition to modify the original decree, on the ground that the court lacked jurisdiction to enter same without notice to him. The court ordered defendant’s petition to stand as an answer to plaintiff’s petition of January 24,1934, and set the cause down for hearing on its merits. October 11, 1934, plaintiff moved to strike defendant’s petition of October 9, 1934, for insufficiency in law. October 25, 1934, defendant filed an additional petition supplementary to his petition of October 9, 1934, and plaintiff’s motion to strike defendant’s petition of October 9, 1934, was allowed to stand as a motion to strike his additional petition. November 30,1934, plaintiff’s motion to strike defendant’s petition of October 9, 1934, as well as his additional petition of October 25, 1934, to vacate all the orders and judgments entered pursuant to plaintiff’s petition of January 24,1934, was sustained by the chancellor on the ground of the insufficiency of such petitions.

This appeal seeks to reverse the last mentioned order of November 30, 1934, and all judgments and orders entered by the trial court subsequent to the filing of plaintiff’s petition of January 24,1934, to vacate or modify the original decree of divorce entered October 25,1929.

Plaintiff’s petition of January 24, 1934, alleged, in substance, that for three years subsequent to the entry of the decree the child, Lang Cummer, lived with her father in Nice, France; that she had been constantly under his supervision, control and domination and had no schooling since she was 14 years of age; that about May, 1933, while his daughter was living with him in Nice, he employed a cook, with whom he committed adultery, and that when his daughter found him in bed with the cook and remonstrated with him, he told her “if she did not like it she knew what she could do”; that the cook remained in the home for about two weeks thereafter, when Cummer took her to Algiers and left his daughter stranded in Nice with no money except what she was able to borrow to get along on; that he returned to Nice from Algiers with the cook in about a month and at that time, although his daughter was ill in a hospital and sent for him, her father did not visit her or pay her hospital bill; that he refused to comply with his daughter’s request to send her clothing to the hospital, almost immediately returning to Algiers with the cook, and that Lang had to borrow 5,000 francs to pay her hospital bill; that when Lang left the hospital she learned that her father had gone to Algiers, and, borrowing money to follow him, found him living there at a hotel with the aforementioned cook; that she discussed the situation with her father and he departed for Nice, leaving her with little money; that she remained in Algiers for about three weeks and in response to a letter to her father requesting money upon which to live, he arranged for an allowance tó her of about $40 a month, which was not sufficient to live upon according to her needs and the mode of living to which he had accustomed her; that because of her father’s failure to furnish Lang* with a passport she was chased from “pillar to post” by the police of Algiers; that she met some English people in Algiers, who took her with them to London since she was without funds to travel and could no longer stay where she was; that shortly after her arrival in England she was arrested for fraudulent entry without a passport and lodged in jail for several days; that, after a trial, she was ordered deported to the United States; that, between the time of her apprehension and deportation, the American embassy and American consul were notified and tried unsuccessfully to locate her father on the Continent to inform him of his daughter’s plight; that, finally, plaintiff sent money to London, England, to Lang* so that she might return to this country as a first-class passenger rather than in the steerage, where deported persons are usually compelled to travel; that Lang* arrived in New York about December 6, 1933, where she remained on funds furnished by plaintiff until January 1, 1934, at which time her mother went to New York and brought her daughter back with her to Chicago; that previous to May, 1933, defendant had spent from $350 to $500 a month for the support of his daughter; that her father failed to support his child since May, 1933, and was liable for her support until July 29, 1934, when she became 18 years of age; that he was reputed to be worth in excess of $1,000,000 and to have an income in excess of $10,000 a month; that he was 67 years old and traveled continuously, wintering during the cold months at Nice or some other place having a warm climate; that Lang Cummer owned and possessed two fur coats, two diamond rings, a diamond brooch, a Ford automobile and various articles of clothing and personal wearing apparel, which her father took from her and gave to the cook; and that in order to exist since May, 1933, Lang was compelled to borrow 35,000 francs and plaintiff advanced approximately $600 for her support and upkeep.

The prayer of plaintiff’s petition was that that portion of the decree of divorce of October 25,1929, giving the care and custody of the minor child, Lang Cummer, to defendant, be vacated and that the decree be modified so that the care, custody and control of Lang be awarded to plaintiff; that defendant be required to reimburse his daughter for the money she was required to borrow to support herself so that same might be repaid; that defendant be required to reimburse plaintiff in the sum of $600, which she was compelled to spend for Lang’s care and support; that he be required to restore to his daughter her personal property heretofore mentioned within a reasonable time or pay plaintiff the value thereof for and in Lang’s behalf; that defendant be ordered to pay plaintiff not less than $400 a month for the care and support of Lang; and that she be awarded reasonable solicitor’s fees, not less than $2,500.

As heretofore stated a copy of the foregoing petition accompanied by notice of a motion for leave to file same was served upon the Butler law firm, which represented defendant at the instance of the Cleveland law firm when the original decree of divorce was entered. Upon the filing of plaintiff’s petition the court entered a rule upon defendant to plead to same within five days. January 29, 1934, the law firm of Butler, Pope, Ballard & Biting filed a written motion, supported by the affidavit of Frank E. Harkness, for an extension of time to February 20, 1934, within which to move to dismiss plaintiff’s petition or answer same. Harkness stated in his affidavit that the law firm upon which plaintiff’s motion and copy of her petition were served was composed in part of some of the same members of the firm that appeared for defendant in this cause at the time of the entry of the original decree; that he was the member of the firm in direct charge of the case and conducted the proceedings in behalf of defendant, which led to the entry of the decree of divorce; that his firm was employed to represent defendant by Squire, Sanders & Dempsey, attorneys at law of Cleveland, Ohio, and received its instructions for the conduct of the case exclusively from the Cleveland lawyers, who informed his firm that defendant was at that time in Europe; that neither he nor any other member of his firm, either as then or now constituted, had had any communication with defendant or any knowledge of his whereabouts since the entry of the original decree; that, immediately upon being served with the notice of plaintiff’s motion, his firm forwarded the copy of her petition to modify the divorce decree to the Cleveland lawyers with a request for instructions in connection therewith; that the Cleveland lawyers telephoned his firm January 24, 1934, that they had not heard from defendant for several years and had no information as to his present residence, but that they were cabling the branch of the National City Bank at Nice, France, in an endeavor to locate him; and that he was advised by one of the Cleveland lawyers on January 27,1934, that no answer had been received from said bank or defendant and that the Cleveland firm was making further efforts to locate defendant, but that thus far their efforts had been unsuccessful.

The chancellor allowed the motion of the Butler firm to extend the time to move to dismiss or answer plaintiff’s petition to February 20, 1934.

February 20, 1934, the Butler law firm moved “to vacate, set aside and annul their appearance as solicitors for defendant in said cause” entered January 29, 1934, and presented Frank E. Harkness ’ affidavit in support of their motion. This affidavit of Harkness, after reciting his membership in the Butler firm, its employment to represent defendant, his conduct of the divorce proceedings in behalf of his firm and the successive changes in the membership of the firm since the decree of divorce was entered, asserted that neither he nor any partner of his successive firms had had any communication directly or indirectly with defendant since October, 1929; that the original divorce action was uncontested, his firm being employed for the sole purpose of seeing that the proceedings therein were regular and that the decree was in proper form and contained provisions satisfactory to the defendant with reference to the custody of his minor child; that his firm was employed by the Cleveland law firm, which, although it had made diligent efforts to locate Cummer since the filing of plaintiff’s petition to vacate, had been unsuccessful; and that neither the Cleveland firm nor the Butler firm nor any member of either firm had received from defendant any instructions or authority to act for or represent him in the matter of plaintiff’s petition.

The motion of the Butler firm to vacate and annul its appearance« was successively continued until March 26, 1934. In the meantime, on March 21, 1934, an injunction was issued by the chancellor, without notice and without bond, restraining the Bankers Trust Company of New York City, individually and as trustee, from paying out, transferring or in any other manner relinquishing the possession and control of any money, securities or other property in its custody belonging to defendant, and restraining defendant from attempting to withdraw, transfer or dispose of any such money, securities or other property.

March 26, 1934, the trial court found that “irrespective of the number of changes in the composition of the personnel of said law firm of Butler, Lamb, Foster & Pope, now known as Butler, Pope, Ballard & Siting, they are still the solicitors of record for the defendant,” and ordered “that the motion of said firm, Butler, Pope, Ballard & Siting, asking this court to vacate, set aside and annul their appearance as solicitors for defendant, be and is hereby denied.” In the same order defendant was ruled to answer within one day plaintiff’s petition of January 24, 1934, to modify the original divorce decree.

March 28, 1934, the 12 members of the Butler law firm filed a petition sworn to by Harkness, in which they averred facts showing that they did not represent defendant; that they had been retained solely to represent him in the proceedings leading to the entry of the divorce decree in October, 1929; and that they had no authority to act for or represent defendant in the matter of plaintiff’s petition to vacate or modify the decree of divorce. This petition also averred that “your petitioners received information that said defendant was residing at No. 5 Rue De la Pondrier, Algiers, Algeria, and your petitioners caused a cable message to be sent to the said defendant at that address, requesting instructions with reference to the petition of said complainant. Your petitioners are informed and believe, and upon such information and belief charge the fact to be, that said cable message was duly delivered to said defendant on or before March 19, 1934, and said defendant has not replied thereto.” The court allowed the prayer of this petition and on March 28,1934, granted leave to the Butler firm and its members to withdraw their appearance as solicitors for defendant, discharging them “of and from further responsibility.”

Thereafter, on the same day, the court entered an order finding defendant in default and further finding (1) that he abandoned his daughter in Nice, France; (2) that he was not a fit and proper person to have his daughter’s custody; (3) that he wrongfully took from his daughter two fur coats, three diamonds and one Ford automobile; and (4) that she had to borrow 35,000 francs to support herself after said abandonment, and that sums of $200, $300 and $500 were expended for Lang Cummer’s care and support by plaintiff. Pursuant to these findings it was ordered (1) that the divorce decree of October 25,1929, be modified and the custody of the daughter awarded to plaintiff; (2) that defendant pay plaintiff $1,000 as reimbursement for moneys alleged to have been expended by her for and on behalf of Lang; (3) that he pay plaintiff $2,310 for the use of Lang in order to repay the 35,000 French francs alleged to have been borrowed by her for her support; (4) that he return the furs, diamonds and automobile of an aggregate value of $4,700 alleged to have been taken by him from Lang; and (5) that he pay plaintiff $2,500 for her solicitor’s fees. It was further ordered that if the property mentioned was not restored and the various amounts paid to plaintiff by defendant within three days, judgment would be entered against defendant in plaintiff’s favor for $10,510, upon which execution was to issue; and that defendant pay plaintiff $400 a month, commencing March 1,1934, for the support of Lang to and including the month of July, 1934, when she would have attained her majority.

April 2, 1934, the court entered a judgment against defendant in favor of plaintiff for $10,510, which included the alleged $1,000 advanced by plaintiff, the alleged $2,310 borrowed by Lang, $500 for fur coats, $3,450 for diamonds, $750 for the automobile and $2,500 for solicitor’s fees.

Another judgment was entered against defendant April 18, 1934, for $800 for support money for Lang for the months of March and April, 1934.

April 20,1934, without notice to defendant and without bond, an order was entered restraining him from selling, assigning or removing any securities, money, etc., and particularly certain specified securities, and also restraining The Fair, an Illinois corporation, from accepting for assignment and transfer any certificate of its stock registered in defendant’s name.

July 3, 1934, the chancellor entered an additional judgment for plaintiff against defendant in the amount of $1,200, which represented $400 a month theretofore ordered for the support of Lang for May, June and July, 1934.

Pursuant to the judgments heretofore set forth, or some or one of them, plaintiff caused a levy to be made on 150 shares of stock of The Fair, owned by defendant, and she purchased this stock at the sheriff’s sale. July 30, 1934, on plaintiff’s motion, the court entered an order directing The Fair corporation to issue forthwith to her two stock certificates, each for 75 shares of its common stock, in lieu of the 150 shares of stock standing in defendant’s name upon the books of said corporation, upon her individual indemnifying bond. On the basis of plaintiff’s judgment of April 2, 1934, against defendant for $10,510, she commenced an attachment proceeding in New» York City and recovered from the Bankers Trust Company, as garnishee, $512.36 belonging to defendant. Plaintiff also collected in New York City $1,257.75 belonging to defendant, which represented the quarterly dividend on certain stock owned by him.

October 9, 1934, defendant filed his verified petition to set aside the order modifying the decree and awarding the custody of the child to plaintiff and to vacate all judgments and orders for injunction and otherwise entered subsequent to the entry of the original decree of divorce. This petition and the petition supplementary thereto filed October 25, 1934, alleged inter alia that defendant was 65 years of age and suffered from the heart ailment known as angina pectoris for nine years; that for two years prior to the entry of the decree of divorce he resided in Europe with his daughter Lang, who was in his care and custody; that continuously since that time he has lived in France or Algiers on account of his health; that he at all times provided for his daughter; that he lived permanently in Nice, France, until February, 1933, except for brief periods when he and his daughter resided in Vienna, Austria, in order to obtain the services of a certain specialist there; that in February, 1933, Lang decided that she wanted to take up nursing and he arranged for her entrance into the dispensary La Croix Rouge at Nice; that he provided her with a home at Le Pension Panonia (in the care of a matronly, motherly woman who had two daughters about Lang’s age) and arranged a credit for her at a bank in Nice, where she could draw necessary funds; that it was necessary for him to make this arrangement because he was ordered by his physicians to go to Algiers where the climate would benefit him; that he heard from his daughter at regular intervals until he returned to his apartment in Nice in April, 1933; that upon his return he learned that Lang had departed from Nice with one Gilbert Murray, a married man of family, and had gone to St. Moritz, Switzerland, and Paris, France, abandoning her nursing studies and the home and care he had provided for her; that he applied to the American consul for aid in enforcing his parental authority over his daughter and was advised that under the French law the consul could not intervene; that he then requested the assistance of the chef de police, who informed him that under the law of France a girl beyond the age of fifteen years and three months could not be compelled to submit to the authority of her parent; that he endeavored to persuade Lang to leave Murray and return to him, but she refused to comply with his request; that he then returned to Algiers and shortly thereafter Lang communicated with him, advising that she had separated from Murray and requesting that he send her money so that she might join him; that he cabled funds to her and she arrived at his hotel in Algiers; that she told him that she desired to further pursue her nursing studies and he arranged for her entrance into a hospital in Algiers, established and paid in advance for living quarters for her at a hotel and provided her with a credit of 500 francs a month for pocket money at Barclay’s Bank, Algeria; and that shortly thereafter he was required to return to Nice for further medical attention, leaving his daughter in Algiers.

It was further averred that Lang called for and received her allowance at the Algiers bank until June 1, 1933; that thereafter the bank notified him that his daughter had not called for her semimonthly allowance payable June 15, 1933, and he immediately endeavored to locate her; that he did not hear from her and was unable to discover anything of her whereabouts until he obtained information that his bank account in New York City and certain stock dividends had been attached as a result of these proceedings, and then learned, for the first time, that his daughter was in the United States; that he later learned that the aforementioned Murray induced Lang to go to France with him from Algiers and there obtained a fraudulent passport for her in the name of Mile. Desmond, with which she entered England with him in the fall of 1933; that this fraud was discovered by the English authorities and Lang was deported to the United States; that she made no effort during this time to communicate with him, though she well knew that he was living at his apartment in Nice, France; and that she also knew that there were funds for her at Barclay’s Bank at Algiers, which she made no effort to obtain.

It was also alleged that Cummer had no knowledge or notice of these proceedings and did not authorize anyone to accept notice for him or to represent him in this cause; that the notice served on the Butler firm was of no effect; that the' members of such firm were not his attorneys at the time of such service and had no authority to accept same or represent him in this matter; that all orders and judgments entered subsequent to plaintiff’s motion and petition of January 24, 1934, were entered without notice or knowledge to him; that he is a fit and proper person to have the care and custody of his daughter; and that he always provided for her according to his means.

In his petitions defendant denied that he had ever had any improper relations with his cook or any other female; that he wrongfully dispossessed his daughter of any of her clothing, jewelry, furs, automobile or other property; that he refused to obtain a necessary passport for her; that he had ever expended sums of from $350 to $500 a month for her support; that he refused to support her since May, 1933; that he gave any property which he had taken from Lang to the so-called cook; that he is a man of large financial means or that he is worth in excess of $1,000,000 or any other sum even approximating that amount; or that he has an income in excess of $10,000 a month.

He further alleged that, subsequent to the entry of his daughter into the Bed Cross dispensary in Nice, France, he at all times, under his physician’s instructions, required the services of a nurse, who accompanied him on his trips to Vienna and to Algiers; that he never had any use for his daughter’s fur coats, jewelry or other property claimed to have been taken .by him from her and that his daughter had possession of all such property owned by her when he last saw her; that she still has such property unless she has lost or otherwise disposed of same; that his daughter never did own a $3,000 diamond ring or an automobile, but that he did and occasionally permitted her to use same; and that his total income since January, 1933, has not exceeded $400 a month, subject to a large reduction because of the international money exchange rate on the American dollar.

Both of his petitions conclude with the prayer that the court vacate all the judgments and orders entered subsequent to the entry of the divorce decree.

It requires neither argument nor citation of authority to sustain the proposition that in a divorce proceeding where the parties have a minor child the court retains jurisdiction of the cause as to the care,- custody and control of such child until it attains its majority, go that the rights of the minor child may be.protected. It is fundamental, however, that before that jurisdiction can be brought into play and the court empowered to enter a valid order affecting the rights of the father, who has by final decree been awarded the care and custody of the child, reasonable notice must be given him so that he may be afforded an opportunity for his day in court to protect his rights. It is obvious from an examination of the record before us that defendant had no notice or knowledge, either actual or constructive, or through any attorney or attorneys authorized to represent him, of the filing of plaintiff’s petition and motion to vacate the decree or of the judgments or orders entered subsequent thereto.

While plaintiff’s counsel seems to feebly urge that even without notice to defendant the trial court had such continuing jurisdiction over the person of defendant, as well as over the subject matter, as to render all the orders and judgments in question valid, in the final analysis he appears to recognize the necessity of reasonable notice to defendant of some kind or nature so that he may be shown to have had at least some knowledge of the proceedings directed against him and his property. The argument of plaintiff’s counsel that a court of chancery retains such jurisdiction of the person of a party to a final divorce decree, where the interests of a minor child are involved, that it may without notice more than four years after the entry of such final decree enter judgments and orders vitally affecting the rights of such party, may, we think, be safely disregarded as being without merit.

What reasonable notice does plaintiff say that she gave defendant of her petition and motion to modify the decree as to the custody of the child and for the other relief sought?

Plaintiff relies (1) on the service of a copy of such petition and motion on the Butler law firm which represented defendant in the proceeding that eventuated in the final decree of divorce entered October 25,1929, and (2) on a cablegram which the Butler firm alleged that it had caused to be sent to defendant’s address in Algiers, requesting instructions with reference to plaintiff’s petition, which cablegram, it was averred, the Butler law firm was “informed and believed” defendant received but did not reply to.

The Butler law firm never formally filed defendant’s appearance in response to plaintiff’s petition and motion to modify the decree. By its petitions and affidavits it repeatedly insisted that no member of the firm had ever seen defendant and that it had merely been retained by his Cleveland attorneys to see that the proceedings were regular and his rights protected under the terms of the decree of divorce; that it had heard nothing from him since the entry of the decree ; and that it did not represent him and had no authority to represent him in the matter of plaintiff’s petition and motion.

In Swift v. Allen, 55 Ill. 303, a decree dismissing a bill in chancery was entered. At a subsequent term the decree was amended. The only notice given to defendants of the intention to move for an amendment of the decree was a verbal notice to their solicitor and a written notice directed to defendants posted on the court house door seven days before the motion was made. The court in holding the amendment to the decree void said, at p. 306:

“The notice to the solicitor was of no avail, because his connection with the suit had terminated with the final decree, even if a merely verbal notice could be held sufficient in any case — a position to which we by no means assent. . . .

“The amendment having, then, been made without notice to the defendant in this suit, it is, as to him, a ■ nullity. The court acted without jurisdiction. It could no more impair his rights by an order made in the guise of an amendment, without first bringing him before the court, than it could do so by pronouncing a new decree. The order making the amendment was not merely erroneous, as suggested by counsel. It was absolutely void, for want of jurisdiction, and can be assailed in a collateral as well as in a direct proceeding.”

In a practically similar situation in Scott v. Scott, 174 Iowa 740, the court said, at pp. 744, 745:

“The modification of the decree, by striking therefrom the provision relating to the custody of the child, was without authority. This order was entered at the term following that at which the decree was entered and therefore could not properly have been made on the court’s own motion or without notice to the plaintiff. (Citing cases.) That the plaintiff knew nothing of the filing of this motion to strike, and received no notice thereof, is not disputed, nor had she employed counsel to represent her, save in procuring the decree of divorce, being attorneys other than those now representing her. Their engagement ended with the entry of the decree. The employment of attorneys to prosecute suit always terminates with judgment or decree, unless something consequent thereof is to he done to render the judgment or decree or fruits thereof effective or available. 3 Am. & Eng. Ency. of Law (2d Ed.) 329; 4 Cyc. 952. As plaintiff was then in possession of the child, there was nothing more to be done, and her then attorneys were without authority to appear in response to the motion to strike, or to enter into any stipulation with reference thereto. It follows that the court was without jurisdiction in striking from the decree the order giving the custody of the child to the plaintiff. ’ ’

The service of notice of the motion to vacate, accompanied by a copy of the petition and affidavit in support thereof, more than four years after the entry of the decree of divorce, on the Butler firm, which represented defendant in the divorce proceeding, was not itself such notice to defendant as authorized the trial court to divest him of his rights. (McNab v. Dunsmure, 274 Ill. App. 560; Jacobsen v. Ashkinaze, 337 Ill. 141; Strook v. Jamieson, 139 Ill. App. 339; Smith v. Wilson, 26 Ill. 186, 187; Weeks, Attorneys at Law, 426; 6 C. J. 640, par. 144.)

On the ground of natural justice and as a matter of fair play defendant was entitled to some notice, such as it may have been practicable to have given him, and, inasmuch as he was subject to the court’s jurisdiction, personal notice to him, even in Europe, would have been sufficient. (White v. White, 65 N. J. Eq. 741.) But it has not been shown that he received notice of any kind, either here, in Europe or in Africa.

The relationship of attorney and client between the Butler firm and defendant having ceased to exist after the decree of divorce was entered October 25, 1929, service of plaintiff’s notice of motion and petition on that firm was without legal effect. The Butler firm’s motion of January 28, 1934, for an extension of time to February 20,1934, to move to dismiss or answer plaintiff’s petition and its subsequent motions and petitions to annul and vacate its appearance were all filed without the authority of defendant and could in nowise bind him. The Butler firm never even pretended to represent defendant or to have authority to represent him in the matter of plaintiff’s petition to modify the decree. Its first motion was merely for time to see if it could communicate with or contact defendant to find out if he wanted that firm to represent him, and when it was unable to make any contact with him its subsequent motions and petitions were all for the purpose of securing the annulment of its purported appearance and its discharge from all responsibility as his solicitors. The notice to the Butler firm not constituting legal notice to defendant, and no notice of any kind having been given him personally of the proposed modification of the decree, the court was without jurisdiction to enter the orders and judgments in pursuance of and subsequent to plaintiff’s motion and petition of January 24, 1934, and all such orders and judgments are therefore void.

.A unique situation appears in the record as to the Butler firm’s various petitions to annul and vacate its appearance for defendant. March 26, 1934, the court entered an order finding that “they are still solicitors of record for the defendant,” and denying its motion “to vacate, set aside and vacate their appearance.” Two days later, March 28, 1934, in response to the petition of all the members of the Butler firm that “they have no authority to act for or represent said defendant in the above entitled cause or any matter connected therewith, ’ ’ the court entered an order granting leave to the members of the Butler firm “to withdraw their appearance as solicitors of record for defendant” and their withdrawal having been entered of record, “they are hereby discharged of and from further responsibility as solicitors of record for defendant.” We thus have the anomalous situation presented, and relied upon by plaintiff, of the court acquiring-jurisdiction over defendant by the appearance and conduct of attorneys whom the court itself found had no right or authority to represent him. Plaintiff’s position in this regard is, of course, untenable. These attorneys were permitted to withdraw and discharged of all responsibility and defendant, as the record discloses, was thereafter without the benefit of counsel and left to the tender mercies of plaintiff and her solicitor.

Plaintiff now insists that the respective terms having passed at which the various judgments and orders sought to be vacated were entered, the trial court was powerless to set them aside. A judgment may be set aside at a term subsequent to that at which it was rendered where the court has failed to acquire jurisdiction of the person of the defendant. (Owens v. Ranstead, 22 Ill. 161, 166; Grand Tower Mining, Mfg. & Transp. Co. v. Schirmer, 64 Ill. 106.) Where it is clear, as here, that defendant was not served with notice, had no knowledge of the proceedings against him, and, therefore, had no opportunity to defend against them, the judgments and orders are void and should be set aside. (Kochman v. O’Neill, 202 Ill. 110; City of Chicago v. Nodeck, 202 Ill. 257.) Defendant states in his verified petitions that he had no knowledge of these proceedings until after the various judgments had been rendered against him. However great the lapse of time, laches is not imputable to a party who had no knowledge of a judgment against him and it is only required of bim to be diligent in seeking relief after he has notice of it. Laches is not mere lapse of time, but is unreasonable delay under the circumstances, generally involving injustice or injury to the opposite party. (34 C. J. 265, sec. 488.) There is no merit to plaintiff’s contention that defendant was guilty of laches in this cause.

Plaintiff concedes that she made no attempt to personally notify defendant of the filing* of her motion and petition to modify the decree, and her claim that the alleged cablegram of the Butler firm addressed to defendant’s purported residence at Algiers constituted personal notice to defendant is without merit. The allegation of the members of the Butler firm, in their petition for permission to withdraw as defendant’s solicitors, that their cable was delivered to defendant was purely on information and belief and is divested of force by defendant’s positive statement (in his veri- - fied petition to vacate all the orders and judgments entered at plaintiff’s instance) that he had no notice or knowledge of the filing of plaintiff’s motion and petition to modify the decree or of the entry of the subse- . quent orders and judgments. The truth of this, as well as of all other well pleaded allegations of defendant’s petition and supplementary petition to vacate the orders and judgments heretofore referred to, was admitted by plaintiff’s motion to strike same.

We have carefully examined all the authorities cited by plaintiff, where a final decree of divorce has been entered, as to the sufficiency of a notice to counsel of record in the divorce action to bind the party he represented therein in a proceeding brought at a subsequent term to amend or modify the decree at the instance of the other party, and find that in every case cited the . party personally appeared or that reasonable notice was in some manner given him. Wisconsin and possibly one or two other jurisdictions have statutory provisions that, even after final decree, notice to attorneys of record of either party to a divorce decree shall constitute notice to such party of proceedings thereafter brought to amend, modify or enforce the decree; but in the absence of such statutory regulation the rule is unquestionably otherwise.

In view of what has already been stated, we deem it unnecessary to discuss such other points as have been urged, except to state that we think that the procuring by plaintiff and her counsel of the veritable flood of judgments, injunctions and other orders in the absence of defendant, who had received no notice and was without counsel to protect his rights, constituted a flagrant abuse of equity and an utter disregard of defendant’s rights.

After defendant’s appeal bond of $1,000 had been approved by the trial court December 19, 1934, he deposited with the clerk of the superior court as additional security for the payment of the judgments entered in this cause- “in the event such judgments or this cause is sustained on appeal,” a certificate for 100 shares of stock of the American Telephone & Telegraph Co. Upon such deposit an order was entered that plaintiff “shall forthwith dismiss all pending actions and suits pending in the state of New York based on the judgments entered in this cause,” and that “all injunctional orders and injunctions heretofore entered herein on March 21,1934, April 20, 1934, and April 25, 1934, be and the same are hereby vacated, dissolved and set aside.”

For the reasons stated herein the order of the superior court of November 30,1934, striking from the files defendant’s petitions for the vacation of all judgments, orders for injunctions and otherwise, commencing with the order of January 24, 1934, granting leave to plaintiff to file her petition of that date to modify the decree and ruling defendant to plead to same, is reversed and this cause remanded to the superior court with directions to grant the prayer of defendant’s petitions of October 9, 1934, and October 25, 1934, to vacate all the judgments and orders entered against him since the entry of the decree of divorce October 25, 1929, including the order of March 28, 1934, containing certain findings of fact, the judgment of April 2, 1934, for $10,510, the judgment of April 18, 1934, for $800, the order of June 26, 1934, directing a certain depositary of defendant to turn over his money or property to plaintiff, the judgment of July 3, 1934, for $1,200 and the order of July 30, 1934, directing The Fair, an Illinois corporation, to issue forthwith to plaintiff certificates for stock of such corporation owned by defendant. It is further directed that defendant be permitted to institute such proceedings in the superior court in this cause as may be appropriate and necessary to compel plaintiff to return to him the amounts of $512.36 and $1,257.75, respectively, collected by her through attachment or other proceedings in the State of New York predicated upon the void judgments entered in this cause, and to compel her to return to The Fair the certificates of stock owned by defendant, which such corporation has heretofore been directed by the court to deliver to plaintiff, so that such stock may again be credited on the books of the corporation as belonging to defendant.

Reversed and remanded with directions.

Scanlan, P. J., and Friend, J., concur.